Contract Administration

Question 1

Do RICS provide any guidance on Contract Administration?

Answer 1

Yes - RICS Contract Administration Guidance Note 1st Edition.

(This only covers JCT minor works, intermediate and standard building contracts)

Question 2

What is the role of a Contract Administrator?

Answer 2

Administering the contract in a way that correct contractual and administrative procedures are followed, and the life of a building contract from inception to completion is accurately recorded.

Question 3

What does the CA need to include for in a final Adjusted Contract Sum (ACS)?

Answer 3

Cost for:
Prelims
Specified Works
Outstanding/Unspent PC and contingency sums
Additions/Omissions
Employer Variations
Anticipated Variations
Loss and Expense
Prolongation Costs
Potential Contractor Claims

Question 4

What do building contracts state about interim valuations?

Answer 4

The basis on which interim valuations are to be carried out;

What sums should be included in the valuations;

Against what elements retention monies should be allocated.

Question 5

Give some examples of certificates/notices that a CA may issue as part of a building contract.

Answer 5

Contract Completion Date Notice

Extensions of Time Certificate

Early/Partial Possession Certificate

Sectional Completion Certificate

Practical Completion Certificate

Question 6

When may conflict arise between the CA and Employer?

Answer 6

Where the CA gives advice to the employer or instructs the contractor on variations (e.g. specifying substitute materials, changes in layout, giving verbal instructions on site).

Giving advice to the employer during the early stages of a project where the employer is deciding what is wanted for a project.

Specifying materials, the performance of which will affect the works.

Question 7

Appointment of a Contract Administrator:

The surveyor when acting as CA should comply with RICS rules and by-laws relative to terms of appointment including:

Answer 7

1. Confirming the terms and conditions of the appointment in writing.
2. Detailing the services to be provided.
3. Confirming the basis of fees to be charges for those services.
4. Identifying that a Complaints Handling Procedure exists.

Question 8

Appointment of a Contract Administrator:

What exact details need to be agreed with the Employer at the outset?

Answer 8

A clear explanation of the scope of services to be provided;

A clear indication of what services will not be included within the appointment;

Information on how the appointment may be terminated by either party;

A dispute resolution procedure (mandatory where the employer is a business);

The level of PII to be provided, the level of which depends on the nature and extent of the project.

Question 9

Where may the CA need to issue an instruction to change works?

Answer 9

Additional / Unforeseen Works;

The employer changes their mind.

Question 10

What are the 2 types of provisional sums?

Answer 10

‘Defined’ - where the provisional sum given is for defined work, and the contractor will be deemed to have made due allowance in programming/pricing preliminaries.

‘Undefined’ - the contractor will be deemed to have NOT made any allowance in programming/pricing preliminaries.

Question 11

What is a Loss and Expense Provision?

Answer 11

Loss and Expense Provisions provide for the contractor to be reimbursed for deferment of possession or the regular process of the works having been affected by certain specified circumstances, where the contractor will not be reimbursed by other provisions of the building contract.

Question 12

What is a Letter of Intent?

Answer 12

Letters of Intent are typically used to facilitate a start of works on site, pending agreement of the contract terms, and so strictly speaking the role of CA is unlikely to commence at this stage.

Question 13

Tell me about the Housing Grants, Construction and Regeneration Act 1996?

Answer 13

Also known as ‘The Construction Act’.

Introduces new procedures into construction contracts to primarily deal with dispute resolution and ensuring cash flow is maintained.

Question 14

Procurement:

What are the 3 main procurement options?

(as detailed in ‘Deciding on the Appropriate JCT Contract 2016’)

Answer 14

Traditional Procurement

Design and Build Procurement

Management Procurement

Question 15

What is Traditional Procurement?

Answer 15

Where the design process is separate from construction, and full documentation is required before the contractor can be invited to tender for carrying out the works.

Appointment of contractor is by competitive tender.

Client has responsibility over design, quality, standards etc. through his appointed consultants. i.e. no design responsibility on the contractor.

Overall project programme can be longer as design and construction are separate processes.

Client has reasonable certainty on costs; as a contract figure is known at the outset.

Question 16

Where is Traditional Procurement typically used?

Answer 16

Lump Sum Contracts - where the contract sum is determined before construction works start.

Measurement Contracts - where the contract sum is not finalised until after completion, but is assessed on remeasurement to a previously agreed basis.

Cost Reimbursement Contracts - where the sum is arrived at on the basis of prime (actual) costs of labour, plant and materials, to which there is an added amount to cover overheads and profits.

Question 17

What is Design and Build Procurement?

Answer 17

Contractor is responsible for undertaking both design and construction of the work in return for a lump sum price.

Appointment of contractor is usually by two stage tendering, therefore keeping a competitive element but not expecting every tenderer to produce full proposals.

Client has control over the design up until the contract is let, when contract then assumes design responsibility and would appoint their own consultants to develop the design to the client’s requirements as necessary.

Valuations/Payments are often left in the hands of the contractor.

Programme length shorter as design and construction takes place at same time.

Question 18

Where is Design and Build Procurement typically used?

Answer 18

Package deal or turnkey contract - where the client settles on a complete package, usually to some standard specification from a commercial firm.

Design and Build contract - where project documents will be written with the contractor’s design obligations relating to the whole of the works in mind.

Contractor’s design for specific elements only - traditional work and materials contracts that include for limited design provision relating to an identified portion of the work.

Question 19

What is Management Procurement?

Answer 19

Client’s consultants have overall design responsibility, but the contractor is responsible for both defining packages of work and then for managing the carrying out of this work through separate trades or works contractor.

Appointment of a contractor is by negotiation or tender, and interview. He is paid a management fee, and the work packages are let by competitive tender.

No certainty over project costs at the outset and works proceed on the basis of the contract cost plan. Final costs will not be known until the last work package is let. However the costs can be monitored by the client QS and action taken as necessary.

Question 20

Where is Management Procurement typically used?

Answer 20

Management Contracts - where the management contractor manages the carrying out of the work through works contractors, who are contractually accountable to him.

Construction Management - where the construction manager undertakes to manage the carrying out of the work through trade contractors but the client is involved in the directing of the project, and the contracts with the trade contractors are directly with him.

‘Design-Manage-Construct’ - This and other variants of management procurement exist but such contracts are invariably on the basis of specially drafted forms to suit the particular situations.

Question 21

JCT Minor Works Building Contract 2016 (MW):

Where is Minor Works typically used?

Answer 21

Where works are simple in character;

Where works are designed by or on behalf of the Employer, the Employer provides the contractor with drawings and a spec to price, and an Architect/CA is employed to administer the contract.

Question 22

JCT Minor Works Building Contract 2016 (MW):

Where is Minor Works unsuitable?

Answer 22

Where bills of quantities are required;

Where provisions are required to govern work carried out by named specialists;

Where detailed control procedures are needed;

Where the contractor is to design parts of the works.

Question 23

JCT Minor Works Building Contract with Contractor’s Design 2016 (MWD):

Tell me about Minor Works with Contractor’s Design?

Answer 23

Similar to MW, but additionally provides for a Contractor’s Design Portion (CDP), i.e. the work is designed and the requirements for contractor’s design are detailed by or on behalf of the Employer; and where the contractor is required to design the CDP.

Question 24

JCT Intermediate Building Contract