Risk – The Importance of Licensing when it comes to Project Management – by Jacon Parry
It is not widely known or understood by many in building services and support industries here in Queensland that Project Managers are required by law to hold the appropriate QBSA licences. The Queensland Building Services Authority Act 1991 states that Project Managers must be licensed under the Act. Most will be surprised when they come to understand what constitutes ‘Project Management’ under the Act as we will outline a little later and the adverse implications on such areas as insurance claims and SMSF’s that being unlicensed can lead to.
The QBSA Act provides that it is unlawful for a person to carry out, or undertake to carry out, building work or building work services unless the person is appropriately licensed. The Act defines ‘Building Work Services’ as the provision of administration, advisory, management or supervisory services for building works.
Any contravention of this provision can lead to prosecution and significant financial penalties. What’s more, any offender is not entitled to any profit. Recovery of expenses may be possible that that does not extend to recovering of any money to cover their own time or profit. Furthermore, contraventions can and will likely lead to insurance policies being voidable, meaning that losses sustained that otherwise were insured may no longer be recoverable.
SMSF’s, Insurance and Pre-Sale contracts at risk.
This can have major implications when it comes to making insurance claims under a wide range of covers such as professional indemnity insurance or contract works policies. Of particular note these days is work being carried on behalf of or by an SMSF, where even the trustee is not permitted to carry out any works on behalf of the SMSF unless they hold an appropriate licences. SMSF’s have a further layer of legislative requirements laid out in the SIS Act prohibiting them from carrying out ‘Development work’ the definition of which we will not detail here but it’s wide ranging – suffice to say, penalties for non compliance can be substantial and long lasting.
In respect to Pre-sale contracts where the contract is entered into before the project is complete, typically contracts provide for settlement after construction is complete but often rely on works outside the building contract being completed by the developer who often is not licensed to carry out such tasks, prior to settlement. The provisions of the Act can have a serious impact on the developer if the developer is not licensed, such as the sale contract being voidable or worse still, awarding of damages.
Legislation in these areas are generally State based and what we have outlined here applies inQueensland for projects located in Queensland. We are not able to advise on what applies in other States but given the potential for wide ranging severe financial implications it would pay to find out if your project is elsewhere.
So… the question is….”Is it worth the risk?” Go on….roll the dice
For the record:
Following is a list compiled by QBSA of some of the sorts of things a person carrying out the task needs to hold the appropriate QBSA licence for.
If a person or firm performs any of the following tasks in relation to building work then they are required to hold the appropriate BSA licence for the work. (This will generally be a Builder class of licence.)
• Acts as Superintendent under a contract (for further information see the Information Statement on this topic)
• Co-ordinates the scheduling of building work by contractors including as agent for another person
• Prepares tender documentation or calls and selects tenders
• Arranges and conducts on site meetings and inspections or
• Arranges certificates, including certificates from a local government, to be issued.”
If your project manager is not licensed and insured you are at risk – further more he is too – – it’s that simple!