Contract Administration Flashcards
1
Q
At Nursteed Rd, Devizes, was the CCTV survey included in the tendered works? Would this have changed your assessment of loss and expense?
A
- CCTV survey was included but repairs to the collapsed drain were not as this was unforeseen.
- Prelims would need to be pro-rata’ed based on additional time, or assessed for which prelim costs were time based vs fixed cost.
- If repairs were in tender doc this would have changed assessment - contractor would have allowed for this.
2
Q
Nursteed Rd - how did you asertain the delay and calculate the cost? How did you present this to the client?
A
- C serves notice that a delay to completion is expected (MW)
- CA makes ‘fair and reasonable’ assessment of delay - requesting info if possible. In this instance, based on time to get specialist subbie to site. CA can issue further EoT if necessary.’
- Cost of variation reviewed with C - based on subbie cost plus OH&P.
- Associated L and E Claim from C based on ACTUAL loss, not based on an estimate - therefore enquiries made to contractor and evidence needed.
- L and E claim based on pro-rata prelims of time-based costs, and contractor OH&P.
- Presented to client as a breadown, including impact on professional percentage based fee, VAT etc.
3
Q
At Atlantic Works, Southampton, How often did you issue financial reports to the client?
A
- In accordance with the Term’s of Appointment which set out that reporting to client would happen after each site inspection.
4
Q
At Southampton, What process did you follow to agree the final account with the contractor?
A
- Records held by the CA e.g. prov sums, contingency sums, additions, omissions, variations, loss and expense.
- Evidence provided by the Contractor that was requested by the CA - these are time limited. e.g. quotations.
5
Q
At Southampton, what is required as CA to release retention at expiry of rectification period?
A
- Contractor has made good ‘defects, shrinkages andother faults’ that have been notified to it in time.
- Certificate of Making Good Defects.
6
Q
What happens at Practical Completion?
A
- Concept Not Defined
- Interpretation of CA
- Only ‘De Minimus’ works outstanding - nothing to prevent beneficial occupation
- Emplyer Takes Possession
- Employer Obliged to Insure
- 50% Retention released
- Right to Claim LADs ends
- Rectification Period begins
7
Q
What is the purpose of the Non-Completion Certificate?
A
- Preserves Employer’s Ability to Claim LADs
8
Q
How should an Interim Valuation be evaluated?
A
- The value of works properly executed.
- Value of materials on or off site - check for receipts/physical existence of materials if necessary. (MW does not include provision for materials off-site).
- % of any agreed variations or instructions.
- Adjustments due to instruction of PC Sums.
- % of time related and fixed prelim costs - including delay and prolongation costs appropriately.
- Retention deducted. For valuations after PC this figure is normally halved.
- Presented Gross, Less previous payments, Less Retention.
- It is possible to accept defective work - adjustments to contract sum should be agreed in writing by both parties.
9
Q
What is a Relevant Event and can you give some examples?
A
- Event entitling contractor to an E.O.T. and potentially Loss and Expense Claim as well.
- Examples:
- Variations
- Exceptionally Adverse Weather
- Terrorism or Civil Commotion
- Delay in giving possession of site.
- Delay by nominated sub-contractor.
10
Q
What is a typical length of a Rectification Period?
A
- Between 6 and 12 month with JCT contracts.
- 12 months is typical as it allows the building to be assessed through a full 4 season cycle.
11
Q
Explain a NEC, ICC and IChem E Contract.
A
- NEC - New Engineering Contract. Created to foster more collaboration in the industry. Latham report recommended more widespread use.
- ICC FIDIC - International Federation of Consulting Engineers, ICC is typically used for infrastructure projects.
- IChemE - performance based contracts for construction of process plants
12
Q
Why was the RICS CA Guidance Note Withdrawn?
A
It was ‘out of date’
13
Q
Talk me through the process of instructing a variation.
A
- Is it a ‘material change’ from the specification - something new or different?
- Has the contractor missed something in the spec?
- CA reviews cost of variation (with C and E). If cannot agree on price of variation with contractor, then CA values it (MW).
- If it gives rise to additional costs, the CA will need to seek permission from Employer.
- CA to consider impact on programme and sequence.
- Issued in writing by the design team to the contractor.
- EOT and Loss and Expense Claim from contractor assessed alongside.
- CA should instruct expediently
- CA should update projected final account.
14
Q
At Nursteed Rd, Devizes, How could the variations / delays been avoided?
A
- It would have been possible to carry out the cctv survey prior to works starting and to include necessary works within the contracted works. However, this would have led to 2 periods of disruption for the trading store.
- The protective barrier in the car-park was added by the client. This didnt add much time, but perhaps could have been avoided with more knowledge of client’s intentions for the site.
15
Q
Apart from RICS Guidance note, what governs payment in construction?
A
- The Housing Grants, Construction and Regeneration Act (The Construction Act) 1996, establishes contractors right to be paid in interim payments
- The provisions of the Contract itself:
- Contractor makes application for payment anytime before Interim Valuation Date
- The Due date is 7 days after the IVD, and the Final Date for Payment is 14 days from this e.g. 21 day cycle.
16
Q
Why was the Rectification Period 12 months? Explain your decision making.
A
- This allows the work to be subject to a full 4 seasons of weather, so any expansion/contraction will become apparent.
- Protects the employer and contractor.
17
Q
What is the difference between named and nominated sub-contractors? What/where is the risk?
A
- Nominated sub-contractor: Pre-selected by the client and imposed on the contractor. Risk for delay or insolvency on the part of the sub-contractor rests with the client.
- Named subcontractor: Client influences the choice of subbie by providing a list within the tender documents. The main contractor (once appointed) seeks tenders from the subbies and appoints. The contractor takes on responsibility for the performance of the subbie.
18
Q
How are LADs calculated under JCT? What processes and notices must be administered and why are these important?
A
- Certificate of Non-Completion - if subsequent EOT is granted then another Cert of Non-Completion must be issued by employer.
- Notice that Employer may require deduction of LADs.
- A Notice demanding payment of LADs or withholding or deducting them.
19
Q
When would you choose a JCT MW Contract?
A
- Traditional procurement - all design completed before tendering to contractors.
- Simple in nature.
- Where there is no requirement to use a specific sub-contractor. Can name in tender documents but must be made clear who accepts responsibility for performance etc.
- Where any Contractor Designed Portion is simple in nature and not critical to the project (as not provision for requiring PI insurance from the Contractor).
- Where there is no need for Sectional Completion or Partial Possession.
- When a Clerk of Works is not required.
- When PI insurance is not required for a Contractor Designed Portion.
20
Q
What requirements does the Construction Act 1996 make of contruction contracts?
A
- Right to stage payments
- Right to notice of the amount to be paid.
- Right to suspend work for non-payment
- Right to take any dispute arising out of the contract to adjudication.
21
Q
What is Retention?
A
- A percentage reduction on interim payments, of which half is released after Practical Completion.
- JCT MW: 95% certified on interim payments (and then 97.5% at PC). JCT IC and S: 97% on interim payments (and then 98.5%).
22
Q
What is the payment procedure under JCT contracts?
A
- Interim Valuation Date - recorded in contract particulars and one month after commencement (Construction Act 1996), and monthly thereafter.
- Due date - 7 days after Interim Valuation Date.
- Employer’s Payment Notice - 5 days after due date at the latest (good practise to get this issued as soon after due date as possible).
- Employer’s Payless Notice - No later than 5 days before the Final Date for Payment.
- Final Date for Payment - 14 days after the Due Date.
23
Q
What certificates must have been issued before the Final Certificate?
A
- Interim payment certificates at monthly intervals.
- Practical Completion certificate.
- Interim payment certs following PC, inc release of 50% of retention.
- Certificate of Making Good.
24
Q
What can a contractor do if an emplyer fails to pay amounts due by the date?
A
- They can charge interest on late payment of interim and final certificates at 5% above the Bank of England rate.
- Contractor also has a right to stop work, or suspend performance of its obligations under the contract.
25
How are defects managed during the Rectification period?
* CA must notify the contractor within 14 days of the expiry of the Rectification Period of any defects, shrinkages, other faults.
* The Contractor should put these right at his own expense.
* The CA could otherwise instruct an appropriate deduction from the Contract Sum.
* Once Contractor fullfilled duties above, CA should issue Certificate of Making Good.
26
What is the Final Payment Procedure under JCT MW?
* Contractor supplies to the CA all documentation required for calculation of the final payment.
* Due date for the final paymet will be 28 days after receipt of this, or from the date stipulated in the cert. of making good, whichever is the later.
* CA to issue final cert for payment no later than 5 days from this due date. This states the Contract Sum, adjusted for any defects not rectified or any instructions not complied with.
* Final date for payment will be 14 days after the due date.
27
How would you choose insurance provisions for works using JCT MW?
* 5.4A used where no existing structures and Contractor covers works in joint names all-risk policy - either as a specific policy or under the Contractor's annual All Risk Insurance.
* 5.4B used where there are exisitng structures - Emplyer covers works in joint-names all risk basis and extends risk to existing structures to cover the contractor on 'specified perils'.
* 5.4C used where insurance by other means needed. e.g. where emplyer is a tenant or a home-owner and existing structures insurance not readily available.
* I would use NBS Prelims software to create prelims which has useful prompts for insurance. I would also defer to a senior colleague if any unusual conditions apply.
28
What is the Base Date in JCT contracts?
A date 7 days before submission of the tenders. Serves to determine what fluctuations are payable (is this provision is used) (MW only)
29
How should LADs be calculated?
* A genuine pre-estimate of the loss that the emplyer is likely to suffer.
* A reasonable and proportionate protection of their commercial interests.
30
What management contracting?
A procurement route where the various contractors are contracted to a single 'management contractor' who is appointed by the client.
Can speed up large projects, as the various stages can be commenced before the complete design is finished e.g. piling started.
31
What is construction management?
Similar to management contracting.
Except the individual contractors/trades are contracted direct by the client and a 'contruction manager' coordinates them on the client's behalf.
32
What is a 'Prime Cost Sum'?
* Different to a Prov Sum. Normally a price ascertained in advance of tender process from a specialist supplier or subbie - not relevant to MW.
* Is still adjustable as there may be uncertainty on what the cost is
33
How does a CA allow for occupation by the employer during works?
* Should be made clear in the tender documents
* Agreement reached with C over necessary arrangements.
* Phased if possible, so dates when C has access are made clear from start.
34
What is the procedure for deducting LADs?
* Can be recovered as a debt, or from monies due (more likely)
* If LADS to be deducted from an amount on a payment cert, must issue a pay-less, with reason for deduction and how calculated clearly described.
* If EoT granted following date for completion, LADs deducted to that point must be re-paid.
* E can claim LADs as reduction in moies due from any cert, or as a debt any time up until Final Cert.
35
If the Contractor and the Employer were of the opinion that an Extension of Time is owed, would you give one?
As Contract Administrator, and under the terms of the contract, it is for me to determine if an EoT is due.
JCT MW - due for occurences that are outside of the C's control.
JCT IC - only possible to give in relation to delay caused by events in Clause 2.20 (Relevant Events):
*Where C has suspended works due to non-payment by E.
*Failure to release info by E, CA or any Emplyer's Person.
*Weather - exceptional and adverse.
*Strikes
*Force Majeure - events outside of the control of humans.
36
When can the Final Certificate be issued?
* At end of rectification period
* Only once the Final Account has been agreed. The final account may have been agreed at PC, in which case any defects arising during rectification period are either made good by C, or E and then deducted from Retention.
37
What is the difference between patent and latent defects?
Patent = discoverable by reasonable inspection.
Latent = not discoverable by reasonable inspection.
38
How can defects be addressed through Final Account?
* Final Account can be agreed at any point - PC or later at end of rectification - it is distinct from the Final Cert.
*If defects rectified by C before Final Account there is no affect on final sum.
* If C does not rectify within time, E can engage another contractor and deduct the amount from the final account.
* If final account agreed at PC - then defects are addressed by C during rectification period. If they don't, E can do them and use retention monies.
39
What is the RICS doc on final account?
Final Account Procedures Guidance Note - 2015.
40
Give some examples of Relevant Events under the JCT IC
*Variations
*Opening Up works that do not show a fault of the contractor
*Deferment of being given possession of the site
*Approximate quantities that are not accurate of work involved.
*Suspension of works by the contractor for non payment by Employer.
41
Give example of Relevatn Matters under JCT IC entitling the Contractor to a Loss and Expense...
*Variations
*Approx Quantities
*Omissions, Impediments etc on part of CA or Employer
