Contract Administration

Question 1

What forms of contract are you aware of?

Answer 1

I am aware of the JCT suite of contracts including:

1. JCT Standard Building Contract - for large or complex budling contracts that follow the traditional procurement route.
2. JCT Intermediate Building Contract - for simple construction projects that require all trades but not specialist work or complex building services.
3. JCT Minor Works with Contractors Design - for small relatively straightforward projects.
4. JCT Design and Build - For design and build procurement route

Question 2

At what value would you use each of the JCT Contracts?

Answer 2

No values formally set by JCT, however a rough guide is:

JCT Standard Building Contract - in excess of £1,000,000
JCT Intermediate Building Contract - in excess of £500,000
JCT Minor Works - up to £500,000
JCT Design and Build - For design and build procurement

Question 3

What is the JCT?

Answer 3

Joint Contracts Tribunal, formed in 1931 to produce standardise contracts for the construction industry.

Question 4

Are you aware of any other suite of contracts?

Answer 4

Yes, the New Engineering Contracts (NEC) however I have no experience of using these.

Question 5

What is the SBCC?

Answer 5

The Scottish Building Contracts Committee.

Question 6

What is the purpose of the SBCC?

Answer 6

To amend contracts to make them suitable for use under Scots Law. This is a process known as “kilting”.

Question 7

Can you explain come of the differences between Scots and rUK contracts?

Answer 7

1.Third Party Rights - Contract (Third Party Rights) (Scotland) Act 2017 provides provision for this.
2. Ownership of Materials - Only when employer / client has paid for materials dp they own them.
3. Enforceability - English contracts unlikely to be enforceable in Scotland.
4. Latent Defects - liabilities for latent defects are longer.
5. Execution - Not executed under hand or as a deed.

Question 8

Under your role as a contract administrator what tasks do you undertake?

Answer 8

1. Managing the day to day running of a project
2. Monitoring works to ensure good workmanship and compliance with the spec.
3. Carry out regular progress inspections and associated reporting.
4. Manage payment certification, review of valuations submitted by contractors.
5. Awarding practical completion
6. Managing rectification period.

Question 9

How would you manage a contract variation?

Answer 9

1. Ask for the variation in writing
2. Assess how it may affect cost or programme
3. Check whether other items in the schedule of works could cover some or all of the cost of the variation.
4. Approve variation after carrying out checks and issue contract instruction.

Question 10

How would you manage an Extension of Time request?

Answer 10

1. If EOT is anticipated ask for notice of this in writing as soon as it becomes reasonably foreseeable an EOT event will occur
2. Assess whether the request is reasonable and the time requested is sufficient
3. Assess how this will affect the programme and costs e.g. extended contract could increase welfare costs.
4. Not unreasonably withhold approval of request should the reasons for it be appropriate.

Question 11

What is a defects liability period?

Answer 11

The period in which a client can report defects relating to a construction contract and for which the contractor will be liable to attend and make good.

Question 12

How long does the defects liability period last?

Answer 12

Typically 6 to 12 months depending on the nature of the works.

Question 13

What is discussed at a Pre-Start meeting?

Answer 13

I use a company template to chair pre-start meetings with headings that include key personnel, health and safety, critical items (e.g. lead in times), payment provision etc.

Question 14

What are a contractors obligations under the JCT Minor Works contract?

Answer 14

The contractor must carry out their works in a “proper and workmanlike manner” and in compliance with the contract document.

Question 15

What are liquidated damages?

Answer 15

Liquidated damages are rates charged for loss should the Contractor fail to complete on time. The damages are charged on a weekly basis and are determined pre-contract.

Question 16

If liquidated damages are to be pursued what must happen?

Answer 16

The employer must give notice of their intent to the Contractor.

Question 17

When are liquidated damages charged?

Answer 17

For the period between the Date for Completion and the date by which Practical Completion is achieved.

Question 18

When can Practical Completion be issued?

Answer 18

1. Contractor must have supplied all documents required of them under CDM (Clause 3.9)
2. Contractor must have passed on all relevant information under Clause 2.1.3 - drawings, spec, materials etc.

Question 19

What must be attended to under the rectification period?

Answer 19

Any “defects, shrinkages or faults” that are due to materials, goods or workmanship that are NOT in accordance with the Contract or from a failure of a Contractor to comply with their obligations.

Question 20

How are defects paid for under the rectification period?

Answer 20

The Contractor must undertake these at their own cost.

Question 21

The Rectification Period has expired, can you still notify the contractor to make good any defects?

Answer 21

Yes, if within 14 days of expiry the Contract Administrator notifies the Contractor in writing.

Question 22

Your client instructs you not to allow the Contractor to make good defects, what do you do?

Answer 22

Under Clause 2.11 I would deduct a sum from the contract sum in lieu of the works being carried out. However, depending on the scale of the issue I would advise that this is carried out under the Rectification Period.

Question 23

When would you issue a “Certificate of Making Good”?

Answer 23

When in my opinion as the CA that a Contractors Duties under the defects clause
(2.11) have been discharged.

Question 24

What should you do when issuing contract instructions?

Answer 24

I would make sure these are in writing as they are only given effect when done so i.e. cannot issue verbal instructions.

Question 25

Under JCT Minor Works Contracts what provisions are there for non-compliance with instructions?

Answer 25

The client / employer can pay another party to do the works. The Contractor is liable for any incurred costs and a deduction from the Contract Sum can be taken.

Question 26

When issuing a variation what should you do?

Answer 26

I should agree a price with the contractor. If this cannot be done I can price using items / rates from the SoW and must also indicate any loss or expense due to the works progress being affected.

Question 27

How should VAT be handled under a JCT Minor Works contract?

Answer 27

The Contract Sum is exclusive of VAT. The Employer should pay this in addition to the Contract Sum.

Question 28

What frequency does the JCT Minor Works set out for interim valuations?

Answer 28

Monthly from the date of commencement, however this can be altered if required.

Question 29

What are the payment terms for interim valuations?

Answer 29

1. Due date for payment is 7 days from valuation date.
2. Not later than 5 days after due date is CA to issue interim certificate for payment.
3. Final payment date is 14 days from due date.

NOTE: 21 days to pay from Interim Valuation Date.

Question 30

How do you carry out interim valuations?

Answer 30

1. This is usually discussed at the pre-start with the contractor agreeing to make an application for payment prior to interim valuation date.
2. I will assess the payment application by visiting site and benchmarking it against expected costs.
3. Once checked I will complete and issue interim certificate for payment.

NOTE: I keep a project tracker with interim valuation dates and expected amount on those dates based off the works programme.

Question 31

When must payment of an interim valuation occur?

Answer 31

On or before the final payment date to the value stated in the certificate.

Question 32

What happens in the event of a non-payment under the JCT Minor Works Contract?

Answer 32

The Contractor can charge simple interest of any monies not received and recover this as debt.

Question 33

What is the simple interest amount for non-payment?

Answer 33

Rate of 5% per annum above the Bank of England base rate.

Question 34

What actions can a Contractor take in the event of non-payment under JCT Minor Works 2016?

Answer 34

The contractor has the right to suspension of the works.

If after 7 days payment isn’t received after Contractor serving notice they have the right to suspend works.

Question 35

What is the timeframe for carrying out a final certification and payment?

Answer 35

1. Following Practical Completion contractor must supply all information to compute final account within agreed time frame (3 months is standard)
2. Due date is 28 days after receipt of information.
3. 5 days after due date CA will issue final payment cert.
4. Final payment shall be 14 days from the due date.

NOTE: 42 days overall.

Question 36

What types of insurance must a contractor have?

Answer 36

Public liability - Protects against liabilities for injuries / illness to third parties (public)

Employers liability - Protects against liabilities for injuries / illness to employees.

Product liability - Protects against liabilities for injury to people from product you supply, manufacture or import.

All Risk - Protects against physical damage to works and site materials you were contracted to undertake.

Question 37

When can a JCT Minor Works contract be terminated?

Question 38

What forms of dispute resolution are you aware of?

Answer 38

Mediation, Adjudication, Arbitration and Litigation.

Question 39

What is mediation?

Answer 39

Mediation is the process wherein the parties meet with a mutually selected impartial and neutral person who assists them in the negotiation of their differences.

Question 40

What is arbitration?

Answer 40

Arbitration is the procedure whereby a dispute is submitted to an arbitrator who makes a binding (legal) decision on the dispute.

Question 41

What is adjudication?

Answer 41

Adjudication is a “fast track” binding interim method of dispute resolution introduced by section 108 of the Housing Grants, Construction and Regeneration Act 1996 for all construction contract.

Broadly, the term “adjudication” refers to the process of resolving a legal dispute, hearing evidence and deciding rights, and coming to a formal decision in court.