The most misunderstood role in construction

Updated: Apr 27

The superintendent – independent certifier or principal’s agent?

In a perfect world, construction projects would run smoothly.

Principals would have perfect drawings and perfect specifications which set out exactly what to build and even, notes on how to build it. With this perfect information, builders would know exactly what difficulties to expect when building, plan accordingly and deliver each project perfectly on time and for the originally agreed price.

Unfortunately, we don’t live in a perfect world.

Principal’s drawings/specifications are often grossly incomplete, don’t make sense or they simply change their mind about what they want.

Builders also don’t really have any way to perfectly plan out the works.

To deal with these uncertainties, construction contracts are flexible and allow:

  • Payments to be made progressively, depending on how much of the work has been completed up to that point;

  • The price to increase or decrease, depending on whether the principal wants more work or less work carried out than originally agreed; and

  • The amount of time to complete the work to increase or decrease, depending on if there are any issues which caused the work to be delayed.

Of course, each contract has tens (or sometimes, hundreds) of other clauses, terms and conditions – but at their core, construction contracts deal with changes to the price and timing for construction work.

Given this ability to change, who should decide:

  • how much payment should be made from one party to another?

  • how much the price of the works should increase or decrease?

  • how much the date for the completion of the works should change?

Enter the role of the superintendent.

Role of the Superintendent

Traditionally, the role of the superintendent was created to allow an independent third party to handle minor disputes regarding the valuation of claims under contracts such as progress claims, variations and extensions of time.

A superintendent is not a party to the contract. He or she is an independent third party that usually agrees through its arrangement with the principal to be bound by any obligations stated under the construction contract.

Usually, the parties will define the obligations of the superintendent under the contract, which ordinarily includes:

  • Assessing and certifying the value of payment claims;

  • Assessing and certifying the value of variations claimed by the contractor;

  • Assessing and certifying the duration of extensions of time claimed by the contractor;

  • Inspecting quality of materials and workmanship and issuing directions to rectify any defective work;

  • Assessing and certifying the value of other claims for extra payment (such as claims following the discovery of a latent condition or requirement to comply with a legislative change);

  • Determining whether the works have achieved completion.

When the Superintendent carries out one of these functions, it must do so fairly, reasonably and impartially. These obligations are implied by law and arguably, cannot be contracted out of: Pacific Associates Inc v Baxter [1990] 1 QB 993 at 1029.

It used to be quite common for architects or engineers to fulfill the role of superintendent and the above common law obligations were incorporated into their codes of ethics.

For example, clause 18 of the Board of Architects of Queensland Code of Practice provides that:

“18. An architect: (a) must act with fairness and impartiality in administering building contracts;”

A similar requirement used to exist for Engineers. In the Institution of Engineers Australia Code of Ethics requires, clause 5 (b) provides:

" our capacity as Superintendent administering a Contract, we must be impartial in our interpretation of the Contract..."

Because professionals such as architects and engineers are bound by a code of ethics and subject to disciplinary proceedings for breaching them, they should carefully consider whether they are sufficiently impartial to take on the role of a superintendent – so as to avoid personal liability for any wrongful certifications under the contract.

In Walton v Illawarra [2011] NSWSC 1188 at [74], McDougall J discussed whether an architect was biased in acting as a superintendent under the contract:

“In my view, both the dual roles that Ms Indyk held and the demands made of her by Illawarra in her

capacity as architect placed her in a position where the possibility of conflict was real, and the

appearance of bias was likely to result.”

No doubt, the above comment from the Court would have been enough for disciplinary proceedings by the

Australian Institute of Architects.

Superintendents are usually also engaged to be the principal’s representative (i.e. the person who does everything on behalf of the principal – which is usually a company). When carrying out this role, the superintendent does not have to be fair, reasonable or impartial. This is because, it is acting essentially as an agent of the principal and should therefore be seen as an extension of the principal.

A question now arises, how do we tell when then the superintendent is acting in the role of a certifier or the role of the principal’s representative?

A ‘dual hat’ role

Some of the roles of the superintendent relate to the assessment of claims (as set out above) whist others relate to doing certain things on behalf of the principal as its agent. These include:

  • issuing directions to the contractor on behalf of the principal;

  • resolving contract document ambiguities;

  • approving programs regarding the timing and sequencing of the work;

  • examining and testing materials;

  • directing variations.

These two streams of responsibilities often lead the superintendent to being described as having a ‘dual-hat’ role.

This requirement, however, appears to have been expressly removed from the Engineers Australia current code of ethics and replaced with a requirement to “act impartially and objectively” generally.

When exercising its role as an agent of the principal, it is under no obligation to act fairly or impartially. This is why contracts are often amended to state that when a superintendent is deciding whether to unilaterally extend time under the contract, it does so as agent of the principal without any obligation to do so in favour of the contractor (discussed below).

It's important to be aware of which role the superintendent is fulfilling and at which time. Often, contractors will mistakenly think the superintendent is helping them, only to later receive a hefty claim from the principal!

Perhaps the best explanation of the dual hat role is described by Judge Thayne Forbes QC in Davy Offshore Ltd v Emerald Field Contracting Ltd (1991) 55 BLR 1. In that case, His Honour (using the older term of architect/engineer instead of superintendent) said at [61]:

"... it is clear that the obligation to act fairly is concerned with those duties of the architect/engineer which require him to use his professional judgment in holding the balance between his client and the contractor. Such duties are those where the architect/engineer is obliged to make a decision or form an opinion which affects the rights of the parties to the contract, eg. Valuations of work, ascertaining direct loss and expense, granting extensions of time, etc. When making such decisions pursuant to his duties under the contract, the architect/engineer is obliged to act fairly."

An interesting question arises as to whether an employee of the principal can be a superintendent under the contract. It seems difficult to imagine how an employee could remain impartial and fulfill its roles to act fairly and impartially as a superintendent when it has a distinct interest in obtaining the best result possible for its employer.

In Perini Corporation v Commo