Contract administration

Question 1

Why is adjudication always included in a JCT contract, while arbitration is optional?

Answer 1

Statutory adjudication is a mandatory right under ‘construction contracts’, as defined in the Construction Act 1996

Question 2

What is a “lump sum” contract?

Answer 2

Fixed total price for entire project (like JCT)
For straightforward projects with clear scope of works

Question 3

What is a “Time and materials” contract?

Answer 3

Contractors are reimbursed for cost and materials, and labour time at established rate.
For rojects without well-defined works scope

Question 4

What is a “relevant event”?

Answer 4

delay that is NOT fault of contractor, eg. “client in control” or “neutral event (noones fault).
Does not necessarily allow contractor to claim for Loss and Expense (neutral events do not allow this - exceptional weather, civil commotion)

Question 5

What is a “relevant matter”?

Answer 5

Client’s fault. Contractor could claim for Loss and Expense.

Question 6

Give examples of when a contractor may be entitled to loss and expense claim.

Answer 6

“Client in control” - failure to provide access, information, decisions, delay of named subcontractor.

Question 7

What are the limitations of the JCT MW16 contract?

Answer 7

Its brevity – can be silent on some matters.
Doesn’t allow for named subcontractors.
No Bills of Quantities.
Suitable for relatively simple works only.
Simplicity means amendments sometimes required.
Roles can become a bit blurred.

Question 8

What is a “traditional” procurement route?

Answer 8

Linear path - employer engages designers first, then contractor to build works

Question 9

What is a “design and build” procurement route?

Answer 9

Contractor designs and builds the works. “one stop shop”
No CA, only “employers agent” (more aligned to the client)

Question 10

What is a “management forms” procurement route?

Answer 10

Client employs different subcontractors directly, there is a main contractor but no contractual relationship between them and client (management contractor).
Most risk lies with employer

Question 11

What are pros and cons of “standard contracts”?

Answer 11

Pros:
Recognised in industry
Familiarity with all
Clarity of content
Written by experts
Complies with laws

Cons:
Not always “robust” enough for employer
Not necessarily easy to understand for first-time employers
Require amendments for bespoke additions

Question 12

What are pros and cons of “bespoke contracts”?

Answer 12

Heavily weighted in favour of employer
Contractor prices higher due to risks
May contain onerous T&Cs

Question 13

What is a “letter of intent”?

Answer 13

“partial contract” effectively - simple statement of intent, not binding on either party.
Allows contractor to start work quickly

Question 14

When is a PC certificate issued?

Answer 14

When “‘the client is physically able to take occupation of the
works and use them for their intended purpose” (RICS Black Book definition)

Question 15

What happens at PC?

Answer 15

Employer must insure building, takes possession
Half retention release
Defect rectification period begins
LDs cannot be taken

Question 16

What is the “critical path”?

Answer 16

Path of the project from start to completion, assuming no delays

Question 17

Give examples of what is typically included in “preliminaries” costs.

Answer 17

Site huts, welfare, hire
Cranes, scaffold
Power and water
Temp electrics
Site management

Question 18

What are “dayworks”?

Answer 18

Contractor paid for specifically instructed work on the basis of the cost of labour, materials and plant plus OHP.
Generally used when work cannot be priced by measurement.

Question 19

What are “preambles” in a contract?

Answer 19

An explanation of the document/contract

Question 20

What is a collateral warranty?

Answer 20

A “warranty” of sorts provided by one party to another, whom it has no contractual relationship, that it has carried out its works correctly.

Question 21

Under what grounds could a JCT contract be terminated, by either side?

Answer 21

• Default (fails to perform contractual obligations) of contractor. EG, fails to proceed regularly or diligently
• Default by employer, eg. does not pay when due, obstructs certificates, one-month suspension due to variations
• Insolvency of contractor/employer
• Contractor/employer fails to comply with CDM

Question 22

How would a JCT contract be terminated?

Answer 22

Termination notices posted (recorded/special delivery), or by hand.
Time periods in the contract must be observed.