On Tuesday, 15 October, BKK issued a long-awaited consultation regarding the new standard agreements through Svensk Byggtjänst. The proposal is to replace AB 04 by AB 25 (General Provisions for construction contracts for building, civil engineering and installation work). It is proposed that ABT 06 should be replaced by agreements for design and construction contracts, ABPU 25 (General provisions for design and construction contracts for building, civil engineering and installation work). The consultation process is open, which means that the proposals are available on the Svensk Byggtjänst website. It is possible to submit comments up to 28 February 2025. After the consultation process has ended, BKK plans to publish the new standard agreements in the summer of 2025 after final processing of the consultation responses.
The new standard agreements contain several new areas dealing with rules for calculation, the environment, the work environment, quality, digitalisation and dispute resolution. In addition, the previous standard agreements have undergone an overall review, which in practice has resulted in what appears to be a completely new structure, which is described in general terms below with regard to AB 25. In this respect, it should also be noted that AB 25 does not contain any commentary on each provision. Some commentary texts have been inserted into the provisions. Otherwise, BKK plans to publish reasons for AB 25. Those reasons will not be issued for consultation.
Definitions
The list of definitions has been supplemented and extends to almost 3 pages of A4. Examples of new definitions of documents include Administrative Regulations, Tender Document, Document, Production Schedule, Drawing and Survey Material, whereas Quality Plan and Environmental Plan have been removed. Roles such as Supervisor and Consultant are also defined.
Important definitions include Fixed Provision and Default Provision. Fixed Provision is defined as a non-cover provision and Default Provision is defined as provisions that open up to other regulations through the wording ““unless otherwise stated” or equivalent””. In other words, default provisions are no longer marked with an asterisk.
The term Hourly Rate is also defined, along with an indication that what is included in an hourly rate is determined by case law unless the parties have agreed otherwise.
One other major new feature is the removal of the definition of ÄTA work. This is discussed in Chapter 5 instead.
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Chapter 1 – General starting points
The first chapter of AB 25 contains, in addition to provisions on the form of the construction contract, responsibility for tasks and documents as well as provisions on remuneration and main sections.
The applicable rules for remuneration are set out in AB 25 Chapter 1, section 2. A fixed price is the form of remuneration for which AB 25 is intended. In the event that an open account is to be applied, the provisions on remuneration should be adapted accordingly. The provision also refers to BKK's General regulations for open accounts, a document that, according to information in a footnote, BKK plans to publish, provided that they agree on those provisions.
The prime cost principle is described in AB 25, Chapter 1, sections 4–7, where section 5 corresponds to the former AB 04, Chapter 6, section 9. The list of costs providing grounds for compensation has been supplemented with Supervisors and Officials other than supervisors, as well as Subcontractors and consultants. This means a clarification of AB 04, Chapter 6, sections 9(2) and 9(5).
AB 25, Chapter 1, sections 6 and 7 correspond to AB 04, Chapter 6, section 10, though with extensive revisions that clarify items that were previously unclear such as contractors’ fees and central administration, as well as a reference to the fact that the parties can agree on a charging model.
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Chapter 2 – Scope
The scope of the contract work is determined, as in AB 04, by the contract documents, which complement one another. The ranking of the contract documents is set out in AB 25, Chapter 2, section 3 and is unchanged compared to AB 04, Chapter 1, section 3, with the exception that Digital model has been inserted as item 11, i.e. before descriptions, drawings and other documents.
The provision also states that changes to provisions must be apparent from the wording and must be found under the correct code and heading of the administrative regulations and that fixed provisions must be included in a compilation in the administrative regulations.
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Chapter 3 – Performance
Unlike AB 04, in which the parties’ duty of loyalty was only dealt with in the preface and in the commentary to AB 04, Chapter 4, section 3, AB 25, Chapter 3, section 1 states that the parties must cooperate and act loyally. The significance of this, as well as regulations on effective communication, is dealt with in AB 25, Chapter 3, sections 1–4.
The remaining parts of AB 25, Chapter 3 contain a mixture of provisions in AB 04, Chapters 1, 2, 3 and 4 regarding organisation, conditions, performance, materials and goods as well as times. However, times are only regulated in relation to actual times – changes to the contract period are dealt with in AB 25, Chapter 5 (Amendment).
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Chapter 4 – Control
The parties’ controls on the work were only briefly described in AB 04, which is why the chapter contains a large number of supplements. It is particularly interesting that, according to AB 25, Chapter 4, section 6, the client has a right to criticise the contractor’s work during the contract period, the client, in accordance with AB 25, Chapter 4, section 7, has the right to demand rectification and the contractor, in accordance with AB 25, Chapter 4, section 8, has an obligation to rectify these circumstances without delay. If this does not take place, the client, in accordance with AB 25, Chapter 4, section 9, is entitled to rectify them at the contractor’s expense. Another new feature is that the client is given the right to interrupt the contractor’s work in order to avoid damage, faults or breach of contract.
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Chapter 5 – Amendment
The prerequisites and consequences relating to amendments are set out in AB 25, Chapter 5. These amendments relate to contract work, contract periods and contract amounts.
As stated initially with regard to the definitions, the term ÄTA work is not used in AB 25. However, the definition of ÄTA work and associated provisions that were included in AB 04 is found in Chapter 5, but the more general term Amendment of the construction contract is used instead.
Amendment of the construction contract is described separately in AB 25, Chapter 5, sections 1–3 and another new term, i.e. deviating circumstances is included in AB 25, Chapter 5, sections 4–7. Thereafter, the adjustment of the contract period is dealt with in AB 25 Chapter 5, sections 8–9 and adjustment of remuneration is dealt with in AB 25, Chapter 5, sections 10–16.
Amendment of the construction contract
In accordance with AB 25, Chapter 5, section 1, Amendment of the construction contract refers to alterations and additional work that are directly related to the contract work and whose nature is not significantly different from that work, as well as discontinued work. In accordance with the provision, the assessment must take into consideration in particular whether the works are so closely linked to the contract work that they form a technical whole and whether it would cause nuisance if the client waits or engages another contractor for to perform the works. The provision mainly coincides with the provisions on statutory ÄTA work in AB 04, the difference being that changes and additional work are assessed together.
In accordance with AB 25, Chapter 5, section 2, the contractor, as previously, is entitled and required to carry out amendment of the construction contract and, in accordance with AB 25, Chapter 5, section 3, changes must be ordered in writing. If a written order has not been issued, the contractor is only entitled to an extension of time and compensation if immediate action must be taken, if the parties have reported different opinions, if the client has changed the digital model without giving notice and if it would otherwise be unreasonable.
Deviating circumstances
AB 25, Chapter 5, section 4 specifies what constitutes deviating circumstances. The provision is a mixture of the prerequisites for equivalent ÄTA work in AB 04, Chapter 2, section 4 and the conditions for extension of time (obstacles) in accordance with AB 04, Chapter 4, section 3.
As stated above with regard to amendment of the construction contract, the contractor is also required and entitled to carry out work attributable to deviating circumstances in accordance with AB 25, Chapter 5, section 5, which requires written notification in accordance with AB 25, Chapter 5, sections 6 and 7.
Adjustment of contract period and remuneration
Both amendment to the construction contract and deviating circumstances entail a right to adjustment of the contract period in accordance with AB 25, Chapter 5, section 8. However, this requires a written notification in accordance with AB 25, Chapter 5, section 7.
Both amendment of the construction contract and deviating circumstances also give rise to entitlement to additional compensation in accordance with AB 25, Chapter 5, sections 10–14, which contain provisions concerning, among other things, which costs may give rise to changes and set out rules on unit prices and the prime cost principle.
In accordance with AB 25, Chapter 5, section 10, the contractor is entitled to receive compensation for costs attributable to amendment of the construction contract in accordance with section 1 and deviating circumstances in accordance with section 4, paragraphs 1–4 and all consequences thereof as well as a contractor’s fee on the costs. However, if the parties have agreed on applicable unit prices, these apply in accordance with AB 25, Chapter 5, section 12. If compensation cannot be calculated according to the above, in accordance with AB, Chapter 5, section 13, the contractor is entitled to receive compensation according to the prime cost principle.
The provisions on additional compensation conclude with the clarification that an agreement on compensation or a deduction settles all claims relating to the circumstances in question, with the exception of unforeseeable costs.
It can thus be noted that, regarding rules on compensation and the right to an extension of time, AB 25 does not distinguish between between ÄTA work and obstacles, as is the case in AB 04. In simple terms, a right to compensation always exists if changes or deviating circumstances are due to the client or to a new statute. Nor does the client have any right to equal sharing of costs, as previously stated in AB 04, Chapter 5, section 4, second sentence with regard to compensation for obstacles.
In AB 25, Chapter 5, section 15 there is an equivalence to AB 04, Chapter 6, section 3. Both the materiality requirement and the unpredictability requirement remain, but the previous action by a public authority condition has been deleted since it has instead been placed in AB 25, Chapter 5, section 4 on deviating circumstances. The provision also specifies how the adjustment must be made. The contractor is responsible for non-substantial cost changes and the client is responsible for the excess.
AB 25, Chapter 5, section 16 contains a simplification of the final settlement rule in AB 04, Chapter 6, section 11. In accordance with the provision, if the construction contract price is lower than the contract amount, the contractor is entitled to 10% of the amount by which it is lower. The contractor thus has no independent right to loss of profit.
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Chapter 6 – Payment
AB 25, Chapter 6, which deals with payment, contains few changes compared to the corresponding provisions in AB 04. However, it should be noted that during the contract period, the client is entitled to withhold 5% of the invoiced amount in accordance with AB 25, Chapter 6, sections 1 and 2, compared to 10% for contract work and 5% for ÄTA work in accordance with AB 04, Chapter 6, sections 12 and 14. The contractor’s obligation to take out insurance is also regulated in this chapter.
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Chapter 7 – Delay and defects
It it is stated in sections 1–2 at the beginning of AB 25, Chapter 7 that the contractor bears the risk for undelivered parts of the construction contract, with the exception of causes that are the fault of the client, war, terror, rebellion, natural disaster or similar circumstances. However, the client bears the risk for damage caused by goods and materials provided. Each party also bears the risk for tools provided.
AB 25, Chapter 7, section 3 regulates the contractor’s penalty for delay. Unlike AB 04, Chapter 5, section 3, in accordance with which the parties are presumed to agree on a penalty, it is stated that a penalty is payable at 0.5 per cent of the contract amount, unless otherwise agreed.
AB 25, Chapter 7, sections 4–10 regulate defects in the construction contract. Section 4 states that defects consist of a deviation from what was agreed due to a circumstance for which the contractor is liable.
AB 25, Chapter 7, sections 6 and 7 state that the liability period is ten years and begins with a guarantee period of five years. As in AB 04, the contractor is strictly liable for defects during the guarantee period and, during the liability period, for substantial defects that have arisen due to negligence.
AB 25, Chapter 7, section 10 specifies the time limits for complaints regarding defects. The time limits for complaints are the same as in AB 04, but have been gathered together into a single provision.
Penalties for defects are dealt with in AB 25, Chapter 7, sections 11–17, where section 11 states that the client is entitled to require a rectification (sections 12–13), rectify at the contractor’s expense (section 14), receive a price reduction (sections 15–16) and claim damages (section 17). These rules are more detailed than those set out in AB 04 and state, for example, how compensation on an open account must be dealt with in the event of rectification of defects and the conditions under which the client may rectify at the contractor’s expense.
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Chapter 8 – Damages in general
Damages in general have been allocated a completely separate chapter in AB 25, which contains clearer provisions than those set out in AB 04.
The liability for compensation for damage to the counterparty and consequential damage for defects (AB 25, Chapter 7, section 17(2)) is, in accordance with AB 25, Chapter 8, section 2, limited to 15% of the contract amount per defect and a maximum of 30% of the contract amount for all defects. The limitations on damages do not apply in the case of gross negligence.
Deadlines for filing claims for damages are dealt with in AB 25, Chapter 8, section 6, which is the same as in AB 04, Chapter 5, section 20.
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Chapter 9 – Inspection
To begin with, it should be noted that the term besiktningsman [inspector (male)] in AB 04 has been replaced by besiktare [inspector (generic)] in AB 25.
The chapter mainly contains the same regulations as AB 04, Chapter 7, but in reverse order. AB 25, Chapter 9 begins with rules on inspection plans, call-outs, inspectors, compensation, implementation and statements. This is followed by the individual types of inspection.
A new type of inspection for AB 25 is the standardised pre-inspection, AB 25, Chapter 9, section 11, which was previously only touched upon in the commentary to AB 04, Chapter 7, section 1.
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Chapter 10 – Termination and cancellation
The chapter is divided into three parts dealing with termination, cancellation and the contractor’s right to interrupt the works.
A right to termination exists in accordance with AB 25, Chapter 10, section 1 in the case of damage due to war, terror, rebellion, natural disaster or similar, if an authority in the event of war or threat of war requisitions an organisation or if the construction contract must be interrupted for such a long period of time that the conditions for performance are significantly disrupted. These grounds for termination coincide with the grounds for cancellation in AB 04, Chapter 8, sections 1–2 paragraphs 9–11.
In accordance with AB 25, Chapter 10, section 2, the contractor must be credited with compensation for work carried out in the event of termination. A valuation is carried out by an inspector. In the event of termination, the contractor is not entitled to a final settlement in accordance with AB 25, Chapter 5, section 16. In the event of termination, the construction contract is delivered in accordance with AB 25, Chapter 10, section 3.
The client’s and the contractor’s right to cancellation is described in AB 25, Chapter 10, sections 5 and 6. The grounds for cancellation are mainly the same as in AB 04, Chapter 8, sections 1–2, with the exception of the grounds that now constitute grounds for termination as described above. Added to these grounds for cancellation is failure to fulfil obligations relating to the working environment, environmental protection, taxes and social security contributions. A party is also entitled to cancel if it is clear that a breach of contract will occur in accordance with AB 25, Chapter 10, section 7, which is a codification of the ability to cancel in the event of an anticipated breach of contract in section 62 of the Sale of Goods Act.
In the event of cancellation, the construction contract is delivered in accordance with AB 25, Chapter 10, section 10. In accordance with AB 25, Chapter 10, section 11, the contractor is not liable for defects included in the valuation of the construction contract. For other defects, the contractor has no right or obligation to rectify the defects, which are settled through a price reduction.
In accordance with AB 25, Chapter 10, section 14, the contractor is entitled to interrupt its work in the same way as in AB 04, Chapter 8, section 3.
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Chapter 11 – Resolution of disputes
The chapter on resolution of disputes begins by noting that agreements are interpreted in accordance with Swedish law, AB 25, Chapter 11, section 1. This is followed in AB 25, Chapter 11, section 2 by a dispute escalation, i.e. a dispute resolution scheme, which means that disagreements must primarily be resolved between the responsible persons most directly concerned. If the disagreement has not been resolved, a party may request deliberation between the parties’ representatives. If the representatives are unable to resolve the issue, the dispute may be referred for simplified dispute resolution, to a general court or for arbitration. Such a referral may be take place without deliberation between representatives if more than 10 days have passed from a request for deliberation or if there are special reasons to refrain from deliberation.
The procedure for simplified dispute resolution is described in AB 25, Chapter 10, sections 3–12, which contain clearer rules and shorter deadlines than AB 04, Chapter 10. Disputes in general courts or arbitration proceedings are described in AB 25, Chapter 11, sections 13–14. Unless otherwise stated in the contract documents, disputes below 500 price base amounts (SEK 29.4 million in accordance with the price base amount for 2025) must be settled by a general court. Disputes above that amount must be settled by arbitration. The limit amount in accordance with AB 04, Chapter 9, section 1 was 150 price base amounts.
Would you like to know more about the Swedish standard agreements?
Lindahl is following the work on both AB 25 and ABPU 25 with great interest and we will certainly have reason to return to this subject. We can also assist in the drafting, assessment and application of procurement documents and construction contracts. We also give advice in advance of and during discussions regarding the Swedish standard agreements on a general level. If there is any interest, we are also able to develop training courses and seminars on construction contract law. You are very welcome to contact us using the contact details below.
