Contract Administration Flashcards
What is the payment process for JCT?
The Contractor may make an application for payment before the Interim Valuation Date
The Due Date falls 7 days after the Interim Valuation Date.
The CA must issue a payment certificate no later than 5 days after the Due Date, whether an application is received or not.
As standard, the Final Date for Payment is 14 days from the Due Date, although this can be amended in the Contract Particulars.
To what date is the value of works measured?
The Interim Valuation Date
Does the contractor need to make an application for payment?
No, the CA would still follow the payment process in either case.
Even if no money is due.
What if the CA intends to pay less than the payment application or a previous payment certificate?
They must issue a ‘pay less notice’ no later than 5 days before the Final Date for Payment.
What if the CA fails to issue the Interim Certificate for Payment?
If the contractor has made an application for payment, that becomes the payment notice.
If the contractor has not made an application for payment, they may after the last date for issue of the Interim Certificate for Payment give a payment notice detailing the sum they consider to be due and the basis upon which that is calculated.
The Final Date for Payment will then be postponed by the number of days after the last date for the issue of the Interim Certificate for Payment that the payment notice is given.
What are early warnings under NEC?
The Project Manager or Contractor should give an early warning as soon as they become aware of any matter which could increase costs, delay completion, delay meeting a key date or impair the functional performance.
What is the process under NEC for searching for and notifying defects?
The Supervisor may instruct the Contractor to search for a defect, detailing the reason for the search.
If a Supervisor finds a defect, he notifies the Contractor, and logs it on the defects register.
The Contractor must rectify the defect before the end of the defect correction period.
The Supervisor may then issue a defects certificate.
If the Contractor fails to correct the defect, the Employer is entitled to reclaim the cost of a third party correcting the defect.
What is the payment process for NEC3?
At the Assessment Date, the Contractor may submit a payment application.
The Project Manager assesses the amount due for work done to date and any additional amounts due.
The Project Manager certifies a payment within one week of each assessment date.
Each payment is to be made within three weeks of the assessment date or as dictated by the Contract.
Describe the Traditional Procurement route?
The employer engages a design team to design the works, and the employer engages a contractor to build the works.
Describe the Design & Build procurement route?
The employer engages a contractor to both design and build the works.
What is the key difference between the two routes?
Under traditional procurement, the design risk falls on the employer, under D&B the design risk falls on the contractor.
What is a cost reimbursable contract?
A contract in which the contractor is reimbursed the costs they occur in carrying out the works, plus an additional fee.
It is typically used where the nature or scope of the works are unclear or difficult to define and the risks are high.
The risk is heavily on the employer as the employer does not know the final cost at the outset.
What is necessary to form a legal contract?
Offer
Acceptance
Consideration
The contract must also be lawful, and the parties must be of sound mind and give genuine consent.
When should you use different JCT contracts?
Minor Works: Low complexity, minimal structural works. (Up to £250k.)
Intermediate: Medium complexity, some structural works. (Up to £1m)
Standard: High complexity with structural works. (Over £1m).
What is the difference between NEC contracts and JCT contracts?
The differences lies in the ethos around collaborative working, with mechanisms such as Early Warning Notices and a rolling Defects Register.
The NEC places greater emphasis on the programme than JCT, with an obligation to update it.
The payment terms are also different under the NEC, where a contractor is paid upon completion of an item within the program, rather than on a percentage basis.
Who is responsible for issuing certifications?
NEC: Project Manager
JCT Standard: Contract Administrator
JCT Design & Build: Employer’s Agent
What is a Request for Information?
A contractor may submit a formal RFI when information is needed to progress the project.
It is common practice to produce an RFI schedule, setting out information and dates required.
What is Practical Completion?
Practical completion is typically defined as the point at which works are complete, save for minor defects, and the client can occupy the building and use it for the intended purpose.
What happens after Practical Completion?
The first portion of the retention money is released to the contractor.
The contractor’s liability for liquidated damages ends.
The defects liability commences.
The employer takes ownership of the site and becomes responsible for insurance, and security of the site.
The final account stage will be triggered.
When a variation is requested, what should the contractor provide?
A quotation detailing the value of the work, effect on any other work, any adjustments for time or loss and expense, and any costs associated with preparing the quotation.
What is the standard process for an interim payment application?
At the interim valuation date the contractor submits an Application for Payment.
The CA/QS reviews the application, either accepting it, or discussing the reasons for non-acceptance with the contractor ahead of the due date, which is typically 7 days after the IV date.
Once accepted, the CA/QS should issue a payment certificate within 5 days of the due date.
The contractor then raises the invoice for the client to pay by the final date for payment, which is typically 14 days from the due date, but can be altered in the contract documents.
How is the final adjustment calculated?
Following practical completion, the contractor will submit all documents necessary to calculate the final sum within 6 months of PC.
The CA will then review this, in combination with their own records of variations etc. and ascertain the amounts remaining due to the contractor.
What are liquidated damages?
Liquidated damages account for the reasonable costs incurred by the employer if the project is not completed on time eg. Costs of temporary accommodation elsewhere.
The costs must be genuine and reasonable costs that at the time of the contract being signed could have been reasonably expected to be incurred.
What is a relevant event?
A relevant event is something that will allow a contractor to receive an extension of time.
What are the two types of relevant event?
Client in Control (Relevant Matter)
Neutral
When may a contractor claim money from the client under a relevant event?
The contractor may only claim money from the employer when it is a relevant matter.
This is because the client is in control and caused the delay.
What is the process for an extension of time under JCT?
The contractor should issue a delay notice as soon as it becomes apparent that there will be delay, stating the cause, the relevant event and a best estimate of the delay.
The CA will clarify the reason, and grant an extension that is reasonable.
The extension should be issued as soon as practicable.
What are examples of relevant events?
Variations
Adverse Weather
Civil Commotion/Terrorism
Failure to provide
information
Delay on the part of a nominated sub-contractor.
Statutory undertaker’s works
Delay in possession
Force Majeure
Supply of goods from the client
National Strikes
Changes in statutory requirements.
What are examples of relevant matters?
Variations
Opening works for inspection
Instruction to postpone work/suspend work.
Quanitities not reasonably forecast.
Contract document discrepancies.
Act, prevention or default by the employer or contract administrator.
How are Compensation Events handled under NEC?
Either party can notify the other of a compensation event.
The Contractor must notify the PM when the event occurs or before if possible. If the Contractor does not notify the PM within 8 weeks, they will be entitled to no additional time or money.
Upon receipt of a Compensation Event notification, the PM has one week to assess its validity, and the Contractor then has three weeks to submit a quotation detailing the time and cost impact.
The PM must respond within a week otherwise the Compensation Event is automatically construed as such.
The parties then follow the quotation provisions to assess the need for additional time and money and the prices and programme are adjusted accordingly.
What is float in construction?
The total extra time a contractor has between the anticipated finish date and the contractual finish date.
What is the Critical Path?
The longest sequence of dependent activities that must be complete in order for the entire project to be complete.
What is free float?
Free float is the total amount of time an activity can be delayed without delaying the successor activity.
What is total float?
The amount of time that a task can be delayed without delaying the completion date of the project.
