15. Contract Administration Flashcards
What is the role of a contract administrator?
The role of a contract administrator is generally to oversee the entire project, analyse, prevent or mitigate errors, risks or disputes. Some of the roles include:
- Ensuring the works are carried out and progressing in accordance with the contract terms
- Managing the timescales and milestones of the project
- Managing the costs of the project
- Liaising with and instructing the main contractor of the project
- Ascertaining variations
- Issuing the relevant certificates (payment, non-completion, practical)
- Record keeping such as site visits, site inspections, correspondences, invoices etc.
- Inspecting and managing the defects and ensuring these are remedied in the stipulated timeframe.
What are the different forms of contract?
I have used the JCT suite of contracts including:
1) JCT Minor Works Building Contract 2016
2) JCT Intermediate Building Contract 2016
There are also other forms of contract within the JCT suite of contracts including:
1) Standard Building Contract 2016
2) JCT Design and Build Contract 2016
3) Pre-Construction Services Agreement
Explain the JCT Minor Works Building Contract
The JCT Minor Works Building Contract is designed for smaller, basic construction projects where the work is relatively straightforward.
- The work is designed by or on behalf of the client
- The client provides drawings and a specification
- The architect or contract administrator is to administer the conditions.
Minor Works can be with or without contractor design portions.
Explain the JCT Intermediate Building Contract
The JCT Intermediate Building Contract is designed for building works that are simple context involving normal, recognised basic trades and skills of the industry, without building service installations of a complex nature or other complex specialist work.
- The work is designed by or on behalf of the client
- The client provides drawings and a specification
- The architect or contract administrator is to administer the conditions.
Intermediate Building Contracts can be with or without contractor design portions.
Explain the JCT Standard Building Contract
The JCT Standard Building Contract is designed for larger works, or works of a complex nature that involve a high degree of building services or specialist works.
- The work is designed by or on behalf of the client.
- The client provides a specification and drawings.
- An architect or contract administrator administers the conditions.
Explain the difference between Minor Works and Intermediate Building Contracts
Intermediate Building Contract offers the client more protection through detailed provisions.
1) Intermediate has the option for sectional completion. Minor works does not.
2) Intermediate has the option for named subcontractors. Minor works does not.
3) Intermediate has collateral warranties. Minor works does not.
4) Intermediate has the option for advanced payments. Minor works does not.
5) Minor works has a restricted extension of time provision.
6) Minor works has a restricted loss and expense provision.
What is an interim payment certificate?
These provide a mechanism for the client to make payments to the contractor during the construction process, before the works are complete.
What is a non-completion certificate?
This is a notice issued by the contract administrator for failing to complete the relevant sections by the contractual date.
What is a practical completion certificate?
The point in the process when the construction work is certified as practically complete.
What happens at practical completion?
- Rectification period commences
- Retention is reduced to 2.5%
- Liquidated damages can no longer be claimed
- Client will take occupation of the site
- Client is responsible for insuring the site
- Final account procedure is triggered
- Contract administrator has 12-weeks after practical completion to issue an extension of time
What is a letter of intent?
This is used in the interim until a formal contract is in place.
It is often used to allow enabling works to be mobilised if there isn’t time for the formal contract.
It is based on the terms of the contract you intend to use and preliminaries.
Time and financial cap to the letter of intent.
What is procurement?
Procurement is the process of acquiring the necessary goods and services to successfully accomplish a construction project.
What are the three main procurement routes?
1) Traditional
2) Design and Build
3) Management
How do you pick a procurement route?
This is very much dependent on several factors. Including:
1) When design certainty is achieved
2) When cost certainty is achieved
3) Input on quality
4) Programme and speed
5) Design input by the client
Explain the traditional procurement route
Traditional design is separate to the construction process.
Full design documentation is required before the contractor is invited to tender or carry out the works.
A lump sum tender requires a fully detailed design prior to tender.
All client decisions must be made prior to award of any contract. Although provisional sums can be used.
Explain the advantages and disadvantages of traditional procurement
Advantages
- All tenders are based off using the same information
- More certainty on cost before works commence
- More programme certainty
- Easy change control process when onsite
Disadvantages
- Requires a fully designed tender pack
- May need to include CDP items or provisional sums
- Will incur additional costs if changes are made onsite
Explain the design and build procurement route
Contractor is responsible for undertaking both the design and construction work in return for a lump sum price.
Tender documents outlining the employers requirements are prepared by the consultants employed by the client.
The contractor is responsible for delivering to time, cost and stated quality. They have little flexibility for making changes which can both be costly and have programme implications.
Once the parameters have been set, there is little opportunity to make material changes.
Explain the advantages and disadvantages of design and build procurement
Advantages
- Cost certainty is established unless the client makes changes
- Programme certainty
- Responsibility of the design stays with the contractor
Disadvantages
- Client has less involvement in design
- Employers requirements often need to be detailed
- May require a longer tender period
- Variations can be expensive
- May be more expensive as the contractor costs risks
Can you use any documentation to assist with deciding on an appropriate JCT Contract?
JCT ‘Deciding on the appropriate JCT contract 2016’
This is a practice note which provides further guidance.
Explain the standard terms for payment
- Valuations are monthly
- Interim Valuation Date is typically a month after commencement
- Due Date is 7 dates after the Interim Valuation Date
- The contract administrator has 5 days from the Due Date to issue a payment certificate
- Client has 14 days to make payment from the Due Date
- A ‘pay less notice’ must be issued 5 days before the payment is due.
What are the types of JCT insurance?
Three types:
A) Contractor to take out an all risk policy in joint names
- This is used for all risk insurance for the works
- Often used in the erection of a new building
B) Employer to take out an all risk policy in joint names
- This is used for all risk insurance for the works
- Often used in the erection of a new building
C) Employer to ensure the existing structures and all risk policy in joint names
- For refurbishment or remediation projects to an existing building
What are variations?
Variations are changes to proposed scope of works. These are issued three ways:
1) Contract Instruction - This is a written instruction by the contract administrator to vary the scope. In order for it to be valid, it must be given as a written instruction.
2) Request for Information (RFI) - This is usually to clarify information in the contract documents. It is important to record the date of the RFI, when a response is required and the dates the responses are received in the event of a dispute.
3) Confirmation of Verbal Instruction (CVI) - This is an instruction that is given verbally (could be during a site inspection) either the contractor or contract administrator should confirm in writing.
What is the difference between a patent and latent defect?
Faults and defects caused by the works that are known and apparent are patent defects.
Latent defects are unknown.
What is the process of a relevant event?
This is an extension of time.
1) When it becomes apparent that there is, or is likely to be a delay that could merit an extension of time, the contractor will give the contract administrator written notice identifying the relevant event that has caused the delay.
2) If the contract administrator accepts the delay was caused by a relevant event, an extension of time will be granted and the completion date adjusted.
3) When assessing a claim, these should be judged against the actual progress of the works. Not the programme and the contractor must be able to demonstrate the link between breach (cause) and the delay.
