15 - Contract Administration

Question 1

Contract Administration - Extract from Candidate Guide - Aug 2018 (updated Feb 2022)

Answer 1

Question 2

What is phased completion ?

Answer 2

Construction works can be planned as a series of stages or phases, rather than as one continuous process.

This can be useful for clients where a complex sequence of events needs to be followed (such as on densely occupied or complex site), or where there are a number of distinct components to the works, particularly for clients who are seeking to maintain some level of business operation during construction and so wish to minimise disruption.

In such cases, the project works can be divided into a series of smaller projects, spaced out over a period of months or even years.

Question 3

What is sectional completion ?

Answer 3

Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works. This is common on large projects that are completed in sections, allowing the client to take possession of the completed parts whilst construction continues on others.

Question 4

What are the risk associated with a client paying for items direct and outside of the contract ?

Answer 4

They would not be included within the contract, contract administrators inspection and have limited protection.

Question 5

Can you please expand on what the role of a Contract Administrator is ?

Answer 5

A contract administrator manages contracts made between building contractors, employers, and clients. Their responsibility is to administer construction contracts, whereby they may act as project managers, engineers, consultants and client representatives

Question 6

Can you expand on your knowledge of the JCT Intermediate contract ?

Answer 6

A JCT contract that allows for a number of addition in comparison to JCT MW including, clerk or works, sectional completion, partial possession, sectional completion, the use of bonds.

Question 7

Can you expand on your knowledge of the JCT Standard Building Contract

Answer 7

The JCT SBC allows for additional to the intermediate contract such as:

Employers representative, listed sub contractors (for specialist works), retention bonds, variation and acceleration quotations, third party rights.

Question 8

What JCT contracts allow for a clerk of works ?

Answer 8

• JCT Standard building contract
• JCT Intermediate Contract
• Not JCT MW

Question 9

What contract allow for sectional completion and named sub contractors ?

Answer 9

Intermediate and standard building contract

Question 10

Can you talk me through the EOT timeline ?

Answer 10

Question 11

Can you explain the interim payment procedure under JCT MW ?

Answer 11

Question 12

Can you explain the final payment procedure under JCT MW ?

Answer 12

Question 13

When can a employer claim for liquidated damages (JCT MW) ?

Answer 13

Liquidated damages are a well established method to collect compensation for a specific breach of a contractual obligation. If the breach is considered a relevant

Question 14

What is the ‘Guide to select the appropriate JCT Main Contract ‘?

Answer 14

Question 15

What is contract between the main contractor and the sub contractor ?

Answer 15

In this scenario is was a bespoke contract, the sub contractors were dealt with as domestic subcontractors and the responsibility of the main contractor.

Question 16

Does JCT MW allow for clerk of works ? What contracts do allow for this ?

Answer 16

No it does not however, both intermediate and standard building contracts do allow for this.

Question 17

What are the main types of tendering ?

Answer 17

• Open
• Selective
• Negotiated
• Serial
• Framework

Question 18

What are the main updates from the previous version (JCT MW updates) ?

Answer 18

JCT MW 2016 updates include :
• Amendments to reflect CDM 2015
• Increased flexibility regarding insurance and ‘insured by other means’
• Simplified payment provision including the interim payment provision under the Housing Grant, Construction and Regeneration Act 1996

Question 19

What is a traditional lump sum contract ?

Answer 19

A lump sum contract is the traditional means of procuring construction, and involves a single ‘lump sum’ price for all the works being agreed before the works begin. This means that the contractor is able to accurately price the works they are being asked to carry out.

Question 20

What is the role of the contract administrator ?

Answer 20

To administer the conditions/works under the terms of the contract. Acting impartially.

Question 21

What is a contract instruction and how would you deal with it ?

Answer 21

In simple terms, a contract variation occurs when the parties agree to do something differently from the way they originally agreed, whilst the remainder of the contract otherwise operates unchanged. Such an agreement, if valid, would amount to a variation of the existing contract.

Question 22

What is traditional procurement ?

Answer 22

Traditional procurement remains the most commonly-used method of procuring building works. It comprises a tripartite arrangement involving a client, consultants and contractor.

The traditional procurement route involves separating design from construction. The client first appoints consultants to design the project in detail and to ensure cost control and inspect the construction works as they proceed. Contractors are then invited to submit tenders for the construction of the project on a single-stage competitive basis.

Included in the contractor’s responsibilities are workmanship, materials and work undertaken by suppliers and subcontractors. The contractor is not responsible for the design (other than temporary works), although some traditional contracts may provide for the contractor to design specific parts of the works (see key criteria below).

Traditional procurement is typically undertaken under a lump sum contract. A single ‘lump sum’ price for all the works is agreed before the works begin, then stage payments are made as the works proceed. This is appropriate where the project is well defined when tenders are sought, and significant changes to requirements are unlikely. This allows the contractor to accurately price the works they are being asked to carry out.

Question 23

What are the others available JCT Contracts ?

Answer 23

• Standard Building Contract;
• Design & Build;
• Intermediate Contract;
• Intermediate Contract with Design;
• Minor Works;
• Minor Works with Design;
• Major Projects (MP)
• Framework, non-binding and binding;

Question 24

What is a letter of intent ?

Answer 24

A letter of intent is a document outlining the understanding between two or more parties which they intend to formalize in a legally binding agreement. The concept is similar to a heads of agreement, term sheet or memorandum of understanding

Question 25

What does the Housing, Grants Construction and Regeneration Act 1996 allow for within the contract ?

Answer 25

• the right to stage payments
• the right to notice of the amount to be paid
• the right to suspend work for non-payment
• the right to take any dispute arising out of the contract to adjudication

Question 26

Does the HGRCA apply to residential occupier ?

Answer 26

No, the HGCRA does not apply to residential occupiers. This is a ‘Section 106 - Residential Occupier’

Question 27

What are the types of specifications ?

Answer 27

• Specifications describe the products, materials, and work required by a construction contract. They do not include cost, quantity, or drawn information, and so need to be read alongside other information such as quantities, schedules, and drawings.
• Specifications vary considerably depending on the stage to which the design has been developed, ranging from performance specifications (open specifications) that require further design work to be carried out, to prescriptive specifications (closed specifications) where the design is already complete.
• Prescriptive specifications give the client much more certainty about the end product when making investment decisions (such as when they appoint the contractor), and place a greater burden on the designer to ensure proper installation rather than the contractor.
• Typically, performance specifications are written on projects that are straight-forward, standard building types, whereas prescriptive specifications are written for more complex buildings, or buildings where the client has requirements that might not be familiar to contractors and where certainty regarding the exact nature of the completed development is more important to the client.”

Question 28

What are the types of procurement ?

Answer 28

• Traditional contract 86%
• Single-stage design and build 41%
• Two-stage design and build 39%
• Management contract 18%
• PFI 10%

Question 29

Under JCT MW does the programme form part of the contract ?

Answer 29

No however the contract promotes the use of one for reference generally.

Question 30

Under JCT what are included within the contract documents ?

Answer 30

• drawings;
• specification;
• work schedules;

Question 31

What is the base date ?

Answer 31

Base date: the base date is usually set at around the time of return of tenders. base date’ is a reference date from which changes in conditions can be assessed. “

Question 32

Who normally retains the contract ?

Answer 32

The contract administrator

Question 33

Does JCT MW make reference to a possession date ?

Answer 33

MW16 does not refer to the contractor being given ‘possession’ of the site, but states simply that ‘The Works may be commenced’ on the date stated in the contract

Question 34

What are the ground for termination from the client under JCT?

Answer 34

• Insolvency
• CDM breaches
• Corruption of the contractor
• Contractor failing to proceed regally and diligently
• Employer failing to pay amounts
• Either party can terminate is the works are suspended for a period of more than one month due to neutral events

Question 35

What are the grounds for termination from the contractor under JCT?

Answer 35

• Insolvency
• CDM breaches
• Corruption of the contractor
• Contractor failing to proceed regally and diligently
• Employer failing to pay amounts
• Either party can terminate is the works are suspended for a period of more than one month due to neutral events

Question 36

Does JCT MW require a contract programme ?

Answer 36

MW16 does not require the contractor to produce a programme, although there would be nothing to prevent such a requirement being included in the specification; a programme might be very useful to the contract administrator, particularly when monitoring progress and assessing extensions of time.

Question 37

Why is it important to define a completion date ?

Answer 37

The significance of having a completion date is that it provides a fixed point from which damages may be payable in the event of non-completion. Generally in construction contracts the damages are ‘liquidated’, and usually expressed as a rate per week of overrun.

Question 38

What is the reason for an extension of time ?

Answer 38

One important reason for an extension of time clause is to preserve the employer’s right to liquidated damages in the event that the contractor fails to complete on time due wholly or in part to some action for which the employer is responsible

Question 39

What is the reason for an extension of time ?

Answer 39

One important reason for an extension of time clause is to preserve the employer’s right to liquidated damages in the event that the contractor fails to complete on time due wholly or in part to some action for which the employer is responsible

Question 40

What is ‘time at large’ ?

Answer 40

When the contractor has not fulfilled the obligations of the contract to meet practical completion but a certificate of non completion has not been issued.

Therefore there is no set completion date and the contractor must complete works only in a ‘reasonable time’.

Liquidated damages cannot be claimed

Question 41

When must a contractor give written notice regarding an extension of time ?

Answer 41

Under MW16 the contractor must give written notice to the contract administrator ‘If it becomes apparent that the Works will not be completed by the Date for Completion’ (cl 2.7, or 2.8 in MWD16). The notice must be given regardless of the reason for the delay, i.e. whether it is caused by the employer, by a neutral event (such as bad weather) or by the contractor itself.

Question 42

When would you issue a certificate of non completion ?

Answer 42

If the completion date is not achieved, under JCT MW the certificate is not required but this failure should be recorded and circulated to all.

Question 43

Does JCT MW state a list of relevant events ?

Answer 43

For guidance on what might be considered to be beyond the contractor’s control, the contract administrator might have regard to those matters listed as ‘Relevant Events’ under SBC16, for example exceptionally adverse weather, the ‘Specified Perils’, strikes, failure to supply information, site access and indeed any difficulty in movement on or around site.

Question 44

When should the CA respond to a contractor EOT claim ?

Answer 44

There are no time limits on when the contract administrator must respond to the contractor’s notice, but it is suggested that this should be done as soon as possible, in order to preserve the employer’s right to liquidated damages. The contract administrator should either fix a new completion date or notify the contractor that no extension of time is due. The contract administrator might call for information if this is necessary to make a fair and reasonable assessment, but this must never be considered as a delaying tactic.

Question 45

Can an EOT be reduced following initial confirmation ?

Answer 45

The second limitation is that there appear to be no provisions whereby the contract administrator may reduce a previous extension of time by fixing an earlier completion date where work has been omitted. Nevertheless, it is suggested that if work has been omitted, the contract administrator could take this into account when deciding what might be a reasonable extension in response to some further notice by the contractor.

Question 46

Does MW allow for occupation of the site prior to completion ?

Answer 46

MW16 makes no provision for the employer to use or occupy the site or the works or any
part prior to practical completion. If arrangements for phased occupation have not been agreed in the contract documents, a situation may arise where the contractor has not completed by the date for completion but part of the works are complete or sufficiently complete to allow the employer to have beneficial use of those parts and the employer is anxious to occupy them. There is nothing in the contract that allows for this; therefore, a separate ad hoc agreement would have to be made.

Question 47

What triggers practical completion ?

Answer 47

Under clause 2.9 (2.10 in MWD16) the contract administrator is obliged to certify the date at which, in the contract administrator’s opinion, works have reached practical completion and the contractor has complied sufficiently with clause 3.9 (its CDM obligations, for example the supply of information required for the health and safety file) and, in the case of MWD16, clause 2.1.3 (supply of CDP drawings). The date certified is the date when the last condition is fulfilled.

it is implied that it will be a fair and reasonable exercise of professional judgment.

However, it has been held that the contract administrator has a discretion to certify practical completion where there are very minor items of work left incomplete, on de minimis principles

Question 48

What does practical completion trigger ?

Answer 48

• Start of the rectification period
• release of half of the retention
• Employer takes responsibility of the site
• liability for liquidated damages ceas

Question 49

How and where would you process liquidated damages ?

Answer 49

May deduct damages from the amount due under the next certificate or reclaim the sum as a debt Under MW16 the contract administrator is not required to certify non-completion, but it may be prudent to record the failure in a letter to both the employer and the contractor. Once the date for completion has passed, the contractor is said to be in ‘culpable delay’.

The liquidated damages may either be recovered from the contractor as a debt or deducted from monies due (cl 2.8.2, or 2.9.2 in MW16). In both cases the following preconditions must have been met:
• the contractor must have failed to complete the works by the completion date (cl 2.8.1,or 2.9.1 in MWD16);
• the contract administrator must have fulfilled all duties with respect to the award of extensions of time.

Question 50

What is culpable delay ?

Answer 50

Culpable delay (sometimes referred to as ‘contractor delay’) on the other hand is a delay that is entirely the fault of the contractor. Where the contractor is culpable for a delay, they have no entitlement to an extension of time or loss and expense.

Question 51

Do liquidated damages need to be proven or estimated for a claim ?

Answer 51

It is no longer considered essential that the amount is calculated on the basis of a genuine pre-estimate of the loss likely to be suffered. Provided that the amount is not ‘out of all proportion’ to the likely losses, the damages will be recoverable without the need to prove the actual loss suffered, irrespective of whether the actual loss is significantly less or more than the recoverable sum. In other words, once the rate has been agreed, both parties are bound by it. Of course, for practical reasons, the rate should always be discussed with the employer before inclusion in the tender documents, and an amount that will provide adequate compensation included to cover, among other things, any additional professional fees that may be charged during this period. If ‘nil’ is inserted then this may preclude the employer from claiming any damages at all , whereas if the clause is left blank then the employer may still be able to claim general damages.

Question 52

What notice would you need to submit if you are planning to recoup liquidated damages form a payment ?

Answer 52

Within a pay less notice

Question 53

What is the process for issuing an extension of time if liquidated damages have been claimed ?

Answer 53

If an extension of time is given following the date for completion, the employer must
immediately repay any liquidated damages recovered for the period up to the new
completion date.

Question 54

What are the key powers of the contract administrator JCT MW ?

Answer 54

• Agree variations
• Issue a pay less notice on behalf of the client
• issue certificates
• certify practical completion making good defects

Question 55

How should a main contractor appoint sub contractors ?

Answer 55

MW16 stipulates that ‘Where considered appropriate, the Contractor shall engage the sub-contractor using the JCT Short Form of Sub-Contract

Question 56

At what point can you no longer issue variations under the contract ?

Answer 56

Following practical completion/Final account.

Question 57

Does the contractor have a right to access the site during the rectification period ?

Answer 57

Yes, but cannot force access. Although the right to return to site ceases at the end of the three-month period, the contractor’s liability for defective materials or workmanship continues throughout the statutory limitation period.

Question 58

How long does the contract administrator have to notify the contractor of the existence defects ?

Answer 58

MW16 requires the contract administrator to notify the contractor of the existence of defects within 14 days of the end of the rectification period .
Unlike SBC16, the form does not state that the contract administrator must issue a schedule of defects. It is suggested that it would be sufficient for the contract administrator to write to the contractor to inform it that defects had appeared, and of their general nature.
The onus would then be on the contractor to identify and make good all defective work. If
the contract administrator prefers to issue a schedule, it might be wise to state that it is
not intended to be a comprehensive list, and that the contractor should make its own
inspection. It would also be sensible to make the employer aware that the contractor must
be allowed access, as to prevent this might result in the employer being unable to claim
for the costs of remedying the defective work

Question 59

Can the employer accept the defect’s and suggest deduction from the retention fund ?

Answer 59

If the employer would prefer to accept the defects rather than require them to be corrected,
then an appropriate deduction is made from the contract sum (cl 2.11). As noted above
(see paragraph 5.31), care should be taken to establish the full extent of the problem and
negotiate a deduction before such a course of action is taken as it is unlikely that the
employer would thereafter be able to claim for consequential problems or further remedial
work

Question 60

What are prolongation costs ?

Answer 60

Prolongation costs are the additional costs that a contractor has incurred as a result of the completion of the works being delayed by an event that is the responsibility of the other party (usually the Employer). Such events might include; failing to give the contractor possession of the site on the date specified in the contract; delays in giving instructions, and so on.

Question 61

Does JCT MW allow for advanced payments ?

Answer 61

No, the contract would have to be amended to suite.

Question 62

What does a valuation include ?

Answer 62

The value of the work properly executed and the value of materials and goods properly brought onto site

Question 63

What does a valuation include ?

Answer 63

The value of the work properly executed and the value of materials and goods properly brought onto site

Question 64

What does a valuation include ?

Answer 64

The value of the work properly executed and the value of materials and goods properly brought onto site

Question 65

Can you allow for defective work to remain ?

Answer 65

The contract administrator should obtain both parties’ agreement, and ensure that its proposed adjustment to the contract price is agreed and confirmed in writing. The rates and prices for that work as set out in the contract can be used as a starting point for negotiation, but are not the only matters to be taken into consideration (see Mul v Hutton Construction Limited ). The contractor may prefer to correct the work, especially if the proposed reduction in the contract price is significant, and in general it cannot be denied the opportunity to do so.

Question 66

What risks are attached with including materials on site within interim payments ?

Answer 66

The employer could be at risk, however, where materials have not yet been built in, even where the materials have been certified and paid for. The contractor might not actually own the materials paid for because of a retention of title clause in the sale of materials contract.

Question 67

What is a payment notice ?

Answer 67

When the CA has not produced a payment certificate the contractor can produce a payment notice.

Question 68

What happens if the employer fails to pay the contractor under JCT?

Answer 68

JCT
Clause 4.6.1 makes provision for simple interest on late
payment of interim and final certificates. This is set at 5 per cent above the official bank rate of the Bank of England (cl 1.1), and the interest accrues from the final date for payment until the amount is paid.

The contractor is also given a ‘right of suspension’ under clause 4.7. This right is required by the HGCRA 1996 (as amended). If the employer fails to pay the contractor by the final date for payment, the contractor has a right to suspend performance of all its obligations under the contract, which would not only include the carrying out of the work, but could also, for example, extend to any insurance obligations

Question 69

What are the insurance options under JCT MW ?

Answer 69

Clause 5.4A is for use with new buildings, and is taken out by the contractor
5.4B is for use with existing buildings where the policy will cover the
new works and existing structure, and is taken out by the employer, 5.4C is used where neither of these options is appropriate and the parties agree their own insurance arrangements (these are to be set out in the contract particulars).

Question 70

How long should does each party have to provide evidence of there insurance in place ?

Answer 70

Both parties must be able to provide reasonable evidence within seven days of a request

Question 71

If a contractor submitted an obvious error in there submission what would you do with a JCT contract ?

Answer 71

• Alternative 1 = Details provided and the contractor has the choice to confirm or withdraw submission with no amendments
• Alternative 2 - Details provided and opportunity to confirm or amend to correct the error.
• Source - JCT Practice note - Tendering”

Question 72

Give me some examples of the requirements of the Housing Grants and Construction Regeneration Act 1996 .

Answer 72

• The right to be paid in interim, periodic or stage payments
• The right to be informed of the amount due, or any amounts to be withheld
• The right to suspend performance for non-payment
• The right to adjudication

Question 73

What 8 Conditions need to be met for a contract to be in place ?

Answer 73

• Offer by one party (tender)
• Acceptance by the other party (tender return)
• Consideration (price of the promise)
• Intention to form a contract
• Legality of contract
• Capacity to make agreements
• Consent
• Possibility of Performance

Question 74

What are the advantages of standard forms over bespoke contracts?

Answer 74

• Written by legal experts
• Rights and obligations of each party are clearly set out to the required level of detail.
• Risks should have been allocated equitably between parties
• Parties should be familiar with the provisions in the form
• Fewer unforeseen anomalies
• The time and expense of preparing a fresh document for each occasion is avoided
• Case law is built up over time – provides a good source of knowledge and clarity.”

Question 75

When pricing an Extension of Time, what would you include for and what rates?

Answer 75

• Include for costs of prolongation of site preliminaries – welfare facilities, utilities etc.
• Facilities management staff, security, cleaners
• Subcontractor mobilisation costs

Question 76

How would you assess an adverse weather claim for EOT ?

Answer 76

• Need to be supported by historical weather data taking into account the time of year and region the project in question is located in.
• The contractors claim should be based on data from a recognised independent source and the data would be compared to previous years to assess if the prolonged period is equivalent to the EOT.”

Question 77

Is the construction phase programme part of the contract document for JCT MW ?

Answer 77

The construction phase plan is not a contract document under MW16, and the recitals make no mention of it. However, the employer and the principal designer must provide the contractor with pre-construction information (regulations 4(4) and 12(3)), which should be sent out with the tender documents. Where the contractor is the principal contractor, the contractor must ensure that the construction phase plan is prepared before setting up the construction site (regulation 12); compliance with this is required under clause 3.9.2.

To avoid uncertainty, it is advisable to require that this document be submitted by the contractor well in advance of start of work on site. Following commencement, the contractor must ensure that the plan is reviewed and updated on a regular basis (regulation 12(4)).

Question 78

What option have you got if a contractor makes a mistake in their tender submission (JCT) ?

Answer 78

• Alternative 1 - Inform the contractor who can choose to either confirm or withdraw
• Alternative 2- Inform the contractor who can choose to confirm or amend

Question 79

What are the payment timescales attached to interim payment applications for JCT MW ?

Answer 79

Question 80

Can you name some legislation in relation to contract administration ?

Answer 80

• Contracts (Rights of Third Parties) Act 1999
• Housing Grants Construction and Regeneration Act 1996
• CDM 2015

Question 81

Why would a final certificate not be issued ?

Answer 81

If there is an ongoing dispute resolution process then a final certificate should not be issued, potential for a certificate of non completion dependent on contract.

Question 82

What is a Rectification Period, and what is the process involved ?

Answer 82

If any defects are found within the Rectification Period, the CA will issue an instruction that notes a schedule of defects, which should be issued no later than 14 days after the expiry of the rectification period. The contractor should then return to rectify those identified defects at no cost to the employer. Once these works have been carried out the CA will issue a certificate of making good to document these works.

Question 83

What clause within the Minor Works contract deals with Defects and Rectification Period?

Answer 83

Clause 2.11 deals with defects found within the Rectification Period, and clause 2.12 notes the requirement for a Certificate of Making Good Defects. The Rectification should be defined within the contract particulars

Question 84

In what situation would acceleration of a programme be considered?

Answer 84

If a contractor wanted to avoid liquidated damages due to delay, or perhaps to free up staff. A client may wish to accelerate a programme to avoid the works being completed late.

Question 85

What is the difference between Sectional Completion and Partial Possession?

Answer 85

Sectional Completion of is a pre-arranged situation, whereas Partial Possession occurs within the course of the project, and needs to be consented to by the Contractor.

Question 86

What is a Pay Less Notice, in what situation would it be issued and what are the timescales involved?

Answer 86

A Pay Less Notice is a notice issued either to the Employer or the Contractor noting the intention to pay less monies than noted as due in a valuation. Where a valuation is considered to be wrong, or where for example the client wishes to claim liquidated damages, then a Pay Less Notice should be issued to detail the amount to be paid. A Pay Less Notice must be issued not later than 5 days before the final date for payment

Question 87

When would a Non-Completion Certificate be issued ?

Answer 87

A Non-Completion Certificate would be issued when works are not complete at the relevant completion date, and no Extension of Time has been issued. Liquidated damages cannot be claimed unless a Non-Completion Certificate has been issued

Question 88

What clause in the Minor Works contract deals with Non-Completion Certificates ?

Answer 88

None. Non-Completion Certificates are not required under the minor works contract but are advised to be defined in writing the practical completion has not been met.

Question 89

How is the amount of liquidated damages applied in a contract calculated ?

Answer 89

Liquidated damages should be a genuine pre-estimate of loss due to delay. They may include loss of rent, extended professional fees, the requirement to rent additional spaces etc.

Question 90

What is the difference between liquidated and un-liquidated damages?

Answer 90

• Liquidated damages are a genuine pre-estimate of loss. When used actual loss is irrelevant, and once set they can only be revised down.
• Unliquidated damages are when the section in the contract particulars is left blank, and the loss must be calculated at the time and need to be proven

Question 91

What clause within the JCT Minor Works contract deals with Liquidated Damages?

Answer 91

Clause 2.9 deals with liquidated damages. Amount of liquidated damages should be defined in the contract particulars

Question 92

What clause within a Minor Works contract deals with Loss and Expense?

Answer 92

Loss and Expense is dealt with in clause 5.10, where details of when a contractor is entitled to loss and/or expense is detailed.

Question 93

What counts as exceptionally adverse weather conditions?

Answer 93

• JCT does not define exceptionally adverse weather condition, meaning it is left to discretion. This means that it can be a potential cause for dispute.
• NEC defines it as a 1 in 10 year event, otherwise the contractor should have allowed for the effects of weather within their price

Question 94

What is a Specified Peril ?

Answer 94

A specified peril is a relevant event which can justify an application for an extension of time, but not an application of loss and expense. 
Defined in MW and IBC :
•	Fire
•	Lightening
•	Explosion
•	Storm
•	Escape of water from tank or pipe
•	Earthquake
•	Riot/Civil commotion

Specified risk are usually covered by the works insurance policy, and may give rise to a claim

Question 95

What is a Relevant Matter ?

Answer 95

A Relevant Matter is a matter for which the client is responsible that materially effects to progress of the works. May give rise to an contractor’s claim for Loss and/or Expense.

Question 96

What is an Extension of Time ?

Answer 96

If a contractor fails to complete the works within the allotted time for reasons beyond their control, the CA can consider an application for the contractor for an Extension of Time - which is a certificate that alters the completion date.

Question 97

What is Retention ?

Answer 97

Retention is a sum deduced at each valuation (generally 5%) to provide the client with security that the contractor will return to correct any defects.

Question 98

What clause within JCT Minor Works contract deals with Retention ?

Answer 98

The amount of retention is defined in the Contract Particulars, and then Clause 4.3 deals with Interim Payments

Question 99

What does Practical Completion trigger ?

Answer 99

• End of contractor liability (termination of any liquidated damages)
• Insurance handover
• Handover of the premises
• Beginning of the defects liability period
• Retention releases, generally from 5% to 2.5%

Question 100

What does Practical Completion mean ?

Answer 100

There is no legal basis for the term Practical Completion. It is when the works are complete to the satisfaction of the Contract Administrator. The CA cannot certify PC of there are outstanding works or patent defects, but they also cannot withhold PC for minor defects outstanding.

Question 101

What is a collateral warranty ?

Answer 101

A collateral warranty is a binding agreement which gives third parties contractual rights which are collateral to an underlying contract to which it is was not an original party. It allows the employer to enforce the obligations of a sub-contractor in the event that the main contractor went bust, or were unwilling to take action themselves.

A contractural right is also more effective than tort.

Question 102

What types of JCT contracts are there and briefly when would you use them.

Answer 102

• JCT MW - simple in nature works, under 500K, don’t need BOQ, traditional procurement With CD - if not enough info to complete design of part or want contractor to take on the risk for the element.
• JCT Intermediate - Sectional completion and BOQJCT Design and build - with DAB procurement
• JCT Standard Building contract - large/complex projects, traditional procurement with or without BOQ
• JCT Major Works

Question 103

What is frustration to a contract ?

Answer 103

Frustration occurs when circumstances that are not the fault of either party mean it is impossible to continue with the contract. The contract will come to an end without any party being considered to be in breach.

Notes: it does not cover contracts that were always going to be impossible to perform. For example, it would not apply in the case of a contract to construct a tall building that could not be fulfilled because the ground conditions were completely unsuitable. Some events that may lead to a frustrated contract include: The government imposing unforeseen restrictions on building. Laws being passed that make it illegal to undertake what was promised under the contract The building where works were to be carried out being destroyed. An event that was crucial for the contractual obligations being cancelled

Question 104

What is Force Majeure ?

Answer 104

An unforeseen act of god Very broadly, it relates to exceptional, unforeseen events or circumstances that are beyond the reasonable control of a party to a contract and which prevent or impede performance of their obligations under the contract. Generally it cannot be an event that the party could reasonably have avoided or overcome, or an event attributable to the other party. Clauses referring to force majeure attempt to set out the circumstances to which the term applies to and prescribe how such situations should be treated. Depending on the provisions of the contract, the following may be considered to constitute force majeure: Unforeseen changes to legislation. Wars and other hostilities (such as terrorism).Fires. Exceptionally adverse weather. Civil unrest, such as riots or revolution. Strikes (other than by the contractor or subcontractors).Natural catastrophes such as earthquakes, floods and volcanoes. Epidemics or pandemics. In some contracts, force majeure is considered a ‘relevant event’, that may allow the contractor to claim an extension of time if they have been prevented or impeded from performing their obligations under the contract. Although, if the contractor has continued to perform their duties, despite the occurrence, they may not be able to make a claim.

Question 105

What certificates might the contract administrator be required to issue under the contract?

Answer 105

The CA will be required to issue a number of certificates. Confirmation of certain events, milestones and occurrences e.g.
•	Practical completion
•	Making good of defects
•	Partial possession
•	Making good to relevant part
•	Non-completion
•	Payment certificates

Question 106

Can you explain what the contract sum means ?

Answer 106

The Contract Sum is the agreed lump sum the client will pay the contractor for the work. This figure will quite often be subject to change (normally an increase) and this will then become the Final Account figure

Question 107

What is a contract instruction and what should it contain ?

Answer 107

A contract instruction is an important legally binding document and may well be referred to in any disputes or legal action which may arise between the client and the contractor so it is essential that the CA ensures the format and content of the document is accurate and compliant with legal protocol The format should be as follows (in writing but can be verbal initially): Names of the parties involved Include the Project Name Specify the Date Provide an issue number Circulate to all necessary parties Quantify the financial implication The content of instructions will include the following: a Only what the contract states e.g. A Variation of the works Removal of work not in accordance with the contract Expenditure of Provisional Sums Opening up of the works for inspection/testing The content of instructions will include the following: a Only what the contract states e.g. Variation of the works Removal of work not in accordance with the contract Expenditure of Provisional Sums Opening up of the works for inspection/testing

Question 108

What is a provisional sum ?

Answer 108

A provisional sum is a figure specified within the tender and contract documents which is included to fund an item which cannot be fully specified prior to work commencing for various reasons. An example would be an inclusion of £10,000 to cover provision of new foundations which cannot be specified due to the uncertainty of the ground conditions. The contractor will then be required to complete the work within that sum therefore the sum included should be adequate

Question 109

What is an instruction under the contract? Can they be verbal ?

Answer 109

These are formal documents issued by the contract administrator to document ANY communication between the CA and the contractor. There are many standard instruction forms available for a CA to use. An instruction can range from a single page of A4 to detailed documentation including drawings and specifications if additional work is being instructed. The Architect/Contract Administrator may issue instructions and the Contractor shall forthwith comply with them. If instructions are given orally, they shall not have effect until the Architect/Contract Administrator confirms them in writing. There may be numerous instructions issued ensure you keep up to date with your records.

Question 110

What is on an agenda for a pre-contract meeting ?

Answer 110

A standard agenda for a pre contract meeting will cover issues including: 
•	Health and safety 
•	Access arrangements
•	Storage
•	Programme
•	Valuation and payment arrangements 
•	Site progress meetings 
•	Project insurance 
•	Person in chargeable

Question 111

When would an extension of time be granted to the contractor and what is considered a ‘relevant event’ ?

Answer 111

The general rule is that an extension of time should only be issued if the reason is outside of the contractors control otherwise known as ‘A relevant event’.

Question 112

What does practical completion trigger ?

Answer 112

• The final months payment (known as the Penultimate Payment).
• Release of the contractors insurance obligations (which may be expensive).
• Exemption of the contractors liability to pay Liquidated damages.
• Half the retention is release
• Start of the Rectification Period

Question 113

What is the rectification period / defects date ?

Answer 113

The Rectification period is where the contract remains open after completion of the work during which the contractor is still liable for rectifying problems (or defects) which have developed following the building work.

Question 114

What are liquidated damages ?

Answer 114

LDs are sum of money included within the contract to incentivise the contractor to complete on time and may be deducted from the contractors final monthly payments and retention (see retention later). LDs are a reasonable estimate of loss as a result of the project not completing on time (for example £250 per week due loss of rent of a residential property).

Question 115

What are defects ?

Answer 115

Defects are the legal term for work which has not been completed to the agreed specification or work that has subsequently failed whilst still under contract.

Question 116

What is the certificate of making good defects ?

Answer 116

This certificate (and also the certificate on ˜Not making good) need to be completed by the contract administrator following rectification/failure to rectify defects and certifies their rectification or otherwise. These will either trigger the Final payment to the contractor or result in withholding money until they are rectified.

Question 117

When would you use JCT Minor works and when wouldn’t you ?

Answer 117

JCT Minor Works contract selection criteria. The JCT Minor Works contract is commonly used for projects likely to be administered by a building surveyor under the traditional procurement method and it is under the following criteria:

• Where the work involved is simple in character.
• Where the work is designed by or on behalf of the client/employer.
• Where the client/employer is to provide drawings and/or a specification and/or work schedules to define adequately the quantity and quality of the work;
• Where an architect/contract administrator is to administer the conditions.
• Where the approximate maximum value is £500k but this is flexible depending on the complexity of the project.

It is not however suitable:
• Under a design and build procurement route as a design and build contract
• Where bills of quantities are required
• Where provisions are required to govern work carried out by named specialists
• Where detailed control procedures are needed

Question 118

What are the contract particulars ?

Answer 118

Contract Particulars This section contains the all-important contract clauses covering items including: 
•	Carrying out the works
•	Control of the works
•	Payment
•	Injury, damage and insurance
•	Termination
•	Dispute

Question 119

What is required to issue practical completion ?

Answer 119

The majority of the works must be completed bar de-minis work. The building must be functional and safe to use. There must not be substantial defects, if there are, you should not submit PC.

Question 120

What are the consequences of issuing PC ?

Answer 120

The health and safety file and operations manual needs to be given to the client, the client takes possession of the site and the client takes on insurance liability of the building. Half the retention is released and the contractors liability for liquidated damages ends and the defects liability period starts.

Question 121

How do you assess liquidated damages ?

Answer 121

Liquidated damages are a pre-determined estimate for the likely costs that will be incurred by the client if the project over runs such as rent payments or income lost etc. They cannot be a penalty.

Question 122

How do you assess unliquidated damages ?

Answer 122

These have to be proven losses incurred by breaching the contract and the amount is not pre-agreed. The amount is determined by the courts.

Question 123

How do you assess Extension of Time?

Answer 123

This is determined by the amount a project critical path is delayed by a relevant event such as the client failing to provide access or providing delayed instructions or constant variations. The EoT claim is reviewed to determine how the contractor has justified it and I then review this and site notes/emails to determine if the contractor made reasonable efforts to avoid the delay or if the delay was down to their own performances. Where they have cited adverse weather, I will take an average of the last 10 years from met office to determine if the weather at the time of the event was to be unexpected or not.

Question 124

How would you calculate loss and expense incurred ?

Answer 124

I would review the contractors claim and review the preliminaries to determine what costs are genuine as a result of the extension, for example, it is unreasonable for the contractor to give a blanket average cost of the preliminaries as items such as scaffolding costs or skips or washroom facilities etc may not have been required at the end when the delay was added. These costs are then combined to create my own idea of what the costs should be and usually, I will discuss this with the contractor so that a fair settlement can be made for the genuine costs incurred by the delay.

Question 125

What type of procurement routes do you know about ?

Answer 125

• Traditional – design is separate from construction
• Design and Build – Contractor performs both design and construction
• Management – The client is responsible for the design but the contractor defines the works packages and arranges for these to be carried out

Question 126

What is a relevant event ?

Answer 126

It is something that causes a project to overrun that is outside of the contractors control such as the client not providing access, acts of god, variations, slow instructions, civil commotion. It allows the contractor to apply for an extension of time.

Question 127

What is a relevant matter ?

Answer 127

Where the client is responsible that materially affects the progress of work and cause the contractor to incur a direct loss and expense such as failure to give contractor possession, delays in instruction, opening up works, failure for the client to supply goods, expenditure of Provisional sums.

Question 128

What is a provisional sum ?

Answer 128

An unspecified amount as an estimate for the likely cost that something will be or cost to install where you do not have enough information to provide any details.

Question 129

What is a prime cost ?

Answer 129

Where you have a specific cost for the purchase of materials but does not include the cost of installation.

Question 130

How do you decide on what contract to use ?

Answer 130

Look at the value of the works, the complexity and nature of the works, procurement route.

Question 131

What are the duties of a CA ?

Answer 131

In short, to administer the obligations of the contract. This includes inviting contractors to tender, preparing contract documents, preparing progress reports preparing interim payment applications, valuing works, acting impartially, preparing the final certificate, collating the schedule of defects.

Question 132

How is CA different to a clerk of works ?

Answer 132

The clerk of works has no authority to make appointments or prepare and issue certificates. They can value the works though and will oversee the quality of the work on site making sure that plans are being followed.

Question 133

What are preliminaries ?

Answer 133

They are a list of project details that are prepared in order to allow the contractor to fully price the project including items which may not be in the specification but important as part of the job such as safety precautions to price up, site facilities, utilities usage, access etc.

Question 134

What are the key elements of a contract executed under deed ?

Answer 134

The contracts are executed under seal, signed by the parties, witnessed and stipulated that it is under deed.

Question 135

What are the key requirements for a contract to be made binding ?

Answer 135

• Offer
• Consideration
• Acceptance
• Competence
• Legal intention

Question 136

What is included in tender documents ?

Answer 136

• The relevant drawings
• Schedule of works
• Preliminaries
• Preambles
• Specific design detail
• Bills of quantity

Question 137

What is included in a traditional contract?

Answer 137

The contract document itself, prelims, preambles, schedule of work, bills of quantity, drawings, design details, specifications, dispute resolution

Question 138

What are the different tender processes ?

Answer 138

• Open
• Selective
• Negotiated
• Serial
• Framework
• Single Stage
• Two Stages
• Public Procurement

Question 139

What is a PCSA ?

Answer 139

Pre Contract Service Agreement – designed for appointing a contractor to carry out pre-construction services under two stage tender process. It allows the contractor to collaborate with the employer and their team to develop detailed design.

Question 140

What RIBA stage would you go out to tender ?

Answer 140

Single stage – go out to tender at Stage 4 which is technical design.
Two stage – go out to tender at stage 2 or 3 which is concept design or spatial coordination.

Question 141

What forms of contract are you aware of ?

Answer 141

• JCT
• NEC

Question 142

What is the difference between NEC and JCT ?

Answer 142

They are both standard forms of contract. JCT is designed for domestic projects whereas NEC is suitable for domestic and international. NEC came after the Latham report and aims to offer better clarity, flexibility and better management processes.

NEC requires and enables a more proactive and collaborative approach whereas JCT is aimed at focussing on liabilities and risk.

Question 143

What is novation ?

Answer 143

The transfer of contractual rights and obligations from one party to another

Question 144

What is assignment ?

Answer 144

The assignor transfers rights, property or other benefits to the assignee.

Question 145

What is a performance bond ?

Answer 145

A contractual bond that guarantees the completion of a project. If the contractor does not complete the project, the bond guarantees against financial loss to the client for a specified amount which is usually 10% of the contract value.

Question 146

What is a concurrent delay ?

Answer 146

Where there are multiple delays all occurring at the same time but for different reasons.

Question 147

What is the difference between a CA and an EA ?

Answer 147

The key difference is that the Employers Agent will perform the contract administration on D&B contracts whereas the CA will perform the role on traditional contracts.

Question 148

What types of contracts are there ?

Answer 148

• Lump Sum
• Measurement
• Cost Reimbursement
• D&B
• Management

Question 149

What is a letter of intent ?

Answer 149

It is a document that states the intent of one party to enter into a contract usually subject to certain conditions being met.

Question 150

What is a contract ?

Answer 150

It is a written or verbal agreement between parties to carry out a service in exchange for some form of repayment.

Question 151

What is the difference between CA and EA ?

Answer 151

CA does it impartially on behalf of contractor and client, EA only administers it on behalf of the employer to protect their requirements.

Question 152

What is procurement ?

Answer 152

The act of obtaining goods or services from external services usually via tendering.

Question 153

What are the limitations with a letter of intent ?

Answer 153

The main disadvantages of letters of intent are as follows: They can become legally binding under certain circumstances when this was not the intention of the organizations. By agreeing to a letter of intent at an early stage in the process you may hinder your ability to negotiate a better deal late in the process.

Question 154

What are the different tender processes ?

Answer 154

• Single Stage – Tender is issued to several contractors, the pack includes all the detail required to provide a cost. The preferred tender is selected and discussions can start.
• Two Stage – First stage is the same as single stage. The contractor will be chosen to provide input into the design or a specific part of the design to help build a specification. This package then goes out to tender again and may include that original contractor. The downside is that it often reduces competition and some contractors will refuse as you already have a relationship with the original contractor.
• Negotiated – similar to single stage but you only go to one contractor and aim to negotiate the cost down to a fair amount but there is no competition.

Question 155

What is the EOT timescales in a minor works ?

Answer 155

There isn’t one. The minor works is not really efficient for dealing with EOT’s and thus another form would have been more suited.

Question 156

What happens at PC ?

Answer 156

• Client becomes responsible for building
• Half of retention released
• Rectification period commences
• H&S file agreed Depending on contract
• PC cert issued

Question 157

What are the main contract suites ?

Answer 157

• JCT - Joint contracts tribunal
• NEC - New Engineering Contract
• FIDIC- International Federation of Consulting Engineers
• ICE - Institution of Civil Engineers

Question 158

How do you try to mitigate delay in a project ?

Answer 158

• Detailed site investigations.
• Careful monitoring and regular meetings.
• Effective site management.
• Collaborative working and effective coordination.
• Careful scheduling.
• Full commitment to the project by all parties

Question 159

What are the key tasks of the CA ?

Answer 159

• Chair meetings
• Periodically inspect works
• Give instructions/variations or changes
• Determine application for EOT
• Authorise interim payments
• Certify completion date
• Setting the adjusted contract sum

Question 160

What standard forms of contract do you know that are offered by JCT ?

Answer 160

• SBC 2011/2016
• Intermediate building contract 2011/2016
• Minor works Building contract 2011/2016
• Major Projects building contract 2011/2016
• Design and build contract 2011/2016
• Management Building contract 2011/2016
• Construction management contract 2011/2016
• Prime cost building contract 2011/2016

Question 161

You’ve mentioned that you work with JCT MW, what sort of works would have led you to choosing intermediate ?

Answer 161

Minor Works Building Contract
• This contract is by far the most commonly used in property renovation
• It is generally agreed that non-complex contracts up to £250,000 can be adequately administered by a minor works JCT and includes the following provisions:
• the employer must provide drawings, a specification or schedule of works to define the quantity and quality of work.
• the price and payment structure for the contract, which is usually based on a lump sum (the price for the job) with monthly interim payments.
• provisions are included for collaborative working and sustainability but also cover liability and insurance
The Intermediate Building Contract
• The intermediate form of the JCT introduces additional complexity to the minor works contract but rather than look similar to that, is really a cut down version of the standard building contract.
• It is generally used to deliver contracts where there is a higher level of complexity and where the contract value reaches approximately £1million.
In the intermediate JCT, the following apply:
• The employer must provide drawings, and either bills of quantities, specification or works schedules to specify quantity and quality of work.
• Price and payment structure of the contract is based on a lump sum (price for the job) with monthly interim payments.
• It can be used where provisions are required to cover named specialists or sub-contractors.
• All sub-contractors are domestic and their performance is the responsibility of the main contractor.
• Provisions are included for collaborative working, sustainability, advanced payment, bonds and collateral warranties.
• It also specifies more detailed liability and insurance issues.

Question 162

What is the role of the CA ?

Answer 162

The contract administrator’s role will generally include:
• Inviting and processing tenders.
• Preparing contract documents for execution.
• Administrating change control procedures.
• Seeking instructions from the client in relation to the contract.
• Issuing instructions such as variations, or relating to prime cost sums or making good defects.
• Considering claims.
• Chairing construction progress meetings.
• Preparing and issuing construction progress reports.
• Co-ordinating and instructing site inspectors.
• Agreeing commissioning and testing procedures.
• Agreeing defects reporting procedures.
• Ensuring that project documentation is issued to the client.
• Issuing certificates of practical completion and interim certificates.
• Collating and issuing schedules of defects.
• Issuing the certificate of making good defects.
• Issuing the final certificate

Question 163

What is the usual payment terms under JCT contract ?

Answer 163

Every 4 weeks unless stated differently in the contract document.

Question 164

What time is the payment timeline under JCT MW ?

Answer 164

The Interim Valuation Date determines the due date for each interim payment which is the date 7 days after the relevant Interim Valuation Date (clause 4.3).

Payment of each interim payment must be made within 14 days from the due date of the interim payment (i.e. 21 days from the Interim Valuation Date).

That simple structure sets out the time framework but in order for a payment to be made it is necessary to certify the amount of each payment. The Architect/Contract Administrator shall within 5 days of the due date for each interim payment (i.e. 12 days from the Interim Valuation Date) do this by issuing an interim certificate.

Question 165

RICS practice statement - ‘Contract-administration-1st-edition-RICS’ - 2011. What are the contents ?

Answer 165

• Introduction
• Context
• Appointment of contract administrator
• Roles and responsibilities

Question 166

Can you name some section of this document (RICS practice statement - ‘Contract-administration-1st-edition-RICS’ - 2011) ?

Answer 166

• Appointment of the CA
• Roles and responsibilities
• Records
• Site inspection
• Meeting
• Valuation of works
• Contract instruction variations
• Final sum
• H&S

Question 167

What did you learn this document (Contract-administration-1st-edition-RICS’ - 2011) ?

Answer 167

• That a CA although normally engaged by the clients should remain unbais and impartial throughout the role of CA
• The process of terms of appointment – in line with RICS for firms
• General administration split into information :
• Ensure the provision of information
• Supply document, drawings etc
• Provide or give additional information
• Financial
• Certify – interim payment
• Consider – interim valuation
• Send -0 adjust contract sum or payment certificate
• Supervision
• Approve – quality of work and materials etc
• Instruct – the contractor
• Obtain – the contractor or clients consent
• Issue – variations etc
• Make a fair and reasonable review of any additional claim”

Question 168

Can you expand on the RICS practice statement – Retention – 1st edition 2012 ?

Answer 168

• Reason for inclusion
• Amount of retention
• Principle of release
• Alternative such as bonds and collateral warranties
• Issue with release
• Guidance Note – Recommended good practice to be followed by competent and conscientious practitioners

Question 169

What is included within a payment certificate ?

Answer 169

o	Date
o	Certificate no
o	Contract sum
o	Details for parties
o	Gross valuation
o	Net amount
o	Issued by

Question 170

What would you be if a contractor has submitted an over estimated valuation ?

Answer 170

Issue a pay less notice and record the reasons and evidence why

Question 171

How do you normally select a contract ?

Answer 171

Based on the complexity and contract value of the works.

Question 172

What edition is the Practice Statements in relation to contract administration ?

Answer 172

o Contract admind– 1st - 2011

o Retention – 1st - 2012

Question 173

You mention sing JCT minor works contract and having read the retention RICS document. Is there any option for any bonds or similar to be used within this contract ?

Answer 173

No option for retention bond this is available within the JCT standard building contract. However they could be some protection under the Third Party Rights Act 1999

Question 174

Within your JCT MW projects what have you set as your levels for the following :

• Retention
• Liquidated damages
• Adjudication measures
• Payment intervals
• Arbitration measures
• Contractors public liability insurance

Answer 174

• Retention – 5% total – 2.5 % releases following the issue of practical completion and 2.5% released following the completion of the rectification period and the certificate of making good defects.
• Liquidated damages - £100 a week. This figure should eb calculated on the actual additional expenditure of the business as a result of not meeting the prescribed @Date for completion’ Clause 2.2 JCT Minor Works contract
• Adjudication measures – RICS
• Payment intervals – every 4 weeks
• Arbitration measures - RICS
• Contractors public liability insurance – based on size, complexity and value of the works. Dependant on size of no of workforce.

Question 175

What is a relevant event ?

Answer 175

Delays on a project will have different contractual consequences depending on the cause of the delay:

Where a delay which impacts on the completion date is caused by the contractor (culpable delay), the contractor will be liable to pay liquidated and ascertained damages (LADs) to the client.
Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’, for which the contractor may be entitled to an extension of time and to claim loss and expense incurred as a direct result of the delay.
A relevant event may be caused by the client, or may be a neutral event such as exceptionally adverse weather. The contract should set out what constitutes a relevant event.

Relevant events may include:

• Variations.
• Exceptionally adverse weather.
• Civil commotion or terrorism.
• Failure to provide information
• Delay on the part of a nominated sub-contractor.
• Statutory undertaker’s work.
• Delay in giving the contractor possession of the site.
• Force majeure (events that are beyond the reasonable control of a party, such as a war or an epidemic).
• Loss from a specified peril such as flood.
• The supply of materials and goods by the client.
• National strikes.
• Changes in statutory requirements.
• Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay. If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Claims for extension of time can run alongside claims for loss and expense however, one need not necessarily lead to the other. The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.

Mechanisms allowing extensions of time are not simply for the contractor’s benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a ‘reasonable’ time. The client would lose any right to liquidated damages.

NB: On NEC contracts, delays are dealt with slightly differently and are referred to as ‘compensation events’

Question 176

What is a relevant matter ?

Answer 176

Relevant matters in construction contracts
Relevant matters are referred to in some construction contracts, such as JCT contracts. A relevant matter is a matter for which the client is responsible that materially affects the progress of the works. This may enable the contractor to claim direct loss and / or expense that has been incurred.

Relevant matters might include:

• Failure to give the contractor possession of the site.
• Failure to give the contractor access to and from the site.
• Delays in receiving instructions.
• Opening up works or testing works that then prove to have been carried out in accordance with the contract.
• Discrepancies in the contract documents.
• Disruption caused by works being carried out by the client.
• Failure by the client to supply goods or materials.
• Instructions relating to variations and expenditure of provisional sums.
• Inaccurate forecasting of works described by approximate quantities.
• Issues relating to CDM.

Relevant matters should not be confused with relevant events. A relevant event is an event that causes a delay to the completion date, which is caused by the client, or is a neutral event not caused by either party. Relevant events entitle the contractor to claim an extension of time; that is for the completion date to be moved. A relevant event does not necessarily entitle the contractor to claim loss and expense. Similarly, a relevant matter need not necessarily result in a delay to the completion date, and so may not always entitle the contractor to an extension of time.

NEC contracts deal with these issues under the single heading ‘compensation events’. They do not treat compensation events as an allocation of blame, but rather an allocation of risk. Any risk that is not specifically identified as being attributed to the client is borne by the contractor.

The Society of Construction Law Delay and Disruption Protocol, 2nd edition, refers to an event or cause of delay or disruption which under the contract is at the risk and responsibility of the employer, as an ‘employer risk event’

Question 177

What is sectional completion ?

Answer 177

Sectional completion in construction contracts
Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works. This is common on large projects that are completed in sections, allowing the client to take possession of the completed parts whilst construction continues on others.

Sectional completion differs from partial possession in that it is pre-planned and defined in the contract documents.

If sectional completion is required, it must be an express term of the contract, and reflected by the fact that there are multiple completion dates rather than just one. The extent of each section must be clearly defined and liquidated damages, and the amount of retention that will be released must be specified for each section. There may also need to be clarification of how extension of time provisions will be applied if, for example, delays to one section of the works have a knock-on effect on other sections (the cascade effect).

In procedural terms, sectional completion is similar to normal completion and follows the usual handover procedures (see handover to client). However, some work within the section may remain outstanding, such as the completion of commissioning, operation and maintenance manuals and as built drawings, which will cross all sections.

It may exclude mechanical and electrical service systems which are reliant on total completion before they can be properly tested and commissioned. This means that their needs to be an agreed protocol for re-entry into completed sections for the contractors to complete outstanding work.

Sectional completion requires particular care to be taken regarding:

• Difficulties with logistics on site when different sections are in the possession of different parties.
• The protection of completed sections from ongoing work.
• The provision of appropriate insurance at all times for all sections.
• The adoption of appropriate health and safety measures to deal with risks resulting from occupation of areas adjacent to, or only accessible through ongoing construction works.
• The provision of appropriate security measures.

The consequences of sectional completion are that

• Half of the retention is released for that section.
• The Rectification Period begins for that section,
• The contractor’s responsibility for insuring the works (if applicable) ends for that section.
• The contractor’s liability for liquidated damages ends for that section.
• The employer is now responsible for any damages to the works for that section.

Question 178

What isForce Majeure ?

Answer 178

Force majeure is used to describe an event that occurs which is beyond the control of the parties, and which prevents them from fulfilling their contractual obligations. The courts have previously held that force majeure is an event which goes beyond what the courts understand by the terms ‘act of God’ or ‘vis major’.

Question 179

How long would you stipulate for a defect liability period ?

Answer 179

Depending on the nature of works and the size of works this could be 6-12 months that would be specified within the contract.

Question 180

When might you consider having a 6 month defect liability period ?

Answer 180

If the works were of simple nature and small size then 6 months would suffice.

Question 181

What is a patent defect ?

Answer 181

A patent defect is identified during the rectification period as a result of reasonable inspection.

Question 182

What is a latent defect ?

Answer 182

A latent defect exists before its discovery. It cannot be identified from reasonable inspections; hidden or concealed flaw.

Question 183

Take me through the process of undertaking a valuation from a contractor ?

Answer 183

• Once received I would carry out a site inspection and ensure the works that are valued are completed on site.
• Cross reference this with the contractor’s programme. I would query any suspicious items. Once a settlement is reached I would request an invoice from the contractor’s QS.
• Once received I would fill out a certificate of payment, ask my senior to QA and sign and I would issue both (invoice and certificate of payment) to the client to pay the contractor within 14 days.

Question 184

On a commercial project were an end-user has agreed to move into the property. How would you assess a suitable rate for liquidated damages prior to a project ?

Answer 184

• Loss of income from rent
• Cost of alternative accommodation incurred during the delay
• Loss of profit to the business at the property where the works are being carried out.

Question 185

How do you provide protection to your client against damages to surrounding buildings ?

Answer 185

• England - Party Wall Act – make neighbour aware of the proposed work and adequate time to object.
• Northern Ireland - Schedule of Condition – is used to record the condition which is agreed in writing with the neighbour’s surveyor. In accordance with Common Law.

Question 186

What is a certificate of practical completion ?

Answer 186

The contract administrator certifies practical completion when all the works described in the contract have been carried out. Certifying practical completion has the effect of:

• Releasing half of the retention (an amount retained from payments due to the contractor to ensure they complete the works).
• Ending the contractor’s liability for liquidated damages (damages that become payable to the client in the event that there is a breach of contract by the contractor - generally by failing to complete the works by the completion date).
• Signifying the beginning of the defects liability period.

Documentation that should be issued to the client on certification of practical completion might include:

• A draft building owner’s manual.
• A building user’s guide.
• The health and safety file.
• The building log book.
• A construction stage report.
• Once the certificate of practical completion has been issued, the client takes possession of the works for occupation.

Question 187

What is a certificate of partial completion ?

Answer 187

The client may wish to take possession of part of a building or site, even if works are ongoing. This can be programmed within the original contract documents it the need can be foreseen through a requirement for sectional completion, but in the absence of such a provision many contracts offer the more open-ended option of partial possession.

The effect of partial possession is that:

• Any part for which partial possession is given is deemed to have achieved practical completion.
• Half of the retention for that part must be released.
• The defects liability period begins for that part.
• Liquidated damages reduce proportionally.
• The client is responsible for that part and should insure it.
• The contractor is not obliged to allow partial possession (although permission cannot be unreasonably withheld), and may not wish to if, for example, access routes are difficult to achieve, it would disrupt the works, or it would incur additional costs. There could also be additional difficulties if the occupants of the part that has been possessed disrupt the contractor, which could result in a claim for extension of time and/or loss and expense.

Question 188

What is practical completion ?

Answer 188

Practical Completion is a contractual term used in the Building Contract to signify the date on which a project is handed over to the client. The date triggers a number of contractual mechanisms including:

• Releasing half of the retention
• Ending the contractor liability for liquidated damages
• Starting the rectification period
• Transfer of insurance liability

Question 189

What is an O and M file ?

Answer 189

The building owner’s manual, or operation and maintenance manual (O&M manual), contains the information required for the operation, maintenance, decommissioning and demolition of a building. The building owner’s manual is prepared by the contractor or the sub-contractor with additional information from the designers (in particular, the services engineer) and suppliers. It is a requirement that is generally defined in the preliminaries section of the tender documentation where its contents will be described, although there may be additional requirements regarding mechanical and electrical services in the mechanical and electrical specification. A draft version of the document should be provided for the client as part of the handover procedure prior to certifying practical completion. The final document is not usually available in full form until several months after practical completion, as commissioning information often needs to include summer and winter readings taken in the fully occupied building. The preliminaries may require several copies of the building owner’s manual and might require an electronic version.

The building owner’s manual might include: A description of the main design principles. Details of the building’s construction (such as finishes, cladding, doors and windows, roof construction, and so on).As-built drawings and specifications. Instructions for its operation and maintenance (including health and safety information and manufacturers’ instructions for efficient and proper operation).An asset register of plant and equipment. Commissioning and testing results. Guarantees, warranties and certificates. Particular requirements for demolition, decommissioning and disposal.

Question 190

Which is more common in the construction industry ? Collateral warranties v Third party rights ?

Answer 190

The construction industry is also more used to using CW, and they are seen as more effective as they mirror the existing responsibilities. However TPR are becoming more popular when included in contracts as they don’t require the preparation of a detailed agreement.

Question 191

What are Liquidated damages ?

Answer 191

Contracts generally include a clause making provision for the contractor to pay liquidated damages (LD, sometimes referred to as liquidated and ascertained damages - LADs) to the client in the event that the contract is breached. In building contracts, liquidated damages usually relate to the contractor failing to achieve practical completion (i.e. completing the works so they can handover the site to the client) by the completion date set out in the contract. They are often calculated on a daily or weekly rate.

Liquidated damages are not penalties, they are pre-determined damages set at the time that a contract is entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date. They might include; rent on temporary accommodation, removal costs, extra running costs, and so on. They are generally set as a fixed daily or weekly sum, although there may be a more complicated formulae where the works are phased, where may be partial possession and so on. It is important that the method of calculation is precisely and formally documented.

If the contract prevents the client claiming liquidated damages, or if actual losses are significantly different to those that were estimated at the time the contract was entered into, then the client may pursue a claim for unliquidated (i.e. actual) damages through the courts. Unliquidated damages are damages, the exact amount of which has not been pre-agreed, and are typically determined by the courts.

As liquidated damages are not a penalty, they must have been based on a genuine calculation of damages when they were set. If they are not genuine, they may be considered a penalty by the courts and so will be unenforceable (see Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd), although this is unlikely as the courts are very reluctant to interfere in contractual agreements negotiated freely by two commercial parties of similar standing.

Calculations might include, amongst other things:

• Loss of rent
• Loss of income
• Fees
• Storage costs.
• Rental costs.
• Fees and fines imposed by third parties.
• Finance costs.

There be a causal link between all the losses the contract foresees are likely to be suffered, and the breach of contract, i.e. the damages flow naturally from the delay and must not be ‘remote’. The principle of ‘remoteness’ is established in the case of Hadley v Baxendale in 1854.

Liquidated damages can be beneficial for the client, as the remove their obligation to prove actual losses in the event of delay occurring. They can also be beneficial to the contractor as they limit their liability to a known amount in the event of delay.

However, in some circumstances, the parties to the contract will wish to exclude liquidated damages. In this case, they should not simply insert ‘nil’ as the rate of liquidated damages, as this can imply that the loss for unliquidated damages is also nil. Instead, they should make clear that unliquidated damages apply, or delete the clause for liquidated damages.

Question 192

Can you name some types of Procurement ?

Answer 192

• Traditional contract 86%
• Single-stage design and build 41%
• Two-stage design and build 39%
• Management contract 18%
• PFI 10%

Question 193

What is Loss and Expense ?

Answer 193

Construction contracts will generally provide for the contractor to claim direct loss and/or expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible, such as:

• Failure to give the contractor possession of the site.
• Failure to give the contractor access to and from the site.
• Delays in receiving instructions.
• Opening up works or testing works that then prove to have been carried out in accordance with the contract.
• Discrepancies in the contract documents.
• Disruption caused by works being carried out by the client.
• Failure by the client to supply goods or materials.
• Instructions relating to variations and expenditure of provisional sums.
• Inaccurate forecasting of works described by approximate quantities.
• Issues relating to CDM.
• Claims may comprise costs resulting from disruption to the works or from delays to the works (prolongation).

The contractor must give written notice of a claim as soon as it becomes reasonably apparent that the regular progress of the works is being materially affected. This need not necessarily result in a delay to the completion date, and so claims for loss and expense and claims for extensions of time do not necessarily always run together.

Claims are restricted to ‘direct’ loss and expense and so ‘consequential losses’ (such as lost production) are generally excluded. Direct losses are those that ‘flow naturally’ from the breach of contract.

There is disparity between contract types about whether items such as head office overheads can be included in claims for loss and expense, and some court rulings have allowed such claims. If there are specific consequential losses which the parties to the contract wish to exclude, it may be prudent therefore to state these explicitly within the contract.

NB: The New Engineering Contract (NEC3) contains provision for the contractor to claim payment for ‘compensation events’ rather than loss and expense.

Question 194

Extension of time ?

Answer 194

Construction contracts generally allow the construction period to be extended where there is a delay that is not the contractor’s fault. This is described as an extension of time (EOT).

When it becomes reasonably apparent that there is, or that there is likely to be, a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay.

If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Relevant events may include:

• Variations.
• Exceptionally adverse weather.
• Civil commotion or terrorism.
• Failure to provide information.
• Delay on the part of a nominated sub-contractor.
• Statutory undertaker’s work.
• A delay in giving the contractor possession of the site.
• Force majeure (such as an epidemic or an ‘act of God’).
• Loss from a specified peril such as flood.
• The supply of materials and goods by the client.
• Strikes.
• Changes in statutory requirements.
• Delays in receiving permissions that the contractor has taken reasonable steps to avoid.
• The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.

Assessing claims for an extension of time can be complicated and controversial. There may be multiple or concurrent delays, some of which are the contractor’s fault and some not. There are many occasions where contractors contribute to delay themselves by their performance during design periods, when producing drawings, mock ups and samples or in inter-facing with sub-contractors.

Crucial in assessing applications for extension of time is the quality of the information provided and records available.

For more information, see How to prepare a claim for an extension of time.

Claims should be judged against the actual progress of the works, not the programme, and must demonstrate the link between the breach (cause) and the delay.

The contract administrator may review extensions of time after practical completion and further adjust the completion date.

Mechanisms allowing extensions of time are not simply for the contractor’s benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a ‘reasonable’ time. The client would lose any right to liquidated damages.

Claims for extension of time can run alongside claims for loss and expense (relevant matters) however, one need not necessarily lead to the other.

It is very important when deducting liquidated damages to ensure that the correct contractual procedures are adhered to. In the case of Octoesse LLP v Trak Special Projects Ltd [2016], Justice Jeffords held that Octoesse was not entitled to deduct liquidated damages as they had agreed to an extension of time after a certificate of non completion had been issued. The JCT Intermediate Building Contract is constructed such that:

‘If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is made after the issue of such certificate, the extension shall cancel that certificate and the Architect/Contract Administrator shall where necessary issue a further certificate.

Question 195

What is a pay less notice ?

Answer 195

The Housing Grants, Construction and Regeneration Act 1996 (also known as the Construction Act) include provisions to ensure that payments are made promptly throughout the supply chain.

These provisions include:

• The right to be paid in interim, periodic or stage payments.
• The right to suspend (or part suspend) performance for non-payment and to claim costs and expenses incurred and extension of time resulting from the suspension.
• Pay when certified clauses are not allowed, and the release of retention cannot be prevented by conditions within another contract.
• In addition, there are specific provisions in relation to the procedures for making payments.
• The client must issue a payment notice within five days of the date for payment, even if no amount is due. Alternatively, if the contract allows, the contractor may make an application for payment, which is treated as if it is the payment notice.
• The client must issue a pay less notice if they intend to pay less than the amount set out in the payment notice, setting out the basis for its calculation.
• The notified sum is payable by the final date for payment.
• If the client (or specified person) fails to issue a payment notice, the contractor may issue a default payment notice. The final date for payment is extended by the period between when the client should have issued a payment notice and when the contractor issued the default payment notice. If the client does not issue a pay less notice, they must pay the amount in the default payment notice.

Question 196

What is a relevant event ?

Answer 196

A relevant event is an event that causes a delay to the completion date, which is caused by the client, or a neutral event not caused by either party. The contract should set out what constitutes a relevant event

Question 197

When might an early warning notice be issued ?

Answer 197

When the contractor starts to experience a delay which might affect the project. Before they submit their EOT claim. Must be issued to the Employer including details of potential impact and cost.

Question 198

What is a target cost contract ?

Answer 198

Examples include NEC Option C (with activity schedule) and Option D (with bill of quantities) Allows team collaboration to benefit from cost savings But also bear some of the clients costs when it overruns

Question 199

What is a compensation event ?

Answer 199

The NEC equivalent of JCT LAD’s

Question 200

Give an example of a situation where a contractor might be entitled to an extension of time ?

Answer 200

Unforeseen works discovered that did not form part of the tender documentation. Relevant Matter/Relevant Event

Question 201

Is a contractor always entitled to loss and expense when they are granted an extension of time ?

Answer 201

No, only if the delay is deemed a Relevant Matter and only if the contract includes a relevant matter provision.

Question 202

What alternative forms of contract would you consider and what factors would make the alternative more suitable ?

Answer 202

Intermediate form of contract. This contract type is more detailed and has more extensive control procedures than the Minor Works Building Contract, but it is less detailed than the Standard Building Contract. It can be appropriate for projects that are procured via both the ‘traditional procurement route’ (or ‘conventional method’) and can be used by both private and public employers.

Question 203

What document(s) would you refer to assist in advising on the most suitable form of contract ?

Answer 203

JCT Deciding on the appropriate JCT Contract 2016.

Question 204

What information is included in the RICS Guidance Note on Contract Administration ?

Answer 204

• Records
• Site inspections
• Meetings
• Interim valuations
• Works
• Variations

Question 205

What current challenges is Covid and/or Brexit bringing to Contract Administration ?

Answer 205

Unpredictable timescales for material procurement and labour shortages may cause extensions to programmes.

Question 206

When might you use an NEC form ?

Answer 206

NEC is a family of contracts that help apply good project management principles and practices, and define legal relationships.The contracts are suitable for procuring a diverse range of works, services and supply, ranging from major framework projects through to minor works and the purchase of supplies and goods.

Question 207

Explain how you would assess contractors valuations.

Answer 207

I inspected site weekly monitor progress / programme. I inspected monthly along with my M&E consultant and the contracts manager and requewed each item of the valuation against the actual progress of works.

Question 208

What timescales did you issue payment certificates following the valuation date ?

Answer 208

Payment Cert 7 days after Interim Valuation Date

Question 209

What are the standard retention rates in a JCT MW Contract ?

Answer 209

5% with 2.5% released at practical completion.

On Standard Building Contract, these can be altered to 3% and 1.5% respectively.

Question 210

What are the consequences of issuing the PC certificate ?

Answer 210

Practical completion cert means that the rectification period can begin.
The retention reduces and the responsibility for insuring the premises passes back to the client.

Question 211

How/when would you certify PC ?

Answer 211

When works are substantially completed and free of patent defects other than those that can be ignored as minor. There is not set definition of practical completion. The client should be able to make beneficial use of the building to issue PC.

Question 212

What happens after the rectification period ends ?

Answer 212

A joint snagging inspection will be carried out with contractor and agent to identify what defects need to be repaired. Once the repairs are carried out, the CA will release the retention in the final payment application and the issue a certificate of making good defects. Contractor issues their final account.

Question 213

What happens after issuing final certificate ?

Answer 213

Provides conclusive evidence that the quality and standard of work is to the satisfaction of agent and all adjustments have been taken to the sum and all loses/expenses are settled.

Question 214

What is the difference between partial possession and sectional completion ?

Answer 214

Sectional completion is written into the contract and can have liquidated damages associated. Partial possession is when the client takes over part of the site that has been substantially completed with the contractors consent. Certificate is issued and defects liability period begins for that area.

Question 215

What insurance would a contractor require before commencing works on site ?

Answer 215

• Professional indemnity
• Public liability
• Employers liability
• All risks insurance

Question 216

Under JCT IC, what collateral warranties may a principal contractor provide ?

Answer 216

Principal Contract provides collateral warranties for sub contractors they use that will have design responsibility. Under IC/SBC, the contract requests for collateral warranties to be provided by the contractor to the purchaser, tenants, funders and employer.

Question 217

How would you identify risks in a project? How are risks rated? How did you deal with them ?

Answer 217

Carry out a risk assessment and log it in a register. Maintain said register throughout the project. The risk is scored on likelihood and severity and outlines the mitigating actions.

Question 218

What is your role as a contract administrator ?

Answer 218

Employed by the client to administer the contract on their behalf. Must always act impartially and integrity. Duties include formulating the contract, issuing instructions, raising certs, carry out inspections, assess damages and EOT.

Question 219

What helps manage meetings ?

Answer 219

• Agendas
• Taking minutes
• Understanding of the purpose
• Allow everyone to discuss their points

Question 220

What is the difference between named and nominated subcontractors ?

Answer 220

Client may wish to nominate their own subcontractor for specific works rather than allow the contractor to choose. This usually occurs where the client already involved the subcontractor in the design process and wants a very specific outcome. The nominated contractor is still appointed by the main contractor.

Named sub contractors are where the client will provide a list of acceptable sub contractors. The tender will allow a provisional sum for the subcontractor package. When the contractor is appointed, they will go to the named contractors to tender for the sections. (they can reasonably rejected the names)

Question 221

Why were nominated sub-contractor provisions changed ?

Answer 221

It was unfair for clients to assume risk of insolvency/performance with the nominations. Nominated was replaced with named subcontractor option where a selection is given to the contractor to choose. This then becomes the domestic sub contractor for the main contractor and assigns risk to them.

Question 222

What is a performance bond ?

Answer 222

Provides the employer with financial security payable by the bank for the contractors failure to perform under the contract.

Question 223

What does delay mean in JCT ?

Answer 223

Caused by contractor, employer or factors outside of either of their control. Something that prolongs the completion date stated in the contract.

Question 224

Provide examples where the contractor would not be liable if they are delayed .

Answer 224

Client cause:
• Instructions to open up and or test of any work materials.
• Instructions in regard to expenditure of undefined provisional sums.
• Delays to possession.
• Instructions which increase the level of work required.
Neutral Event:
• Statutory undertaker executing or failing to execute in pursuance of its obligations
• Adverse weather
• Loss or damage caused by fire, flooring, explosion, earthquake etc.
• Force Majeure

Question 225

What is the procedure for an extension of time ?

Answer 225

The contractor must provide written notice as soon as it becomes apparent that the work will not complete on time. Notice must include the conditions causing the delay. CA must then decide if the condition is relevant event and whether an extension of time is granted. Must notify the contractor as soon as decision is made and within 12 weeks of receipt of notice. If the EOT is warranted, the CA has to fix a later completion date and notify the contractor.

Question 226

Are you aware of any recent case law relating to extensions of time ?

Answer 226

Walter Lilly & Co V Mackay and DMW Developments. Judge held that where there have been concurrent delays under a JCT or similarly drafted contract, the contractor is entitled to an EOT for the period caused by relevant events

Question 227

What remedies would be available for the contractor should an employer or their agent cause a delay by their action or inaction ?

Answer 227

Delays caused by employer or their agent may lead to a claim for loss and expense relating to the delay. Contractor must make written application to the CA as soon as they are aware of a likely incurred loss. Provide info to the CA to determine the loss.

Question 228

What are relevant matters ?

Answer 228

• Variations
• Instructions
• Approximate quantities in the tender do not reflect the amount actually required.
• Any prevention or impediment or default by act or omission by the employer or their agent

Question 229

What remedies would be available for the client if the contractor is delayed ?

Answer 229

Contractors should use their best endeavours to prevent delays. If the contractor fails to, the client can claim compensation for liquidated damages. This process is sped up by allowing a set sum allowed for in the contract.

Question 230

What is the procedure of claiming liquidated damages ?

Answer 230

CA must issue a certificate of non completion. Employer may inform contractor in writing that they will withhold deduct or requirement payment of liquidated damages.

Question 231

What are LADs ?

Answer 231

Liquidated and Ascertained Damages is a monetary payment the employer is entitled to if a project is not completed by the completion date without prior agreement.

Question 232

How are LADs calculated ?

Answer 232

Loss of rent/revenue, costs imposed by other parties, additional fees, fines from statutory bodies. Normally calculated on a weekly basis.

Question 233

Can an employer claim LADs if they do not actually incur the loss identified in the initial calculation ?

Answer 233

Technically, yes, providing the calculation is not deemed a penalty and is a genuine pre estimate.

Question 234

What are un-liquidated damages ?

Answer 234

Not quantifiable by loss in the contract. Must be ascertained by the courts and must demonstrate an actual loss.

Question 235

What is the implication of writing nil in the liquidated damages clause ?

Answer 235

Means there are no damages and the client is not entitled to deduct anything if the contract over runs

Question 236

What is the difference between sectional completion and partial possession ?

Answer 236

In an NEC3 contract, Sectional Completion dates are stated within the contract and known from the outset. Partial possession is where the employer take possession of part of the site before the end of the project. When either occur, insurance liabilities transfer to the employer and rectification period commences.

Question 237

If there was no contract would be HGRCA apply ?

Answer 237

Yes

Question 238

What is the final account inclusive of ? WEAL

Answer 238

• All works
• Claims for Extension of time
• Claim for Loss and Expenses
• All variations

Question 239

What is the benefit to JCT MW insurance options being in joint names ?

Answer 239

Employer and contractor cannot make claims against each other.

Question 240

What information is included in Pre Construction Information ?

Answer 240

Project info/arrangements
Health hazards
Design hazards
Site layout, access etc

The regulations define pre-construction information as ‘information in the client’s possession or which is reasonably obtainable by or on behalf of the client, which is relevant to the construction work and is of an appropriate level of detail and proportionate to the risks involved

Question 241

Are materials off site automatically included in an interim valuation?

Answer 241

No. Not unless stipulated in the contract

Question 242

Client calls and says he is short of money and doesn’t want to pay. What to do?

Answer 242

Explain to client that they are in breach of contract and client is liable. Recommend talks between contractor and client.

Question 243

What is PCSA?

Answer 243

Used in two-stage D&B tendering. Procure contractor involvement in the design process. Having the contractor on at an early stage, they can advise on the design, improving buildability and cost-certainty.

Question 244

What is the purpose of Joint Names Insurance policies?

Answer 244

Used in two-stage D&B tendering. Procure contractor involvement in the design process. Having the contractor on at an early stage, they can advise on the design, improving buildability and cost-certainty.

Question 245

What is the purpose of Joint Names Insurance policies?

Answer 245

The key feature of this type of policy is that the insured parties are unable to claim against one another in respect of an insured loss, as they are considered to be one-and-the-same for the purposes of the insurance.

Question 246

Can you name some JCT intermediate contracts facts ?

Answer 246

• JCT intermediate Building contract 2016 (+ ICD with contractors design)
• Used for reasonably complex nature works
• Allow for names subcontractors which must be engaged using jct intermediate named sub contract document
• Similar to mw the works are designed by or on behalf of the employer
• Allows for sectional completion
• Details list of relevant extensions of time and loss and expenses, both matter and time
• Collateral warranties allowed for

Question 247

What is a O&M manual ?

Answer 247

(O&M manual), contains the information required for the operation, maintenance, decommissioning and demolition of a building.
The building owner’s manual might include:

• A description of the main design principles.
• Details of the building’s construction (such as finishes, cladding, doors and windows, roof construction, and so on).
• As-built drawings and specifications.
• Instructions for its operation and maintenance (including health and safety information and manufacturers’ instructions for efficient and proper operation).
• An asset register of plant and equipment.
• Commissioning and testing results.
• Guarantees, warranties and certificates.
• Particular requirements for demolition, decommissioning and disposal.

Question 248

What is the Health and Safety file ?

Answer 248

A file that is prepared pre construction including information such as :

• Description of the works carried out
• Any outstanding hazards
• hazardous materials
• nature and location of services
• information and as built drawings

Question 249

What is procurement ?

Answer 249

The process of acquiring good and services

Question 250

What is tendering ?

Answer 250

The sourcing of the selected labor/contractor to carry out the works.

Question 251

What is culpable delay ?

Answer 251

When the PC has not been met.

Question 252

What is the term culpable delay ?

Answer 252

When the completion date has not been met by the contractor and the fault of the contractor

Question 253

What is the Local Democracy, Economic Development and Construction Act 2009 ?

Answer 253

The Local Democracy Economic Development Act (LDEDA) 2009 was introduced in 2011 and amended the Housing Grants Construction and Regeneration Act 1996 (the Construction Act).
• Removes the requirements for contracts to be in writing
• Added the slip rule to allow for the correction of clerical or typographical error
• Removes pay when certified clauses
• Amendments to the payment notice requirements

Question 254

Who bears the cost of a bond ?

Answer 254

Normally the contractor

Question 255

What is traditional procurement ?

Answer 255

The design proportion is carried out by or on behalf of the client/employer prior to tender. Allowing for design control from the client.

Question 256

What is D&B procurement ?

Answer 256

• Employer agent appointed
• Normally 2 stage
• Contract appoint a contractor to create the design and construction
• Quicker
• Contractor liable for design

Question 257

What is management contracting ?

Answer 257

One main management contractor manager several package of sub contracted packagers of specialist works.

Question 258

What is construction management ?

Answer 258

Client directly appoints several sub contractors. A contractor is then appointed to manage the works as an agent.

Question 259

What are the options available for errors in submitted tenders ?

Answer 259

Alternative 1: Tenderer should be informed of errors & Discrepancies, and afforded the opportunity to confirm or withdraw his tender.

Alternative 2: The tenderer should be given opportunity to confirm his offer or amend it to correct genuine errors.

Question 260

What is a health and safety file ? What is included in one ?

Answer 260

Principal Designer to create during the pre construction phase but it is then updates during the course of the works, which is passed to the client following completion.

Contents include :

• Description of the works
• Outstanding hazards that have not been eliminated through the design and construction
• As built plans showing services

Question 261

Can you list some examples of relevant events ?

Answer 261

• Variations.
• Exceptionally adverse weather.
• Civil commotion or terrorism.
• Failure to provide information.
• Delay on the part of a nominated sub-contractor.
• Statutory undertaker’s work.
• Delay in giving the contractor possession of the site.
• Force majeure (such as a war or an epidemic).
• Loss from a specified peril such as flood.
• The supply of materials and goods by the client.
• National strikes.
• Changes in statutory requirements.
• Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

Question 262

What is a relevant event ?

Answer 262

A relevant event is an event that causes a delay to the completion date, which is caused by the client, or a neutral event not caused by either party. The contract should set out what constitutes a relevant event. Relevant events entitle the contractor to claim an extension of time; that is for the completion date to be moved.

Question 263

What is a relevant matter ?

Answer 263

A relevant matter is a matter for which the client is responsible that materially affects the progress of the works. This may enable the contractor to claim direct loss and / or expense that has been incurred.

Question 264

Can you give me some example of relevant matters ?

Answer 264

• Failure to give the contractor possession of the site.
• Failure to give the contractor access to and from the site.
• Delays in receiving instructions.
• Opening up works or testing works that then prove to have been carried out in accordance with the contract.
• Discrepancies in the contract documents.
• Disruption caused by works being carried out by the client.
• Failure by the client to supply goods or materials.
• Instructions relating to variations and expenditure of provisional sums.
• Inaccurate forecasting of works described by approximate quantities.
• Issues relating to CDM.

Question 265

What are preliminaries and what information would be included as part of this?

Answer 265

NBS suggest that ‘the purpose of preliminaries is to describe the works as a whole, and to specify general conditions and requirements for their execution, including such things as subcontracting, approvals, testing and completion.’ Preliminaries and work sections together describe what is required to complete the works required by the contract.
The costs attached to preliminaries may also be referred to as ‘preliminaries’ or ‘prelims’, or as ‘site overheads’, or general cost items or expenses. The Code of Estimating Practice published by the Chartered Institute of Building (CIOB) describes preliminaries as:
‘…the cost of administering a project and providing general plant, site staff, facilities, and site based services and other items not included in the rates.’
Preliminaries in tender documents may include:
A general summary.
Method statements.
Pre-construction information.
A description of any planning conditions or other conditions that may affect the work to be carried out by the contractor.
A description of any outstanding statutory approvals that may fall to the contractor to satisfy.
Party wall requirements or other agreements with, or rights of, neighbours (such as rights to light).
Any emergency services obligations.
A description of the reporting information that the contractor will be required to submit (often on a monthly basis) describing construction progress (including a detailed critical path programme, key performance indicators and earned value analysis). See Construction progress reports for more information.
A description of the commissioning strategy, separating setting to work and balancing tasks from independent verification by the consultant team.
Relevant reports (such as soil reports).
An information release schedule.
Quality management procedures.
Labour relations.
Schedules of mock-ups, testing and samples required from the contractor.
The method of sub-contracting.
Requirements for insurance, performance bonds, warranties and product guarantees (for the contractor and sub-contractors).
Requirements for the operating and maintenance manual (the client’s facilities management team may wish to comment on this).
Requirement for progress photos to be taken on site during construction and off-site during fabrication.
Dates for partial possession.
Collaborative practices.
Building information modelling (BIM) requirement and protocols (including requirement for BIM in sub-contracts).
Site waste management plan.
Contractor’s site preliminaries, such as; staff, welfare provisions, site offices, plant, site waste clearance, water, electricity, furniture, ICT and consumables, rates, protection of work, protective clothing, site transport, setting out, building control fees, and so on.

Question 266

What are the Sections of JCT MW ?

Answer 266

• Recitals
• Articles
• Contract Particulars
• Attestation
• Conditions
• Schedules

Question 267

Why and when would you advise the use of a JCT MW contract ? Where could you seek guidance prior to advising a client ?

Answer 267

• Simple in nature
• No requirement for sub-contractor design
• No requirement for sectional completion
• No required for collateral warranties.
• Reference JCT deciding on the most appropriate contract

Question 268

What are the other generic suites of contracts are available ?

Answer 268

• JCT Intermediate
• JCT standard building contract
• JCT Major project
• JCT Design and Build
• JCT + Contractors Design
• NEC3 / 4
• FIDIC - International federation of consulting engineers

Question 269

What is the main difference between JCT AND NEC contracts ?

Answer 269

• JCT is adverbial whereas NEC is collaborative
• NEC uses the contract programme as a contract document
• Contract Administrator v Project manager
• Relevant events / matter v compensation event (both time and money)
• NEC does not allow for provisional sums

Question 270

What is an employers agent ?

Answer 270

The contract administrator under JCT design and build contracts

Question 271

If there was an error with a submission from a contractor what are your options to move forward under a JCT contract ?

Answer 271

Alternative 1 = Details provided and the contractor has the choice to confirm or withdraw submission with no amendments
Alternative 2 = Details provided and opportunity to confirm or amend to correct the error.
Source - JCT Practice Note - Tendering 2017

Question 272

What is the difference between liquidated and unliquidated damages ?

Answer 272

• Liquidated damages are a pre-determined sum of money payable in respect of a specific breach of contract. Most commonly we associate liquidated damages with delay. In this context the parties usually agree in the contract that in the event the contractor is late in reaching completion of the works for handover then the contractor shall pay to the client the sum of [x] per day or per week that the works are delayed. See B is for Breach for more information.
• Unliquidated damages by contrast are the damages claimed when the loss has not been pre-determined by the parties. I.e. unliquidated damages are claimed for any breach of contract which is not subject to a liquidated damages clause.

Question 273

Was does the JCT MW not allow for ?

Answer 273

• Sub-contractor design
• Section completion
• Named sub-contractors
• Clerk of works
• QS
• Programme as contract documents
• Relevant events / matters
• Novation / Assignment

Question 274

What is a domestic subcontractor ?

Answer 274

A domestic sub-contractor is any sub-contractor, other than a nominated-sub contractor, that the main contractor sub-contracts to carry out part of the works. The work of the sub-contractor is the responsibility of the main contractor as far as the contract between the main contractor and the client is concerned

Question 275

What is required for a under hand contract ?

Answer 275

Signed by director and secretary

Question 276

What is required for a under deed contract ?

Answer 276

Signed by director and company seal affixed

Question 277

What are the insurance provisions in the JCT MW contract ?

Answer 277

• 5.4A (Work insurance by Contractor in joint names) - New building
• 5.4B (Works and existing structures insurance by employer in joint names)
• 5.4C (Works and existing structure insured by other means)

Question 278

What are the other insurance relevant to a project ?

Answer 278

• PII insurance,
• All risk insurance
• Contents insurance
• Public liability insurance

Question 279

What is all risk insurance ?

Answer 279

“All risks” refers to a type of insurance coverage that automatically covers any risk that the contract does not explicitly omit. For example, if an “all risk” homeowner’s policy does not expressly exclude flood coverage, then the house will be covered in the event of flood damage.

Question 280

What is a pay less notice ?

Answer 280

The purpose of a pay less notice is to give the paying party the right to pay less than/withhold all or part of the notified sum. The notice must specify the sum that the paying party considers they require to pay and the basis on which the sum has been calculated, even if that is zero

Question 281

What is the due date for payments (JCT MW) ?

Answer 281

14 days after the interim due date or the final due date

Question 282

What is a defined and undefined provisional sum ?

Answer 282

• Defined provisional sums are those that are sufficiently well defined and/or detailed to allow the contractor to make allowances for them in their programming, planning and pricing preliminaries.
• Undefined provisional sums are less well described as they refer to work which is not completely designed. As such, the contractor cannot be expected to make allowance for them in their programming, planning and pricing preliminaries. This means the contractor may be entitled to an extension of time and/or additional payments when the actual works are undertaken.
• An example of an undefined provisional sum might be work required below an existing structure, where the ground conditions, and so the extent of work required, cannot be determined until the structure is demolished and the ground opened up.

Question 283

What is a prime cost ?

Answer 283

Prime costs are a firm’s expenses directly related to the materials and labour used in production.

Question 284

What considerations should be made with regards to novation?

Answer 284

Whether the new party has the right to take action against the novated team for an issue that occured prior to the novation.

Question 285

What is assignment ?

Answer 285

Assignment is the transfer of a right or an interest vested in one party (the ‘assignor’) to another party (the ‘assignee’). A valid assignment will entitle the assignee to demand performance of a contractual obligation

Question 286

What is a bond ?

Answer 286

A construction bond is a written agreement in which one party (the surety) guarantees that a second party (the principal) will fulfil its obligations to a third party (the oblige). If the principal defaults on its obligations, the surety must complete them or pay the completion costs to the oblige.

Bonds are a means of protection against the non-performance of the contractor. They are an undertaking by a bondsman or surety to make a payment to the client in the event of non-performance of the contractor. The cost of the bond is usually borne by the contractor, although this is likely to be reflected in the contractor’s tender price.

Bonds can be ‘on demand’ or ‘conditional’, with conditional bonds requiring that the client provides evidence that the contractor has not performed their obligations under the contract and that they have suffered a loss as a consequence.

See also Bonds v guarantees.

Performance bond
A performance bond is commonly used as a means of insuring a client against the risk of a contractor failing to fulfil contractual obligations to the client, although they can also be required from other parties. Performance bonds are typically set at 10% of the contract value. This compensation can enable the client to overcome difficulties that have been caused by non-performance of the contractor, such as, finding a new contractor to complete the works.

Advance payment bond
If the client agrees to make an advance payment to the contractor, (for example where the contractor incurs significant start-up and procurement costs before construction begins), a bond may be required to secure the payment against default by the contractor. This will normally be an on-demand bond.

Off-site materials bond
It can sometimes be appropriate for the client to pay for items even though they remain ‘off-site’. For example, where a contractor has made a large payment for plant or materials that have yet to be delivered to site, or if the client wishes to ‘reserve’ key items in order to protect the programme. This is similar to the situation where an advanced payment is made in that a bond secures the payment against default by the contractor and is likely to be an on-demand bond. The bond might be up to the value of the off-site items, with the value of the bond reducing as deliveries to site are made.

Retention bond
Retention is a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate that is retained by the client. The purpose of retention is to ensure the contractor properly completes the activities required of them under the contract. Half of the amount retained is released on certification of practical completion and the remainder is released upon certification of making good defects. An alternative to retention is a retention bond, where the client agrees to pay the amounts which would otherwise have been held as retention, but instead a bond is provided to secure the amount that would have been retained. As with retention, the value of the bond will usually reduce after practical completion has been certified.

Defects liability bond (or defects liability demand guarantee)
The defects liability period (now called the ‘rectification period’ in Joint Contracts Tribunal (JCT) contracts) begins upon certification of practical completion and typically lasts six to twelve months. During this time, it is the contractor’s responsibility to rectify any defects that become apparent in the works. A defects liability bond can be used to ensure that the contractor continues to provide services, rectifying defects that become apparent after practical completion has been certified. This is generally an on-demand bond that may be required on projects where there are no remaining payments to be made, or other security such as retention, after practical completion.

Question 287

What is a vesting certificate ?

Answer 287

What is a vesting clause or a vesting certificate? A vesting clause is a contractual term which deals with the transfer of ownership of goods and materials and a vesting certificate is a document evidencing that transfer of ownership of those goods or materials.

Under such circumstances, a ‘vesting certificate’ or ‘certificate of vesting’ may be required from the contractor (or sub-contractors or suppliers), certifying that ownership of the goods, plant or materials listed in a schedule will transfer from one party to the other upon payment and confirming that they will be will be properly identified, separately stored, insured and are free from encumbrances (such as retention of title).

Question 288

What a material off site bond ?

Answer 288

Off-site materials bond
It can sometimes be appropriate for the client to pay for items even though they remain ‘off-site’. For example, where a contractor has made a large payment for plant or materials that have yet to be delivered to site, or if the client wishes to ‘reserve’ key items in order to protect the programme. This is similar to the situation where an advanced payment is made in that a bond secures the payment against default by the contractor and is likely to be an on-demand bond. The bond might be up to the value of the off-site items, with the value of the bond reducing as deliveries to site are made.

Question 289

What is the JCT MW final account timeline ?

Answer 289

• 28 day before due date contractor can submit valuation
• Due date
• 5 days after due date contractor administrator should issue payment notice
• 14 days to the due date for payment
• 5 days before the due date for payment the client has the ability to issue a pay less notice
• If CA does not issue a payment certificate within the first 5 days what contractor can submit an equivalent direct to the client.

Question 290

What is traditional lump sum procurement route ?

Answer 290

Traditional procurement remains the most commonly-used method of procuring building works. The traditional procurement route involves separating design from construction. The client first appoints consultants to design the project in detail and to ensure cost control and inspect the construction works as they proceed.

Question 291

What is a letter of intent ?

Answer 291

A letter of intent is a document expressing an intention to enter into a contract at a future date but creates no contractual relationship until that future contract has been entered into. A letter of intent is not an ‘agreement to agree’.

It is important to bear in mind that ‘letter of intent’ is a term of commercial convenience and not a term having a substantive legal meaning, as for example ‘subject to contract’. Each letter of intent must be construed on its own particular meaning.

Question 292

What may you use instead of a letter of intent ?

Answer 292

“JCT’s Pre-Construction Services Agreement (General Contractor) is designed for appointing a contractor to carry out pre-construction services under a two-stage tender process.

The Pre-Construction Services Agreement enables the contractor to collaborate with the employer or their team of consultants to develop detailed designs, to develop the main contract works, or to compile specialist tender documents.

The contractor’s involvement at the pre-construction stage is valuable and often essential in the final design process of a project, as well as making preparations for the construction phase, such as the programme, cost plans, buildability and any specialist procurement.

The agreement covers the period from the submission of first stage tenders up to the submission of a definitive second stage tender and entry into a main contract for the construction phase.

The agreement can be used when the main contract is one of the following:
Standard Building Contract
Design and Build Contract
Major Project Construction Contract
Intermediate Building Contract (with or without contractor’s design) “

Question 293

Does JCT MW allow for relevant events and relevant matters ?

Answer 293

No there is no specific reference to this, however I could seek guidance of examples from the SBC.

Question 294

Does JCT MW allow for a certificate of non completion ?

Answer 294

No but it does reference a letter to confirm the non completion.

Question 295

How did you prepare costs for review ?

Answer 295

From BCIS, spons and in house data

Question 296

How would you review and extension of time ?

Answer 296

• Consider is it a relevant event
• Process and review the contractors claim
• Formally issue confirmation and the revised completion date

Question 297

What other suites of contracts are available ?

Answer 297

• NEC - NEC was first published in 1993 as the New Engineering Contract. It is a suite of construction contracts intended to promote partnering and collaboration between the contractor and client. It was developed as a reaction to other more traditional forms of construction contract which have been portrayed by some as adversarial.
• FIDIC - International Federation of Consulting Engineers - FIDIC stands for ‘Fédération Internationale des Ingénieurs - Conseils’, which is best translated from French as The International Federation of Consulting Engineers.

Question 298

What are the difference between JCT and NEC ?

Answer 298

• JCT is adversial where as NEC is collaborative
• NEC uses the contract programme as a contract document
• Contract Administrator v Project manager
• Relevant events / matter v compensation event (both time and money)
• NEC does not allow for provisional sums

Question 299

What is the role of a contract administer ?

Answer 299

A contract administrator manages contracts made between building contractors, employers, and clients. Their responsibility is to administer construction contracts, whereby they may act as project managers, engineers, consultants and client representative

Question 300

You mention the RICS Guidance note on contract administration, can you expand on its contents please ?

Answer 300

Contract Administration
Guidance Note
1st Edition
2011

• Appointment of the contract administrator
• Roles and responsibilities
• Notice
• Variations
• Instructions
• Site inspections
• Meetings

Question 301

You mention the RICS Guidance note on retention, can you expand on its contents please ?

Answer 301

Guidance Note
1st Edition
2012

• Reasons for inclusions
• General principals of release of retention
• Alternatives - Bonds etc
• Contract specific clauses

Question 302

You mention the JCT practice note deciding on the appropriate jct contract, can you expand on its contents please ?

https://www.jctltd.co.uk/docs/Deciding-on-the-appropriate-JCT-contract-2016.pdf

Answer 302

JCT Practice Note - 2016

This is a document detailing the difference between the contracts. This document also includes a flow chart to help guide the decision.

Question 303

What is a Employer’s agent ?

Answer 303

The contract administer equivalent on a design and build contract

Question 304

What does practical completion trigger ?

Answer 304

Practical Completion is a contractual term used in the Building Contract to signify the date on which a project is handed over to the client. The date triggers a number of contractual mechanisms including, releasing half of the retention, ending the contractor liability for liquidated damages, starting the rectification period.

Question 305

What are the contents/what are included in typical contract documents ?

Answer 305

Drawings, schedule of work, preliminaries, pre ambles, construction programme, the contracts, photo report, asbestos and H&S information

Question 306

What is required for a contract under hand ?

Answer 306

Signed by director and a the company secretary, liability for 6 years.

Question 307

What is required for a contract under deed ?

Answer 307

Signed by two directors and attached the common seal of company

Question 308

What is the final account ? What are the timelines attached to this ?

Answer 308

The final account is the conclusion of the contract sum (including all necessary adjustments) and signifies the agreed amount that the employer will pay the contractor. It includes any works that are paid to the contractor through the main contract. The timeline is as follows :

• Contractor submit valuation up to 28 days before the due date
• CA assesses and issue Payment certificate within 5 days of due date
• Employer can issue a pay less notice up to 5 days before final date for payment
• Final date for payment is 14 days from due date

Question 309

What is partial completion ? What contract did you run this under ?

Answer 309

The client may wish to take possession of part of a building or site, even if works are ongoing. This can be programmed within the original contract documents it the need can be foreseen through a requirement for sectional completion which is not allowed under JCT MW, but in the absence of such a provision many contracts offer the more open-ended option of partial possession.

The effect of partial possession is that:

• Any part for which partial possession is given is deemed to have achieved practical completion.
• Half of the retention for that part must be released.
• The defects liability period begins for that part.
• Liquidated damages reduce proportionally.
• The client is responsible for that part and should insure it.
• The contractor is not obliged to allow partial possession (although permission cannot be unreasonably withheld), and may not wish to if, for example, access routes are difficult to achieve, it would disrupt the works, or it would incur additional costs. There could also be additional difficulties if the occupants of the part that has been possessed disrupt the contractor, which could result in a claim for extension of time and/or loss and expense.

Question 310

How would you review and extension of time ?

Answer 310

• Assess the contractors claim - should be notified when reasonable apparent
• Consider was this a relevant event
• Assess the claim
• Formally confirm the outcome

Question 311

How would you formal define at extension of time ?

Answer 311

Via a formal letter to contractor and employer

Question 312

What were your insurance revisions under the JCT contract ? Joint names ?

Answer 312

JCT MW
• 5.4A (Work insurance by Contractor in joint names) - New dwelling
• 5.4B (Works and existing structures insurance by employer in joint names)
• 5.4 C (Works and existing structure insured by other means)

Question 313

What would you look at when assessing contractors and sub consultants ?

Answer 313

• Credit rating
• Reference
• Size
• Experience
• Availability
• Willingness
• H&S

Question 314

Is there a provision for partial completion under JCT MW ?

Answer 314

Not within the contract but an adhoc agreement can be made

Question 315

What might you do as a contract administrator prior to the contract being signed ?

Answer 315

The role of contract administrator does not technically commence until a building contract is in place between the employer and the contractor; however, in practice the responsibilities of the CA will have commenced before the building contract exists. However, the contract administrator would normally draft the contract prior to a pre start meeting.

Question 316

What are payment timescales under JCT MW ?

Answer 316

Interim
• Interim Valuation date is 7 days before the due date. contractor can submit valuation application for payment prior to this.
• CA has 5 days from due date to create payment certificate
• Final date for payment is 14 days from due date
• Employer has up to 5 days before due date to issue a pay less notice

Final
• Contractor has 28 before due date to submit valuation
• CA as 5 days from due date to create payment certificate
• Final date for payment is 14 days from due date
• Employer has up to 5 days before due date to issue a pay less notice

Question 317

What happens if your contractor does not get paid ?

Answer 317

The contractor has the ability to terminate the contract, however I would ensure to consider negotiations in the interim.

Question 318

What are the differences between minor works and intermediate JCT contract ?

Answer 318

JCT Intermediate allows for Named sub contractors and Sectional completion

Question 319

Have you ever used any other types of contract ?

Answer 319

I have not but i do have an awareness of the other contracts within JCT and NEC contracts generally, variation in inclusions and terminology, aimed towards civil construction works in some cases.

NEC
•	Compensation event
•	Project Manager
•	Programme forms part of the contract
•	No Allowance for provisional sum

Question 320

What are the other types of JCT Contracts ?

Answer 320

• Homeowner - not CA
• MW / with CD
• Intermediate BC / with CD
• Standard BC / with CD
• Design and Build
• Major Projects

Question 321

Why did you choose a jct minor works contract ?

Answer 321

• Works simple in nature
• No requirement for sectional completion
• No requirement for sub contractors design

Question 322

What are the other suites of contracts available ?

Answer 322

• NEC
• FIDIC
• JCT

Question 323

What are the CA duties ?

Answer 323

A contract administrator manages contracts made between building contractors, employers, and clients. Their responsibility is to administer construction contracts, whereby they may act as project managers, engineers, consultants and client representatives.

Question 324

What certificates can you issue under JCT MW contract ?

Answer 324

• Contract variation
• Payment cert
• Cert of making good defects
• Cert of practical completion
• Letter of non-completion
• Contract instructions

Question 325

What option do you have regarding a fixed completion date ?

Answer 325

• Acceleration
• RICS Guidance Note
• 1st Edition
• 2011
• Falls within the Black Book Suits of RICS Guidance Notes
• Provision for this within JCT SBC with timelines and process defined

Question 326

What happens if a tendering contractor included an obvious error ? What are the options ? Where would find this information ?

Answer 326

• Alternative 1 = Details provided and the contractor has the choice to confirm or withdraw submission with no amendments
• Alternative 2 - Details provided and opportunity to confirm or amend to correct the error.

Source - JCT Practice note - Tendering 2017

This information would be contained within the Preliminaries of the document.

Question 327

Tell me about your tender analysis process and the recommendations you made to your client.

Answer 327

I reviewed the tender and created a spreadsheet to compare all of the tender prices per item to highlight any provisional sums, calculation errors, high or low prices in comparison to the other submissions. I advised the client of the best price and consideration regarding start date, previous experience and highlighted prudent information.

Question 328

What process did you follow when opening the tenders ?

Answer 328

They were all opened in the presence of a colleague after the tender deadline.

Question 329

When can a JCT MW contract be terminated ?

Answer 329

• Default by contractor
• Default by employer
• Insolvency
• Non performance
• Non payment
• Agreement from both parties

Question 330

What are the types of procurement ?

Answer 330

• General contracting
• Design and build
• Construction management
• Management contracting

Question 331

What are the types of tendering ?

Answer 331

• Open Tendering.
• Selective Tendering.
• Serial Tendering.
• Framework Tendering.
• Single-stage and Two-stage Tendering.
• Public Procurement.

Question 332

How would you calculate a contingency ?

Answer 332

I would refer to the number of provisional or unknown sums and any investigates items and calculate a suitable percentage to be added. This would not be visible to the contractor but between the CA and employer.

Question 333

What insurance would you seek from a contractor prior to construction ?

Answer 333

• All risks
• Public Liability
• Employers Liability

Question 334

What is all risk insurance ?

Answer 334

“All risks” refers to a type of insurance coverage that automatically covers any risk that the contract does not explicitly omit. For example, if an “all risk” homeowner’s policy does not expressly exclude flood coverage, then the house will be covered in the event of flood damage.

Question 335

What is a Extension of Time is refused ?

Answer 335

Time at large

Question 336

What is time at large ?

Answer 336

An example includes when EOT has been declined by the client the completion date in not defined. ‘Time is at large’

Question 337

What are the procurement options available ?

Answer 337

• Traditional contract 86%
• Single-stage design and build 41%
• Two-stage design and build 39%
• Management contract 18%
• PFI 10% - The private finance initiative (PFI) is a procurement method which uses private sector investment in order to deliver public sector infrastructure and/or services according to a specification defined by the public sector.

Question 338

What are the JCT MW insurance options ?

Answer 338

• 5.4A - Works insurance by Contractor in Joint names - Intended new building with no existing structure - contractor would take out all risk insurance
• 5.4B - Works and existing structure insurance by Employer in Joint names. Works to existing buildings - The existing structure together with its contents are insured in joint names against specified perils. Employer amend current insurance to cover the contractor
• 5.4C - Works and existing structure insurance by other means. Employer keeps there insurance and the contractors take out insurance for the works and damage to the structure

Question 339

What is traditional procurement ?

Answer 339

Traditional procurement remains the most commonly-used method of procuring building works. It comprises a tripartite arrangement involving a client, consultants and contractor.

The traditional procurement route involves separating design from construction. The client first appoints consultants to design the project in detail and to ensure cost control and inspect the construction works as they proceed. Contractors are then invited to submit tenders for the construction of the project on a single-stage competitive basis.

Question 340

What is design and build procurement ?

Answer 340

Design and build is a term describing a procurement route in which the main contractor is appointed to design and construct the works, as opposed to a traditional contract, where the client appoints consultants to design the development and then a contractor is appointed to construct the works.

The contractor is responsible for the design, planning, organisation, control and construction of the works to the employer’s requirements. The employer gives the tenderers the ‘Employer’s Requirements’ and the contractors respond with the ‘Contractor’s Proposals’, which include the price for the works.

Design and build can be seen as giving a single point of responsibility for delivering the entire project. Some clients, however, consider it is only appropriate for simple projects, where design quality is not the main consideration.

Question 341

Who calculated the figure for liquidated damages ?

Answer 341

The client.

Contracts generally include a clause making provision for the contractor to pay liquidated damages (LD, sometimes referred to as liquidated and ascertained damages - LADs) to the client in the event that the contract is breached. In building contracts, liquidated damages usually relate to the contractor failing to achieve practical completion (i.e. completing the works so they can handover the site to the client) by the completion date set out in the contract. They are often calculated on a daily or weekly rate.

Liquidated damages are not penalties, they are pre-determined damages set at the time that a contract is entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date. They might include; rent on temporary accommodation, removal costs, extra running costs, and so on. They are generally set as a fixed daily or weekly sum, although there may be a more complicated formulae where the works are phased, where may be partial possession and so on. It is important that the method of calculation is precisely and formally documented.

If the contract prevents the client claiming liquidated damages, or if actual losses are significantly different to those that were estimated at the time the contract was entered into, then the client may pursue a claim for unliquidated (i.e. actual) damages through the courts. Unliquidated damages are damages, the exact amount of which has not been pre-agreed, and are typically determined by the courts.

Question 342

What is an insurance backed guarantee ?

Answer 342

An Insurance Backed Guarantee (IBG) is a guarantee given by a contractor to provide peace of mind in case the contractor has ceased trading. Contractors can offer guarantees for up to 25 years, but if the contractor was to close down then their guarantee would be worthless, hence the requirement for it to be backed by a third party insurer.

Question 343

What is required to form a contract ?

Answer 343

• Offer
• Acceptance
• Consideration
• Legality
• Capacity
• Intent

Question 344

What is a relevant matter ?

Answer 344

Relevant matters in construction contracts
Relevant matters are referred to in some construction contracts, such as JCT contracts. A relevant matter is a matter for which the client is responsible that materially affects the progress of the works. This may enable the contractor to claim direct loss and / or expense that has been incurred. Relevant matters might include:

• Failure to give the contractor possession of the site.
• Failure to give the contractor access to and from the site.
• Delays in receiving instructions.
• Opening up works or testing works that then prove to have been carried out in accordance with the contract.
• Discrepancies in the contract documents.
• Disruption caused by works being carried out by the client.
• Failure by the client to supply goods or materials.
• Instructions relating to variations and expenditure of provisional sums.
• Inaccurate forecasting of works described by approximate quantities.
• Issues relating to CDM.

Relevant matters should not be confused with relevant events. A relevant event is an event that causes a delay to the completion date, which is caused by the client, or is a neutral event not caused by either party. Relevant events entitle the contractor to claim an extension of time; that is for the completion date to be moved. A relevant event does not necessarily entitle the contractor to claim loss and expense. Similarly, a relevant matter need not necessarily result in a delay to the completion date, and so may not always entitle the contractor to an extension of time.

NEC contracts deal with these issues under the single heading ‘compensation events’. They do not treat compensation events as an allocation of blame, but rather an allocation of risk. Any risk that is not specifically identified as being attributed to the client is borne by the contractor.

The Society of Construction Law Delay and Disruption Protocol, 2nd edition, refers to an event or cause of delay or disruption which under the contract is at the risk and responsibility of the employer, as an ‘employer risk event’.

Question 345

What is a relevant event ?

Answer 345

Delays on a project will have different contractual consequences depending on the cause of the delay:

Where a delay which impacts on the completion date is caused by the contractor (culpable delay), the contractor will be liable to pay liquidated and ascertained damages (LADs) to the client.
Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’, for which the contractor may be entitled to an extension of time and to claim loss and expense incurred as a direct result of the delay.
A relevant event may be caused by the client, or may be a neutral event such as exceptionally adverse weather. The contract should set out what constitutes a relevant event.

Relevant events may include:

• Variations.
• Exceptionally adverse weather.
• Civil commotion or terrorism.
• Failure to provide information
• Delay on the part of a nominated sub-contractor.
• Statutory undertaker’s work.
• Delay in giving the contractor possession of the site.
• Force majeure (events that are beyond the reasonable control of a party, such as a war or an epidemic).
• Loss from a specified peril such as flood.
• The supply of materials and goods by the client.
• National strikes.
• Changes in statutory requirements.

Delays in receiving permissions that the contractor has taken reasonable steps to avoid.
When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay. If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Claims for extension of time can run alongside claims for loss and expense however, one need not necessarily lead to the other. The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.

Mechanisms allowing extensions of time are not simply for the contractor’s benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a ‘reasonable’ time. The client would lose any right to liquidated damages.

NB: On NEC contracts, delays are dealt with slightly differently and are referred to as ‘compensation events’.

Question 346

What items would normally be included in contractors design ?

Answer 346

Mechanical and Electrical

Question 347

If the liquidated damages section is left blank what does this mean ?

Answer 347

They have not been agreed but can be claimed for in court.

Question 348

Is there any provision in the contract for the inclusion of any negotiations ?

Answer 348

Yes, within the JCT MW contract both the client and the contractor have a represented nomination with regards to negotiation of disputes

Question 349

Can you give me an example of items contained within a snagging list / rectification period ?

Answer 349

• Broken tiles on the roof.
• Patchy paintwork, anywhere in or on the property.
• Insufficient loft insulation.
• Incomplete grouting in the bathroom.
• Poorly fitted skirting boards.
• No acid wash on outside brickwork.

Question 350

Does the contractor have a right to access during the rectification period ?

Answer 350

Yes but should be pre agreed access etc

Question 351

What is subcontractor design ?

Answer 351

When a sub contractor carries out take the liability for art of the design, normally a specialist items.

Question 352

Why would you allow a 12 month rectification period ?

Answer 352

To allow for full seasonal changes.

Question 353

Did you undertake any pre-qual checks on the contractors?

Answer 353

• PQQ
• Insurance
• References
• Credit checks

Question 354

What is the main aim of an extension of time ?

Answer 354

To protect the employers right to liquidated damages in the event the contractor fails to complete on time.

Question 355

What does the term ‘ time at large ‘ relate to ?

Answer 355

Time at large usually means that there is no enforceable date for completion, and the contractor then only has an implied obligation to complete the works within a ‘reasonable time’.

Question 356

Does JCT MW allow for phased completion or occupation ?

Answer 356

No but an adhoc arrangement can be agreed by the parties.

Question 357

What is a pay less notice ?

Answer 357

A Pay Less Notice is a written notification from the Payer to the Payee of the Payer’s intention to pay less than the value stated in either their previous Payment Notice and/or the Payee’s application.

Question 358

What is the final certificate conclusive of? (WEAL)

Answer 358

• Works, goods or materials that are expressly described within the contract are to the architect’s satisfaction
• All adjustments of the contract sum have been dealt with and agreed
• All extensions of time have been given and dealt with
• All loss/ and or expense claims have been settled.

Question 359

If you had made an error and approved the additional costs, what could the client do so they don’t make the over payment ?

Answer 359

Issue a pay less notice

Question 360

What advise did you give to the client in relation to Covid-19 ?

Answer 360

The consideration regarding timescales, staffing from the contractor, additional H&S measures, limitation exposure and contents of the HM government Covid 19:working in construction.

Question 361

What affect would this have on the client making any claims from the contractor ?

Answer 361

Completion date would be moved back affecting the ability to collect liquidated damages

Question 362

What must liquidated damages be ?

Answer 362

A true calculation of the costs and or loss, not a penalty.

Question 363

Which form(s) of contract are you most familiar with ?

Answer 363

JCT and JCT MW 2016 more specifically

Question 364

What are the limitations of this form of contract (JCT MW) ?

Answer 364

Does not allow for sectional completion or sub contractor design.

Question 365

What alternative forms of contract would you consider and what factors would make the alternative more suitable?

Answer 365

JCT Intermediate Contract
•	Simple constriction works
•	Works carried out in parts
•	Requirements for for clerk of works or QS
•	Names sub contractors

JCT Standard Contract
• Large or complex works

Question 366

What document(s) would you refer to assist in advising on the most suitable form of contract ?

Answer 366

• RICS Contract Administration - 1st Edition - Guidance Note - 2011
• JCT Deciding on the appropriate JCT contract 2016

Question 367

What information is included in the RICS Guidance Note on Contract Administration?

Answer 367

• Roles and responsibilities of a contract administrator
• Records
• Site meetings
• Meetings
• Interim Valuations
• Health and Safety

Question 368

Give me some examples when the JCT Minor Works contract is most suitable ?

Answer 368

• Simple in nature
• No section completion
• No sub contractor design
• No requirement for names sub contractor, QS or COW

Question 369

What is a relevant event?

Answer 369

Delays on a project will have different contractual consequences depending on the cause of the delay:

Where a delay which impacts on the completion date is caused by the contractor (culpable delay), the contractor will be liable to pay liquidated and ascertained damages (LADs) to the client. Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’, for which the contractor may be entitled to an extension of time and to claim loss and expense incurred as a direct result of the delay.
A relevant event may be caused by the client, or may be a neutral event such as exceptionally adverse weather. The contract should set out what constitutes a relevant event.

Relevant events may include:

• Variations.
• Exceptionally adverse weather.
• Civil commotion or terrorism.
• Failure to provide information
• Delay on the part of a nominated sub-contractor.
• Statutory undertaker’s work.
• Delay in giving the contractor possession of the site.
• Force majeure (events that are beyond the reasonable control of a party, such as a war or an epidemic).
• Loss from a specified peril such as flood.
• The supply of materials and goods by the client.
• National strikes.
• Changes in statutory requirements.

Delays in receiving permissions that the contractor has taken reasonable steps to avoid.
When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay. If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Claims for extension of time can run alongside claims for loss and expense however, one need not necessarily lead to the other. The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own.

Mechanisms allowing extensions of time are not simply for the contractor’s benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a ‘reasonable’ time. The client would lose any right to liquidated damages.

NB: On NEC contracts, delays are dealt with slightly differently and are referred to as ‘compensation events’.

Question 370

How do NEC contracts differ from JCT contracts in the terminology used?

Answer 370

• JCT is adversial where as NEC is collaborative
• NEC uses the contract programme as a contract document
• Contract Administrator v Project manager
• Relevant events / matter v compensation event (both time and money)
• NEC does not allow for provisional sums

Question 371

When might an early warning notice be issued on an NEC contract?

Answer 371

The contract makes provision for early warning procedures. Both parties must give early warning of anything that may delay the works, or increase costs as soon as they become aware of them. They should then hold an early warning meeting to discuss how to avoid or mitigate impacts on the project.

If the contractor fails to give early warning of a possible delay to the works, or increase in costs, they will only be compensated for effects that would have remained anyway even if they had given early warning.

If the contractor fails to give early warning of an event that may give rise to a possible delay to the works, or increase in costs, within 8 weeks of becoming aware of the event, they will not be entitled to a change in price, completion date or key date, unless the project manager should have notified the event to the contractor but did not.

Question 372

How would you calculate Liquidated Damages for inclusion within a contract?

Answer 372

The client would calculate the actual costs incurred per week for the potential delay.

Question 373

Give an example of a situation where a contractor might be entitled to an extension of time?

Answer 373

• Variations.
• Exceptionally adverse weather.
• Civil commotion or terrorism.
• Failure to provide information.
• Delay on the part of a nominated sub-contractor.
• Statutory undertaker’s work.
• A delay in giving the contractor possession of the site.
• Force majeure (such as an epidemic or an ‘act of God’).
• Loss from a specified peril such as flood.
• The supply of materials and goods by the client.
• Strikes.
• Changes in statutory requirements.
• Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

Question 374

Is a contractor always entitled to loss and expense when they are granted an extension of time ?

Answer 374

No, a claim for loss and expenses would lint to a relevant matter

Question 375

What does the end of the rectification mean re access to the site ?

Answer 375

Ends the right of the contractors to return to site for access and put right snagging times

Question 376

What if the client does not want the contractor to complete the snagging items within the rectification period / does not want to give access ?

Answer 376

They have to allow the contractor to make good these unless and agreement is made.

Question 377

Talk me through the process you followed when assessing the contractor’s request for payment.

Answer 377

I reviewed the progress, programme, valuation in reference to the tender breakdown. The items being claimed has not previously been raised and were not suitable claims.

Question 378

How did you determine when practical completion had been achieved ?

Answer 378

Following a site inspection in reference to the schedule of work items

Question 379

If you did not agree with the amount claimed by the contractor, what action would you take ?

Answer 379

Discuss initially and then create my own valuation of the works to be followed by a payment certificate.

Question 380

How did you determine the length of the defect liability period for this contract ?

Answer 380

Under JCT MW this is by default 3 months however I would consider if this should be extended to allow for seasonal changes.

Question 381

Do you always specify for a retention amount to be retained – discuss the implications of not keeping retention.

Answer 381

I do in my project, this helps to safeguard the client and in reality helps to get the contractor back to site to complete the remaining works. If this was retained then remedial works could be completed by a third party but would likely relate to additional costs.

Question 382

How would you deal with a request for payment for materials on site ?

Answer 382

Check to ensure they are on site, delivered and for the project, this would then be included within my following payment certificate if accurate.

Question 383

Explain why you felt it necessary to check the tender submission was not “front loaded” ?

Answer 383

This is something that I consider will all tender to ensure and check the weighting of the figures in comparison to other during the tender analysis.

Question 384

Explain the process you followed when the contractor over-valued his application for payment.

Answer 384

I reviewed the progress and material on site to confirm my valuation of the works, I communicated this to the contractor who agree, I then created and issued a payment certificate (interim).

Question 385

What information was included on the penultimate certificate issued at practical completion.

Answer 385

• Penultimate Valuation
• Valuation No
• Date
• File / Project Ref
• Date
• Retention at 2.5%
• Less previously certified

Question 386

Explain what action you took before issuing the final certificate.

Answer 386

Inspection of site to confirm completion of snagging items and agreement of final account.

Question 387

What information do you include on a contract instruction?

Answer 387

• Variation No
• Date
• File / Project Ref
• Add /Omit
• Value of variation
• Contract Sum

Question 388

Explain how you dealt with any defects arising during the defects period

Answer 388

I created a snagging list which was issued to the employer and the contractor, I then re inspected to confirm the items had been completed within the rectification period

Question 389

When getting the defects made good at the end of the defects liability period how do you ensure everything is complete before issuing the final certificate

Answer 389

Via an inspection, I allow for early issue of snagging last and various inspections to confirm this, Regular communication also helps with this regard.

Question 390

Explain the advice given to the client in respect of the delays caused by COVID 19.

Answer 390

At this time it was classed as a relevant event, to which the contractor submitted an EOT to delay the completion date due to the unforeseen events.

Question 391

Explain the advice given in respect of the cost of the proposed conversion and the sources of information used to prepare the cost estimate.

Answer 391

Costs were sough from BCIS ( Building cost information Service) regarding the area and the rate. This was ratified in part by recent tenders to confirm the rates.

Question 392

Why do you have predominate experience with JCT MW ?

Answer 392

As I deal with similar sized projects, however I do have knowledge of the other forms of contract such as intermediate and standard building contract.

Question 393

What affect did COVID have on your JCT contract ?

Answer 393

Potential delay - consideration of if relevant event or relevant matter

Question 394

How would the tender evaluation differ when using a performance specification to ensure you chose the best solution offered by the tenderers, rather than simply selecting the cheapest ?

Answer 394

The request for further information regarding how the contractor proposes to complete this.

Question 395

What factors did you consider when offering design and construction advice?

Answer 395

Cost, time, quality

Question 396

What else could you use apart from BCIS for cost estimates?

Answer 396

Previous tender submission relative to the work and Spons data

Question 397

How do you keep track of the current cost of an on-going contract ?

Answer 397

I have a cost tracker spreadsheet, % or value of work is entered per item as the works progress on site.

Question 398

How do you manage cost and cost variance on a project?

Answer 398

A cost tracking spreadsheet to defined cost per items including add and omit variations to the the SOW

Question 399

What is a feasibility survey. ?

Answer 399

Feasibility studies are preliminary studies undertaken in the very early stage of a project. They tend to be carried out when a project is large or complex, or where there is some doubt or controversy regarding the proposed development. If an environmental impact assessment (EIA) is required, this may involve assessments best undertaken as part of feasibility studies.

The purpose of feasibility studies is to:

• Establish whether the project is viable.
• Help identify feasible options.
• Assist in the development of other project documentation such as the business case, project execution plan and strategic brief.

Question 400

What are liquidated damages?

Answer 400

Liquidated damages are a well established method to collect compensation for a specific breach of a contractual obligation

Question 401

How does a compensation event differ from a relevant matter or relevant event?

Answer 401

Compensation are an allocation of risk, not blame under NEC CE. Any risk that is not specifically identified as being attributed to the client is borne by the contractor.

Question 402

What are some of the responsibilities of the PM under NEC

Answer 402

Managing risk, utilising NEC change management procedures, reviewing progress of works

Question 403

What is the difference between programme in NEC and JCT

Answer 403

In NEC, it is a contractual document. In JCT, it is an indication.

Question 404

What are the timescales for a Compensation Event?

Answer 404

The contractor must notify the project manager within 8 weeks of becoming aware of the event.

The PM has one week to agree.

The contractor has three weeks to provide a quotation.

The PM has two weeks to accept.

Question 405

What is important to consider when engaging with sub-consultants?

Answer 405

That our agreement is back to back with out head agreement

Question 406

How would you write a performance specification?

Question 407

When were NEC contracts introduced?

Answer 407

1993

Question 408

When was the Latham Report?

Answer 408

1994

Question 409

When were JCT contracts introduced?

Answer 409

1931

Question 410

When would you expect to see Employer’s Requirements?

Answer 410

On a D&B contract.

Question 411

Name some types of compensation events?

Answer 411

Instructions to change the service (unless this results from accepting a defect, or from a change requested by the contractor).
Failure to provide access.
Failure of the client to provide equipment, plant or materials.
An instruction to halt, or delay the works.
Work done by others.
Conditions that could not reasonably have been foreseen.
Exceptionally adverse weather (beyond one in ten year frequency).
Force majeure (such as an epidemic or an ‘act of God’).

Question 412

How are provisional sums dealt with in NEC?

Answer 412

The NEC3 also does not cater for provisional sums.

If an element of the works is incapable of being accurately specified at the outset then it should be described in as much detail as possible in the technical documentation (ie the Works Information) together with appropriate assumptions - any amendments can be made through a CE.

Question 413

What are the main differences between NEC3 and NEC4

Answer 413

*Works Information becomes Scope
*Gender inclusive language
*X29 climate change clause included
*Working from home becomes a defined cost

Question 414

What are defined costs?

Answer 414

They are used to calculate compensations events. They are the actual costs incurred by the Contractor on the Works minus retention and any costs which would fall within the overheads covered in the Fee.

Question 415

What are the categories of defined cost?

Answer 415

People: Those directly employed or paid by the contractor to carry out the works.
Equipment: Items provided by the contractor and used to provide the works.
Plant and materials: Items intended to be used and included in the works.
Charges: Cancellation charges arising from a compensation event, payment to public authorities, specialist services, and so on.
Manufacture and design: Only apply if they are outside the working areas and wholly or partly designed specifically for the works.
Design: Costs for the works and equipment only.
Insurance: Does not actually facilitate cost recovery for the contractor. Costs that would otherwise be recoverable that have been paid by the insurer to the contractor are set off against the recoverable cost.

Question 416

How would you choose between the NEC options?

Answer 416

The differences are how the contractor gets paid, and the allocation of risk.

Question 417

How is design and build reflected in the NEC suite of contracts?

Answer 417

A Client can include the requirement for the Contractor to be doing elements or all of the design by including such requirements within the Scope. This avoids the need for a separate “design and build” option within the NEC family of contracts. Excludes Design, Build, Operate (DBO).

Question 418

How would you sub-contract NEC ECC?

Answer 418

Subcontract (ECS) - Similar to/complex as ECC, head contract passes down most of the terms from contractor to subcontractor.

Short-contract (ECSC) - For client-contractor. Abbreviated ECC, less administration. For low risk work.

Short-subcontract (ECSS) - Contractor-subcontractor, low risk work. Mainly for under ECSC.

Question 419

What type of contracts would professional’s use under NEC?

Answer 419

Professional Services Contract (PSC) - Service, not physical construction works. Most of the clauses within this contract are the same as that in the main ECC contract, so that all Contractors, Designers and Subcontractors have pretty much the same obligations and processes to follow as each other.

Framework Contract (FC) - Work packages will then be let during the life of that framework. Parties follow the headline clauses within the framework contract (which is a fairly slim contract) and then the individual clauses within the chosen contract for that package. Different work packages can be let using different contracts during the life of the framework.

Term Service Contract (TSC) - Project that is operational or maintenance based - usually minimal construction works/betterment.

Question 420

What are the X Clauses under NEC?

Answer 420

Optional clauses that develop the T&Cs of the contract - examples include Sectional completion / delay damages

Question 421

What are the Y Clauses under NEC?

Answer 421

3rd party rights

Question 422

What are the Z Clauses under NEC?

Answer 422

Bespoke amendments

Question 423

What are defined vs undefined provisional sums under JCT?

Answer 423

Undefined PS is where the extent of works is unknown, e.g. as further information is required such as ground conditions. With undefined provisional sums, the client typically bears the price and scheduling risks.

Defined provisional sums are those which have been described in sufficient detail - the contractor is expected to have made allowance for them in their programming, planning and pricing preliminaries.

Question 424

When would you use Bill of Quantities?

Answer 424

It is about where risk sits and when and how the contractor gets paid.

Option B or Option D - A QS prepares a BoQ, which is a more fair and accurate way of pricing for tendering contractor as they are working off the same scheme.

Additionally, the works are re-measured, so the Contractor gets paid for the amount they do (as has to be 100%) so works can be broken down/itemised to assist, and given the Employer produces the BofQ any errors/omissions in the B of Q will be a compensation event.

Question 425

What is Price for Work Done to Date?

Answer 425

Core Clause 50.2 of NEC3 and 50.3 of NEC4, the amount due to the Contractor is the total of: Price for Work Done to Date; plus other amounts to be paid to the Contractor (such as compensation events); less any amounts to be paid or retained from the Contractor.

Question 426

What are the insurance options under JCT?

Answer 426

*Option A, which is where the Contractor takes out and maintains joint names all risks insurance of the works

*Option B, which is where the Employer takes out and maintains the joint names all risks insurance of the works

*Option C, which is the only option referring to renovations and involving existing structures.

Question 427

What are the W clauses under NEC?

Answer 427

Disputes

Question 428

What are the Payment Terms under NEC?

Answer 428

1. Pre-defined assessment date
2. Due date is 7 days after assessment date
3. Final payment date for main contract is 14 days after due date

Question 429

What considerations must you give when reviewing a CE if outside the 8 week timescales?

Answer 429

If the project manager should have given notification.
If an EWN was raised which eliminates the 8 week limit.
How to prove that the contractor was aware of the CE if outside of the 8 week timescale.

Question 430

What would have been considered adverse weather in NEC?

Answer 430

When number of days where temperature stays below 0 deg C exceeds the one-in-10-year average

Question 431

What are the types of float in NEC?

Answer 431

Project float (total float)
Time-risk allowance (free float)
Period between planned completion and the completion date (terminal float)

Question 432

How would you know if it exceeded the one in ten year average?

Answer 432

Down-time report from the Met office

Question 433

How would you know if the contractor could claim for a relevant event for weather disruption?

Answer 433

Long term averages in the contract

Question 434

How would you select an NEC contract?

Answer 434

Depending on the employer’s preference for risk and reward. Options A and B are higher contractor risk, Option E and F are higher employer risk, and C and D are in between and more equally shared

Question 435

What is the difference between works information and scope?

Answer 435

Works information is NEC 3, Scope is NEC 4.

Question 436

What is the difference between scope and activity schedule in NEC?

Answer 436

The scope is prepared by the client, the activity schedule is prepared by the contractor.

Question 437

What is the difference between the schedule of works and the activity schedule?

Answer 437

The contractor prepares the activity schedule in NEC, the client/designer prepares the schedule of works in JCT, usually a building surveyor.

Question 438

What measurement considerations would you make when preparing a bill of quantities?

Answer 438

I would refer to the new rules of measurement - NRM2. Refers to
- number
- length
- volume
- weight
- time

Question 439

Does design and build allow for any kind of financial benefits?

Answer 439

It permits the designer and contractor to innovate.

Question 440

What are preliminaries?

Answer 440

Describes the works as a whole, and to specify general conditions and requirements for their execution, including such things as subcontracting, approvals, testing and completion. The PCI will be included in this bundle of information.

Question 441

What are preambles?

Answer 441

An explanation of a document to help with its interpretation - usually a contract, specification or BoQ. May include a description of the parties, their competence, any existing negotiations or tendering requirements.

It should not repeat rights or obligations included elsewhere in the document.

Question 442

How long is the defects/rectification period?

Answer 442

There is no strict requirement, often contracts may auto-populate 6 months but on larger projects it is generally accepted it will be 52 weeks to ensure all the seasons are cycled for impact.

Question 443

What happens if the client fails to pay the contractor under NEC?

Answer 443

Dealt with through the payment provisions set out in the contract.

The contractor may issue a notice of non-payment to the client, which triggers the dispute resolution process under the contract.

If a payment is not made in accordance with the payment provisions, the contractor is entitled to receive interest on the amount outstanding. The interest rate is set out in the contract and is calculated from the date the payment became due until the date it is paid

Question 444

What can the contractor do if they are not paid?

Answer 444

Suspend works (and insurances) under Housing Grants and Construction Regeneration Act 1996

Question 445

What are the grounds for termination by the client under NEC

Answer 445

Clause 80.1
The contractor fails to remedy a serious breach of the contract within a specified period of time after receiving a notice from the employer; or
The contractor becomes insolvent or goes into liquidation.

Question 446

What are the grounds for termination by the contractor under NEC?

Answer 446

Clause 81.1
The employer fails to pay an amount due to the contractor within a specified period of time after receiving a notice of non-payment; or
The employer fails to provide access to the site or to give possession of the site or works to the contractor within a specified period of time after the date stated in the contract.

Question 447

Can you name some X clauses from NEC?

Answer 447

Price adjustment for inflation
Sectional completion
Delay damages
Retention

Question 448

Can you name some Y clauses from NEC?

Answer 448

UK specific, refers to 3rd party rights

Question 449

Can you name some Z clauses from NEC?

Answer 449

Z clauses are completely customisable prior to contractual agreement.

Question 450

What are the clause types in NEC?

Answer 450

• Core clauses
• Main Option Clauses (A-F)
• Secondary Option Clauses

Question 451

Can a contractor get a bonus for early completion?

Answer 451

If stipulted so in X6

Question 452

What is the contractor liable for under NEC ECC

Answer 452

81.1
Claims from third parties
Loss or damage to works, plant, materials and equipment
Loss or damage to client property
Death or injury of employees

Question 453

What are the clients liabilities under NEC ECC?

Answer 453

80.1
Activities on site of the contractor after takeover
Loss of or damage to the works, plant and materials due to; war, strikes and civil commotion

Question 454

If the client wanted to know what insurance deductibles the contractor had, when would they be required to request this information?

Answer 454

Tender stage

Question 455

When is the contractor required to insure their liabilities from?

Answer 455

It is required to be in place from the starting date until the defects certificate is issued. This means the contractor must have a policy in place beyond the date of completion.

Question 456

What insurance is the contractor required to have past the issuing of the defects certificate?

Answer 456

Professional indemnity insurance

Question 457

What are the project manager’s responsibilities when it comes to insurance?

Answer 457

To review the contractor’s insurance certificates and decide to accept or reject them - the project manager is required to ascertain if the insurance complies with the contract and assess the commercial position of the insurer.

Question 458

How would you check if insurance documentation is suitable?

Answer 458

• Name of the contractor is stated in the certificate
• The certificate is current and that the amount of cover is equal to or greater than that specified in the contract data.

Beyond this project managers should seek competent advice – the client’s insurance broker

Question 459

How is design liability approached in NEC?

Answer 459

The contractor is not required to have insurance for design negligence claims.

If secondary option X15 regarding reasonable skill and care is not referred to, the client should increase their professional indemnity insurance requirements in the contract data (part 1).

Question 460

What is subgroation and why might it be waived?

Answer 460

A right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. It is generally waived on joint-names insurances to stop the parties from persuing eachother for payouts they recieve.

Question 461

What are the benefits of using NEC?

Answer 461

• Flexible, pushes good management
• Simple, methodical
• Avoids subjective writing for ambiguity
• Proactive

Question 462

What are the negatives to using NEC?

Answer 462

• Admin heavy; PMs charge more
• Time intensive
• Personal resistance
• Spirit of mutual trust not always respected

Question 463

What is the government construction strategy?

Answer 463

• Recommended use of NEC for public sector works

Question 464

What are the benefits of JCT?

Question 465

What are the negatives of using JCT?

Question 466

What are disallowed costs?

Answer 466

Costs that cannot be recovered by the contractor as a ‘defined cost’.

Question 467

What are the advantages of using an activity schedule?

Answer 467

Option A - It is the contractor’s responsibility to fill out the Activity Schedule, taking dims/quants off the drawings themselves. If the client provides an indicative schedule, must caveat that the contractor can add their own detail. Cost may be higher as a result.

Question 468

What are the disadvatages of using an activity schedule?

Answer 468

• Cost may be higher as a result as contractor takes more risk for design
• Under Option A there is no automatic right for contractors to claim the value of unfixed materials on site whether or not they are delivered in a timely manner; increases cost
• Provisional sums are not allowed for and thereofre must be described in as much detail as possible

Question 469

What are the advantages of using a BoQ?

Answer 469

More accurate and fair way of tendering
Tender comparison is apples to apples
Contractor is taking onboard less risk so costs may be reduced compared to AS

Question 470

What are the disadvantages of using a BoQ?

Answer 470

Requires a complete design
Client errors in measuring will be compensated through a CE

Question 471

What were the main changes between NEC3 and NEC4

Answer 471

• New contracts, such as DBO and Facilites Management
• Dispute avoidance clarity, including new option W3
• Scope (was Works Information)
• Client (was Employer)
• Early Warning Register (was Risk Register)
• Inclusive language

Question 472

What are the key differences between NEC and JCT?

Answer 472

• Terminology (CoW v Supervisor, CA vs PM)
• Programme
• Change control (RM/RE vs CE)

Question 473

What is included within the works information /scope?

Answer 473

Technical information, specifications and drawings.

Constraints for how the contractor provides the works, such as safety requirements.

Work to be designed by the contractor.

Question 474

What would you expect to find in an NEC tender?

Answer 474

• Works Information
• Site Information

If it is AS - the client may provide an indicative schedule that the contractor then will add to and take responsibility for.

If it is a BoQ - the client will provide the BoQ for the contractor to fill in and return

Question 475

What would you expect to find in a JCT tender?

Answer 475

• Preambles
• Preliminaries
• SoW / Drawings

Question 476

Where would you have an Employer’s Agent?

Answer 476

To act as contract administrator in a design and build contract (JCT) - they are the ‘client’ for all matters

Question 477

What are the responsibilities of the employers agent?

Answer 477

In addition to their role as contract administrator

• Co-ordinating the tender process
• Co-ordinating the novation of consultants
• Collating contract documents for execution
• Implementing change control procedures

Question 478

What are the advantages of Employer’s Requirements?

Answer 478

The more detailed, the fairer the tender and likely the more cost certain

Question 479

Can you give an example of time-risk allowance?

Answer 479

Allowing extra time to pour concrete in winter.

Question 480

Who is responsible for the design under JCT (MW or I)

Answer 480

Client - usually supplied by a design team in the form of drawings, specifications and then either a schedule of work or bill of quants.

Question 481

What should the client consider when naming a specific supplier?

Answer 481

The supply contract is with the main contractor, not with the client, the client should ensure that they have a direct warranty with the nominated supplier to guarantee performance and indemnify the client if any default allows a claim for loss and expense or extension of time by the main contractor.

Question 482

What is the difference between a management contractor and a construction project manager?

Answer 482

The management contractor is acting as a principal whereas the construction manager is acting as an agent.

Management contractors contract works contractors direct, whereas construction managers only manage trade contracts, the contracts themselves are placed by the client.

Question 483

What are the advantages and disadvantages of a management contract?

Answer 483

Adv - the client only has one contract to administer.
Adv - appointed early to assist with cost/buildability and packaging of works.

Disadv - the client will require warranties against each contractor incase the management contractor becomes insolvent.
Disadv - if operating on cost plus fee, the management contractor will struggle to prove loss of non performance for the works contractors as the loss is usually passed onto/experienced by the client. Warranties required to combat this.

Question 484

Should other professional services be appointed separately, eg PM, CM?

Answer 484

Judgement has to be made on the competence and experience of the management contractor’s proposed project team - if a client has already engaged a CM/PM at concept stage they may be retained for confidence.

Question 485

How does a term service contract work?

Answer 485

The contract is
PPM - monthly rates
Reactive maintenance - item rates

This^ information may change acutely e.g. short term increase or same service in a new area - compensation event under 60.1 (1) changes to prices

Where something extra is required, it will be a task order which is a mini project with its own programme under optional clause X19 - items not covered in the price list above are assessed as a new compensation event (the forecast defined cost plus the tendered fee percentages). Delay damages are applicable here but not above.

Question 486

How are the task orders different in NEC3 and NEC4?

Answer 486

They are a core clause under NEC4 based on experience of NEC3. The contractor must submit a quotation for the proposed work and have this accepted. It is no longer just after consultation with the contractor but after agreement of a quotation. A decision that a quotation is not accepted or a ‘Task’ order will not be instructed is a compensation event. This highlights the intention that the ‘Task’ order process is intended for significant pieces of work, to be developed and priced co-operatively.

Question 487

When would a task order not be appropriate?

Answer 487

The TSC, and therefore ‘Tasks’, have
- no compensation events for physical conditions or weather
- no provisions for design of permanent works
- no provisions for contractor design of plant and materials to be installed at the affected property

So are not suitable for major or complex works

Question 488

How might a TSC become a management contract?

Answer 488

Through modification of the Z clauses, to allow tasks to acommodate significant standalone work.

Question 489

Are there any disadvantages to a TSC?

Answer 489

• Bureaucracy
• Lengthy administration procedures
• Consideration for what is a task order and what is reactive maintenance, not always well managed.

Question 490

When is a contractor entitled to interim payments?

Answer 490

Under Construction Act, if the contract period is in excess of 45 days

Question 491

Referring to the 9th floor refurbishment, How did you ensure that the take over by the Client of the office refurbishment under NEC ECC Option A was compliant with the contract provisions?

Answer 491

I referred to the Takeover clause, CE clauses and NEC handbook

Question 492

How did you advise the Client and Contractor to proceed when the brand colours for a business changed during the construction period of the refurbishment under JCT Intermediate Building Contract?

Answer 492

I instructed the omission and addition through a relevant event. This was instructed via email and brought up in the following progress meeting.

Question 493

In Halifax Fence, can you explain how you determined that the Contractor was not entitled to a compensation event for the sub-zero temperatures affecting the fencing works being delivered under NEC ECC Option A?

Answer 493

The CE refers to a less than 1-in-10-year event. The temps recorded were not out the ordinary.

Question 494

In 54 Princess Street, how did you arrive at the percentage completion for the tea-point works during the interim payment valuation inspection under JCT Minor Works Building Contract with contractor’s design, and what was the justification for the decrease in percentage?

Answer 494

I referred to the description of the works in the activity schedule.
I referred to the programme of install and progress against this
I looked at the benefit to the client, what materials were on site

Question 495

How did you determine that clause 35.2 was applicable in 9th floor refurbishment, and how did you ensure that the Client’s taking over of the works did not affect the overall completion of the project?

Question 496

Can you explain the differences between NEC and JCT contracts, and when it would be appropriate to use each one?

Question 497

In Halifax Fence, how did you balance the Contractor’s responsibility to anticipate inclement weather with their inability to pour the foundations in sub-zero temperatures?

Question 498

What criteria did you use to determine the percentage of completion in 54 Princess Street, and how did you communicate this to the Contractor?

Question 499

Can you discuss a time when you had to mediate a dispute between the Contractor and the Client regarding contractual obligations? How did you ensure impartiality in your decision-making process?

Question 500

What steps would you take to ensure that all parties involved in a construction project are aware of their contractual obligations and responsibilities before work commences?

Question 501

How did you ensure that the Contractor adjusted their valuation accordingly to the Client’s satisfaction when instructing the omission of existing wall decoration and addition of decoration with the revised wall colour under JCT Intermediate Building Contract?

Answer 501

• BCIS?

Question 502

How did you determine that the Contractor would not be entitled to a compensation event for sub-zero temperatures affecting the progression of the fence installation under NEC ECC Option A?

Question 503

Can you explain how you justified the decrease in the percentage of works completed for the tea-point under JCT Minor Works Building Contract with contractor’s design, and what steps you took to communicate this to the Contractor?

Question 504

Have you ever encountered a situation where the selection of the wrong contract has led to problems during construction? If so, how did you resolve the issue, and what did you learn from the experience?

Question 505

In what ways can you ensure impartiality when executing contract provisions, and why is it important in contract administration?

Question 506

How do preambles and preliminaries facilitate contract execution, and what are some common clauses that are included in these sections of a contract?

Question 507

Can you discuss a situation where you had to select a contract appropriate for the proposed works required, and what factors did you consider in making your decision?

Question 508

What are some common mechanisms and responsibilities associated with different forms of contracts, and how can you ensure that these mechanisms are executed accurately and timely?

Question 509

How do you balance the interests of the Client and the Contractor when executing contract provisions, and what strategies do you employ to ensure that both parties are satisfied with the outcome?

Question 510

How do you ensure that you execute contract provisions timely, accurately, and ethically while being impartial, and how does this assist in contract delivery?

Question 511

In 8 Fulwood Park, how did you justify the decrease in percentage for the tea-point works completed, and what specific terms of the contract did you reference to support your decision?

Question 512

Is there any case law behind frustration?

Answer 512

Davis Contractors vs Fareham UDC

• Frustrating event is not caused by the default of either party
• The contract has become something entirely different and is now impossible to fulfil.
• There is no provision in the contract that covers the frustrating event

Question 513

What happens if the employer actually suffered no loss in relation to liquidated damages?

Answer 513

It doesn’t matter, they can still be deducted at the agreed value

Question 514

If there is a discrepancy between the employers requirements and contractor’s proposals which will prevail?

Answer 514

the contractor’s proposals

Question 515

What are the advantages of using a standard contract over a bespoke contract?

Answer 515

• Written by legal experts
• Risk allocated to parties equally and to those best placed to receive them.
• Rights and obligations set out in the required level of detail

Question 516

When would you use a bespoke contract?

Answer 516

• Novel obligations
• When specialist advisors can undertake the amendments

Question 517

What is retention of title?

Answer 517

When the sub-contractor retains the ownership of materials until they are paid for by the contractor - issues can be avoided through vesting certificates

Question 518

Who might want a collateral warranty?

Answer 518

Any party with financial interests in the project but not party to the main contract.

Question 519

What is fitness for purpose?

Answer 519

The provision of a service that is suitable for the employer’s intended purpose.

Question 520

What is the main difference between practical completion and completion in NEC/JCT?

Answer 520

PC is not defined in JCT and is on the CA’s opinion. In NEC, completion ins defined as ‘when all works have been completed in accordance with the works information and are free from any defects which would prevent the employer from using the works and others from doing their work’

Question 521

Does Takeover also require a PC certificate?

Answer 521

No - just a Takeover cert

Question 522

Can Practical Completion certificate be conditional under JCT?

Answer 522

No

Question 523

Can certifying completion be conditional under NEC?

Answer 523

• Rectifying defects?

Question 524

What is the difference between planned completion and completion date?

Answer 524

Planned completion imitates reality, completion date denotes liability

Question 525

What would the effect on the completion be if you accelerated working and the contractor knew that that might be a possibility?

Answer 525

No change to completion date only planned completion, and the contractor regains some terminal float.

Question 526

Does the contractor have to accelerate programme?

Answer 526

No, they only have a duty to mitigate delay.

Question 527

Are you competent to prepare/assess a valuation?

Answer 527

Yes, the duty falls to the CA but they may delegate to the cost consultant on larger jobs/where one has been employed to undertake those responsibilities

Question 528

What is the point of interim payments?

Answer 528

Eases contractor cash flow, which facilitates programme being adhered to

Question 529

What period of time does the interim valuation cover?

Answer 529

It is all works to date, and then previous payments are subtracted

Question 530

What are the three types of payment notice?

Answer 530

• Payment Notice
• Payless Notice
• Default Payment Notice

Question 531

What should the payment notice contain?

Answer 531

• State the Sum Due
• Provide the Basis for Calculation of the Sum Due
• Date, Addresses, refer to works

Question 532

What is the difference between a payment notice and a payment certificate?

Answer 532

payment notice is an initial notice requesting payment by whoever took the valuation, while a payment certificate is a final certification that the payment amount is correct and should be paid and is issued by the CA

Question 533

What are the different types of certificate?

Answer 533

• Payment certificate
• Progress certificate (EoT, MGD)

Question 534

In your JCT contract, what insurance optios did you proceed with and why?

Answer 534

Option 3 - This is where the Employer takes our and maintains a joint name all risks insurance of the works and the policy also insures the existing structure and contents against ‘specified perils’.

Question 535

If you were having work done on your house, what building contract might you use?

Answer 535

RIBA domestic building contract

Question 536

What happens at project handover?

Answer 536

• Contractor releqased from delay damages liability
• Half of the retention is released back to the contractor
• The defect liability period commences

Question 537

What are the types of NEC contract?

Answer 537

• Option A : Priced with AS
• Option B: Priced with BoQ
• Option C: Target with AS
• Option D: Target with BoQ
• Option E: Cost reimbursable
• Option F: Management contract

Question 538

How long does the contractor have to accept the programme under Nec 4

Answer 538

2 weeks

Question 539

How long does the PM have to accept the programme under NEC3

Answer 539

Not a core clause - the last accepted programme is the programme. Not deemed accepted. Raises questions as to why though if there was improper communication.

Question 540

Who accepts the programme?

Answer 540

The project manager

Question 541

What is included in a collateral warrenty?

Answer 541

Similar to a contract:

• The obligation to use reasonable skill and care in the performance of services being performed in the underlying contract.
• ‘Equivalent rights of defence’ wording (which gives the granter the protection of any limitations built into their appointment carrying through to the collateral warranty).
• A grant of an unconditional copyright licence.
• Clear limitation period.
• Step-in clauses.
• Obligation to maintain professional indemnity (PI) insurance.

Question 542

In NEC takeover, does that mean there will be multiple defects dates?

Answer 542

The Defects Date is determined based on the contract provisions and is applicable to the project as a whole rather than specific areas.

During a takeover, the responsibility for the works or a section of the works is transferred from the contractor to the employer or a nominated subcontractor.

After a takeover, any defects that arise in the works, regardless of the area, would be subject to the same Defects Date and the contractor’s obligations to rectify them within the specified timeframe.

Question 543

At JCT partial possession, what happens?

Answer 543

• Notice of Intention to Take Partial Possession: The employer typically issues a formal written notice to the contractor, indicating their intention to take partial possession of a specific area or section of the works. This notice should specify the intended date of partial possession and the specific area to be taken over.
• Site Inspection and Verification: A joint site inspection may be conducted by the employer, contractor, and potentially the architect or contract administrator. This inspection verifies that the specific area or section of the works is complete to the agreed-upon standards and is ready for partial possession.
• Partial Possession Certificate: Upon satisfactory inspection and verification, a Partial Possession Certificate is usually issued. This certificate serves as formal documentation confirming the transfer of possession from the contractor to the employer for the specified area. It may include details such as the date of partial possession, the specific area taken over, and any specific conditions or requirements associated with the partial possession.
• Handover Documentation: The contractor may be required to provide relevant handover documentation for the area taken over. This could include as-built drawings, operation and maintenance manuals, warranties, and any other pertinent information related to the works within the partial possession area.
• Variation or Interim Valuation: Depending on the specific contract provisions, the certification of partial possession may trigger changes in the valuation of the works. This could involve adjusting the contract sum or issuing a variation order to account for the partial possession and any resulting changes in the contractor’s obligations and entitlements.

Question 544

What rights/responsibilities are transferred at partial possession?

Answer 544

Responsibility for the area taken over: Once partial possession is granted, the employer becomes responsible for the area taken over, including its maintenance, security, and any risks associated with that specific section of the works.

Health and Safety: The employer assumes responsibility for ensuring health and safety within the area taken over. They must maintain a safe working environment and comply with relevant health and safety regulations and requirements for that specific portion of the project.

Insurance: The employer typically assumes the responsibility for insuring the area taken over. This includes arranging appropriate insurance coverage to protect the works, materials, and personnel within the specific section of the project.

Defects and Completion: The employer becomes responsible for any defects that arise within the area taken over after partial possession. The contractor’s obligation to rectify defects within the taken-over area is generally reduced or removed, and the employer assumes responsibility for addressing any defects or completion works required within that specific section.

Liabilities and Risks: Once partial possession is granted, the employer generally becomes liable for any damage, loss, or risks associated with the area taken over. The contractor’s liability for those specific sections of the works is typically reduced, and the employer assumes responsibility for any risks, such as damage or loss of the works or materials within the taken-over area.

Question 545

How do you typically assess percentage completion?

Answer 545

Review the Contract Documents: Familiarize yourself with the specific terms and conditions outlined in the JCT contract, including the payment provisions and procedures for measuring progress. Pay attention to any specific guidance or definitions related to assessing the percentage of completion.

Identify Measurable Units: Determine the measurable units or milestones specified in the contract for the particular item in question. These units could be based on quantities, stages of work, or other criteria defined in the contract. For example, if the item is a building component, the measurable units could be the number of installed units or the completion of specific stages of installation.

Establish a Baseline: Determine the baseline for the item in question, which is typically defined at the start of the project or at a specific milestone. The baseline represents the initial agreed-upon percentage of completion for the item.

Measure Actual Progress: Regularly monitor and measure the actual progress of the item. This can involve on-site inspections, tracking work completed, reviewing documentation, and consulting with relevant parties involved in the project.

Document and Record Progress: Maintain detailed records and documentation of the work completed for the item. This can include progress reports, site diaries, photographs, and any other relevant evidence to support the assessment of completion.

Calculate Percentage of Completion: Apply the agreed-upon method specified in the contract to calculate the percentage of completion. This could involve comparing the actual progress against the baseline and determining the ratio or percentage achieved.

Interim Payment Application: Prepare an interim payment application, indicating the assessed percentage of completion for the item. Provide supporting documentation and evidence to justify the assessment and align with the requirements outlined in the contract.

Question 546

What could you do to avoid disputes surrounding percentage completion?

Answer 546

Use a BoQ

Question 547

What is float?

Answer 547

Affordable delay in a task chain that does not affect the sequencing of task chain

Question 548

Who owns float?

Answer 548

Terminal and time-risk = contractor
Total = shared

Question 549

What is a takeover certificate?

Answer 549

It certified that the works are complete in the area described and the client takes over responsibility for htat space

Question 550

What are the limitations of a shortform contract

Question 551

What is compensation event 15?

Question 552

What are the clients liabilities at Takeover?

Answer 552

Loss of or damage to the parts of the works taken over by the Client, except
- A defect which existed at take over
- An event occurring before take over which was not itself a Client’s liability or
– the activities of the Contractor on the Site after take over.

Question 553

Can you name some optional caluses under NEC?

Answer 553

• Retention
• Delay damages

Question 554

What type of clause is retention?

Answer 554

X clause - optional

Question 555

Can you name some core clauses under NEC?

Question 556

What period of time can takeover be?

Answer 556

Before completion and completion date.

Must be certified within one week of the date.

Question 557

In your case study, did the contractor recover costs as a result of the takeover?

Answer 557

Yes, as they had to work around the occupancy and thus the trades were required to come back over a longer period of time.

Question 558

In your case study, was the completion date changed as a result of the takeover?

Answer 558

Yes, the contractor submitted an amended programme which I accepted

Question 559

Under NEC Takeover, how are delay damages assessed?

Answer 559

They are assessed with regards to the benefit to the employer. So in my case study, as the client was able to occupy the space, the delay damages were reduced to nothing as they had possession of the works and the contractors outstanding works did not impact them.

Question 560

How does JCT approach reducing delay damages as a result of partial possession?

Answer 560

It is reduced proportionally e.g % works complete. Contract has to include a provision to reflect though.

Question 561

What is the dividing date?

Answer 561

Used in NEC 4- The dividing date is the switch point between using actual Defined Cost and forecast Defined Cost of a compensation event.

It states that if the CE has arisen from a Project Manager instruction, the date of that instruction is the “dividing date” (i.e. the CE will only ever be assessed as a forecast as the Contractor should not have done any work prior to the instruction). For any other compensation events not arising form a PM instruction, it states the dividing date is the date of the notification from the Contractor that it is a compensation event.

Question 562

What information must the accepted programme contain?

Answer 562

The starting date, access dates, Key Dates and Completion Date;
Planned Completion;
The order and timing of the operations which the Contractor plans to do in order to Provide the Works;
The dates when the Contractor plans to meet each Condition stated for the Key Dates and to complete other work needed to allow the Client and Others to do their work;
Provision for float, time risk allowances, health and safety requirements, and the procedures set out in the Contract;
Other information which the Scope requires.

Question 563

What are defined costs and disallowed costs?

Answer 563

These are used in NEC ECC options C,D,E,F

Question 564

Under NEC how long does the PM have to accept the programme?

Answer 564

2 weeks

Question 565

How often should a programme be revised under NEC?

Answer 565

In accorance with the minimum submission intervals in accordance with the contract.

The PM can also instruct the CContractor to provide a new programme at any time

Question 566

How long does the contractor have o notify the CA of a delay?

Question 567

How long does the CA/employer have to accept a delay and allow a EOT?

Answer 567

12 weeks (reasonabl time) or before the end of the contract if it is less than 12 weeks.

Question 568

What impact does the critical path have on extension of time?

Question 569

What is ‘Time is of the essence’.

Answer 569

Where the party will suffer damages as a result of non-completion of an activity by a certain date. Either express or implied (via emails). Allows the party to both terminate the contract, and claim damages.

Time is not generally assumed to be of the essence in construction contracts, as there are mechanisms already in place to mitigate e.g. delay damages

Question 570

Example of relevant matters?

Answer 570

• Failure to give C possession
• Delay in instruction
• Discrepancies in contract docs
• Variations
• CDM issues
• Client failing to supply goods

Question 571

Example of relevant events?

Answer 571

• Variations
• Exceptionally adverse weather
• Force Majeure
• Delay on the part of a nominated sub-contractor
• Changes to statutory requirements
• Loss from a specified peril

Question 572

How many compensation events are there and name some examples?

Answer 572

There are 19.
- Change to works information
- C can’t get access to the site
- PM does not respond to communication within the required timeframe
- Supervisor inspection causes unneccesary delay
- Adverse weather conditions
- Takeover

Question 573

What is the retention free amount?

Answer 573

Assist with cashflow, that retention is not applied under payments meet a threshold.

Question 574

What is the purpose of the accepted programme?

Answer 574

• Transparency for parties knowing what theyre doing and when
• As a basis for the calculation for compensaion events

Question 575

What do you know about the public contract regulations 2015?

Answer 575

Public procurement should be based on value for money

Encourages free and open competition

Amended following Brexit

Threshold for works contracts is £5.3m

Question 576

In your CPD you prepared a blog article discussing the effects of covid on construction contratcs - whats your understanding?

Answer 576

• Force majeure cannot be implemented irrespective of what has been agreed by the parties: the clause must exist
• The contractor can only have an EoT if they would have been able to complete their obligations anyway
• It must be impossible to fulfil their obligations
• If theres an extension mechanism to prevent time at large
• If the employer refuses, frustration may still protect the contractor

Question 577

How do JCT and NEC each deal with trust?

Answer 577

NEC - not optional: Spirit of mutual trust and cooperation
JCT - optional: Good faith and trust. Box ticking as contradicted elsewhere, e.g. ‘notice of termination should not be given vexatiously’

Question 578

If delay damages are paid but then the completion date is extended, what happens to those monies?

Answer 578

Client returns overpayment of damages with interest.

Question 579

What would you do if a contractor went into administration?

Answer 579

RICS GN Termination of Contract
- Secure the site and materials
- Call on any bonds, collateral warranties or third party rights
- Liaise with the administrators
- Prepare a notional final account
- Prepare an outstanding schedule of works and prepare to relet the works

Question 580

When would you use a shortform contract?

Answer 580

Short-contract (ECSC) - For client-contractor. Abbreviated ECC, less administration. For low risk work.

Short-subcontract (ECSS) - Contractor-subcontractor, low risk work. Mainly for under ECSC.

Question 581

When would you refer to the defining completion guidance note ?

Answer 581

certifying completion of works
certifying payment after completion of works
analysing delay
advising on the deduction of delay damages
advising on insurance provisions
advising clients of their occupancy options if works are delayed
advising main contractors, or specialist contractors on issues, such as release of retention, rectification of defects etc.
advising purchasers, tenants, bondsmen and other third parties of their rights and obligations
resolving or adjudicating disputes related to any of the above activities
drafting or reviewing contract documents.

Question 582

How is a cost reimbursable contract priced?

Answer 582

Lump sum for profits
Pro-rata for rates
Good for emergency or un-defined work