Contract Admin Flashcards

Question 1

Q

What is a pay less notice?

Answer

A

Issued by the employer in the event of over certification
E.g. CA mistakenly certifies defective work that was only noticed after certificates were issued. CA informed and employer issues a pay less notice
Also, if liquidated damages are due after non-completion issued.

Question 2

Q

What if the contractor goes out of business?

Answer

A

Suspend payments
Take back possession of the site
Secure all unfixed materials

Question 3

Q

What is a variation?

Answer

A

An item that has not been priced and included within the specification
A variance to quality or quantity

Question 4

Q

How do you agree a valuation?

Answer

A

Prior to works being undertaken.

Question 5

Q

What was the significance of the 2011 edition of the Local Democracy, Economic Development and Construction Act (Construction Act)?

Answer

A

Removed requirement for contracts to be in writing for adjudication to apply
Both employer and contractor can issue payment notices
Revision of EoT provision
New definition of insolvency
Removal of pay when certified clause

Question 6

Q

What was the aim of the LDEDCA 2011 Construction Act?

Answer

A

To tighten up payment, certification and payments to protect contractors.

Question 7

Q

What must you give when certifying a payment?

Answer

A

Payment certificate

- Basis on which this has been calculated (valuation document)

Question 8

Q

What is insolvency?

Answer

A

A company unable to pay its debts

Question 9

Q

What does a contract administrator do?

Answer

A

Manage the contract between employer and contractor

- Administered by the employer

Question 10

Q

What is a designer?

Answer

A

Someone employed to do design work.

Question 11

Q

What are the responsibilities of the CA?

Answer

A

Administer terms of the building contract
Agent for the employer, but acting impartially
Makes decisions
Both contractor and employer challenge decisions

Question 12

Q

What would you expect of a CA?

Answer

A

Knowledge to understand the contract
Knowledge to understand construction
Impartial and fair
Keep records
Be aware of critical path and programming

Question 13

Q

What does a CA do?

Answer

A

Meetings
Valuations
Inspection of works
Determine EoT applications
Interim payments
Certify PC
Settle final account

Question 14

Q

What information should you provide and in what format do you agree to take on an instruction?

Answer

A

In writing
Confirm terms and conditions of appointment
Detail services provided
Confirm fee basis
Identify complaints handling procedure in place
Limitations (what is not included)
Dispute resolution procedure
Level of PII
Set out if CA is allowed to make changes

Question 15

Q

What do other consultants on a project do?

Answer

A

Support the CA in administration (design changes, costs)

Question 16

Q

How do you know how many times you should visit site as a CA?

Answer

A

Complexity of the project
Calibre of the contractor
Progress of work
Predetermined stages

Question 17

Q

What do you look for on a site visit to a construction site?

Answer

A

Activity on site
Details of instructions given (are they doing it?)
Progress
Quality of work
Check materials are being used
Refer to preambles
H&S arrangements

Question 18

Q

How do you check progress?

Answer

A

Check against a programme
Portion of works valued to date
Experience – you should know
Consult with suppliers
The contractor should progress regularly and diligently

Question 19

Q

Would you value materials?

Answer

A

If reasonably on site at the correct time

- If way too early, do not value.

Question 20

Q

In what instance will a variation be issued after PC?

Answer

A

If defective work in rectification period.

Question 21

Q

What do you need to issue practical completion?

Answer

A

H&S file – contractor provides information
All test certificates
Works complete (allow de-minimis)
Beneficial occupation can be taken

Question 22

Q

When can a contractor make a claim for loss and expense?

Answer

A

If they can evidence that a relevant matter has occurred, including deferment of possession by the employer, where the regular programme is affected by certain circumstances, but it must be a proven loss.
Contractor to make a written application for consideration.

Question 23

Q

What is the risk if a claim for loss and expense is the fault of the surveyor? (Late issue of instruction)

Answer

A

PII claim

- Must notify insurers

Question 24

Q

What statutes must you consider when taking on a project services instruction?

Answer

A

Party Wall Act
Town and Country Planning Act
Tree Preservation Orders
Conservation areas/listed buildings

Question 25

Q

What are the timescales for payments?

Answer

A

Contractor can make application 7 days before valuation date
Valuation effects as a payment notice
Contractor issues payment notice is CA does not issue within 5 days of due date.

Question 26

Q

When must a pay less notice be issued?

Answer

A

An employer must issue five days before final date for payment
Cannot be done by CA

Question 27

Q

What are the implications if no payment certificate is issued within the required timeframe?

Answer

A

Employer must pay the notified sum provided by the contractor.

Question 28

Q

What should you do if an error is notified to the CA by the contractor via written notice regarding errors or inconsistencies of the docs or convergence to statute?

Answer

A

CA should issue a variation to change the docs.

Question 29

Q

What are the obligations of the contractor?

Answer

A

To carry out and complete the work
Design under Contractor’s Design Portion
Complete on time
Pay liquidated damages
Make good defects during the rectification period
Have a site manager in control of the site
Indemnify the employer for expense, liability, loss, claim or proceedings.
Have and give evidence of insurance

Question 30

Q

What if a material is not available that is specified?

Answer

A

Contractor must provide like for like for approval

- If something totally different is needed, may be a variation with EoT rights.

Question 31

Q

Does the contractor have any statutory responsibilities?

Answer

A

Yes – a statutory responsibility to comply with a legislation that’s relevant to carrying out the work e.g. building regs, H&S.

Question 32

Q

Under what circumstances can the contractor terminate the contract?

Answer

A

Breach of contract – failure to pay on time, provide conditions agreed upon or adhere to the terms of the contract, follow CDM 2015, allow access to site.
Demanding too many compulsory extensions (suspension)
Frustration (force majeure)

Question 33

Q

Under what circumstances can the employer terminate the contract?

Answer

A

The contractor does not develop the construction phase plan before work commences
Failure to proceed regularly and diligently
A specified default notice must be served.
Breach of contract – refusal to carry out work, abandoning site , removing plant from site, employing others to undertake the works, failure to remove or rectify defective works.
Frustration (force majeure)

Question 34

Q

What is the difference between the start dates on MW and IC?

Answer

A

MW states the start date in the contract (failure to give access = EoT)
- IC’s is date of possession

Question 35

Q

What is repudiation?

Answer

A

Damages claimed by contractor as required access not given for works
Start up costs, procurement, etc.
Can agree a new date or can terminate

Question 36

Q

What does ‘time is of the essence’ mean in a construction contract? (e.g. if a break date is involved)

Answer

A

Completion needed for a particular date
If date not met, refurb is effectively worthless
Considered a fundamental breach, so can terminate
This would need to be written into the contract by a legal representative

Question 37

Q

What is the purpose of an EoT?

Answer

A

Preserves employer’s right to claim for damages

Question 38

Q

What is time at large?

Answer

A

If employer causes delay and no provision for an EoT is in the contract, the original completion date does not need to be adhered to.
No means for fixing a completion date
Contractor must complete works in a reasonable time
No liquidated damages.
May be able to claim general damages if it can be proved that the contractor does not complete the works in a reasonable time.

Question 39

Q

What is PC?

Answer

A

Works are practically complete and achieve beneficial occupation
CDM info provided for H&S file.

Question 40

Q

How do you decide on PC?

Answer

A

No patent defects
Complied sufficiently
All work defined is completed
De-minimus

Question 41

Q

What is the EoT procedure?

Answer

A

In writing stating employer or contractor led delay
Do not need a reason, but should.
Must be a relevant event
CA responds either granting or declining
Can request more information
CA to be fair and reasonable

Question 42

Q

What is culpable delay?

Answer

A

Delay caused by the contractor

Question 43

Q

What is concurrent delay?

Answer

A

Both parties liable

- EoT granted

Question 44

Q

What is a relevant event?

Answer

A

Event occurring that leads to an extension of time, such as:
Force majeure
Extreme weather
Failure to provide information
Specified peril
Variations
A relevant event does not always lead to loss and expense. For this, relevant matters must occur.

Question 45

Q

What is a relevant matter?

Answer

A

A relevant event is a matter for which the client is responsible that materially affects the progress of works. This enables the contractor to claim direct loss and or expense that has been incurred.
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 46

Q

What does retention do?

Answer

A

Give protection to the employer in the result of a latent defect.

Question 47

Q

What is the due date following PC?

Answer

A

7 days

- Certify in the normal manner

Question 48

Q

What are the effects of non-completion?

Answer

A

Employer claims liquidated damages
Issues notice stating intention to (pay less notice)
Can deduct from the next payment certificate or as a debt

Question 49

Q

What are liquidated damages based on?

Answer

A

A pre-estimate of loss

Question 50

Q

Can you claim damages if they are not included at the outset?

Answer

A

Yes, if it is left blank.

- No, if Nil is inserted.

Question 51

Q

How are liquidated damages deducted?

Answer

A

Employer issues a pay less notice stating the amount, and how this has been calculated
Employer deducts damages, CA only advises on non-completion and informs client of right to deduct.

Question 52

Q

When does a contractor not have to comply with an instruction?

Answer

A

If it would conflict in terms of the contractor’s design portion.

Question 53

Q

What is an instruction?

Answer

A

An instruction of work which the contractor must comply with.
Removing a person from site (exclusion of persons from work)
Paint in a particular colour

Question 54

Q

What is a variation?

Answer

A

Add
Omit
Change in material or method order, or period of works.

Question 55

Q

How do you complete an interim valuation?

Answer

A

Confirm all works properly executed
Materials are stored securely on site
Include any listed items (IC) are insured and stated as employer’s possessions.

Question 56

Q

What powers does the CA have?

Answer

A

Consent to a domestic subcontractor
Issue variations
Issue instructions
Agree price of variations
Exclude persons from site

Question 57

Q

What are the valuation rules for an intermediate contract?

Answer

A

Measurable work:
o Similar works of a similar nature already in the spec – can pro-rata
o Similar works with different conditions (fair allowance for additional prelims etc.)
o Works of a different nature (here the works will be valued at fair rates and prices – tender rates, BCIS, etc.)
Day work:
o Day work, material breakdown

Question 58

Q

What are the requirements for liquidated damages?

Answer

A

Need a pay less notice for deduction

- Must be issued by employer 5 days before the final date for payment.

Question 59

Q

What is time at large?

Answer

A

When non-completion is not issues and no fixed completion date it set.
Contractor has to complete in a reasonable period of time.

Question 60

Q

What is the difference between non-completion in minor works and intermediate?

Answer

A

Minor works (give what is due to contractor, state that they want an extension) – fair and reasonable basis, cannot award after contractor is in delay.
Intermediate (give notice stating reasons prior to PC date – can award 12 weeks after contractor is in delay).

Question 61

Q

What is a CA’s role under JCT?

Answer

A

Issue instructions
Certify payment
Issue EoTs
Consider all variations, loss and expense, claims and interim applications
Assess when PC has been achieved.

Question 62

Q

Who is the Employer’s Agent?

Answer

A

Typically used in D&B contracts

- Used to ensure the client’s best interests are met

Question 63

Q

What is the main contractor responsible for?

Answer

A

Construction of the project through either direct labour or subcontracted labour
Health and Safety if they are the principal contractor then CDM regs apply.
Construction Phase Plan
Prepare, develop and implement written site plans
Provide welfare facilities
Ensure all workers have site inductions
Provide all relevant information required for H&S file to the PD.

Question 64

Q

What is novation?

Answer

A

Where the contractual benefits and burdens of a contract are passed form one party to another.

Answer 65

A

No, unless they state that they have adopted the design.

Answer 66

A

Where the contractual benefits of a contract are passed from one party to another, such as the assignment of a collateral warranty from one tenant to another.

Answer 67

A

Any time as it is a statutory right, however, it can be limited within a contract.

Answer 68

A

Restricting the assignment of a collateral warranty to one time only without the written consent of the warrantor.

Answer 69

A

Give the assignee the same rights as the assignor under the contract.

Answer 70

A

A way of forming a direct contractual link between two parties which otherwise would not have had a link, such as between a subcontractor and a client.

Answer 71

A

Parkwood Leisure v Laing O’Rourke
Found that collateral warranties can be considered to be a construction contract and are therefore subject to the same provisions as the Construction Act.

Answer 72

A

Collateral warranty for a purchaser/tenant
Collateral warranty for an employer
Collateral warranty for a funder

Answer 73

A

An alternative to collateral warranties
Allows a third party to be written into a contract
Introduced as part if the contracts (third party rights act 1999)

Answer 74

A

Give the third party the benefits of the contract only, not the burdens i.e. writing in the tenant as the third party will ensure that they receive the contract benefits.

Answer 75

A

Document outlining an agreement between two parties before a formal contract has been created.
Each letter of intent is different with each being assessed based on its meaning.

Answer 76

A

An expression of the intention to enter into a contract at a future date, which does not give rise to any legal obligation. OR
An expression of the intention to enter into a contract at a future date which does not exclude the right to recover costs on a quantum merit basis
The creation of an interim contract
The creation of a legally binding contract whereby the letter can be offered and accepted.

Answer 77

A

Spending caps and expiry dates

Answer 78

A

Where the goods and services remain the property of the seller until a certain obligation is undertaken e.g. payment.

Answer 79

A

A form of financial security used to cover the client against the contractor failing to fulfil their contractual obligations.

Answer 80

A

Typically approximately 10% of the contract value to the client

Answer 81

A

They will come at the client’s cost.

Answer 82

A

Default bond

- On demand bond

Answer 83

A

Default bond can be called in when the contractor defaults on their contractual obligations but the client will have to prove they have defaulted
On demand bond – can be called in at any time without having to satisfy a pre-condition.

Answer 84

A

Advanced payment bond – financial surety to the client if they have to make an advanced payment
Retention bonds – bond taken out instead of taking retention from interim valuations
Materials off site bond.
Tender bond

Answer 85

A

If a contractor has poor cash flow

Answer 86

A

If a contract has high up front costs

Answer 87

A

Bond value will need to be updated or the additional retention can be deducted as usual.

Answer 88

A

The client is entitled to take the retention out of the next interim application.

Answer 89

A

An alternative form of surety for the client whereby a parent company will warrant the subsidiary company’s work and remedy any breaches by either stepping in to complete the works, paying damages etc.

Answer 90

A

A form of insurance that covers professional negligence.

Answer 91

A

A form of insurance that covers the injury and death arising from business activities.

Answer 92

A

A form of insurance that covers for subsequent loss or damage.

Answer 93

A

Nature of the works
Who is to design the works
Do you need a warranty?
Is it to be completed in stages?
Is PII required?

Answer 94

A

IC has a more extensive design provision
IC Has a PII clause
IC allows you to name subcontractors
IC allows you to defer possession (of the site to the contractor for up to 6 weeks)
IC allows partial possession and sectional completion provision
IC includes collateral warranty

Answer 95

A

Simple work
Designed by or on behalf of the Employer
Contract should not be long so fluctuations do not apply
Nature of works will decide, not cost

Answer 96

A

Simple work
Designed by or on behalf of the Employer
Contract should not be long so fluctuations do not apply
Nature of works will decide, not cost

Answer 97

A

It is simple
Silent on many matters
Cannot comment on contractor’s design portion
Cannot reduce contract period if work is omitted
No EoT without notice from the contractor
Can’t award opening up, or deduct for defective works if they remain

Answer 98

A

Simple content involving normal, basic trades without complex service installation
No financial limits

Answer 99

A

Where the contractor is to design discrete parts of the work
More protective to the Employer than the Minor Works contract.

Answer 100

A

When a named subcontractor is doing design work.

Answer 101

A

Where a domestic subcontractor is doing design work.

Answer 102

A

The contractor agrees to the works as shown in the first recital, by the completion date as shown in the particulars, in return for the contract sum shown the articles.

Answer 103

A

A simple specification and/or prescriptive of performance (normally a combination of both)
Contractor submits design proposals with their tender

Answer 104

A

Drawings, specifications, schedules, method statements, programmes

Answer 105

A

Under MW design can be undertaken by a competent contractor
Under Intermediate the works need to be undertaken by a professional designer (PII required)

Answer 106

A

Liaise with the main contractor to overlap the works

- Early survey work can begin on site whilst last section of demolition is taking place.

Answer 107

A

They are cheaper than drafting a bespoke contract
Offer a level of familiarity between the parties
Tried and tested contracts in court so you should be able to predict the outcome in the courts.

Answer 108

A

Costly to produce and time consuming
Contractors do not like them, as they regularly put a lot more risk on the contractor
Not tried and tested like a standard form

Answer 109

A

Client’s criteria
Procurement method you are going to use
Nature of the works
Timings – are the works required to start quickly or do you have the time to produce a robust set of documents.

Answer 110

A

Standard Building Contract
Design and Build Contract
Minor Works Conract
Intermediate Building Contract
Management Building Contract
Construction Management Contract
Major Project Construction Contract
Prime Cost Building Contract
Constructing Excellence Contract

Answer 111

A

NEC Option A (Priced contract with activity schedule)
NEC Option B (priced contract with bills of quantities)
NEC Option C (target contract with activity schedules)
NEC Option D (target contract with bills of quantities)
NEC Option E (Cost reimbursable)
NEC Option F (management contract)

Answer 112

A

Complex works of high value
Where sectional completion is required
Where there are named subcontractors
Where there are detailed control procedures

Answer 113

A

JCT Minor Works Contract (w/Contractor’s Design)
JCT Standard Building Contract
JCT Intermediate Works Contract (w/Contractor’s Design)
JCT Design & Build Contract
JCT Construction Management Contract (employer appoints separate trade contracts to carry out works and a construction manager oversees completion for a fee)
JCT Major Project Construction Contract
JCT Management Building Contract (employer appoints management contractor to oversee works and construction is completed under a series of separate works contracts which the management contractor appoints and manages for a fee)
JCT Constructing Excellence Contract (partnering/collaborative and integrated workspaces)
JCT Measured Term Contract (maintenance/minor works carried by single contractor over a period of time)
JCT Prime Cost Building Contract (early start with design documents completed after work commenced)
JCT Repair and Maintenance Contract (no CA, defined programme of repairs to specified buildings)

Answer 114

A

Terraced houses with scaffolding.

Answer 115

A

1st Ed – April 2011

- Since been withdrawn, as it is out of date.

Answer 116

A

Technically when a building contract is in place between the contractor and employer
May be implied requirement for CA to perform pre-contract services – selection of the method of procurement, calculation of liquidated damages and deciding contract type.

Answer 117

A

Agent of employer in some circumstances, but will be required to make impartial decisions in others.
Agency function and decision making function
Decision making always impartial where parties may have conflicting interests (either party may challenge the decision).
Distinct from Employer’s Agent under D&B where the employer would not normally be able to challenge the employer’s agents decisions.

Answer 118

A

Knowledge/skill to understand the relevant contractual provisions and know how to apply them.
Act in a manner that is independent, impartial and fair when making decisions.
In-depth knowledge of construction and inter-relationship between trades and construction operations so that the changes/impact of changes can be traced
Set up appropriate office procedures and record keeping commensurate for the scale/nature of the building contract and the works
Be aware of and conversant in the different types of critical path and project programming techniques.

Answer 119

A

Critical path method (sequence of critical tasks on which overall duration of the programme is dependent and float (items not on the critical path)) – selects the activities that are mainly critical whose delays would affect the deadline of the whole project
Gantt chart – illustrates scheduling of works over the duration in a horizontal bar with milestones. – simple linear visualisation of the time and trend of projects that does not show any of the dependencies between activities.
PERT (Programme evaluation review technique) – observes dependencies of the various activities, but is complicated to use for projects that have a large amount if activities/links.

Answer 120

A

Chairing meetings
Periodically inspecting the works
Giving instructions, including variations or change orders
Determining any applications for EoT by the contractor
Authorising interim payments to the contractor
Certifying date of completion
Settling adjusted sum/final account

Answer 121

A

Under MW, IC and SBC the role of CA does not include design
Undertaken by architect, lead consultant, engineers, or surveyor who has been appointed as CA.

Answer 122

A

Where CA gives advice/instructions to the contractor in relation to the works
Gives advice to the employer during the early stages of the project
Specifying materials
Care should be taken to ensure instructions given to the employer and designers are expressly approved by the client
CA should not allow responsibility to extend to checking the design of the works during inspections – obligation remains with the client

Answer 123

A

End of contractor liability (termination of any liquidated damages)
Insurance handover
Handover of the premises
Start of the rectification period
Retention releases (generally 5% to 2.5%)

Answer 124

A

No legal basis for term – it is when works are complete to the satisfaction of the CA
CA cannot certify PC if there are any outstanding works or patent defects, but they cannot withhold for minor defects outstanding
Beneficial occupation

Answer 125

A

Manuals (O&M), testing and commissioning certificates, building control sign off, completion certificates, keys.

Answer 126

A

A sum deducted at each valuation (generally 5%) to provide client with security that the contractor will return to correct any defects.

Answer 127

A

If a contractor fails to complete the works within the allotted time for reasons beyond their control, the CA can consider an application from the contractor for an EoT, which is a certificate that alters the completion date.

Answer 128

A

Time is considered at large and damages as defined in the contract may be enforceable.

Answer 129

A

Whether the cause of the delay is a relevant event (SB) or outwith the contractor’s control (MW)
Will this delay have an effect on the completion date? If so, to what extent?

Answer 130

A

In the standard building contract and intermediate building contract, relevant events are defined as
o Variations
o Loss or damage caused by specific perils
o Civil action
o Terrorism
o Force majeure
o Exceptionally adverse weather conditions
o Deferment of possession of site
o Any impediments, prevention or default by the employer
o Approximate quantity in bill of quantities inaccurate
o Statutory works
o Strikes

Answer 131

A

Standard Building Contract – contractor obliged to alert the CA to any delay at the earliest opportunity.
Once a request has been received, the CA has 12 weeks to assess and make a decision (if less than 12 weeks to completion, the CA needs to make a decision prior to completion date)
Under MW no specific timescales are defined.

Answer 132

A

A matter for which the client is responsible that materially affects the progress of works.
May give rise to a contractor’s claim for loss and expense.
Might include:
o Failure to give site possession
o Failure to provide access to/from site
o Delays in providing instructions
o Discrepancy within the contract documents
o Disruption caused by works carried out by the client
o Instructions relating to variations and expenditure of provisional sums
o Issues related to CDM

Answer 133

A

-	A relevant event which can justify an application for an extension of time, but not application of loss and expense.  Defined in MW and Intermediate BC as:
o	Fire
o	Lightning
o	Explosion
o	Storm
o	Escape of water from tank/pipe
o	Earthquake
o	Riot/civil commotion
o	Specified risks usually covered by the works insurance policy and may give rise to a claim.

Answer 134

A

Not defined in JCT so left to discretion

- Can potentially be a potential cause for dispute (NEC defines it as a 10 year event)

Answer 135

A

Clause 5.10 where details of when contractor is entitled to loss and expense is detailed.

Answer 136

A

Loss and expense section – 4.23 – matters materially affecting regular progress
4.24 – relevant matters.
4.25 deals with amount ascertained (additions to contract sum)
4.26 provides details of the contractor’s rights and remedies.

Answer 137

A

Contractor makes a claim for any direct loss and expense incurred due to a default from the employer or relevant matter – Contractor must submit any supporting information required by CA. If reasonably incurred it is considered to be an ascertained amount and is added to the contract sum.

Answer 138

A

A legally binding agreement between 2 parties to provide goods/services within a specified timeframe.

Answer 139

A

An offer
Acceptance
Consideration
Intentions to be legally bound
Capacity to make an agreement

Answer 140

A

Under hand – signed by both parties – 6 year limitation period for claims for breach of contract
Under seal (as a deed) – signed and witnessed – 12 year limitation period. Valuable consideration not required (something of value in the eyes of the law)

Answer 141

A

The contract (with any amendments)
Preliminaries
Contract Sum analysis/pricing schedule
Drawings
Specification
Planning conditions/agreements
Contractor’s proposals

Answer 142

A

JCT (Joint Contract Tribunal)
NEC (New Engineering Contract)
FIDIC (International Federation of Consulting Engineers
ICE (Institute of Civil Engineers)

Answer 143

A

Assigning the contract and rights to another party.

Answer 144

A

Purchaser and tenant (contractor to give to purchaser/tenant)
Funder warranty (contractor to give to company providing finance)
Subcontractor Purchaser and Tenant or Finance (SC to give to parties)
Subcontractor and Employer (SC to give to employer)
o Warranties will be limited to an amount and are generally only assignable twice

Answer 145

A

A guarantee to pay a certain sum of money.

Answer 146

A

Sum paid by employer up front to get the contractor ‘moving’
Employer may be concerned about paying it
Guaranteed by a bond to safeguard should the contractor default
May be used for offsite materials.

Answer 147

A

In respect of materials off site – payment bond (guarantee)
Used for large costs i.e. lift as need deposit due to long lead in times
Gives security to employer whose materials are kept elsewhere

Answer 148

A

Same as retention , but a sum is agreed in lieu of the usual percentage

Answer 149

A

It creates a contract between parties where there would usually not have been one.

Answer 150

A

Privity of contract means only the contracted parties can enforce it
Collateral warranty gives another party rights
A whole contract is assigned

Answer 151

A

If a contractor goes out of business, a contractual obligation still remains between the client and the subcontractor.

Answer 152

A

Issue an instruction to the contractor correcting it.

Answer 153

A

List of techniques which can be included within a contract to encourage collaborative working.

Answer 154

A

Oral or part oral contracts are accepted under LDEDCA (Construction Act 2011).

Answer 155

A

Schedule stating what info will be released at what time by the CA
Contractor can claim EoT if there is a delay in the release

Answer 156

A

Principal Designer

- Contractor must provide information to sufficiently meet PC requirements.

Answer 157

A

Check competence
Ensure management arrangements
Ensure sufficient time and resources
Provide PCI
Appoint a Principal Designer where there is more than one contractor
Appoint a Principal Contractor where there is more than one contractor
Ensure CPP is drawn up prior to commencement
Adequate welfare facilities on site
Check that H&S file has been prepared by the PD/PC
Retain and provide access to the H&S file.
F10 notification

Answer 158

A

Where more the one contractor
o Plan, manage and monitor the pre-construction phase including
 Taking account of the general principle of prevention
 Ensuring designers carry out their duties
 Liaise/cooperate with the principal contractor and others
o Assist client in preparation of PCI
o Health and Safety File

Answer 159

A

Eliminate hazards and reduce risks during design
Provide information about remaining risks
Check that the client is aware of their duties
Provide information needed for the H&S file

Answer 160

A

Plan, manage and monitor
Prepare, issue and implement a CPP
Share the plan
Provide welfare
Check competence
Induct and train
Consult with the workforce
Liaise with the Principal Designer
Secure the site
Provide H&S file if PD appointment has ended before project completion.

Answer 161

A

An electronic document to be completed and submitted on the HSE website when works exceed certain thresholds.

Answer 162

A

30 days on site AND more than 20 workers working simultaneously at any point in the project, or
Exceeds 500 person days (50 works working simultaneously for 10 days = 500 person days)

Answer 163

A

Standardisation and protection over common issues (offers assurances to both sides of a baseline of risk management)
Recognisable and equitable allocation of risk (both parties familiar with the risks and this ensures they are split equally across both parties)
Dispute resolution (provisions on how to deal with a dispute and allow parties to avoid more costly and drawn out court proceedings)
Dangers surrounding the industry are addressed (protect employers against poor contractors – most eventualities are covered – penalties for late completion)

Answer 164

A

Value of the contract sum
Complexity of the works
Likelihood of the works completing in stages
Whether any named subcontractors are needed
Whether collateral warranties are needed
Whether the contractor is required to design any aspects of the project
The procurement route followed

Answer 165

A

Public sector clients must follow a very prescriptive framework and it is likely that an NEC contract would be selected.
International clients may prefer the use of a FIDIC contract as it has an international standard and is translated into 20 languages

Answer 166

A

If it is abroad, it may be preferable to use FIDIC

- Delays can be more likely in different areas due to weather conditions.

Answer 167

A

On a project in Uxbridge, where there were multiple units to be refurbished across the estate, with a total contract value of £650k.
I considered the contract value, which I felt was too high for a MWC, but suitable for a IC
I felt sectional completion would be important, which would not be available for a MWC
I reviewed the complexity of the works and felt that this was a simple refurbishment, and a MWC would suffice.
The contractor was only required to design specific items relating to the installation of new M&E plant, so adding contractor’s design would be sufficient, and D&B would not be appropriate
No specific named subcontractors were required, so MWC would be sufficient
Traditional procurement route followed so MWC or IC would be fine.

Answer 168

A

Amending the contract to make it assignable without the contractor’s consent (not standard position under JCT) in the case of sale or financing. (highlighted)

Answer 169

A

I have not experienced project partnering, which I understand to involve collaboration, encouraging trust and openness amongst parties to a contract, who become dependent on each other for success. I am aware of the JCT Constructing Excellence Contract 2016.
I am also aware of the PPC2000 Standard Form of Contract for Project Partnering (amended 2013) and understand that this provides a pathway for the partnering process.

Answer 170

A

That standard forms of contract offer the benefit of reducing costs, as it eliminates the need to negotiate the many details of a contract, but there is a lower level of flexibility.
Bespoke contracts must be undertaken with care, as there is a risk that they may not adequately or fairly make provision for all circumstances, and they are not supported by a history of case law.

Answer 171

A

Where the contractor is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. High risk, as final cost unknown.
JCT Prime Cost Building Contract 2016
Option E of the NEC3 Engineering and Construction Contract

Answer 172

A

JCT Constructing Excellence Contract 2016

- NEC 3 Option C or D Contract – agree to a target cost for the works.

Answer 173

A

Minor Works
Intermediate Works
Major Works
Design and Build
Standard Building Contract
Management Building Contract
Construction Management Contract

Answer 174

A

The nature of the project – new build, refurbishment, restoration of an historic building
The scope of the works – unusual size, complexity or location of the works, access issues, specialist contractor’s works, phased or single construction operation
Measure of control by the client – design wholly in hands of client’s consultants of some details the contractor’s responsibility, or provision for specialist subcontractors
Accountability – project manager or client’s representative – who is responsible.
Appointment of a contractor – by negotiation or competitive tendering
Certainty of final cost – lump sum? Fixed price or with fluctuations?
Start and completion times – shortest programme or is a specific completion date required.
Restrictions – security problems, restrictions on noise and working hours, occupied property?
Changes during construction – likelihood of design changes during the project – can contract accommodate variations
Assessment of risks - lowest risk to client and how have risks been apportioned
Building relationships with the supply chain – long term relationship with a supplier (partnering)

Answer 175

A

JCT Prime Cost Contract 2016

Answer 176

A

Standard Building Contract
Intermediate Works Contract
Minor Works Contract
Design and Build Contract

Answer 177

A

SBCC (Scottish Building Contract Committee) approach to create as much uniformity across the UK, adopting JCT forms wherever possible.
Key differences due to different legal system – bring them in line with Scots law.

Answer 178

A

JCT is the UK’s standard construction contracts vs NEC’ more progressive approach.
o JCT uses more legal language and more precise terms and is more suited to those seeking a ‘hands off’ approach to the project and/or greater certainty about risk
o JCT is designed to transfer risk from the client to the contractor (can be adversarial)
o JCT required the client to appoint a CA/EA depending on the type of contract, who deals with processes, procedures and payment administration.
o JCT has no specific programme requirements/updates apart from start, completion and access dates and any sectional completion dates.
o Contractor only obliged to claim for more time and money after a risk event has occurred.
o Remuneration on a lump sum basis and cost variations/EOTs details with differently as time and costs are dealt with separately and an EOT does not guarantee a cost adjustment.
o More commonly used in the private sector – preferred by private commercial property developers as greater control by transferring risk as far as possible, which helps to meet the expectations of the funders.
NEC suite uses simpler language designed to establish construction principles that can be interpreted in a common sense way as part of a flexible, collaborative project management approach.
o NEC takes a ‘partnering’ approach to find a fair balance of risk.
o Requires more direct involvement by the client, so must be sufficiently experienced and resourced – responsible for the NEC Scope and requires more technical detail than the JCT employer requirements.
o NEC requires a project manager whose wider remit involves proactive project management.
o NEC requires the contractor to submit a detailed programme of work and must be kept up to date as an early warning system bringing delays to the fore and allowing them to be addressed.
o Greater flexibility with more pricing method options (reimbursable) and time and costs are grouped together as compensation events.
o Tend to be used by experienced, proactive clients with depth of management resources – public bodies and large corporate occupiers – large buildings/infrastructure.

Answer 179

A

The latham report was published in 1994, commissioned by the government to investigate the perceived problems with the construction industry which was described as ineffective, adversarial, fragmented and incapable of delivering for its customers.
He proposed that the client should be at the core of the construction process and the industry should move away from its adversarial structure, adopting a more integrated approach with greater partnering and teamwork. He praised the contracts specifically and a new version was issued in 1995 following Latham’s recommendations.

Answer 180

A

NEC contracts are designed to stimulate good management, for clarity and flexibility

Answer 181

A

Government projects, but could be used in the private sector.
It is no longer being updated, and they now use NEC4.

Answer 182

A

It provides a specification as well as bills of quantities and the spec takes precedence over drawings
Allows the design of any pat of the work to be undertaken by the contractor, and where the contractor design is required, the contractor is also responsible for subcontractor’s work.

Answer 183

A

Constructor takes responsibility for the supply of materials
Must use best endeavours at all times to minimise any delay or increase in cost to the project, but if the date of completion is adversely affected by one of the listed events, the constructor will be entitled to an EOT.
Any partnering team members can request a change if it is in the best interests of the project.
Ownership of all materials intended for the project passes to the client when they are incorporated into the project/when the constructor received payment.
Supply chain collaboration provisions including the client’s involvement in the selection of specialists and the ability for key specialists to be members of the partnering team and have representation.
Parties have contractual mechanisms to engage directly with materials suppliers.

Answer 184

A

NEC4 Facilities Management

- GC/Works /10 Standard Facilities Management Contract

Answer 185

A

I have incorporated a ‘Contractor’s Design’ element into both MW and IW contracts, providing details of the specific areas requiring design, and outlining the client’s requirements. This largely involves the design of M&E works.

Answer 186

A

This introduces a mechanism that enables the contractor and/or consultant team to share in the benefits of cost savings, but also bear some of the cost when there are cost overruns. This is typically shared in a pre-agreed proportion.

Answer 187

A

Design and Build – the tender documents outlining the employer’s requirements are prepared by consultants in the form of a brief, which is developed into an outline scheme design. A single contractor is then appointed (either in limited competition or negotiated) who will deliver the requirements as outlined.
Traditional lump sum method – client appoints consultants to prepare a specification or bill of quantities to enable the tendering process to select a contractors who is then appointed to construct the project as designed for a fixed sum within a certain time period.
Management contracting – management contractor appointed on the basis of a fixed management fee (percentage of prime cost of the project) and rates for staff costs and common user facilities. The management contractor programmes, packages and obtains tenders for the works, which are let on a competitive lump sum basis to the management contractor. The client retains the cost risk, unless there is a default by the management contractor.
Construction management – Similar to management contracting, but the project is split into packages and the client enters into separate contracts with each works contractor. They appoint a team and a construction manager on a fee basis, who manages the works.
PFI (private finance initiative) - transforms government departments and agencies into owner/operators into purchasers of services from the private sector. Private firms become the long term providers of services, rather than up-front asset builders, combining the responsibilities of designing, building, financing and operating assets in order to deliver on the services demanded by the public sector.

Answer 188

A

The intermediate contract is good for medium complexity works, up to a value of £1m.
It is less detailed than the standard building contract, but more complex than the minor works contract.
Suitable where no complex building service installations/specialist work
Limited provisions for fluctuations
It is very versatile and can be used on a wide range of project types and scales.
It has the virtue of brevity and contains relatively simple procedures.
It provides various options to integrate supplier design via the main contractor, the contractor’s subcontractors or client named specialist subcontractors
If works are more complex, a Standard Building contract may be better.
The contractor will not tend to be involved in design on a SBC
Intended for large or more complex construction projects where detailed contract provisions are needed.
It has fluctuations clauses, and if omitted, client would have to pay more for fixed costs.
It has listed subcontractors, the option of a retention bond, variation quotations, acceleration quotations, third party rights and code of practice for tests.

Answer 189

A

IC – offers flexibility, option for phased completions,

- MW – less onerous, but offers no provisions for sectional completion.

Answer 190

A

JCT Design and Build 2016 -

- NEC4 Design, Build and Operate

Answer 191

A

Used where a client has a regular programme of works that they would like to be undertaken by a single contractor (maintenance work/minor work)
Contract defines the buildings to be covered by the works, the term over which the works may be required (1-3 years) an estimate of the likely total value of the works required over the term and an estimate of the likely size of individual orders/
Appointment based on an agreed schedule of rates on which payments are calculated.

Answer 192

A

Yes – NEC offers this, as does PPC2000.

Answer 193

A

A subcontractor that contracts with the main contractor to supply or fix any materials or goods, or execute work forming part of the main contract.

Answer 194

A

Where contractors are listed on a ‘preferred’ or ‘recommended’ list of installers for the main contractor to follow.

Answer 195

A

Housing Grants, Construction and Regeneration Act 1996 is intended to ensure payments are made promptly throughout the supply chain. It applies to all contracts for construction operations including construction contracts and consultants appointments.

Answer 196

A

The Construction Act 1996 section 113 provides that any term making payment under the contract conditional on the payer receiving a payment from a third party is ineffective. Section 110 states that every construction contract is required to contain an adequate mechanism for determining what and when payments are due. ‘Pay when certified clauses are also intending to be prohibited to get around the issue.

Answer 197

A

As a general principle a contractor cannot sub contract perforamcne of any part of the contract scope without consent of the employer unless the contract expressly states otherwise.

Answer 198

A

Unless the contract states otherwise, ownership of the materials will transfer to the client, even if they have not been paid for.

Answer 199

A

Via the main contractor, as the contractual relationship is with them.

Answer 200

A

On a Standard building contract, you would be able to name listed sub-contractors that the contractor would have to choose from, but they would still be domestic subcontractors.

Answer 201

A

No, as this does not form one of the relevant events.

Answer 202

A

There is no contractual relationship between the employer and the subcontractor, so it would need to be the main contractor that removes any subcontractor.

Answer 203

A

The same as a domestic subcontractor, who contracts with the main contractor after being named on a shortlist within the main construction contract.

Answer 204

A

The client first provides a short list of acceptable subcontractors in the tender documents to the main construction contract. The tender documents allow for the subcontract package by including a provisional sum.
When tendering the main contractor makes allowance for mark up, attendance and programme in relation to the subcontract package. Once appointed, the successful contarctor seeks tenders for the package from the named subcontractors.
Once the main contractor has selected and appointed a subcontractor, the provisional sum is replaced with the actual sum.

Answer 205

A

Intermediate Works Building Contract
Standard Building Contract (and with contarctors design)
Major Project Construction Contract

Answer 206

A

It allows the client to influence the selection of subcontractors, while leaving responsibility for their performance on the main contractor.
It is useful when works require specialist workmanship and experience and assured quality is necessary.

Answer 207

A

There is no direct contractual relationship between the client and the subcontractor, so the main contractor would pay the subcontractors directly.

Answer 208

A

I have not experienced a client requesting specifically named contractors on a project, but am aware that this would influence the contract selection process (minor works would not be an option) and the list of named contractors would need to be incorporated into the main contract tender.

Answer 209

A

No, as there is no direct contractual relationship between the two parties. Payments to subcontractors should be made by the main contractor.

Answer 210

A

The contractor is responsible for the subcontractor’s performance.

Answer 211

A

One of the purposes of the ‘named subcontractor’ provisions in JACT IC 2016 is to enable the employer to procure a specialist’s design input. However, the main contractor is not responsible for defects in the named subcontractor’s design (only quality in terms of materials and workmanship).
In order to ensure adequate contractual recourse against a named subcontractor for defects in their design, the employer should obtain a warranty.

Answer 212

A

The works are checked by the main contractor, as they are responsible for the subcontractor’s performance.
The client may also request a collateral warranty to bridge the contractual gap and create a direct contractual link for the benefit of those parties that might otherwise have no recourse.

Answer 213

A

Naming of subcontractors would allow you to influence the selection, by including them on the tender list, but there would need to be a minimum of three subcontractors listed, and the contractor is not obliged to select your preferred subcontractor.
The subcontractor would be treated as a domestic subcontractor, so they would still be contracted to the main contractor, and this would allow you to influence contract selection.
Costs may increase if named subcontractors are included, as the main contractor may disproportionately mark up the prices, to bear the burden of the additional risks of working with an unknown subcontractor.

Answer 214

A

There is no contractual link between the client and the named subcontractor, and the main contractor has no liability for any design defects, only that of poor workmanship or materials.
I would recommend that my client implements a collateral warranty to bridge the contractual gap and create a direct contractual link for the benefit of those parties that might otherwise have no recourse.

Answer 215

A

Nominated subcontractors are pre-selected by the client and then imposed on the contractor once in contact.
Usually borne out of working together earlier in a project’s development e.g. feasibility stage or outline design stage where the specialist has provided input which has allowed the client to drive their project forward to the build stage.

Answer 216

A

There is a named specialist option in the JCT Standard Building Contract that allows the client to choose the subcontractor and terms, and the contractor has to take that subcontractor on, albeit they can make grounds for reasonable rejection.
In terms of pricing the works, the chosen method is typically via a prime cost sum which allows the contractor to add an uplift for attendance to manage the subcontractor through the completion of their works.
Performance issues leading to project delay and the potential for insolvency of the nominated subcontractor could have an impact on the contractor’s programme, which could be levied at the client. The contractor may also be wary of the performance issues associated with nominated contractors and may reject their appointment or seek to be indemnified before they agree to take them on. Most court rulings absolve the contractor from responsibility in such matters.
It can be done by either by naming the firm in the contract documents or issue an instruction relating to a provisional sum, which may be objected to by the contractor.

Answer 217

A

JCT Standard Builidng Contract as a named specialist.

- Not common since 2005, but is used on international contracts.

Answer 218

A

Usually borne out of working together earlier in a project’s development e.g. feasibility stage or outline design stage where the specialist has provided input which has allowed the clilent to drive their project forward to the build stage.
May have worked with them before and found them reliable.
Long delivery items where ordering is necessary before the appointment of the main contractor
Where specialist design input is needed

Answer 219

A

Via the main contractor as there is no direct contractual link to the client.

Answer 220

A

The client’s cost consultant will periodically value their work and the amount properly due is then shown as a separate amount on interim certificates. The amount is also notified to the nominated subcontractor.

Answer 221

A

The contractor must pay the nominated subcontractor the certified amount, but the contract might allow the client to pay the nominated subcontractor directly if the main contractor fails to do so.

Answer 222

A

The contractor may or may not be held responsible depending on the wording of the contract, but as the contractor has no choice in the selection of the nominated subcontractor, they generally are not held responsible for their failure to perform. However, as the contract for the nominated subcontractor is with the main contractor, not with the client, the client should ensure that they have a direct warranty with the nominated subcontractor to guarantee performance and to indemnify the client if any default allows a claim for loss and expense or extension of time by the main contractor.

Answer 223

A

Courts have held that design responsibility was limited to the extent of the nominated supplier’s liability to the main contractor by operation of the terms of the nominated subcontract.
By including full details of the design within the main contract you could argue that the design obligation is also imposed on the main contractor
The design work performed by the specialist subcontractor should be subject to a direct warranty from the specialist contractor to the employer. A contractor cannot acquire design liaibility merely because he is instructed to enter into a subcontract with a nominated subcontractor who is going to do some design work for the employer. The design work should be subject to direct warranty

Answer 224

A

The client may also request a collateral warranty to bridge the contractual gap and create a direct contractual link for the benefit of those parties that might otherwise have no recourse.

Answer 225

A

The client will take on additional risk, as the contractor is instructed to enter into a contract with them, and design/performance liability will be shifted towards the client.
There can be issues if the subcontractor becomes insolvent.
Performance issues may impact on the programme and the liability would sit with the client, in terms of EoT and loss and expense.
May lead to disputes.

Answer 226

A

The issue is that the main contractor may not wish to engage with this subcontractor and if they have a reasonable objection, it may be necessary to suggest alternatives.
It may be more expensive, as the contractor is likely to inflate costs to cover risks.
More likely to encounter disputes
Issues of performance and design liability
Collateral warranties needed.
Alternatives could be named contractors, where three are listed, and the contractor can select between them. Less liability for client to take on.
Domestic subcontractors, and all liability goes to the contractor for performance and design.

Answer 227

A

If an indemnity is agreed, then the contractor can claim if the subcontractor fails in the contractor’s obligations, but if no objection and indemnity was implemented, the contractor has no recourse against the employer for any damages caused by the subcontractor, but may be able to claim for damages against the subcontractor provided that the subcontract contains such provisions.

Answer 228

A

Offer, acceptance, intent to create legal relations and consideration

Answer 229

A

A verbal contract is a valid contract if the minimum requirements are met. It is not necessary for any of these to be written down.
The Construction Act abolished the need for construction contracts to be in writing.

Answer 230

A

Yes. It must be present for a contract to occur.

Answer 231

A

An agreement for the carrying out of construction operations, including the construction of structures forming part of the land, whether permanent or not.

Answer 232

A

All design and construction contracts, including professional appointments are likely to be construction contracts as long as they relate to ‘construction operations’. Construction operations includes a very wide range of construction operations and the most common forms of engineering operation (civil engineering), but some engineering projects such as mining and power generation are expressly excluded as are contracts with residential occupiers.

Answer 233

A

The changes implemented are mandatory and parties cannot contract out of them. If a construction contracts that do not comply with the amendments will automatically have the new rules implied into them by the Scheme for Construction Contracts. It supplements the provisions of the Act where it has deficiencies relative to the requirements of the Act, or replaces the contract where it is non compliant.

Answer 234

A

No – the laws are similar, but distinct. English and Welsh, Scottish and Northern Irish law are all separate.

Answer 235

A

A non-binding statement of future intention for the both parties (comfort letter)
An interim contract on its own terms, which will govern the relationship between the parties unless and until a formal written contract is executed.
As a final contract which, despite there having been no formal execution is deemed to have incorporated the terms and conditions of the formal written contract that the parties intended.
The first is not a formal contract and the contractor will at best only be paid on a quantum meruit basis that is reasonable for the work done.
The second will have the issue of whether the interim contract has been replaced by a full contract – if expiry dates are ignored it may be that they enter into the full binding contract that they have been negotiating.

Answer 236

A

An assignment transfers the benefit of a contract from one party to another, but only the benefit and not the burden.
A novation will transfer both the benefit and the burden of a contract from one party to another.

Answer 237

A

Under deed.
The majority are executed as deeds with the main advantage that the limitation period for bringing a claim under a deed is 12 years (under hand is only 6 years).
Where a collateral warranty consists of unilateral undertakings by one party, the contact must be under deed if it is to be enforceable.
Deeds are enforceable even when no consideration is being exchanged.

Answer 238

A

A payment schedule is included within the contract.
This outlines the starting date for the contract, all interim valuation dates, the timeframe within which the project will be completed and the estimated total contract sum.
It sets out who needs to do what and when.

Answer 239

A

A letter of intent was issued to the contractor at an early stage, including key details of the project, expressing an intention to enter into a contract at a future date to enable the contractor to start incurring preliminary costs and place orders for items with longer lead in times. It was used as interim arrangement until the contract documents could be drafted and executed.

Answer 240

A

A letter of intent usually contains little detail which means that if a court or arbitrator concludes that a contract has been formed, it is likely to be a simple contract lacking the detailed terms that cover every aspect of the project.
If parties commence work on the basis of a letter of intent or simple contracts and fail to agree on an applicable cap on liability, a court may conclude that there is a contract between the parties, but that it does not contain any cap on their liability. It is therefore safer not to commence work until there has been an agreement over the terms.
If parties opt to commence work under a letter of intent, they should have regard to scenarios where no formal contract is concluded and ensure that there are provisions in place to allocate risk.

Answer 241

A

Novation normally occurs when design consultants are initially contracted to the client, but are then novated to the contractor. This is common on design and build contracts. It effectively overwrites the contractual history to give the impression that the consultant has worked for the contractor throughout the project, but does not make the contractor responsible for any design carried out for the client prior to novating their contract.

Answer 242

A

It is the transfer of a right or invest vested in one party to another party and will entitle the assignee to demand performance of a contractual obligation.
Only rights can be transferred by assignment.
Often arises where a party to a construction contract, collateral warranty or consultant’s appointment wants to assign the benefit under that contract to a third party, such as a purchaser or tenant of a building.
A bank or funder may also want assignment to acquire the benefits of such documents in the event of default by the employer of its financial obligations during the course of the works.

Answer 243

A

There is usually a restriction on the employer’s ability to assign – often it will provide that 2 assignments are allowed. Subject to the nature of the works and whether or not they are likely to be sold often, the warranty may need to expressly provide for assignment more than twice throughout the 12 year period.

Answer 244

A

Harvey v Facey (1893) – related to the sale of a property. Facey stated their lowest price they would accept for the property, but did not indicate an intention to sell, as they had not answered the question of whether they would sell the property. This confirms that an offer requires an intention to be bound.

Answer 245

A

I would confirm that the Construction Act prohibits such a clause, as payment should not be conditional on another contractual arrangement, and that they would be able to suspend performance if payments were withheld.

Answer 246

A

Payment schedule, including notice regime
Clauses that allow employer to withhold payments without notice in the event of contractor insolvency
Clauses allowing contractor to suspend performance for non-payment
No conditional payment clauses.

Answer 247

A

A letter of intent usually contains little detail which means that if a court or arbitrator concludes that a contract has been formed, it is likely to be a simple contract lacking the detailed terms that cover every aspect of the project.
If parties commence work on the basis of a letter of intent or simple contracts and fail to agree on an applicable cap on liability, a court may conclude that there is a contract between the parties, but that it does not contain any cap on their liability. It is therefore safer not to commence work until there has been an agreement over the terms.
If parties opt to commence work under a letter of intent, they should have regard to scenarios where no formal contract is concluded and ensure that there are provisions in place to allocate risk.

Answer 248

A

It is a contract if it has been created on terms intended by the parties for incorporation into a final contract even though no formal written contract has been executed.

Answer 249

A

The current contract between the client and the design team will be rescinded/terminated and this will be overwritten by a new contract in which the original contractual obligations are carried out by the new parties. It must be agreed at the outset when consultants are appointed or the consultants are under no obligation to agree to be novated. Consent is required by all three parties.
It is essential that novation agreements are drawn up correctly, with principal contracts between clients and consultants and between client and contractors containing express terms obliging the contractor and consultant to enter into a novation agreement. A specimen form of the proposed novation agreement should be appended to the original contractual documentation otherwise there is a risk of creating an agreement which is unenforceable.
Typically novation agreements replicate the terms of the original contract, but it is possible to vary the existing terms if necessary, by inserting appropriate clauses into the novation agreement.
It may be wise to require collateral warranties from novated designers.

Answer 250

A

It is a contract if it has been created on terms intended by the parties for incorporation into a final contract even though the contractor has not formally executed it.

Answer 251

A

It enables clients to employ contractors before the main construction commences.
Typically they are part of a two step tender process, used in the first stage to procure contractor involvement in the design process.
The early involvement of the contractor should improve the buildability and cost certainty of the design and create a better project team, reducing the likelihood of disputes.
It is important that the client ensures they have some means of securing an alternative bid if the second stage negotiations fail.

Answer 252

A

A framework is an overarching agreement put in place with a provider or range of providers that enables buyers to place orders for services without running lengthy full tendering exercises.

Answer 253

A

They are used to bridge the contractual gap and create a direct contractual link for the benefit of those parties that may otherwise have no recourse.
It is a contract under which a party involved in the works warrants to a third party beneficiary that it has fulfilled its obligations under its underlying building contract, subcontract or professional appointment.
They are needed as courts decided that defects in buildings are not recoverable in tort, as they are an economic loss, which is only recoverable through a contractual relationship.

Answer 254

A

I have not experienced a pre-construction agreement on any of the projects that I have been involved in, but I am aware that they are used on a two-stage tendering process and enable a client to employ a contractor before the main contract commences to involve them in the initial design meetings to improve both buildability and cost certainty.

Answer 255

A

I have not experienced partnering on any of the projects that I have been involved in, but am aware that this a collaborative management approach that encourages openness and trust between parties to a contract. It should integrate the whole project team for the mutual benefit of all.

Answer 256

A

I have not experienced collateral warranties on any of the projects that I have been involved with, but am aware that they are used to bridge the contractual gap and create a direct contractual link for the benefit of those parties that may otherwise have no recourse.

Answer 257

A

Performance issues that lea to project delays, the potential for insolvency of the nominated contractor and the consequential effect on the contractor’s programme could be levied on the client.
The contractor may also be wary of performance issues, fearing that they would be held liable for a perceived third party supplier, and they may reject their appointment or seek to be indemnified before they agree to take them on.
Most court rulings absolve contractors from responsibility for issues caused by nominated subcontractors.

Answer 258

A

Standard forms are very often cheaper than bespoke alternatives, are familiar to the parties involved, reducing tendering, negotiation and administration costs, and tend to contain fewer unforeseen anomalies.
Bespoke contracts may not adequately or fairly make provision for all circumstances and they are not supported by a history of case law.
Large numbers of legal issues have been created by non-standard bespoke contracts and they are often costly and time consuming to draft and disputes can be costly and time consuming to resolve in court.

Answer 259

A

Contracts have commonly been formed consisting of a partnering agreement in conjunction with an appropriately amended standard form of contract. The partnering agreement generally defines the provisions of the arrangement such as attitude, partnering performance, allocation of risk and incentives for reward or penalty.
Forms of contract have been drafted that incorporate partnering principles and clauses, including NEC Partnering Option, PPC2000 Partnering Agreement.
Partnering charters are generally intended to be non-binding statements reflecting the participants’ commitment to partnering principles.
All partnering arrangements, whether strategic or project specific, will have a finite life and it is imperative that a pre-determined exit strategy is built into the agreement.

Answer 260

A

Client

- Main contractor

Answer 261

A

Form of appointment for consultants

Answer 262

A

It is the CA’s responsibility to administer the project in such a way that the correct contractual procedures and good administrative practices are followed and that the life of the building contract from inception to completion is accurately and completed recorded.

Answer 263

A

They are the same. The only difference is that an Employers Agent performs the contract administration role within design and build contracts whereas the contract administrator performs the same role in traditional forms of contract.
However, normally an employer is not able to challenge the employer’s agent’s decisions on a D&B contract. Either party can challenge the CA in a traditional contract.

Answer 264

A

On larger projects it may be appropriate to appoint a resident site inspector/clerk of works to inspect the construction works as they proceed on behalf of the client. They provide an independent assessment of the works and will generally report to the CA, but do not supervise the works.

Answer 265

A

They are separate from the project manager. Their role is to monitor the contractor’s compliance with the scope. They need the skills of the ‘clerk of works’, but they also need to be able to manage their part of the contract. This includes the management of defects, witnessing of tests and regular site inspections, providing weekly and monthly reports.

Answer 266

A

Agency and decision-making function
o Chairing meetings
o Periodically inspecting works
o Giving instructions, including variations or change orders
o Determining any applications for EoT
o Authorising interim payments to the contractor
o Certifying the date of completion
o Settling the adjusted contract sum/final account

Answer 267

A

Similar, as we follow the same processes in practice, but the Minor Works contract is simpler to administer, as there are less provisions.

Answer 268

A

No, as if the client issues the instruction, this may constitute a new contract.

Answer 269

A

There is nothing in the JCT contract that obliges the contractor to have a master programme. As it is produced after the execution of the contract, the programme does not impose any obligation on the contractor beyond those obligations imposed by the contract documents.

Answer 270

A

JCT Minor Works Contract
Procuring the design - Provide specification for the building, including drawings
Make suitable arrangements for managing the project
Compliance with CDM 2015
Make payments within the necessary timeframes

Answer 271

A

They cannot pre-appoint consultants.

Answer 272

A

Allow him to bring a claim against the contractor/subcontractor/consultant if the relevant services were performed negligently.
The contractors liability under the warranty would be not greater in extent or duration than its liability to the employer under the underlying building contract.

Answer 273

A

Article of agreement and conditions of contract
Specification
Working drawings
Bills of quantities (not in MW)
Schedules of work
Information release schedule
Schedule of tender adjustments
Requirement for contractor to provide a performance bond/obtain collateral warranty

Answer 274

A

Articles of agreement and conditions of contract
Employer’s requirements
Contractor’s proposals
Contract sum analysis
Bill of quantities

Answer 275

A

Employer’s requirements for such portions that are to be designed by the contractor
Contractor’s proposals.

Answer 276

A

A consistent approach to authoring specification information across the construction team
Use of masters to build up a library of commonly used master specifications to save time
Allows for collaboration
Products can be instantly incorporated

Answer 277

A

Prepared by a contractor as part of their tender on design and building projects.
It breaks down the contractor’s price into a form allowing the client to analyse it and compare it to other tenders. It may be used as a basis for calculating payments due to the contractor as the works progress.

Answer 278

A

An order of precedence will rank documents in the contract such that it should be clear which documents take precedence. It will often rank bespoke amendments over standard form provisions, but will need checking in each instance. More significant problems can arise when there are conflicts between provision within the same contract document or where contract documents are equally ranked.

Answer 279

A

-	Articles of Agreement
o	Date of agreement
o	Party signatures
o	Recitals
o	Articles
o	Contract particulars
o	Attestation (execution)
-	Conditions
-	Schedules

Answer 280

A

I included details of the project, describing the works as a whole, specifying general conditions and requirements for their execution, including subcontracting, approvals, testing and completion.
It includes a general summary, method statements, pre-construction information, planning conditions, party wall requirements, emergency services obligations, reporting requirements for the contractor, quality management procedures, site waste management, contractor’s site prelims such as welfare.

Answer 281

A

The contract administrator on behalf of the client

- This is issued to the client for review by their solicitors before it is executed.

Answer 282

A

The specification and tender documents are included within the main contract in an appendix.

Answer 283

A

It is not always clear which document prevails after the contract has been entered into, unless a strict order of precedence has been included.

Answer 284

A

NEC requires that the contractor prepares a programme for the works which is then submitted to the project manager for their approval and it becomes part of the ‘accepted programme’

Answer 285

A

I would explain that there are dangers with issuing bespoke contracts, as it is imperative that all of the various issues are considered and addressed within it, to avoid conflict and disputes later.
If the client does require a bespoke contract, I would recommend that they seek legal advice and request that a qualified solicitor draft a lease.

Answer 286

A

Pre-Construction Information
Employ a Principal Designer
Ensure contractor provides a construction phase plan.
H&S file
F10 notification

Answer 287

A

JCT – Interim payment certificates, certificate of practical completion, certificate of making good defects, certificate of non-completion, final certificate
ECC – unsure (highlighted)

Answer 288

A

Sectional completion – a provision with construction contracts allowing different completion dates for different sections of work – common on large projects, allowing client to take possession of the completed parts whilst construction continues on others. It is pre-planned and defined in the contract documents. It must be an express term of the contract and reflected by the fact that there are multiple completion dates rather than just one. The extent of each section must be clearly defined and liquidated damages and the amount of retention that will be released must be specified for each section. There may need to be clarification on how EoT provisions will be applied if delays to one section delay another. It follows the same handover procedures as normal completion. Some work within the section may remain outstanding such as O&Ms which will cross all sections.
Partial possession – there can be pressure for client or tenants to take possession of a building or site as it nears completion, even if the works are ongoing or there are defects to be rectified. In the absence of sectional completion, many contracts offer the more open ended option of partial possession. That part is deemed to have achieved practical completion, half of the retention must be released and the defects liability period begins and the client is responsible for insurance of that element. The contractor is not obliged to allow partial possession although it cannot be unreasonably withheld. They may not wish to if access routes are difficult to achieve and it would disrupt works and incur additional costs. This could be an issue if the occupants disrupt the contractor, which could result in an EoT and /or loss and expense.

Answer 289

A

Performance specified – refers to aspects of a building development that are identified in contract documentation to be designed by contractors/suppliers. They describe the result required from particular items and leave it to the contractor to satisfy the requirement, requiring them to complete the design.
Contractor’s design – agreement for the contractor to design specific parts of the works. The client’s requirements will generally be set out in the tender documents as employer’s requirements in response to which the contractor will submit contractor’s proposals.

Answer 290

A

changes in respect of payment, designed to reflect fair payment principles and to simplify and consolidate payment provisions, payment is monthly

Answer 291

A

May be caused by the client or neutral. The contract should set out what constitutes a relevant event.
Includes:
o Variations
o Exceptionally adverse weather
o Civil commotion/terrorism
o Failure to provide information
o Delay on the part of a nominated subcontractor
o Statutory undertaker’s work
o Delay in granting possession of the site
o Force majeure (war/epidemic)
o Loss from a specified peril such as a flood
o Supply of materials and goods by the client
o National strikes
o Changes in statutory requirement
o Delays in receiving permissions that the contractor has taken reasonable steps to avoid.

Answer 292

A

A certificate of non-completion will be issued
This entitles the client to claim for liquidated damages. These are deducted from monies otherwise due to the contractor providing that a pay less notice has been issued, setting out the basis for the calculation.

Answer 293

A

Traditional means of procuring construction and the most common.
A single lump sum price for all the work is agreed before the work begins.

Answer 294

A

Collateral warranty – imposes an extended duty of care and broader liability on parties.
Contractor’s all-risks insurance/contract works insurance – covers all risks associated with a construction contract commonly issued under the joint names of the contractor and principal client. Can be extended to cover public liability, business interruption and equipment erection.
Employers’ liability insurance – pays compensation if an employee is injured/ill due to work undertaken.
Directors/officers insurance – protects company directors and officers from claims by shareholders/creditors.
Flood insurance
Integrated project insurance – insures client and all other partners such as consultants, specialists, manufacturers, construction managers and supply chains.
Latent defects insurance – provides cover for new buildings in event that latent defects become apparent.
Legal expenses insurance
Legal indemnity insurance – recompense in the event the policy holder incurs capital loss or expense in dealing with a range of possible legal issues.
Office combined/contents/buildings insurance – insured against damage or theft.
Performance bond – means of insuring the client against the risk of a contractor failing to fulfil contractual obligations – concern if contractor becomes insolvent before completing the contract. Bond provides guaranteed compensation up to the amount of the performance bond (cost usually borne by contractor).
PII – for all providers of professional services it is essential – covers negligence.
Public liability insurance – required of contractors to provide cover against death or personal injury, or loss/damage of property of third parties.
Residual value insurance – designed to underwrite valuation of assets at the date of termination of a lease or other financial arrangement.
Terrorism insurance

Answer 295

A

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. They entitle the contractor to claim an extension of time. The contract should set out what constitutes a relevant event.

Answer 296

A

They tend to be significant events that would cause very significant damage, such as fire, explosions, earthquakes or flooding. All risk insurances tend to cover a broad range of these risks.

Answer 297

A

It is commonly used as a means of insuring a client against the risk of a contractor failing to fulfil contractual obligations to the client.
Whether or not a performance bond is required will depend in the main on the perceived financial strength of the party bidding to win the contract, as the most common concern related to a contractor becoming insolvent before completing the contract.

Answer 298

A

Generally instructions must be made formally in writing following a procedure set out in the contract.
Common for contracts to allow instructions be given verbally, but the CA should then confirm the instruction in writing to the contract administrator (confirmation of verbal instruction)
No – SBC 2016 and D&B 2016 requires oral instructions to be confirmed in wiring within 7 days.

Answer 299

A

If events occur during the course of the works that cause the completion of the works to be delayed, then these may be compensation events. They will normally result in additional payment being made to the contractor and may result in adjusting the completion date. They tend to be events that impact on the completion date and not the contractor’s fault. It does not treat compensation events as an allocation of blame, but rather an allocation of risk. Any risk not specifically identified as being attributed to the client is borne by the contractor.

Answer 300

A

Mediation – consensual process of dispute resolution in which a third party mediator, appointed by the parties to the dispute, assists in the negotiated resolution of the dispute.
Adjudication – a contractual/statutory procedure for swift interim dispute resolution provided by a third party adjudicator selected by the parties in dispute. Decisions are binding unless revised by arbitration or litigation. There is no right of appeal and limited right to resist enforcement. Generally adjudicators cannot award costs other than their own fees and expenses.
Arbitration – a private, contractual form of dispute providing for the determination of disputes by an impartial third party arbitrator or arbitration panel (lawyer/expert), select by the parties to the dispute. The decision, known as an award, is legally binding and can be enforced through the courts. Normally there is no appeal. Arbitrators have the power to ascertain facts, rather than just listen to submissions, and to order costs.

Answer 301

A

A period following practical completion (usually 6 or 12 months) during which a building contractor remains liability under a building contract for dealing with any defects which manifest themselves.

Answer 302

A

Practical completion is certified and issued alongside a snagging list.
The works are valued and payment certificates issued, and half of the retention released.
Ends contractor’s liability for liquidated damages.
Signifying the beginning of the rectification period.
Client takes possession of the site and must insure the property.

Answer 303

A

A pay less notice is issued outlining how the damages have been calculated, and the sums due are deducted from the contractor’s payment.

Answer 304

A

This would depend on the provisions within the contract. If a provision was included, liquidated damages could be reduced proportionally, however, I am aware that the courts have found that a single rate of liquidated damages can be valid and enforceable in circumstances where an employer has taken partial possession of the works unless the contract provides otherwise.

Answer 305

A

I included separate staggered completion dates for each of the sections to enable the client to take these areas back sooner.
I ensured each section was clearly defined and liquidated damages and the amount of retention was defined for each section.
A specific provision was also included to ensure that delays to one section would not lead to non-completion in the other sections.

Answer 306

A

I collect information from the Met Office, including the amount and duration of rainfall, air temperature and duration, volume and duration of lying snow, wind speed, depending on the nature of the works. I would compare this to other years, as it must be exceptionally adverse for the time and location.

Answer 307

A

No. The contractor is only able to claim for loss and expense as a result of progress of works being materially affected by relevant matters for which the client was responsible, such as:
o Failure to give possession of the site
o Failure to give contractor access to/from site
o Delays in receiving instructions
o Opening up works that prove to have been carried out in accordance with the contract
o Discrepancies in the contract documents
o Disruption caused by works being carried out by the client
o Failure by the client to supply goods/materials
o Instructions relating to variations and expenditures of provisional sums
o Inaccurate forecasting of works described by approximate quantities
o Issued relating to CDM

Answer 308

A

I would review whether the property was at high risk of fire (timber) and the value of the works.

Answer 309

A

The contractor is required to carry PII and the level and amount of cover should be included in the contract particulars (if not included it will be the aggregate amount for any one period of insurance, and if no amount is stated then no insurance will be required).

Answer 310

A

I include the client’s requirements for contractor’s design within the tender documents as ‘Employer’s Requirements’, in response to which the contractor will submit contractor’s proposal.
This includes a description of the client’s requirements and the extent of design required from the contractor, defining the success of the outcome.

Answer 311

A

JCT IC 2016 – interim valuation is generally prepared by the contractor ahead of the interim valuation date. It is checked and signed off by the CA following a site visit to check that the work has been carried out. A payment certificate and valuation document is then issued 7 days after the interim valuation date, with the final payment due 14 days from the due date.

Answer 312

A

Both parties must make provision for early warning procedures, giving early warning of anything that may delay the works, or increase costs, as soon as they become aware of them. They must then hold an early warning meeting to discuss how to avoid or mitigate impacts on the project.
If the contractor fails to give early wanting of a possible delay to the works or increase to costs, they will only be compensated for effects that would have remained anyway been if they had given early warning.

Answer 313

A

Interim certificates might include amounts in respect of off site ‘listed items’. These may be materials or goods and/or prefabricated items for inclusion in the works and the items must be listed by the employer and the list attached to the bill of quantities or specification/schedule of work and supplied to the contractor at the tender stage.
The value of a listed item may be included on an interim certificate prior to its delivery on site provided certain preconditions are fulfilled (insurance in place, is under order, is in accordance with the contract, the property is vested in it, etc).

Answer 314

A

It is sometimes necessary to provide verbal instructions on site, during site meetings, in order to prevent delays. This should always be followed up in writing to ensure accurate records are kept and to ensure the intention of the instruction is understood.

Answer 315

A

Once a request has been received, the CA would review the relevant events that have been relied upon to determine if the request is reasonable. The decision would be conveyed to the client and contractor and an extension of time would be granted or denied.

Answer 316

A

IC 16 – adjudicator may either be named or nominated by the nominating body in the contract particulars. (RICS)
The party wishing to refer a dispute to the adjudicator must first give notice and should briefly identify the dispute or difference, give details of where and when it has arisen, set out the nature of redress sought and include the names/addresses .
If no adjudicator is named the parties may either agree an adjudicator or apply to the nominator identified in the contract
The referring party must refer their dispute to the selected adjudicator within 7 days of the date of the notice and the adjudicator will then set out the procedure to be followed.
A decision must be reached within 28 days of referral.
The parties must meet their own costs of the adjudication unless they have agreed that the adjudicator has the right to award costs.

Answer 317

A

These should be calculated based on the actual loss to the client and should be calculated to include genuine loss from rent on temporary accommodation, removal costs, extra running costs, loss of rent, etc. They are generally set as a fixed daily or weekly sum, but cannot be a penalty or they would be unenforceable (must be genuine loss).

Answer 318

A

I would explain that they would not be entitled to claim liquidated damages should the construction programme be delayed due to the fault of the contractor, but that it may be possible to seek unliquidated damages. However, this may be taken to mean that losses for unliquidated damages are also £0. If parties wish to exclude liability for liquidated damages, they must state this clearly in the contract to avoid ambiguity, wither stating that unliquidated damages apply or deleting the clause altogether.

Answer 319

A

Time will be at large and the contractor will no longer be bound by the obligation to complete the works by a certain date, but should do so within a reasonable time.
Some contracts require that a certificate of non-completion is issued as a pre-requisite for deducting liquidated damages (JCT Standard Form). The Minor Works contract does not require a certificate of non-completion to be issued, but it is considered best practice to issue one anyway.
The client would only be able to claim for damages if they could establish that the contract was not completed within a reasonable time.

Answer 320

A

Breach of contract/repudiation – due to refusal to carry out work, abandoning site, removing plant from site, failure to make payments, employing others to carry out the work, failure to allow access to site, failure to proceed regularly and diligently, failure to remove/rectify defective works.
Frustration – where circumstances out of the control of both parties mean it is impossible to continue with the contract – force majeure.
Convenience – if client fails to secure sufficient funding to allow the project to proceed – can leave terminating party open to significant claims by the other party. Often only available to the client or not included within the contract.
Insolvency/bankruptcy
Suspension – may have right to terminate at the end of the suspension period if it becomes prolonged.

Answer 321

A

There is a mechanism whereby the cost saving or overrun is calculated and split between the parties according to an agreed formula at the end of the contract.

Answer 322

A

An indemnity clause is an important element of a contract as it allocates the risk for claims for loss or damage between contracted parties.
If one of the parties suffers a loss, the other party will need to reimburse them if the indemnities are present in the contract drafting.
The precise consequences of an indemnity clause will depend on its wording and how it is read in relation to the rest of the contract.
Performance bonds and parent company guarantees may also include indemnity clauses requiring the surety to indemnify the client against default by the contractor.
Designers are required to hold PII to cover such a liability.

Answer 323

A

If the client wishes to pay less than the amount paid out in the payment notice/certificate they must issue a pay less notice setting out the basis for their calculation within 5 days of the date of payment. It used to be called a withholding notice before 2011.

Answer 324

A

He can request partial possession from the contractor.
This would allow the client to take back possession unless the contractor has reasonable reasons to refuse.
This may lead to issues with delaying the contractor from completing works to other sections, which could lead to a request for an EoT/loss and expense.
Practical completion would need to be issued for this section, and liquidated damages would need to be apportioned, if this is provided for in the contract.
Client would need to insure this section of the building.

Answer 325

A

Once PC is certified, it ends the client’s rights to claim for any delays to the work, and they may lose any rights they had to claim on a performance bond.
Rectification period commences and the CA can only give instructions in relation to any incomplete work and defects that arise during this period.
The CA can no longer issue any variations
Liability to insure the property would also pass to the client, along with the risk of loss or damage to the works.

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