Contract Admin Flashcards
What is the role of CA?
The role of a CA is to impartially administer the contract between the employer and the contractor.
What are the key tasks of a CA
Documentation
*Ensuring that project documentation is issued to the client.
Tender
*Inviting and processing tenders.
Contract Documents
*Preparing contract documents for execution.
Meetings & Report
Chairing construction progress meetings &Preparing and issuing construction progress reports (Meeting Minutes)
Instructions
*Issuing instructions such as variations, or relating to prime cost sums or making good defects.
Certificates
*Issuing certificates of practical completion, interim certificates, certificate of making good
Defects
defects and Final certificate.
What types of procurement route are you aware of?
- Single stage tendering
- Two stage tendering
- Design and build
- Framework agreements
What is the difference between a CA and an EA?
Employers agent is the role undertaken under design & Building contract .CA is traditionally procured contract.
CA = identified within the contract and is solely responsible for administering the contract for the employer. Role technically starts when the contact is signed.
EA = identified within the contract however acts on behalf of the employer in all matters.
What is required to have a contract?
- Offer
- Acceptance
- Consideration
- Intention
- Time
- capability
What are the parts of the contract?
*Agreement
The ‘articles of agreement’ setting out the core obligations/details of the parties involved
*Recitals
Recitals contextualize the agreement,
giving factual explanations for the basis of the contract.
recitals describe what is required and the events that have taken place.
*Articles
These set out what is agreed between the parties.
*Contract Particulars
This section sets out the aspects of the contract that are particular to the project to which the contract relates.
*Attestation
Act of signing &/or witnessing a legal document (Contract agreement / Execution) to formally execute the document
Under hand - disputes must proceed to court within 6 years
As a deed - disputes must proceed to court within 12 years
What are the difference between Minor Works and Intermediate contracts?
- More detailed procedures
- Relevant Events defined
- Collateral warranties
- Named sub-contractors
- Early possession
- Sectional completion
- Advance payment
- Bill of quantities
What can you tell me about Professional Indemnity insurance and JCT Minor Works?
As regards contractor’s professional indemnity insurance under MWD it has not been felt necessary to include such insurance in the published form because of the relatively low risks anticipated in respect of design under such a contract.
what if the contractor did not complete on time? What could you issue?
I could issue a Certificate of Non-Completion
Explain your process in completing the valuations?
I time the progress inspection with the interim valuation date. Therefore, the contractor provides me with their valuation in advance of the meeting.
Whilst on site I review the progress through visual inspection against the contractors valuation.
Where necessary I discuss costs with the contractor and request that they correct any inaccuracies.
What are the timescales for payment and what is it governed by?
The Housing Grants, Construction and Regeneration Act 1996 intended to ensure payments are made promptly throughout the supply chain and disputes are resolved swiftly.
Sets minimum requirements relating to adjudication and payment.
- The amount of each payment is based on the value of the work and other costs to which the contractor is entitled during the payment interval.
- 28 day payment cycles
- payment is due 7 days after each 28 day period (or 7 days after the contractor’s claim for payment if later).
- The paying party must give notice within 5 days of the due date, specifying the amount proposed to be paid and the basis on which it is calculated.
what do you do if the contractor doesn’t issue a interim valuation?
Irrespective of whether an interim application is submitted, I must carry out the valuation myself and issue a payment certificate no later that 5 days after the due date.
what is the due date on a payment certificate?
the due date falls 7 days after the interim valuation date or as per the contract
What do you need to issue if you don’t agree with the valuation?
A pay less notice.
what information is on a payment cert?
- Employer and Contract details,
- Site Address,
- description of the work,
- contract date
- contract sum
- valuation date
- issue date
- instalment no.
- gross valuation
- less amount previously certified
- less retention
- payment sum not due
how do you review contractor valuation?
I assess the application against the works carried out on site to date.
What happens once practical completion is served?
- Issued Penultimate Payment Certificate
- Release half the retention
- Contractor’s insurance period ceases and liability falls on employer.
- Employer can no longer claim liquidated damages.
- Rectification period commences.
What is the purpose of retention?
Protect both the employer and contractor..
The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract.
And ensures they return at the end of the defects period to repair any Latent defects.
how long is the rectification period? Why choose that length?
12 months this allows for any settlement due to seasonal changes.
difference between patent and latent defects?
Patent defects - visible or apparent defects.
Latent defects - defects caused by failure of design, workmanship or materials, which may not become apparent until many years after completion.
A defect which is not immediately apparent. Can be rectified under negligence claim under Defective Premises Act 1972. The time bar for which is set under the Limitations Act 1980.
whose responsibility is it to identify all defects?
The CA should identify defects following a final inspection. however, the contractor is ultimately responsible for ensuring all defects are identified and rectified.
What is a relevant event?
A relevant event is an event that is beyond the contractors control and cause either:
by the employer or their representatives (such as variations, deferment of site possession or inaccurate contract docs) or
a neutral even (such as civil commotion, terrorism, fire, storm, explosion etc.).
What is a relevant matter?
A relevant matter is a matter for which the client is responsible for that materially affects the progress of the works e.g.:
• Variations
• Failure to give the contractor possession of the site
• Failure to give the contractor access and egress from the site
• Delays in receiving instructions
• Discrepancies in the contract documents
• Disruption cause by works being carried out by client
• Instructions relating to variations and expenditure of provisional sums
• Issues relating to CDM
What’s the difference between a relevant event and a relevant matter?
A relevant event is an event that is beyond the contractors control and cause either by the employer or their representatives (such as variations, deferment of site possession or inaccurate contract docs) or a neutral event (such as civil commotion, terrorism). Relevant events entitle a contractor to claim an extension of time.
A relevant matter is a matter for which the client is responsible that materially effects the progress of the works (such as variations, failure to give possession or access, delay in instructions). This enables the contractor to claim loss and or expense that has been incurred.
You advised on LDs, how did you go about assessing those?
LDs are a pre-agreed sum by the parties to the contracts payable on breach by the contractor should the project not be completed on or before the completion date without prior agreement.
They are calculated on the basis of a genuine pre-estimated loss the employer would be subject to should they not be able to operated from the premises under construction / refurbishment . Cannot be a penalty must be realistic according to potential costs suffered.
When advising on a sum I took into account the following:
- loss of rent or other income
- additional professional fees
- costs imposed by other parties on the client e.g. costs by not having the building available - storage, rent of other premises
- fines from statutory bodies
What items would you have on a contract instruction?
- Employers details
- Contractors details
- project address
- description of the works
- contract date
- issue date
- items to be omitted
- items to be added
- contract sum
- value of previous instructions
- value of current instruction
- adjusted total
What is sectional completion?
Sectional completion is written into the contract and can therefore have liquidated damages associated with it.
What is partial possession
Partial possession is when the client takes over part of the site that has been substantially completed with the contractor’s consent (which cannot be unreasonably withheld).
What is a collateral Warranty
This document provides a contractual link with a third party to convey rights and obligations of the 3rd party where not otherwise would have existed
What is the difference between a guarantee and a warranty.
Guarantee is a promise that the product will last/perform in a specific period subject to certain requirements.
Warrenty hold manufacturer responsible for the repair.
What was the Latham report?
Addressed perceived problems with the construction industry - Constructing the Team
Using NEC contracts
Adjudication
What was the Egan report?
Rethinking Construction
What makes up a building contract?
a. The building contract - This is a legal document, usually in standard form. It sets out the roles, rights and responsibilities of the employer and the contractor.
b. The specification:
i. Prelims - Preliminaries are activities or costs that are not necessarily linked to the building work. They are costs associated with administration, setting up and Statutory Authorities regulations and fees.
ii. Preambles – Quality of materials and workmanship.
iii. Works - The technical requirement to complete, execute and/or perform every little task or material being incorporated in the construction project. It specifies common standards, deviations accepted, materials accepted and the required testing for all materials. Specific referencing to construction standards and codes.
iv. The drawings/plans – Drawings detailing the works to be undertaken referring to and to be read in conjunction with the specification to gain a full understanding of the works.
c. priced schedule of work/bill of quants - Breakdown of all items being incorporated in the construction project. This is usually the base of the application for payment.
d. Pre Construction Information Pack – Details of all the health and safety, security, welfare, access considerations that need to be taken into account. The response to which should be the contractors construction phase health and safety plan.
Difference between Preambles and prelims?
Prelims detail non construction related works that the contractor needs to cost and preambles detail the quality requirements for materials and workmanship.
Difference between single stage and two stage
Single Stage – Go to tender with completed consultants design and specification. Contractor prices the bill of quants, schedule of work or performance spec. Benefits include greater cost and programme certainty, reduced cost due to competitive tender, clear allocation of risk.
Two Stage - The first stage tender is based on a partially developed consultant’s design (prelims, prov sums, demolitions, earthworks, schedule of rates etc.). The contractor selected at the first stage is then able to assist with the final development of the design and tender documents used to obtain tenders for the construction works. The second stage can either be tendered or negotiated to arrive at a contract sum. Benefits include contractors input and buy in to the design, collaborative working relationship.
what happens when the rectification period ends?
Ensuring enough time is allowed for the contractor to rectify any defects identified a joint snagging inspection should be undertaken by the CA and Contractor. The contractor should rectify any defects
then a second inspection should be undertaken to confirm this.
Then a certificate of making good defects and a final payment certificate should be issued for the retention.
The contractor will then issue this to the client with his final invoice.
Concurrent delay?
Concurrent delay refers to the complex situation where more than one event occurs at the same time, but where not all of those events enable the contractor to claim an extension of time or to claim loss and expense.
Contractor, client & outside sources
What is a collateral warranty?
A contract under which a construction professional (the “provider”) promises a third party (the “beneficiary”) that it has complied with the requirements of its professional appointment. creates a contractual link between employer and sub contractors.
It enables the beneficiary to:
- step into a construction contract if the employer goes into liquidation.
- sue the provider for defects.
They are usually executed as deeds and enforceable for 12 years alter PC.
What are the advantages and disadvantages of collateral warranties?
- They are familiar to construction professionals and to their insurers
- More regularly tested in the Court and therefore, more certainty of their meaning
- More likely to be subjected to adjudication and payment provisions under the Housing Grants, Construction and Regeneration Act (1996)
- Can provide step-in rights e.g. where the employer steps in when a contractor becomes insolvent and has the job finished.
- Time consuming – a warranty is required for each separate party
- Expensive – the administrative costs required are significant and expensive suing to enforce
- Often needed after work has started and therefore, not signed
- Could be unenforceable in the absence of consideration if not properly executed e.g. signed; insolvency of a contractor
what is a bond?
Bonds are a means of protection against the non-performance of the contractor.
They are an undertaking by a bondsman or surety to make a payment to the client in the event of non-performance of the contractor. The cost of the bond is usually borne by the contractor, although this is likely to be reflected in the contractor’s tender price.
Bonds can be ‘on demand’ or ‘conditional’, with conditional bonds requiring 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.
What are the different type of bonds?
Performance bond
is commonly used as a means of insuring a client against the risk of a contractor failing to fulfil contractual obligations to the client, although they can also be required from other parties.
Performance bonds are typically set at 10% of the contract value. This compensation can enable the client to overcome difficulties that have been caused by non-performance of the contractor, such as, finding a new contractor to complete the works.
advance payment bond
If the client agrees to make an advance payment to the contractor, (for example where the contractor incurs significant start-up and procurement costs before construction begins), a bond may be required to secure the payment against default by the contractor. This will normally be an on-demand bond.
What’s included within a named-subcontractor agreement?
- contractual Parties
- nature of the works
- CA info
- Main contractual works
- Attestation
- information Requirements
- procurement and/or fabrication of material and goods
- collateral Warranties
What is the difference between a named-subcontractor and a nominated subcontractor?
Nominated sub-contractor
Sub-contractor is selected by the employer following the main contractor appointment they appointed nominated sub-contractor.
No provision within JCT
Grey area as Principal Contractor has no choice.
Named sub-contractor
Employer can influence sub-contractor selection by putting forward a list of contractors
Mini-tender tends to take place of sub-contractors
Main contractor is to instruct successful sub-contractor
Tell me about Standard building contract.
Standard Building Contract - Detailed to accommodate more significant works which involve high degree of specialist works - Provision for o Advance payment bonds o Retention bonds o Master programme o Arrangements for acceleration quotes
