Building procurement

Question 1

What are the 4 main types of tendering?

Answer 1

1 - Open tender
2 - Selective tender
3 - Negotiated tender
4 - Single-stage and two-stage tendering

Question 2

What different forms of procurement are appropriate for a £12million office development and what would influence the choice?

Answer 2

Traditional, D&B, Management (MC & CM), Collaborative

Choice effected by:

• Attitudes to risk
• Complexity of the project
• Time
• Cost certainty required
• Design control
• Quality

Question 3

How do architects duties vary in different types of building procurement routes/ contracts?

Answer 3

General contracting
Contract administrator acting for the client (agent: instructions, inspecting works etc) and independent adjudicator (claims, valuation etc)

Design and Build
Techincal co-ordination, production information

Management
Lead consultant and information co-ordination, design information, approval, etc

Question 4

Under the JCT SBC16 form of building contract, what actions should the architect take when the Completion Date has passed and the works are not finished? What rights does the Employer have under the contract?

Answer 4

Issue a Non-Completion certificate; The Employer has the right to deduct LD’s (Liquidated damages) provided correct notification procedures are followed

Question 5

What are the different methods of dispute resolution?

Answer 5

Negotiation, Conciliation, Mediation, Adjudication, Arbitration and Litigation

Question 6

What are the duties of the contract administrator in a standard form of building contract?

Answer 6

To act impartially with respect to both parties to the contract.

Issuing: 
o Contract Administrator Instructions 
o Variations
o Interim certificates
o Certificates of non-completion, extensions of time, practical completion, final certificate. 

Assessing Notices by both parties

Question 7

Explain what is meant by a Contract Administrator under a traditional building contract carrying out a dual-role?

Answer 7

Under a traditional contract a Contract Administrator carrying out a dual role is also the Architect. As well as their duties as architect to inspect work on site and act for the employers interest, they are also required to take on an impartial role to administer the contract between the Contractor and the employer.

Question 8

If a Domestic Client gives written notice to ‘pay less’ to the Architect than the Notified Sum invoiced, what additional information must the Client supply?

Answer 8

The client must provide a letter outlining which terms of the appointment contract the Architect has not met to justify the retention of fees. This is why the scope of services and brief and fees should be clearly defined at appointment.

Question 9

Under a JCT form of Contract, when is a building Practically Complete?

Answer 9

The building is practically complete when all elements defined in the contract documents have been completed and the patent defects have been rectified by the contractor. PC can also be issued when it would generally be perceived that the building is fit for the client to take possession, but there may be some ‘de minimus’ elements of the work that still need to be carried out that would not get in the way of the client using the building.

Question 10

Give your definition of practical completion certificate

Answer 10

A certificate issued by the CA when construciton has been finalised and possession of the site is transferred from the contractor to the Client.

Question 11

Design and Build. Give your definition of the following:

1) Consultant switch
2) Novation ab initio

Answer 11

1) In novation, when agreement between a Consultant and a Client is terminated and a new one is signed with the contractor.
2) ‘Ab inition’ means ‘from beginning.’ When consultants are novated and their liability to the contractor includes services to the beginning of the involvement in the project

Question 12

Give five questions to ask a contractor you hope to use for the construction of your own house?

Answer 12

Do they have relevant experience for the type of work?
Do they have insurance provisions?
What is the cost of works?
What is the programme?
Recommendations for specialist sub-contractors?

Question 13

What is the difference between sectional completion and partial possession?

Answer 13

‘Sectional Completion’ is an allowance for different completion dates and possession for different portions of the works and must be defined in the building contract. ‘Partial Possession’ allows for possession of a portion of the site and may be done post contract.

Question 14

Explain what is meant by a relevant event

Answer 14

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.

NOTE: A relevant event does not necessarily entitle the contractor to claim loss and expense. To claim loss and expense, a relevant matter must have occurred.

Relevant events might 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 (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 15

Explain what is meant by a relevant matter

Answer 15

A relevant matter is a matter for which the client is responsible that materially effects the progress of the works. This enables 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.

Question 16

If there is damage to property other than the works (neighbouring building etc), due to carrying out of the works, who is liable?

Answer 16

The contractor and they should indemnify the employer against any losses, claims etc

exception - only liable for extent of negligence

Question 17

Death, injury, damage to property (other than the works) - what must the contractor insure against and how?

Answer 17

JCT SBC and ICD Clauses 6.1 (death, injury) and 6.2 (damage to property) (MWD 5.1 and 5.2)

normally achieved through:

• Employers liability insurance
• Public liability insurance

Question 18

Damage to works - What is insurance option C?

Answer 18

Existing buildings, the employer takes out two insurances

• Insurance for the works; policy to be in ‘joint names’ and for ‘all risks’
• insurance for damage to the existing structure by ‘ specified perils’, policy to be in ‘joint names’

policy means that everyone takes the liability and the policy covers everyone, rather than one party claiming from another.

Question 19

Non-negligent damage to property, if the contract particulars require it, what must the contractor take out?

Answer 19

The contractor must take out insurance to cover any liability of the employer for non-negligent damage to property, other than the works.

could happen where the contractor has not been negligent in laying piles but a surrounding buildings is fragile and therefore damage has occurred.

can be expensive insurance to take out and therefore is optional insurance and entirely down to the employer whether they want to do this. Depends on context of site etc.

There are exclusions:

• Damage caused by the negligence of the contractor (i.e for which contractor is liable under clause 6.2)
• Damage due to errors in design. - design team could be liable

Question 20

If a contractor is undertaking design, what do the contracts require?

Answer 20

Professional indemnity insurance just as any party that is designing elements.

(except minor works, where it is assumed that it is only a minor thing the contractor is designing)

Question 21

Damage to works - what is insurance option A?

Answer 21

new builds - contractor takes out insurance for the works in a ‘joint names’ policy

Question 22

Damage to works - what is insurance option B?

Answer 22

New buildings - Employer takes out insurance for the works with the policy to be in ‘joint names’ and for ‘all risks’

means that regardless of causation, the insurance kicks in and the ‘joint names’ means that the employers insurers can’t claim against the contractor for example

Question 23

Explain what is implied by the terms ‘shall’ and ‘may’ in contracts

Answer 23

shall - a duty

may - a power

Question 24

What does IRS stand for? and what is the advantage of having one?

Answer 24

Information release schedule, helps reduce the number of RFI’s later in the contract by setting out to the contractor exactly when information will be issued to them for the carrying out of works. Optional in a contract. Could also be given to tendering contractors at tender stage for greater clarity of programme and pricing.

Question 25

Who is the sole person whom decides what works will be included in valuations?

Answer 25

Contract adminstrator

Question 26

Defects liability period DLP usually last for what amount of time in a contract?

Answer 26

6-12 months

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.

NOTE: the defects liability period is not a chance to correct problems apparent at practical completion, it is a period during which the contractor may be recalled to rectify defects which appear. If there are defects apparent before practical completion, then these should be rectified before a certificate of practical completion is issued.

Question 27

What certification must be granted by the contract administrator before issuing of final certificate?

Answer 27

When the contract administrator considers all the items on the schedule of defects have been rectified, they issue a certificate of making good defects. This has the effect of releasing the remainder of any retention and results in the final certificate being issued.

Question 28

what happens at the end of the defects liability period?

Answer 28

At the end of the defects liability period, the contract administrator prepares a schedule of defects, listing those defects that have not yet been rectified, and agrees with the contractor the date by which they will be rectified. The contractor must in any event rectify them within a reasonable time.

Question 29

What are the default retentions for SBC, ICD and MW?

Answer 29

SBC and ICD - 3%
MW - 5%

The retention is used as a safeguard for defects that could appear later that were not apparent when certificate was issued. If all money was paid, then the contractor wouldn’t have an incentive to return and fix any defects.

Question 30

What does the term ‘de minis’ relate to?

Answer 30

Small matters that do not inhibit possesion of the site and practical completion can therefore be issued.

Question 31

What does an ‘Ad Hoc’ agreement refer to in the context of practical completion?

Answer 31

As hoc agreement looks to seek a practical solution to the works should a client not be able to posses the site and non-completion certificate is issued - agreement of employer needed and the PC not issued until that agreement fulfilled.

E.G alternative kitchen facilities sought in the event a hotel has all rooms but the kitchen completed by the end of the contract date. Here a contractor could offer to pay for use of a dark kitchen whilst the works are being completed to the contract works kitchen.

no agreement? - non-completion certificate issued and liquidate damages claimed by the employer

Question 32

Do drawings or a bill of quantities take precedent in the instance of conflict of information?

Answer 32

Bill of quantities take precedent as they are what the contract sum has been calculated from.

Question 33

Outline the difference between an approximate quantity and a provisional sum.

Answer 33

Approximate quantity - spec known but the quantity not - sum not needed to be altered when clarity is reached. e.g. existing building where clarity not given until opening up works take place.

Provisional sum - spec is unknown and therefore figure amended in the contract documents as a variation once the works clarity given.

Question 34

How is payment usually made to the contractor throughout contracted works?

Answer 34

Monthly certification, can also do advanced payments (paid before carrying out of works) and payment at milestones

Question 35

Outline what is meant by an interim certificate

Answer 35

Interim certificates provide a mechanism for the client to make payments to the contractor before the works are complete. The Housing Grants, Construction and Regeneration Act, states that a party to a construction contract in excess of 45 days is entitled to interim or stage payments.

Interim payments can be agreed in advance and paid at particular milestones, but they are more commonly, regular payments, the value of which is based on the value of work that has been completed (this is the actual value of the work completed, taking into account variations, etc.).

Question 36

Should an interim certificate be issued if there are defects?

Answer 36

CA needs to make a judgement on the invoice to be paid by the client. If there are defects, a sum should either be taken off the line item or taken off the total in order to cover the cost of rectification.

CA should only include work that has been properly carried out

Question 37

What is meant by an appropriate deduction?

Answer 37

“Any defects, shrinkages or other faults in the Works or a Section which appear and are notified by the Architect/Contract Administrator to the Contractor not later than 14 days after the expiry of the Rectification Period, and which are due to materials or workmanship not in accordance with this Contract, shall at no cost to the Employer be made good by the Contractor unless the Architect/Contract Administrator with the consent of the Employer shall otherwise instruct. If he does so otherwise instruct, an appropriate deduction shall be made from the Contract Sum in respect of the defects, shrinkages or other faults not made good.”

Question 38

Why is whether signing under hand or deed important?

Answer 38

Hand - 6months
Deed - 12 months

This is important for PII.
Latent Damage Act 1986 –
3 years from when there is knowledge of damage 15 years is the longstop