22 - Contract Administration Flashcards
947 - Who is responsible for administering the building contract? (3)
1) NEC3 & NEC4 ECC - Project manager (as named in the contract).
2) JCT 2016 D&B - Employer’s agent (EA).
3) JCT 2016 MW, Intermediate & SBC contracts - Contract administrator (as named in the contract).
948 - Please detail some of the key responsibilities of the contract administrator under a JCT contract? (statement + 12 examples)
The contract administrator is responsible for administering the terms of the building contract between the contracting parties. Responsibilities include, but are not limited to;
1) Determining extension of time claims.
2) Determining loss and expense claims.
3) Issuing practical completion statements.
4) Issuing instructions to overcome discrepancies and / or changes to the scope of works.
5) Issuing instructions to expend provisional sums.
6) Certifying interim payments to the contractor.
7) Administrating change control procedures.
8) Collating and issuing schedules of defects.
9) Issuing the certificate of making good defects.
10) Notifying partial possession.
11) Certifying section completion.
12) Certifying non-completion.
949 - Do you know how the employer’s agent role differs from the contract administrator role? (2)
1) CONTRACT ADMINISTRATOR - This is a party who is specifically identified within the contract and is solely responsible for administering the contract for the employer. It is an impartial role and only exists at the point the contract is entered into i.e. when a contract exists.
2) EMPLOYER’S AGENT - This is a party who is identified within the contract and who acts on behalf of the employer in all matters, effectively as if the employer’s agent was the employer. When carrying out certification and decision making functions under the contract, the employer’s agent should act impartially.
950 - What is practical completion? (2)
1) Practical completion is often referred to as ‘PC’.
2) Generally, it is the point at which a building project is complete, except for minor defects and outstanding works that can be put right without undue interference or disturbance to an occupier. Some construction practitioners describe this point as when the building project is “capable of beneficial occupation and use” by the Employer.
951 - Can you rescind the PC statement once it has been issued?
No. Once the PC certificate has been issued, it remains final and binding on the employer and cannot be revoked.
952 - Once the PC statement has been issued, what are the consequences for the contractor and employer? (4)
1) 50% of retention is usually released (subject to the contract).
2) The defect rectification period starts.
3) The employer is usually required to start insuring and securing the building.
4) The employer’s ability to levy liquidated damages ends.
953 - What is a non-completion certificate?
The certificate of non completion gives formal written notice that the contractor has failed to complete the works described in the contract by the completion date.
954 - What are the consequences of a non completion certificate?
The non completion certificate triggers the right for the employer to levy liquidated damages should they choose to do so. Three key documents need to be in place to levy damages;
1) Certificate of non completion issued by the contract administrator
2) The employer must write to the contractor notifying them of their intent to levy liquidated damages (LDs)
3) The employer must issue a pay less notice to recover the LDs
955 - How is completion defined under NEC EEC contracts?
Completion is defined under clause 11.2(2)
NEC3 EEC definition;
1) Done all the work which the Works Information states he is to do by the Completion Date and
2) Corrected notified Defects which would have prevented the Employer from using the works and Others from doing their work.
NEC4 EEC definition;
1) Done all the work which the Scope states is to be done by the Completion Date and
2) Corrected notified Defects which would have prevented the Client from using the works or Others from doing their work.
956 - Why might the employer’s agent (EA) instruct the contractor to ‘open up’ works which have been covered up?
If the EA suspects work has not been completed ‘in a proper and workmanlike manner’ or ‘believes materials, goods or work are not in accordance’ with the contract, the EA may issue an instruction to open up the area for inspection. This process is defined under clauses 3.12 & 3.13.
957 - Assuming the EA has instructed the contractor to ‘open up’, please briefly detail the potential outcomes including the effect on cost and the completion date? (2)
1) WORKS NOT DEFECTIVE - The contractor is paid for opening up and may be entitled to an adjustment of the completion date.
2) WORKS ARE DEFECTIVE - The contractor remedies at their own expense or gives the Employer a saving. The EA can then instruct the Contractor to open up similar work. If similar work is defective then no payment or adjustment of the completion date is granted. If similar work is not defective then completion date may be adjusted but still no payment granted.
958 - What is an Extension of Time (EoT)?
The EoT provision allows for the contract administrator to ‘adjust the completion date’, preventing time becoming ‘at large’ and thereby postponing the employer’s right to recover liquidated damages. This provision is used in instances where the delay is not the contractor’s responsibility or fault.
959 - What is the procedure for claiming an EoT? (4)
1) As soon as it is reasonably apparent that a delay has, or is likely to occur, the contractor should write to the contract administrator to notify them.
2) The notification should identify the ‘relevant event’ which has occurred and give an indication of the extent of the delay. This is usually shown on a programme demonstrating the ‘cause and effect’ of the event.
3) The contractor is required to submit information requested by the contract administrator to determine the claim.
4) The contract administrator will ultimately notify the contractor of his / her decision of the claim. Should the claim be in accordance with the contract and the period of delay is adequately demonstrated, the contract completion will be adjusted.
960 - From a contract administrators point of view, what are the time periods related to assessing relevant events and adjusting the completion date?
The contract administrator / EA must notify the contractor of his / her decision within 12 weeks of receipt of the required particulars (or sooner if the completion date is less than 12 weeks away) and state the extension awarded.
961 - Assuming the contractor successfully demonstrates a relevant event and the contract administrator / EA subsequently adjusts the completion date, is the contractor due additional preliminaries?
No, the contractor is required to demonstrate a ‘relevant matter’ for a loss and expense claim.
