Contract Administration Flashcards
Do RICS provide any guidance on Contract Administration?
Yes - RICS Contract Administration Guidance Note 1st Edition.
(This only covers JCT minor works, intermediate and standard building contracts)
What is the role of a Contract Administrator?
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.
What does the CA need to include for in a final Adjusted Contract Sum (ACS)?
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
What do building contracts state about interim valuations?
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.
Give some examples of certificates/notices that a CA may issue as part of a building contract.
Contract Completion Date Notice
Extensions of Time Certificate
Early/Partial Possession Certificate
Sectional Completion Certificate
Practical Completion Certificate
When may conflict arise between the CA and Employer?
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.
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:
- Confirming the terms and conditions of the appointment in writing.
- Detailing the services to be provided.
- Confirming the basis of fees to be charges for those services.
- Identifying that a Complaints Handling Procedure exists.
Appointment of a Contract Administrator:
What exact details need to be agreed with the Employer at the outset?
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.
Where may the CA need to issue an instruction to change works?
Additional / Unforeseen Works;
The employer changes their mind.
What are the 2 types of provisional sums?
‘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.
What is a Loss and Expense Provision?
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.
What is a Letter of Intent?
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.
Tell me about the Housing Grants, Construction and Regeneration Act 1996?
Also known as ‘The Construction Act’.
Introduces new procedures into construction contracts to primarily deal with dispute resolution and ensuring cash flow is maintained.
Procurement:
What are the 3 main procurement options?
(as detailed in ‘Deciding on the Appropriate JCT Contract 2016’)
Traditional Procurement
Design and Build Procurement
Management Procurement
What is Traditional Procurement?
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.
Where is Traditional Procurement typically used?
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.
What is Design and Build Procurement?
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.
Where is Design and Build Procurement typically used?
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.
What is Management Procurement?
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.
Where is Management Procurement typically used?
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.
JCT Minor Works Building Contract 2016 (MW):
Where is Minor Works typically used?
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.
JCT Minor Works Building Contract 2016 (MW):
Where is Minor Works unsuitable?
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.
JCT Minor Works Building Contract with Contractor’s Design 2016 (MWD):
Tell me about Minor Works with Contractor’s Design?
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.
JCT Intermediate Building Contract
