Black Books - All Flashcards
What are the pros & cons of subcontracting?
Pros: Using specialists Flexible resources Transfer of risks Reduce cost of training & development
Cons:
Smaller businesses lack resources for training & development
Less control
Risk dumping
Types of subcontracting?
Nominated
Named
Labour only
Design consultants
Features of a subcontract?
Agreement Conditions Particulars Scope & Attendances Technical documents Security (Bonds / PCG) Collateral Warranties
What is the difference between procurement & tendering?
Procurement is the overall process of obtaining goods and services including the strategy of how.
Tendering is the bidding process phase of procurement
Why are amendments included in a contract?
- To reflect a project specific obligation (i.e. an agreement for lease)
- To reflect the client’s business needs ( i.e. performance security)
Where does the Construction Act NOT apply?
Residential occupiers
Demolition of plant and machinery
What are the payment terms under a JCT subcontract & NEC subcontract?
JCT:
Application 7 d - Due Date - FDFP 14 d = 21 days
NEC4:
Application 14 d - Due Date - FDFP 14 d = 28 days
How do the notices in NEC4 differ between the standard contracts and subcontracts?
Standard - Main Contractor has 8 weeks
Subcontract - Subcontractor has 7 weeks
What are damages?
- Time related prelims (often fixed LDs)
- L&E from other s/c
- Inflation costs
- Costs due to retention held under MC
- Loss of contribution to OH&P
- Interest costs
What is included in a procurement strategy?
- Exec summary
- Contract details
- MC works
- s/c packages
- Financial planning
- Programme
- Pre-qual
- Tendering procedure
- ITT
- Assessment
- Appointment
What are the signs of subcontractor insolvency?
- Difficultly getting pricing from supply chain
- Resignations / high t/o of staff
- Requests for advance payments / reduced payment terms
- Refusal to provide bonds / high premiums
- Rumours of financial stability
- Lack skilled labour
- Inflated valuations / claims
- Chasing payments
- Payment for Materials off site
What are cashflows used for?
- Obtaining bank loans
- Progress monitoring
- Managing cash
- Forecasting business performance
Types of Valuations?
- Staged payments (payments at set times regardless of progress)
- Milestones
- Activity Schedule
- Valuation of works done.
What are the key impacts of the Construction Act?
- Right to interim payments
- Right to adjudicate
- No withholding payments unless payless notice issued
What are the considerations when collating a cashflow?
- Should retention be included
- Whole development or just contract
- Gross / net
- Monthly / cumulative / both
- Adjustments for easter / xmas breaks
Reasons for variances in cashflows?
- Progress
- adverse weather
- site conditions
- resequencing
- materials off site
- materials not delivered / labour shortages
Why might a contractor be ahead of forecast cashflow?
- Front loading
- Ahead on Programme
- Re-sequenced works
- Variations
- Acceleration to finish earlier
- Cashflow not accurate in first place
What are the different forms of procurement?
- Lump sum
- Remeasureable
- D&B
- Construction Management
- Management contracting
- Partnering
- PFI
How does having a good knowledge of construction effect estimates?
- Understanding how something is constructed can help to understand elements that need to be priced and/or check are included.
i.e
Joints between planks
Impacts of off site fabrication
Bathroom pods
What is conflict avoidance?
Techniques used to prevent a dispute before it occurs:
- Good management
- Clear contract docs
- Good project management
- Good design management
- Good payment practices
- Record keeping & reporting regularly
What are the 3 pillars of dispute resolution?
- Negotiation
- Conciliation & Mediation
- Adjudicative processes
What are the timescales for Adjudication?
7 days to appoint adjudicator from notice to adjudicate
28 days for decision
Decision is binding & enforceable in TCC (technology & construction court)
Does Arbitration cover if a company is insolvent?
No - covered by Insolvency Act
What is required for adjuducation?
- Must be a dispute
- Contract to refer to ‘at any time’
- Adjudicator to be appointed within 7 days of notice
When would you use an expert determination?
- When Construction Act does not apply
- If detailed within the contract
- If parties agree to refer it to expert determination
What levels of PI does the RICS recommend?
Up to £100k t/o = £250k cover in each and every
£101 - 200k t/o = £500k cover in e&e
£201k + t/o = £1m cover in e&e
What types of surety are you aware of?
- Performance Bond
- Retention Bonds
- Advance Payment Bond
- Maintenance Bond
What is the purpose of a surety bond?
- Links parties to ensure privity to a contract i.e. third parties / non-contractural parties have some security:
- Funders
- End users / tenants
- Consultants
What is the difference between an On-demand bond and a Conditional bond?
On demand - advance payment / retention bond - can be paid on demand of beneficiary
Conditional bond - require proof that contractor has not performed their duties
What is a ‘net contribution clause’?
Used in some collateral warranties to limit liability to such a sum that is fair and just.
i.e. If a joint default - each consultant is only liable for their part or equal parts (50% each) rather than each 100%.
What would you include when collating benchmark data?
- Project type
- GIFA / NIA (same for all)
- Contract sum
- Base date
- Location
- Type of contract
What are common difficulties with using benchmark data?
- Can focus on just the ££ rather than what it represents
- Need to review objectively - do any ‘skew’ data
- How are risks allowed for
- Are variations included
What is the purpose of cost reporting?
- Understand costs in a set period
- Forecast final liabilities & profit
- Costs can be estimated where not yet known
- Risk allowances foreseen
- If undertaken regularly allows a team to control outturn costs
What is included in a cost report
Prelims subcontractors consultants stats materials risk allowance's variations insurances
What is the difference between liquidated and unliquidated damages
Liquidated - genuine pre-estimate / predefined sum (£/day , £/week)
Unliquidated - proven at time of loss & based on actual loss / costs incurred. Need to demonstrate reasonable mitigation
What are the pros & cons of liquidated damages
Allows the contractor to plan for any potential delay risk in advance
Usually deducted regardless of actual loss
Need to issue non-completion certificate
If an EOT is then issued, any deduction must be reflected in the next interim certificate along with any interest due
Where are damages noted in the JCT & NEC contracts?
JCT - Contract Particulars
NEC - Contract Data Part 1 & X clauses
What is the completion of a project?
When all contractual obligations have been satisfied
What happens on completion?
- Client takes possession
- Transfer of risk to client - any damage is clients responsibility
- Liability for any delays / damages ends
- Defects liability period starts
- Release of retention monies
- Insurances need to be in place by client
- Bonds / Guarentees / payments due/ end.
What are the pros & cons of traditional procurement?
Pros:
Competitive fairness
Design -led
Price certainty
Cons:
Can be slower
Attempts to speed up process and issue information before design completion can result in cost errors
No contractor input into design
Not ideal where full scope cannot be defined
What are the pros and cons of D&B procurement?
Pros:
- Quicker programme
- Contractor input
- Better value
- Contractor takes risk
- Single point of responsibility
Cons:
- Not as competitive
- Need to commit to concept design at early stage
- bids can be difficult to compare
- Quality may be compromised
What is the difference between construction management and management contracting?
Construction management - Client employs a construction manager to oversee construction yet employs all the trades directly.
+ Can overlap design & construction
+ Changes in design can be accommodated later
+ Client employs s/c directly therefore better cashflow into supply chain
- Price and time certainty not known until last package let
- An informed and pro-active client is required
- close design management needed
Management contracting - Client employs a management contractor to oversee works but employs trades directly.
+ Can overlap design & construction
+ Changes in design can be accommodated later
+ Client employs s/c directly therefore better cashflow into supply chain
- Need good quality contractor - risk of being a post box
- May be gaps in packages that would usually be picked up by trade contractors / main contractor
What is a Project execution plan (PEP)?
Includes:
- Overview of project & objectives
- Specific objectives
- Proposed procurement route
- Control mechanisms - admin / contractual / financial / reporting / changes / value / quality / H&S
- Time schedule
- Budget
- Responsibilities
- How will items be measured
- Risks & Opportunities
What is a Project execution plan (PEP)?
Includes:
- Overview of project & objectives
- Specific objectives
- Proposed procurement route
- Control mechanisms - admin / contractual / financial / reporting / changes / value / quality / H&S
- Time schedule
- Budget
- Responsibilities
- How will items be measured
- Risks & Opportunities
Are the black books mandatory
No, they are guidance notes that encourage best practice
Can you name some of the black books?
- Retention
- Valuing change
- EOT
- Damages
- CA & DR
- Insurance
- FAs
