Carrying our the Works (Section 2)

Question 1

What section is “Carrying out the Works” found in in the JCT SBC?

Answer 1

Section 2

Question 2

What are the general obligations of the contractor when carrying out the works in accordance with the JCT SBC?

Answer 2

In a proper and workmanlike manner and in compliance with the Contract Documents.

Question 3

What is the normal duty of care that both professional services and building contracts require of the service provider?

Answer 3

Reasonable skill and care.

Question 4

What does the term fit for purpose mean and how does that serve to change the normal duty of care?

Answer 4

A fitness [or fit] for purpose obligation imposes a higher duty [than that imposed by “reasonable skill and care”], as it is an absolute obligation to achieve a specified result. A breach of which does not require proof of negligence. PI (professional indemnity) may not cover fit for purpose due to the nature of it not allowing any errors.

Question 5

What is a performance bond [or performance security]?

Answer 5

A bond which is provided by a bank / insurer which will be paid out if the contractor fails to fulfill their obligations in providing what is stated in the contract.

Question 6

What is an on demand performance bond and how does it differ from the sort of performance bonds commonly used today?

Answer 6

On Demand - can be called upon whether there has been a default or not.

Conditional or default - requires 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.

Question 7

What is an advanced payment bond?

Answer 7

A bond which is provided by a security provider to cover the loss or damage to materials already paid for.

Question 8

What is the purpose of a bond covering the payment of materials off site?

Answer 8

It covers the loss or damage to materials already paid for off site, in case the supplier goes into administration.

Question 9

Where are bonds appropriate?

Answer 9

A new contractor, to protect a one off developer, due to risks in the project.

Question 10

In your experience, what level of cover is generally taken out in a performance bond?

Answer 10

10% of Contract sum

Question 11

Does the price included by a contractor for a performance bond in its tender tell you anything about the contractor?

Answer 11

Yes - the cost of the bond gives client a guide as to the credit worthiness and reputation of the contractor in the bond market.

Question 12

Where you have used a PCG on a project and how did you determine the financial stability of the parent company?

Answer 12

The financial stability of the parent company would be assessed by analyzing the financial accounts for the previous 3 years. - profit & loss, balance sheet.

Question 13

What is a Parent Company Guarantee (PCG)?

Answer 13

Parent Company Guarantee (PCG) - form of security that may be required by clients to protect them in the event of default on a contract by a contractor that is controlled by a parent company.

Question 14

What is the period of deferment of possession as stated in the JCT SBC?

Answer 14

Maximum of 6 weeks

Question 15

If there is an error in the ER’s, what is the process?

Answer 15

Alter and modify accordingly and treat as a variation.

Question 16

If there is an error in the CP’s, what is the process?

Answer 16

Alter and modify but no addition to contract sum or EoT.

Question 17

What must be in place for materials off site to be used in a contract?

Answer 17

The materials must be included in the Contract Particulars as Listed Items.

Question 18

When adjusting the completion date, what must be proven by the Contractor?

Answer 18

That there has been a Relevant Event.

Question 19

What are the relevant events in the JCT?

Answer 19

Clause 2.26

• Variations
• Instructions (incl. opening up for inspection, where the Works were in accordance with the contract)
• Deferment of possession
• Antiquities (e.g. fossils, antiques and other objects of interest on site)
• Contractor’s right of suspension (following non-payment)
• The carrying out by a Statutory Undertaker of work in pursuance with its statutory obligations in relation to the works
• Exceptionally adverse weather conditions
• Specified Perils
• Force majure (terrorism, pandemic, earthquake)
• Strikes (of workmen)
• Delay in receipt of any necessary permissions or approval of any statutory body

Question 20

What is the contractor expected to do if there is an EoT? - in terms of work.

Answer 20

Provide best endeavors to prevent delay in progress of works, and do all reasonably required to proceed with works.

Question 21

What certificates are to be issued if the works are completed on time/not completed on time?

Answer 21

On time = Practical Completion Certificate

Late = Non-completion Certificate

Question 22

What does practical completion trigger?

Answer 22

1. ) release of 1/2 retention
2. ) LAD relief
3. ) Rectification period begins
4. ) Insurances back with the client, they’re responsible for site security etc.

Question 23

What must the employer send to the contractor if damages are to be levied?

Answer 23

Pay Less notice

Question 24

Where are damages stated?

Answer 24

Contract Particulars

Question 25

What are damages and how are they calculated?

Answer 25

They are a genuine pre estimate of loss to the employer if the contractor does not obtain PC on the specified completion date. For example, by delaying a property from being rented, the client would be losing out on rent if PC is delayed.

Question 26

If the employer asked you to calculate their damages for a project, what would you say?

Answer 26

I would state that I cannot calculate LADs but I could give advice to the employer on how he can calculate. E.g.

1. ) Damages should be set as a genuine pre-estimate of loss
2. ) What is the intended use of the development?
3. ) What is the average property price or rental price for that area?
4. ) Are there any potential out of sequence promotional costs?

Question 27

What is the difference between sectional completion and partial possession?

Answer 27

Sectional:
Sectional completion is agreed up front and provided for in the contract. The contractor has an obligation to achieve the sectional completion date. LD’s are agreed up front, should the section be delivered late.

Partial Possession:
Requires an agreement during the progress of the works which requires an instruction. Usually more expensive than sectional completion.

Question 28

What happens to damages and retention when a section is handed over?

Answer 28

Pro-rate in relation to the size / value of the completed area.

Question 29

Can you tell me the process for during and after the rectification period if defects are found?

Answer 29

During = patent defects.
The defects are to be put into a schedule of defects. These are to be given to the contractor no later than 14 days after the end of the rectification period and the contractor must correct these in reasonable times at no cost to the employer. The contractor must be given the chance to correct the defects, if he fails to then the employer can amend the defect at the cost of the contractor (retention money)

After = latent defects.
After the end of the defects liability period the building owner does not have a contractual right to insist that the contractor rectifies defects not notified during that period. The building owner must instead seek action for damages, breach of contract or for negligence.

Question 30

What certificate is issued following the rectification period?

Answer 30

Certificate of making good

Question 31

What effect does the issuance of the certificate of making good have?

Answer 31

1. ) Releasing the remainder of any retention.

2. ) Results in the Final Certificate being issued.