Contract Administration Flashcards

Question

What is negotiated tender?

Answer 1

- A single contractor is provided with the tender documentation by the client and then submits their initial cost to carry out the entirety of the works. - The client's professional team then negotiates the cost of the works with the contractor to achieve a final cost.

Answer 2

Advantages: - Ensures that only capable and approved firms submit tenders (as they are preselected from an approved list). - Client gets cost certainty as they are provided with a lump sum for the works. Disadvantages: - The full design has to be prepared before the works can be tendered which is not suitable whereby total programme length is important.

Answer 3

Advantages: - Allows the contractor to contribute to the design and early planning of the work (so increases buildability). - Allow the contractor to commence works on sections before the entirety of the design is complete. Disadvantages: - Hard to replace the contractor is second stage negotiations break down. - Risk of increased cost for retendering works if second stage negotiations have broken down. - The second stage is not a competitive process so the contractors cost may not be competitive. Two-stage tendering is suitable for: - Projects that are complex (require contractor's input on design). - When programme length is important. - Projects whereby the magnitude of the works are yet unknown.

Answer 4

Advantages: - The contractor is usually approached because they have carried out similar works and to the required standard before so there is greater certainty of cost and quality. - Time and cost savings by reducing input into the tendering process because only a single tender needs to be analysed. - Time saving on tender process allows earlier commencement of the works. Disadvantages: - Lack of competitive tendering may increase the cost for the works. - Negotiation process needs to be structured and controlled otherwise there could be adversity between the parties before works have even commenced. - You would usually utilise negotiated tendering when overall programme length is a priority over cost and whereby the client wants to replicate the quality of a project that the contractor has delivered before.

Answer 5

- Traditional. - Design and build (single and two stage). - Management Contracting. - Construction Management. - Framework agreements. - Partnering.

Answer 6

- Design and build is whereby the contractor is responsible for the design, planning organisation, control and construction of the works to the employer's requirements. I would utilise design and build when... - The client has a need to make an early start on site as the design can be developed during the construction phase. - The client wishes to minimise their risk in relation to the design of the works, this may be due to risky nature of the works for example replacement of combustible cladding. - The design is complex and contractor input is needed to ensure buildability. - The client does not want to or is not bothered about retaining control over the development of the design. - The JCT Design and Build, 2016 contract would be used.

Answer 7

- A procurement option whereby a client employs a management contractor to contribute to design and manage the works. - The management contractor has direct contractual links with all of the works contractors and has the responsibility for the works without carrying them out. - The management contractor breaks down the project into suitable works packages and selects works contractors through competitive open book tenders. - The client then then reimburses the cost of the works packages to the management contractor in addition to their fee. - I would utilise this procurement route when: 1. The client values an early start and overall project length over cost. 2. The works are extensive. 3. The works are complicated. - I would use the JCT Management Contract, 2016.

Answer 8

Advantages: - There is a single point of responsibility for the design and construction of the works. - Works can commence earlier on site as the design and construction process can overlap. - Contractor involvement with the design ensures buildability and expertise are incorporated into the design. It also promotes innovation in design (contractor's not constrained by detailed design) which leads to cheaper and faster construction. Disadvantages: - It may be hard for a client to prepare a sufficiently comprehensive brief. - Harder to compare tenders as the contractors each have their own designs rather than pricing for fully defined and designed works. - Designs submitted may also be uninspiring as contractors may emphasise quickness of construction over quality.

Answer 9

- A procurement strategy whereby the client engages directly with specialists for the design of the works via individual contracts. A construction manager is then employed on a consultant basis to plan, coordinate and monitor the works. - The construction manager coordinates the design team and has no contractual links with the specialist contractors or the design team. They prepare the programme, determine prelims and then break down the project into suitable works packages and obtain and evaluate tenders. - I would utilise construction management when: 1. The client is uncertain of the extent of works to be carried out. 2. Those clients that want to commence works on site quickly and is less concerned about cost certainty. 3. The client is an 'expert' and would benefit from the simple and direct legal relationships as they allow for effective redress of latent defects should they arise. - JCT Management Contract, 2016.

Answer 10

Advantages: - The construction manager can be appointed early on and can contribute to the design and planning process. - Project duration is shortened as there is an overlap between the design and planning. - Offers flexibility in design and the works as specialist contractors are let in stages. - The simple and direct contractual link between the client and expert contractors allow easy redress regarding latent defects. - Cost for the works packages may be lower due to direct contracts between the client and expert contractors. Disadvantages: - Client needs to be an 'expert' to manage the various contracts between them and specialist contractors and consultants. - Can be difficult to select a suitable construction manager as selection is based on skill and not cost of a tender submission. - Puts risks of the performance of specialist contractors largely on the employer as the construction manager has little responsibility. - There is little incentive for the construction manager to reduce costs associated with the works as their payment is fee based. - The price of the works is not confirmed until the last package of works has been let.

Answer 11

Advantages: - Overall project duration is shorter due to overlapping design and construction - There is contractor contribution to the design and planning process - Changes can be accommodated in packages not yet let if they have no further impact - The works are let competitively at current market prices on a firm price basis Disadvantages: - Can be difficult to select a suitable construction manager as selection is based on skill and not cost of a tender submission. - Puts risks of the performance of specialist contractors largely on the employer as the construction manager has little responsibility. - There is little incentive for the construction manager to reduce costs associated with the works as their payment is fee based. - The price of the works is not confirmed until the last package of works has been let.

Answer 12

- Framework agreements allow client's that are consistently instructing construction work to invite tenders from contractors to be carried out over a prolonged period of time on a call off basis as and when required. - Could use JCT FA, 2016.

Answer 13

Advantages - Reduces costs related to tendering works. - Allows quick start on site. - Integration of supply chain. - Continuity of finishes end product. - Allows development of long term and strong relationships. Disadvantages - Reduced competition resulting in higher overall project cost. - Contractors must be able to undertake all types of work - this may not be the case if not considered before creation of framework agreement.

Answer 14

- Will depend on the client or sector but the public sector is governed by EU procurement rules which limit a FA to 4 years.

Answer 15

- Suppliers are appointed on the basis of their capability & capacity to carry out the works. - I would first discuss the scope of work & size of packages likely to be involved throughout the FA & would then draw up a list of potential capable contractors either from an internal list of approved contractors which the Client may have (Network Rail) or from my own knowledge & experience & discussions with colleagues. - I would invite the contractors to pre-qualify for the Framework, requesting information such as the financial standing, work load, number & quality of staff, previous experience in the potential projects under the FA, H&S & QA procedures in place. - Appointment would be assessed based on quality & capability rather than price.

Answer 16

- Carry out random audits & benchmark with the industry data (BCIS or internally against other projects recently tendered). - Bid some of the work competitively outside the framework & invite framework contractors to tender."

Answer 17

- Documents that evidence the details of the building contract.

Answer 18

- Employer's requirements: Can be a brief written performance statement, sketch drawings, planning permission drawings or detailed drawings and bill of quantities. - Contractors proposals: These can be equally as brief or extensive as the employer's requirements. - Contract sum analysis: The CSA could be a full bills of quantities produced in accordance with NRM2 schedule of rates, or a simple elemental cost breakdown. - The building contract: JCT Design and Build, 2016. - A BIM protocol (if applicable): This creates the requirement for the contractor to provide specified BIM at defined levels of detail and incorporates provisions which supports the production of deliverables for 'data drops' at defined project stages.

Answer 19

- Drawings. - Specification. - Schedule of works. - Contract sum analysis. - Employer's requirements for any contractor designed portions. - The building contract.

Answer 20

- The contractor must be given written notice that the employer intends to pay them less than the sum certified no less than 5 days before the final date for payment in the form of a Pay Less Notice.

Answer 21

- A letter of intent or a pre-construction services agreement is a document that is used when two parties wish to commence construction works immediately prior to negotiation and formation of the final building contract. - There are two main types of letter of intent, these are: 1. Non-binding letters of intent: - Intended to give rise to a contract but confirms the parties intention to enter a contract at some point in the future. - It does not create liability for either party to enter into a contract afterwards if they not wish to. - The contractor is under no obligation to complete the works in a certain timeframe / complete them at all. - There are limited remedies under this form of letter of intent - the employer has no counterclaim for damages for where there isn't a contract in place, but they can deduct the cost from the value of the works. 2. Contractual letters of intent: - It creates some limited reciprocal rights rights and liabilities between the parties - e.g carrying out works within a timeframe etc. - It is usually limited in scope - for example the amount of time the contractor or money the contractor can take / expend. - Whether this form of letter of intent is contractually binding will depend on whether: + Offer and acceptance + Consideration + An intention to create legal relations and + Certainty as to the essential terms.

Answer 22

- Limit the scope of the letter - limiting the scope by time or money encourages the contractor to agree to a full contract within a certain period of time / once a certain value has been reached. This also protects the employer should a contract not be agreed or signed. - State whether or not the contactor should stop works once the limit has been reached and if not then on what terms and confirm the payment provisions. - Identify the works to be carried out. - Insurance: state the level of public and employer's liability in addition to all risks insurance. If the contractor is carrying out design works then level of professional indemnity insurance should be stated. - CDM Regulations requirements: state that the contractor is to act in accordance with the regulations. - Payment provisions: clearly state payment provisions. If not then Scheme of Construction Contracts default payment provisions apply. - Warranties: depending on the type of works, third parties may require collateral warranties from the contractor / sub contractors. - Copyright: if contractor carrying out design work, the letter should provide for a licence to be given to the employer allowing it to use any design documents following termination of the contractor's involvement with the works. - Termination: letter must provide for the employer to terminate the contractor's engagement and confirm that the employer has no obligation to enter into a full contract come the end of the letter of intent.

Answer 23

- Both parties can have numerous commercial issues to be resolved before the contract is fully negotiated which leads to parties neglecting these issues meaning that full execution of the contract is never undertaken meaning a contract may never be fully negotiated / executed. This can lead to future disputes and exposure of the parties as the letter of intent does not contain detailed provisions.

Answer 24

Stated by Judge in Cunninghame V Collet [2006]: - Where contract work scope and price are agreed or there is a clear mechanism in place to reach an agreement. - Where terms and conditions are (or are very likely) to be agreed. - Where start and finish dates and the outline programme are broadly agreed. - Where there are good reasons for the works to be commenced in advance of contract documents being finalised.

Answer 25

- A scheme that that applies when construction contracts do not comply with the Housing Grants, Construction and Regeneration Act. - The scheme either supplements or replaces provisions of a contract where it has deficiencies relevant to the Housing Grants, Construction and Regeneration Act. Ensures that construction contracts remain capable of performance whilst allowing regulatory control over their provisions.

Answer 26

- A contract provision that allows adjustment of the contractual completion date. - It reserves the right of the employer to claim liquidated damages in the event that the contractor is unable to complete the works by the completion date for a reason that is partly due to the employers - if the completion date could not be adjusted then the contractor would only have the complete the works with a 'reasonable time' (time at large). - It also protects the contractor as if granted it relieves the contractor of their liability to pay liquidated damages.

Answer 27

1. Contractor must notify the CA as soon as it becomes apparent to them that a delay has occurred or will likely occur: - Notification required even if contractor is not seeking an EoT. - Notice doesn't need to confirm whether the delay is a relevant event. 2. Contractor must provide CA with any further information reasonably required by the CA to assess the delay. 3. CA then assesses if there is a delay and notifies the contractor if an EoT has been granted. - No defined timeframe for the notification but the CA must notify "as soon as he is able".

Answer 28

1. Contractor notifies the Employers Agent / the Employer as soon as it is apparent that a delay has or will occur. - Notification required even if EoT is not being pursued. - Notice needs to confirm the cause of the delay AND confirm whether the delay is the result of a 'relevant event' and confirm the anticipated delay caused to the works / works section. 2. Employer's Agent / Employer must assess the delay. - Notice must confirm whether an EoT has been granted or not. - Contractor must be notified within 12 weeks from receipt of the contractor's notice / contractor must be notified before the completion date if there are less than 12 weeks until the completion date.

Answer 29

- A concurrent delay is caused two or more delays occurring at the same time. It is not to say that the delays occur simultaneously but their effects are apparent at the same time. For example exceptionally inclement weather occurs alongside a contractor's inability to source site labour.

Answer 30

- Customary to grant an extension of time for the 'dominant reason' but only where it begins and ends after the other reasons. - Even if the dominant reason is not a ground for a loss/expense claim this may still be awarded over other concurrent delays that could lead to a claim. - H Fairweather and Co Ltd V London Borough of Wandsworth [1987].

Answer 31

- The contractor would be granted an extension of time for the full length of delay caused by the relevant event. - Henry Boot Construction (UK) Ltd V Malmaison Hotel (Manchester) Ltd [1999]: + Malmaison appointed Henry Boot to construct hotel in Piccadilly, Manchester. + Judge cited example of exceptionally inclement weather occurred concurrently with a contractor's inability to source labour during the same week. + Judge stated that Architect would not be allow to deny the contractor an extension of time on the grounds that the works would have been delayed by the labour shortage - contractor entitled to an EoT by 1 week.

Answer 32

- The contractor would be granted an extension of time for the full length of delay caused by the relevant event. - Henry Boot Construction (UK) Ltd V Malmaison Hotel (Manchester) Ltd [1999].

Answer 33

- Contractor must 'constantly use his best endeavours to prevent delay and must take steps to minimise the effect of the delay on the completion date.

Answer 34

- Liquidated damages are a predetermined sum agreed between both parties of a building contract which are to be paid by the contractor to the employer whereby the contractor has failed to complete the works by the contractual completion date. - The rate for liquidated damages is stated in the contract particulars and is usually expressed as per week or part there of. - If the works are to be carried out in sections, the rate for liquidated damages can differ for different sections.

Answer 35

* Usually comprise of cost for anticipated rental income - usually informed by the client's surveyor, professional fees (CA etc), any other costs incurred as a result of the delay e.g finding alternative accommodation for storage of a an incoming tenant's property etc. * It is no longer essential for the rate to be calculated on the basis of a genuine pre-estimate of the loss likely to be suffered by the employer - reference ParkingEye Limited V Beavis. * Provided the amount is not 'out of all proportion' to the likely loss, damages will be recoverable and the employer will not have to prove their loss, even if it is much less than the amount of damages being claimed (BFI Group of Companies v DCB Integration Systems).

Answer 36

- If 'nill' is inserted as the rate of liquidated damages into the contract, this will likely prevent the contractor claiming liquidated damages or general damages (Temloc V Errill). - If nothing is inserted as the rate of liquidated damages then the employer may be able to claim general damages.

Answer 37

- If 'nill' is inserted as the rate of liquidated damages into the contract, this will likely prevent the contractor claiming liquidated damages or general damages (Temloc V Errill). - If nothing is inserted as the rate of liquidated damages then the employer may be able to claim general damages.

Answer 38

1. Contractor must have failed to complete the works by the contractual completion date. 2. Employer / CA must have fulfilled any duties with respect to the award for an EoT (if EoT should have been granted then liquidated damages will not be claimable). 3. Employer / CA must have issued a certificate of non-completion (JCT Intermediate) / non-completion notice (Design and Build) to the contractor. 4. Employer must have notified the the contractor before the due date of the final payment (D&B) / before the date of the final certificate that it intends to withhold payment or requires payment for liquidated damages. 5. A second notice is then required to state how the liquidated damages will be claimed.

Answer 39

- Advise the client that they must provide formal instruction if they wish for the late tender to be included.

Answer 40

- Analyse all tenders methodically and logically to ensure the tenders have been analysed on a like-for-like basis.

Answer 41

- Arithmetical errors. - Obvious errors in the programme dates / lead in and contract period. - Conflicts of interest - review proposed sub-contractors.

Answer 42

- According to the JCT tendering guidance note, the employer has agent / the CA has two options: 1. Notify the tenderer of the errors and give them chance to confirm or withdraw their tender. If withdrawn the next most financially advantageous tender is analysed. If they confirm their tender then a letter of endorsement should be included within the priced documents prior to acceptance. The endorsement should confirm that all rates / costs in the documents (excluding contingencies, PS and prelims) are to be considered as reduced or increased - endorsement should be signed by both parties. 2. Notify the tenderer and give them opportunity of confirming or correcting it. If the tendered elects not to amend then an endorsement will be required to confirm this. If the tenderer elects to amend their tender then they should be either given access to the original tender to make adjustments or confirm their adjustments in a letter. The letter is then appended to any tender acceptance letter.

Answer 43

- List of tenders received. - Initial tender return totals. - Any qualifications identified. - Any post tender adjustments following queries / analysis. - The revised tender sum. - Comparison of the tender returns - in a tender analysis document. - Comparison with the pre-tender estimate. - Recommendations.

Answer 44

* **Option A (new buildings)** - requires the _contractor_ to take out and maintain all risks insurance of the works. * **Option B (new buildings)** - requires the _employer_ to take out and maintain all risks insurance of the works. * **Option C (existing structures)** - requires the _employer_ to take out and maintain (a) insurance in respect of the existing structure and their contents and (b) all risks insurance of the works.

Answer 45

Appropriate: * When works are simple in nature - works themselves are simple and involve recognised basic trades and skills without very complex building services installations. * When works are designed by or on behalf of the employer and fairly detailed contract provisions are necessary. * When employer provides contractor with drawings, bills of quantities, a specification or work schedule to define the works. * Where an Architect of Contract Administrator will administer the contract. Can be used: * When works are to be carried out in sections. * by both private and local authority employers. * Where provisions are required to cover named specialists (**where the work is of a specialist nature and allows the employer the opportunity to select a sub-contractor with the relevant expertise).** * Where additional provisions not found in minor works contract needed - partial possession, bonds and collateral warranties needed. * Using traditional procurement method. Not suitable: * where contractor is to design discrete parts - need ICD. * for D&B procurement route.

Answer 46

**_Appropriate:_** * When work involved is simple in character. * Where work designed by or on behalf of the employer. * Where the Employer is to provide drawings and/or a specification and/or work schedules to define adequately the quantity and quality of the work. * Where an Architect/Contract Administrator is to administer the conditions. **_Can be used:_** * By private and local authority employers. **_Not suitable:_** * Where bills of quantities are required. * Where provisions are required to govern work carried out by named specialists. * Where detailed control provisions are needed * D&B procurement route. * When sectional completion partial possession required. * When performance bonds required.

Answer 47

* It is used when the contactor has agreed to design specific parts of the works. They will usually sub-contract the works whereby a specialist installer or manufacturer is required. Ensures buildability and other factors are taken into account. The contractor is responsible for the procurement and must adhere to the programme. * Specialist works can include; installation of services, roof replacement etc. * Takes the liability of the design off the client and design team.

Answer 48

* **Introductions** – if parties haven’t met before then good to define everyone’s roles in person. * **Health and safety** – F10, Construction Phase Plan, COSHH and CDM regs, site cleanliness, temporary works, contractor’s compound. * **Contractor / site management** – Site manager, office support and progress reports. * **Communication** – Instructions and methods of communication. * **Contract details**: Date of possession, contract sum, programme, completion date, contractor and employers insurances. * **Site** – Access, neighbours, accommodations, working hours, security and any other restrictions. * **Statutory approvals** – Building control. * **Progress meets and valuations** – Agree progress meetings (informal every 2 weeks and formal once a month close to valuation date as possible). * **Info required**. * **Any other business**.

Answer 49

* Procurement is the purchasing of goods and services. * **Construction management:** works constructed by numerous trade contractors who are employed by the client but managed by a construction manager (employer’s agent). Allows early appointment of construction manager who can improve buildability and package works. Way of client being able to keep tabs on quality of works. * **Design and build:** Main contractor employed to design and construct the works. Can have single or two stage tendering process – used when specialist design needed / put responsibility of works on contractor (roof / cladding). * **Framework agreement:** Used when client is regularly instructing works and uses a contractor regularly – cuts down lead ins and costs. Contractors submit tender and are instructed on a call off basis. * **Lump sum:** The most traditional form of procurement – a lump sum price for all the works is agreed before they commence. Usually used when a project is well defined and major changes are unlikely.

Answer 50

* A tender is a submission made by a prospective supplier in response to an invitation to tender and makes an offer for the supply of goods or services. * **Single stage:** All information is made available to the contractor to allow them to price when tendering commences. Invitation to tender is issued to prospective contractors, tenders are returned, and a preferred tender is selected and the contractor appointed. * **Two-stage:** First stage involves a limited appointment to allow works to commence (maybe enabling works), in the second stage a fixed price is negotiated for the contract. Allow early appointment and commencement of the works. * **Negotiated:** Single contractor is invited to tender; they submit their tender which the CA will then review and negotiate costs before appointment. Utilised where works are highly specialised, or where the contractor has completed a very similar job for the employer before + allows for reduced time and costs tendering (can commence works quicker). Drawback is that competitive pricing might be reduced. * **Selective tendering:** Contractors can submit tenders only by invitation. Pre-selected list of contractors (usually ‘approved’ contractors) based on their suitability for an instruction. Their performance is regularly monitored to allow them to remain on the approved list.

Answer 51

* They are not a party to the contract and therefore must repair impartial at all times. Simply there to administer the contract. * Chair pre contract meeting. * Issue contract instructions. * Deal with payment provisions. * Manage change procedures – design changes etc. * Involve with dispute avoidance. * Issue certificates. * Deal with completion / possession issues.

Answer 52

* Is used for the design and build procurement route (employer appoints main contractor and then gets them to design and then undertake the works, as opposed to using consultants to design works then appoint contractor). * Can ensure good buildability (designed by contractor). * Some consider only effective for smaller projects where they don’t need as much control / are not as concerned with the design. * Client may just like using the contract – has amendments for it. * Client doesn’t want liability for the works – cladding replacement etc. * Employer will issue ‘employers’ requirements’: gives the minimum standards that the contractor needs to achieve with the works, the scope of services required and allocation of risk for unknown items. * Payment notices given instead of payment certs. * Retention is 3% rather than 5% - contractor is taking on greater portion of the responsibility.

Answer 53

* Intermediate Building Contract 2016 + with contractor’s design portion. * Minor Works Building Contract 2016 + with contractor’s design portion. * Design and Build Contract 2016. * Management Building Contract 2016. * Measured Term Contract 2016.

Answer 54

**_Appropriate:_** * Where detailed contract provisions are necessary and Employer’s Requirements have been prepared and provided to the Contractor. * Where the Contractor is not only to carry out and complete the works, but also to complete the design. * Where the Employer employs an agent (who may be an external consultant or employee) to administer the conditions. **_Can be used:_** * Where the works are to be carried out in sections. **_Not suitable_** Where the Contractor’s design responsibility is restricted to discrete parts of the works and he is not responsible for completing the design for the whole works, consideration should be given to using one of the JCT contracts that provide for the employment of an Architect/Contract Administrator and limited design input by the Contractor.

Answer 55

JCT guidance document - Deciding on the appropriate JCT contracts

Answer 56

The contract administrator under JCT design and build contracts

Answer 57

A domestic sub-contractor is any sub-contractor, other than a nominated-sub contractor, that the main contractor sub-contracts to carry out part of the works. The work of the sub-contractor is the responsibility of the main contractor as far as the contract between the main contractor and the client is concerned

Answer 58

* Sub-contractor design * Section completion * Named sub-contractors * Clerk of works * QS * Programme as contract documents * Relevant events / matters * Novation / Assignment

Answer 59

* Liquidated damages are a pre-determined sum of money payable in respect of a specific breach of contract. Most commonly we associate liquidated damages with delay. In this context the parties usually agree in the contract that in the event the contractor is late in reaching completion of the works for handover then the contractor shall pay to the client the sum of [x] per day or per week that the works are delayed. See B is for Breach for more information. * Unliquidated damages by contrast are the damages claimed when the loss has not been pre-determined by the parties. I.e. unliquidated damages are claimed for any breach of contract which is not subject to a liquidated damages clause.

Answer 60

* Recitals * Articles * Contract Particulars * Attestation * Conditions * Schedules

Answer 61

Contract Particulars This section contains the all-important contract clauses covering items including: • Carrying out the works • Control of the works • Payment • Injury, damage and insurance • Termination • Dispute

Answer 62

This is determined by the amount a project critical path is delayed by a relevant event such as the client failing to provide access or providing delayed instructions or constant variations. The EoT claim is reviewed to determine how the contractor has justified it and I then review this and site notes/emails to determine if the contractor made reasonable efforts to avoid the delay or if the delay was down to their own performances. Where they have cited adverse weather, I will take an average of the last 10 years from met office to determine if the weather at the time of the event was to be unexpected or not.

Answer 63

Single stage – go out to tender at Stage 4 which is technical design. Two stage – go out to tender at stage 2 or 3 which is concept design or spatial coordination.

Answer 64

* JCT * NEC * FIDIC

Answer 65

They are both standard forms of contract. JCT is designed for domestic projects whereas NEC is suitable for domestic and international. NEC came after the Latham report and aims to offer better clarity, flexibility and better management processes. In NEC, the contract is administered by a PM and in JCT, it is a CA. NEC requires and enables a more proactive and collaborative approach whereas JCT is aimed at focussing on liabilities and risk. NEC has early warning notices and compensation events rather than relevant events/matters

Answer 66

* A contract document that allows an employer to create direct contractual links with a party who isn't party to the main construction contract. * This protects the employer in the event that the contractor becomes insolvent as the employer would have no direct link with any subcontractor and therefore no form of redress if defects arise. * JCT provide standard forms of collateral warranties which can be utilised.

Answer 67

* A contractual bond that guarantees the completion of a project. If the contractor does not complete the project, the bond guarantees against financial loss to the client for a specified amount which is usually 10% of the contract value. * It is obtained via a bondsman and protects the employer if the contractor becomes involvement - the pay out is there to essentially pay the cost of finding and appointing another contractor to complete the works. * Performance bonds will need to run to the end of the rectification period to ensure they are covered for any defects that arise.

Answer 68

It is a written or verbal agreement between parties to carry out a service in exchange for some form of repayment.

Answer 69

A patent defect is identified during the rectification period as a result of reasonable inspection.

Answer 70

A latent defect exists before its discovery. It cannot be identified from reasonable inspections; hidden or concealed flaw.

Answer 71

* Professional indemnity * Public liability * Employers liability * All risks insurance

Answer 72

Drawings, schedule of work, preliminaries, pre ambles, construction programme, the contracts, photo report, asbestos and H&S information

Answer 73

* Offer * Acceptance * Consideration * Intention to have Legal relations * Ability / Performance

Answer 74

Relevant matters are referred to in some construction contracts, such as JCT contracts. A relevant matter is a matter for which the client is responsible that materially affects the progress of the works. This may enable the contractor to claim direct loss and / or expense that has been incurred. Relevant matters might include: * 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. Relevant matters should not be confused with relevant events. A relevant event is an event that causes a delay to the completion date, which is caused by the client, or is a neutral event not caused by either party. Relevant events entitle the contractor to claim an extension of time; that is for the completion date to be moved. A relevant event does not necessarily entitle the contractor to claim loss and expense. Similarly, a relevant matter need not necessarily result in a delay to the completion date, and so may not always entitle the contractor to an extension of time. NEC contracts deal with these issues under the single heading ‘compensation events’. They do not treat compensation events as an allocation of blame, but rather an allocation of risk. Any risk that is not specifically identified as being attributed to the client is borne by the contractor. The Society of Construction Law Delay and Disruption Protocol, 2nd edition, refers to an event or cause of delay or disruption which under the contract is at the risk and responsibility of the employer, as an 'employer risk event'.

Answer 75

Delays on a project will have different contractual consequences depending on the cause of the delay: Where a delay which impacts on the completion date is caused by the contractor (culpable delay), the contractor will be liable to pay liquidated and ascertained damages (LADs) to the client. Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’, for which the contractor may be entitled to an extension of time and to claim loss and expense incurred as a direct result of the delay. A relevant event may be caused by the client, or may be a neutral event such as exceptionally adverse weather. The contract should set out what constitutes a relevant event. Relevant events may include: * Variations. * Exceptionally adverse weather. * Civil commotion or terrorism. * Failure to provide information * Delay on the part of a nominated sub-contractor. * Statutory undertaker’s work. * Delay in giving the contractor possession of the site. * Force majeure (events that are beyond the reasonable control of a party, such as a war or an epidemic). * Loss from a specified peril such as flood. * The supply of materials and goods by the client. * National strikes. * Changes in statutory requirements. Delays in receiving permissions that the contractor has taken reasonable steps to avoid. When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay. If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted. Claims for extension of time can run alongside claims for loss and expense however, one need not necessarily lead to the other. The contractor is required to prevent or mitigate the delay and any resulting loss, even where the fault is not their own. Mechanisms allowing extensions of time are not simply for the contractor's benefit. If there was no such mechanism and a delay occurred which was not the contractor’s fault, then the contractor would no longer be required to complete the works by the completion date and would only then have to complete the works in a 'reasonable' time. The client would lose any right to liquidated damages. NB: On NEC contracts, delays are dealt with slightly differently and are referred to as 'compensation events'.

Answer 76

Under JCT MW this is by default 3 months however I would consider if this should be extended to allow for seasonal changes.

Answer 77

Cost, time, quality

Answer 78

Retention is a sum deduced at each valuation (generally 5%) to provide the client with security that the contractor will return to correct any defects.

Answer 79

Frustration occurs when circumstances that are not the fault of either party mean it is impossible to continue with the contract. The contract will come to an end without any party being considered to be in breach. it does not cover contracts that were always going to be impossible to perform. For example, it would not apply in the case of a contract to construct a tall building that could not be fulfilled because the ground conditions were completely unsuitable. Some events that may lead to a frustrated contract include: The government imposing unforeseen restrictions on building. Laws being passed that make it illegal to undertake what was promised under the contract The building where works were to be carried out being destroyed. An event that was crucial for the contractual obligations being cancelled.

Answer 80

There is no legal basis for the term Practical Completion. It is when the works are complete to the satisfaction of the Contract Administrator. The CA cannot certify PC of there are outstanding works or patent defects, but they also cannot withhold PC for minor defects outstanding.

Answer 81

* End of contractor liability (termination of any liquidated damages) * Insurance handover * Handover of the premises * Beginning of the defects liability period * Retention releases, generally from 5% to 2.5%

Answer 82

* JCT does not define exceptionally adverse weather condition, meaning it is left to discretion. This means that it can be a potential cause for dispute. * NEC defines it as a 1 in 10 year event, otherwise the contractor should have allowed for the effects of weather within their price

Answer 83

* Loss of income from rent * Cost of alternative accommodation incurred during the delay * Loss of profit to the business at the property where the works are being carried out.

Answer 84

Construction contracts will generally provide for the contractor to claim direct loss and/or expense as a result of the progress of the works being materially affected by relevant matters for which the client is responsible, such as: * 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. * Claims may comprise costs resulting from disruption to the works or from delays to the works (prolongation). The contractor must give written notice of a claim as soon as it becomes reasonably apparent that the regular progress of the works is being materially affected. This need not necessarily result in a delay to the completion date, and so claims for loss and expense and claims for extensions of time do not necessarily always run together. Claims are restricted to 'direct' loss and expense and so 'consequential losses' (such as lost production) are generally excluded. Direct losses are those that 'flow naturally' from the breach of contract. There is disparity between contract types about whether items such as head office overheads can be included in claims for loss and expense, and some court rulings have allowed such claims. If there are specific consequential losses which the parties to the contract wish to exclude, it may be prudent therefore to state these explicitly within the contract. NB: The New Engineering Contract (NEC3) contains provision for the contractor to claim payment for 'compensation events' rather than loss and expense.

Answer 85

* The contractor must provide written notice as soon as it becomes apparent that the work will not complete on time. * Notice must include the conditions causing the delay. * CA must then decide if the condition is relevant event and whether an extension of time is granted. * Must notify the contractor as soon as decision is made and within 12 weeks of receipt of notice. If the EOT is warranted, the CA has to fix a later completion date and notify the contractor.

Answer 86

* The contractor must have failed to complete the works by the date for completion or any extended date (if an EoT has altered the completion date). * The contract administrator must have issued a certificate of non-completion (cl.2.22). * The contract administrator must have fulfilled all duties with respect to the award for an extension of time (cl.19.2). * The employer must have given the contractor written notice of its intention before the date for the final certificate.

Answer 87

* The contractor must have failed to complete the works by the completion date. * The employer (or employer's agent) must have fulfilled all duties with respect to the award for an EoT. * The employer (or employer's agent) must have issued a non-completion notice to the contractor. * The employer (or employer's agent) must have notified the contractor before the due date for the final payment that it may require payment of, or withold, liquidated damages.

Answer 88

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Answer 89

**_Advice:_** * I advised that depending on the contents of a letter of intent, their legal effect can range dramatically and therefore it would need to be carefully drafted by their lawyers to include key provisions that would protect both the employers and contractor's positions. * I advised that a letter of intent should only be used when; the scope of works and price have been agreed, where terms and conditions are agreed (or likely to be agreed), where start and end dates of the project are broadly agreed, when there is a good reason to not wait until the main contract has been agreed. * I explained that the client and contractor should have real intentions to enter into the full contract and not issue further letters of intent as if key provisions were not included within the letter of intent that would be included in the full building contract both parties would be exposed. For example if the LOI didn't include a provision for liquidated damages the employer would not be able to claim if non-completion had occurred. **_Outcome:_** The client's lawyers issued a compressive letter of intent that included: * **Contract sum** for the works: £600K. * **Contract period** for the full scope of works. * **Authority to proceed** to cost of £106K - based on a pro rata rate of the contract sum over a 2 week period which was how long it was anticipated to take full agreement and execution of the building contract. * **Liquidated damages**: £35K per week for each section of the works. * **Insurance:** PII, PLI * **CDM Regulations:** CPP and general CDM obligations.

Answer 90

* The contractor needed to make an earlier start on site than originally agreed as the employer had interest for the property from very reputable prospective tenant. However, the tenant would only want the unit if the works could be completed by certain dates which meant the full building contracts had not been drafted or agreed at that point. Therefore a letter of intent would mobilise the contractor to commence works early.

Answer 91

* The client required the full design prepared the works were tendered and required a lump sum cost for the works to ensure the project was feasible and they could gain board approval for capital. * Works were relatively simple in nature and therefore didn't require contractor input for buildability (would do in first stage of two stage tendering).

Answer 92

* Loss of rental income. * Professional fees (e.g CA fees). * Looking for alternative accommodation (in case of residential works).

Answer 93

* Under the terms of the contract the client could have claimed for liquidated damages however, as they did not have a tenant lined up for the unit and therefore were not suffering any actual loss they chose not to pursue LADs to protect the professional relationship between them and the contractor, particularly as the contractor had been the most competitive for number of refurbishment projects across the estate in the past.

Answer 94

* Relieves the contractor from having to pay liquidated damages. * Reserves the employer's right to claim liquidated damages - if an extension of time couldnt be granted then it would be time at large and contractor would only need to complete the works within a reasonable time. * Contractor is still liable for securing the site / insuring.

Answer 95

* **_Relevant event_** is something that causes a project to overrun and is outside of the contractor's control and are listed in the JCT contract, these can include acts of god, adverse weather conditions, specified perils (fire and flood etc), delays handling over possession of the site, variations and instructions. * **_Relevant matter_** are matters for which the employer is responsible for and that materially effect the progress of the works and result in the contractor incurring loss and expense. These can include: delays in handing over possession of the site to the contractor, delays in issuing instructions, discrepancies in contract documents.

Answer 96

* The contractor must have failed to have complete the works by the date for completion or any extended date. * The contract administrator must have issued a certificate of non-completion. * The contract administrator must have fulfilled all duties with respect to the award of an extension of time. * The employer must have given the contractor written notice of its intension to claim liquidated damages before the date of the final certificate.

Answer 97

1. Valuation date occurs at monthly intervals as stated in the contract particulars (or closest working business day). 2. If the contractor issues their application for payment prior to or on the interim valuation date then then due date is 7 days after the interim valuation date. 3. If the contractor submits their interim payment application later than the valuation date the due date is 7 days from the date of receipt. 4. The employer / EA must issue a payment notice five days after the due date. 5. The final date for payment is 14 days from the due date. 6. If employer wishes to pay contractor less than sum stated in interim certificate then they must issue a pay less notice no later than 5 days before the final date for payment. Note: the overall effect of the payment mechanism is that **_the contractor's interim payment application is a condition precedent to its right to be paid!_**

Answer 98

They don't get paid! Receipt of their interim application for payment is a precedent for their payment.

Answer 99

* Provision that allows contractor to add simple interest on late payments at 5% over the base rate of the Bank of England. Interest accrues from the final date for payment until paid by the employer. * Provision that allows contractor ‘right of suspension’. If the contractor fails to pay the contractor by the final date for payment the contractor has a right to suspend performance of all its' obligations under the contract which would include carrying out the work and any insurance obligations. * Right to terminate the contract - must give the employer notice of the intention.

Answer 100

* Where a certificate has been issued, the contractor is only entitled to the amount shown, irrespective of the sum stated in their application for payment and even if the certificate contains an error. * Lubenham v South Pembrokeshire District Council - stated that the contractors remedy for an error made in a cert is to request it is corrected in the next cert or to bring proceedings (such as adjudication) to have the certificate adjusted.

Answer 101

It is an insurance policy that covers all risks normally associated with a construction project and will protect against: * The cost for unforeseen loss or damage to building works. * Public liability. * Tools. * Plant owned by the policy holder.

Answer 102

* Option A insurance is taken out by the contractor and is to be for the full reinstatement value of the works, including professional fees, to the extent entered in the contract particulars. If no rate is stated for professional fees, the default is 15%. * The contractor is responsible for keeping the works fully covered and in the event of under insurance, will be liable for any shortfall in recovery from the insurers.

Answer 103

* Insurance option B is taken out by the employer, and must be for the full reinstatement value of the works, including professional fees. The employer is responsible for keeping the works full covered and, in the event of under-insurance, will be liable for any shortfall.

Answer 104

* Insurance Option C is applicable where work is being carried out to existing buildings. It include two insurances, both taken out by the employer. The existing structure and contents must be insured against ‘Specified Perils’. New works in, or extensions to, existing buildings must be covered by an ‘All Risks’ insurance policy, which like Options A & B, must be for the full reinstatement value of the works, including professional fees.

Answer 105

* _Description of the works_ – what risks are identified as part of the works. * _Management of the works_ - Communication information (project directory and emergency out of hours contacts), working hours, training (toolbox talks and site inductions), welfare facilities, emergency procedures (nearest A&E), emergency, evacuation plan, site waste management plan. * _Information on how significant site risks will be managed_ – site traffic management plan, handling of deliveries, site set-up (contractor’s compound), noisy works (abide by LA rules). * _The health and safety file_

Answer 106

JCT contract states: * All instructions must be in writing and sent in the format and by the means which the parties ‘have agreed or may from time to time agree in writing’. So written electronic communication can be used to instruct. If no means have been agreed, then written instructions need to be sent via ‘any effective means’. * Oral instructions have no effect and will not be valid into confirmed in writing by the contract administrator. If contractor carries out work from oral instruction before receiving it in writing, they are proceeding at their own risk.

Answer 107

* The document covers the appointing of a contract administrator, describing the role and its responsibilities. Appendices feature useful checklists and also information regarding office administrative procedures. * RICS state on their website that it has been withdrawn due to being ‘out of date’. * To my knowledge there is not any replacement document but I refer to the Sara Lupten guides and the JCT Practise notes for how to undertake specific CA duties.

Answer 108

* **Introductions** – if parties haven’t met before then good to define everyone’s roles in person. * **Health and safety** – F10, Construction Phase Plan, COSHH and CDM regs, site cleanliness, temporary works, contractor’s compound. * **Contractor / site management** – Site manager, office support and progress reports. * **Communication** – Instructions and methods of communication. * **Contract details**: Date of possession, contract sum, programme, completion date, contractor and employers insurances. * **Site** – Access, neighbours, accommodations, working hours, security and any other restrictions. * **Statutory approvals** – Building control. * **Progress meets and valuations** – Agree progress meetings (informal every 2 weeks and formal once a month close to valuation date as possible). * **Info required**. * **Any other business**.

Answer 109

* Date, time and location of meeting. * Attendees and apologies. * Review of previous minutes. * Program / progress of works. * Site management. * H&S. * Matters arising. * Client comments. * Actions.

Answer 110

* Amendments to contract clauses that usually the employer wishes to make do protect themselves usually from issues they have had in the past or to adapt the contract for the works. * I have done this for my case study at the request of the client’s solicitors who issued the contract amendments which were then integrated into the standard form contract. * The main addition was a clause that outlined certain works / deleterious materials that should not be specified such as high alumina cement, wood wool slabs and asbestos. * Only solicitors should design contract amendments as incorrectly modifying standard forms of contract can lead to no interaction / cross referencing of key clauses (not enforceable if not properly cross referenced), issues with interaction of common law – e.g modifying EoT clauses can lead to unwanted outcomes .

Answer 111

* The CA is permitted under the JCT contracts to instruct the contractor to open up completed work for inspection or arrange for testing of any of the work or materials if they have reasonable grounds for suspecting defective work or materials. * CA should instruct opening up as soon as it becomes apparent that it needs actioning to prevent any additional further costs. * If no defective works are observed - costs for opening up and testing are added to the contract sum and the contractor may be entitled to and Extension of Time and Loss and/or expense. * If work is found to be defective, the contactor must provide a written proposal detailing how they will establish if any other defective works. If the CA does not receive this in 7 days or cannot wait they can instruct further opening up work which the contractor will have to incur the expense for even if the additional testing does not uncover any additional defective works. * The contractor has the right to object within ten days of receipt of the instruction to undertaken additional opening up works. If the CA and PC cannot agree then the Employer and Principal Contractor may need to refer to the contractual dispute resolution processes.

Answer 112

* I try to ensure that progress meetings align as close to the due date of each interim valuation to ensure I can view the current progress of works and value them as accurately as possible. * On site I will check off all works completed by observing them against the previous valuation document. * I will then review the contractor's Application for Payment when received and input the valuation percentages I believe are correct against all works items. I will request for vesting certificates for any offsite materials that the contractor has included within their application for payment. * I then produce a payment certificate and issue to the employer and contractor, along with formal correspondence and the valuation document.

Answer 113

If a contractor become insolvent during the project they employer will be at a loss.

Answer 114

* If the contractor has failed to pay a sub-contractor for goods or becomes insolvent then the sub-contractor could claim ownership of the materials. * JCT deals with this by stating that all materials delivered to site cant be removed from the site without written consent by the CA - would be deemed a breach of contract and the employer could claim damages. Also those materials on or off site that have been included within a certificate become the property of the employer.

Answer 115

**_NEC (New Engineering Contract)_** * Suitable for domestic and internal use. * Aims to offer better clarity, flexibility and management processes. * Administered by a Project Manager rather than a Contract Administrator. * Has early warning notices and compensation events rather than relevant events / matters. * Enables a more proactive and collaborative approach rather than focusing on liabilities and risk (JCT). * NEC4 - Engineering and Construction Contract: used for a large proportion of the England Olympic infrastructure. * Tend to be used for Public Procurement - Phase 2 of HS2 is using NEC3. **_FIDIC_** * French suite of contracts. * Used Internationally - good to encourage international bidding to secure more competitive tenders. * Contract types are referred to by colour: 1. Green Book - used for engineering and building work of small value, non- specialist work (traditional procurement), allows for contractors design portion. 2. Red Book - used for when employer undertakes design (traditional procurement). 3. Orange Book- used when design is carried out by the contractor (Design and Building procurement) and for turnkey contracts (where employer wants a fully completed project fit for the end user.

Answer 116

* If applied, if the cost for materials increases between submitting a tender and ordering the materials, the client will have to pay for the increase, likewise if they reduce in cost the employer will make a saving. * Not included in minor works.

Answer 117

* The Employer's agent is a term of describe an agent acting on behalf of the client who undertakes the same contract administration duties as a contract administrator but for a D&B procurement route that utilises a JCT Design and Build contract as the contract does not make reference to a contract administrator. * Like the contract administrator the Employer's agent should remain impartial at all times but acts on behalf of the employer on all matters, effectively as if the employer's agent is the employer.

Answer 118

**_Project Manager_** * Party who manages a team to develop and deliver a project for an employer, often from project inception stage, making decisions on behalf of the employer and giving instructions to the contractor. The project manager is to remain impartial with respect to the contract. **_Contract Administrator_** * This is a party who is specifically identified within the contract and is solely responsible for administering the contract for the employer. It is an impartial role and only exists at the point the contract is entered into. **_Employer's Agent_** * The Employer's agent is a term of describe an agent acting on behalf of the client who undertakes the same contract administration duties as a contract administrator but for a D&B procurement route that utilises a JCT Design and Build contract as the contract does not make reference to a contract administrator. * Like the contract administrator the Employer's agent should remain impartial at all times but acts on behalf of the employer on all matters, effectively as if the employer's agent is the employer.

Answer 119

**_Minor works does not contain the following:_** * Sectional completion / work sections. * Possession of the site is not given to the contractor. * Partial possession. * Sub-letting to names sub-contractors (ones that the client stipulates). * Provisions for testing and opening up. * Loss and expense less expressly provided for. * Extension of time full list of relevant events - JCT recommends referring to standard building contract for relevant events! * Extension of time, notice regarding delay - less onerous on the contractor they are only required to give notice to the contract administrator ‘if it becomes apparent that the works will not be completed by the date for completion’ as opposed to IC16 whereby the contractor must give written notice as soon as it becomes apparent that progress is likely to be delayed even if it doesn't prevent completion of works by the completion date. Additionally MW only states that the contractor does not have to sight the reason for the delay.