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LEGAL NEWS - AB 18: New standard terms for the construction sector

NJORD logo
15. March 2018

Entirely new standards are on their way in the construction sector. AB 18 and ABR 18 have been sent to interested parties for consultation.

What is the AB-system and when do the new terms become effective?

The AB-system consists of general terms and conditions within the building and construction industry and has existed for more than a 100 years. The first standard conditions were adopted in the end of the 19th century and since then, the conditions were revised approximately every 20 years. The last time was in 1992 and it is now time for new standard terms in 2018.

The AB-system includes 3 different series of standard conditions: 

  1. ABR 89 (general terms for technical consultation and support)
  2. AB 92 (general terms for delivery and construction contracts in the building and construction industry)
  3. ABT 93 (general terms for turnkey construction contracts)

The AB-committee, which is composed of 14 representatives from public and private organizations, has reviewed the question of the AB-system revision, including ABR 89, AB92 and ABT 93, since 2015.

On 2 February 2018, AB 18 and ABR 18 were submitted for consultation. The Ministry of Transport, Building Trade and Housing must now accept these terms, and it is expected that the final version of AB 18 and ABR 18 will be published May 2018 and become effective on 1 January 2019. There is no final draft of ABT 18 available yet, but it is expected to come up later this year.

What has changed with AB 18 compared to AB 92?

According to the draft of AB 18 and ABR 18, there will be major changes in the construction sector. 
Some of the new terms are named here:

  • Planning: detailed requirements concerning time schedules and update of these schedules, in order to ensure the right construction activity at the right time at the right price.

  • Fewer errors and omissions: a decrease in the number of errors and omissions through „preliminary discussions“ and new regulations about quality management and control.

  • Projecting by the contractor: a new framework for cases in which the building contractor conducts parts of the project planning (projecting).

  • Direct claim against the subcontractor: the principal can make a claim directly against the subcontractor of the building contractor if it would be unusually cumbersome for the principal to conduct a warranty claim against the building contractor.

  • Daily penalty for exceeding intermediate deadlines: In recent practice daily penalties for exceeding intermediate deadlines have become possible, and the proposal is in accordance with this development. Daily penalties for the exceeding of deadlines are are to be agreed upon if the deadline is set to ensure the completion of an activity that is decisive for the building process or for other essential matters.

  • Contractual penalty for omissions in the project: If an adviser, omits important parts of the in the preparation of the project documents, this will often lead to additional work for the contractor. With ABR 18, it is proposed that the adviser in principle must pay 5 % of the total costs of such additional work.

  • Dispute resolution: Socalled “resolution stairs” require all parts to try to settle the dispute through negotiations, before the next step in the resolutions stairs is taken. Along with this, AB 18 introduce a new type of proceeding, called „quick decisions“, which is a simplified, fast and low-priced arbitration proceeding. Lastly, the committee suggests a „cool-down period“, meaning the arbitration proceedings cannot be initiated earlier than 4 weeks after the negotiation process has ended.

Why are the new AB standards necessary?

The construction sector and its methods are under constant growth, and a lot has happened since the last revision of the AB-system in 1992. Nowadays, agreements and contracts are often concluded with exceptions of the AB standards, which leads to many conflicts. A revision must therefore be made so that the general terms thereby can be brought in line with recent practice.

The purpose of the new standard terms is to minimize the number of conflicts and to increase the efficiency and the competition within the construction sector.

Need more knowledge?

At NJORD , leading experts in the field provide courses about AB 18. NJORD has developed seminars so that everyone is guaranteed excellent training and can gain the knowledge about the new standard terms that is needed.
The law firm offers a one-day course in German about AB 18 and ABR 18 as well as online courses, in which the new terms are introduced. 

For further information as well as registration, see www.njordlaw.com/de/veranstaltungen  


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