Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

RICS APC 2024 > Contract Administration > Flashcards

Contract Administration Flashcards

1
Q

Why did you not consider a Standard form contract for this project (Forest Academy), would that have been appropriate?

A
  • The contract sum was only circa £300k (Standard contracts are typically used upward of £1million+)
  • Plus, the works were not particularly complex in nature and did not warrant a Standard contract.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
1
Q

You mention that you recommended the JCT Intermediate 2016 on Ranelagh Primary School project - can you tell me what factors you considered when determining to use that contract?

A

A few factors including:
o The requirement for splitting the works into phases / contract sections as the school required the works to be conducted out of term time only.
o A Minor Works JCT does not include provisions for Sectional Completion, whereas an Intermediate does.
o The project value was circa £300K and not particularly complex in nature

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Can you just name some other JCT contract forms?

A
  • Minor Works Building Contract
  • Intermediate Building Contract
  • Standard Building Contract
  • Design and Build Contract
  • Measured Term Contract
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

For your Forst Academy Extension project, what defects liability period did you select following issue of the practical completion certificate?

A

12 months, as this gave the building a full yearly cycle of weather and use.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Could you have recommended another suite of contract, in lieu of the JCT?

A

There are other forms of contract such as the NEC, however, my client is not familiar with the NEC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Can you set out some key differences between the NEC and the JCT?

A
  • The NEC is drafted in plain English, its intended to be easier to understand than the JCT
  • NEC viewed as more collaborative / “working in the spirit of mutual trust and co-operation” / where as typically the JCT is seen to be more adverse / less collaborative (stuck in a drawer and only referred to when a dispute arises)
  • The Project Manager holds far more obligations under the NEC
  • The programme is a contractual document under the NEC and payment can be withheld for the contractor not providing a programme; whereas it is not with the JCT (only start and completion dates are stated)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a Pay Less Notice / do you know the timescales for this?

A

Pay Less Notice is:
o Submitted where the client intends to pay less than the sum stated on the payment notice / certificate issued previously

May be issued “no later than 5 days before the final date for payment” (5 days to 1 day)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

You mention that you endeavour to issue your payment recommendation to the CA well in advance of the deadline, what do you mean by this?

A

The JCT contract states that the “CA” is required to issue the payment notice 5 days after the due date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What would happen if you were late and subsequently the CA was late in issuing their payment notice?

A

There is a risk that the Contractor’s Application for Payment notice can become the default payment notice, regardless of whether the sum applied for is accurate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is a contract?

A

A legally binding agreement between two or more parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is a PCG?

A
  • Parent Company Guarantee
  • It is a form of security for the client that may be required to protect them in the event of default on a contract by a contractor that is controlled by a parent company (“holding company”)
  • This could be in the event of insolvency
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is a bond?

A
  • An arrangement where a contractual duty owed by one party to another is backed up by a third party
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Name at least 4 types of bonds?

A
  • Performance bond
  • Retention bond
  • Materials off-site bond
  • Advance payment bond
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is a performance bond?

A
  • It insures a client against the risk of a contractor failing to fulfil their contractual obligations (i.e., contractor becoming insolvent)
  • The Guarantor pays for loss up to the value of the bond (typically 10% of the contract sum)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a collateral warranty?

A

A side agreement which establishes a contractual link between two parties which would not otherwise exist (sub-contractor and Client)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are third party rights?

A

A third party right is the right of a person who is not a party to a contract to enforce the benefit of that contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is assignment?

A
  • Transfer of contractual rights only (not obligations)
  • i.e., where a developer transfers rights for claiming defects to a purchaser
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is insolvency?

A

Insolvency is concerned with the inability to pay debts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is termination?

A

Where the contract works are lawfully stopped under the contract

19
Q

On your project at Orbis Energy, you describe how you decided to issue an extension of time – can you talk us through how you determined this?

A
  • The contractor advised of a delay in receipt of the materials due to the COVID pandemic.
  • Under JCT this is a considered a relevant event as it is classed as ‘Force majeure’.
20
Q

Can you talk me through the timescales for your valuations on your Forest Academy project?

A
  • First step in process: There is an “Interim Valuation Date” = (typically 4 weeks from the date of commencement and then the same date in each month)
  • Contractors’ application: Contractor to submit an application “no later than the interim valuation date”
  • “Due Date” which is 7 days after the Interim Valuation date
  • Payment Certificate - which is to be issued no later than 5 days after the Due Date
  • Final Date for Payment - Client is required to pay the Contractor within 14 days of the Due Date
21
Q

How did you deem that Practical completion had been achieved on Forest Academy?

A
  • In my opinion as the CA, I deemed the project sufficiently complete and ready for occupation
  • Applied the “De minimis” principle, i.e., only very minor snagging items remained to be completed and did not affect the employer to use the building for its intended purposes
  • Compliance with CDM regs:- Employer was in possession of the:
    o Health and Safety file
    o As-built drawings
22
Q

Does the JCT contract define practical completion? What does it state?

A

No, it is deemed to have occurred when in the “CA’s opinion practical completion of the works is achieved and sufficiently complied with.

Supply of documents in connection with CDM regulations (Health & safety file and as built drawings)

23
Q

What were the minor snagging items on your Forest Academy project?

A

Touching up some skirting boards which had been scuffed

24
Q

In terms of your payment certificate which you issued at PC on your Forest Academy project, how did that differ from your other payment certificates?

A

It included release of half the retention (2.5%)

24
Q

How did you capture the snagging items on your Forest Academy project to make sure the contractor completed those?

A
  • When I issued the practical completion certificate, the certificate stated that completion was subject to completing the “following snagging items”
  • And attached a snagging list to the PC cert
24
Q

What were the implications for your client when you issued practical completion on your Forest Academy project?

A
  • Client no longer able to claim for Liquidated Damages
  • Insurance – Client responsible for insuring the building
  • Defects liability period kicks in from issue of the PC date
  • Release half of retention held
25
Q

When is the other half of retention released?

A

On the issue of the Certificate Making Good Defects

26
Q

What would happen if the CA did not issue the payment certificate within the contractual timescales?

A

The Contractor’s application could become the default payment certificate

27
Q

In your role as the CA, can you explain what the typical mechanisms or procedures are that you would be expected to implement throughout a project?

A
  • Issuing Contract Administrators Instructions for variations
  • Processing interim valuations and issuing Payment Certificates
  • Assessing Extension of Time claims
  • Issuing Completion or Non-Completion Certificates
  • Issuing Certificate of Making Good Defects
  • Issuing the Final Certificate
28
Q
  1. What exactly is a collateral warranty and why are they important
A

Definition - A side agreement which establishes a contractual link between two parties which would not otherwise exist (i.e., sub-contractor and Client)

Importance - In the sub-contractor collateral warranty for CDP scenario, it provides the client extra surety – they can claim against the sub-contractor as well as the Main Contractor

29
Q

If your client is putting pressure on you to reach a conclusion on a contractual matter, how would you respond?

A
  • Set up a meeting with them to explain the importance of the contractual matter
  • I always provide a high standard of service and work to protect my client’s interests – sometimes this involves managing expectations
30
Q

To use an example, the contractor has submitted an extension of time request which you deem to be valid, but the client is putting pressure on you as CA to reject it – how would you deal with that?

A
  • Acting with integrity, I would politely remind the client that my role as the CA is to act impartially and administer the contract fair and reasonably
  • The client’s actions could damage their reputation / could result in adjudication
31
Q

Can you talk me through how you would assess an extension of time claim?

A

(1) Firstly, establish whether an entitlement exists (what is the cause, what is the necessary “relevant event” the contractor is claiming against?)

(2) Review claim submitted by the contractor and fix a new (later) completion date if it is considered fair and reasonable to do so

(3) This review should by considering / undertaking the following:

o Overview of the facts (review past emails, site meeting minutes, progress photographs etc)
o Analysis of delay claimed against the contract programme to understand how the critical path has been affected

(4) Attribute the delay to each Relevant Event (say number of days or weeks to each event)

(5) Only grant an extension for the time I consider to be valid

Refer to “Extensions of Time” RICS Guidance Note also

32
Q

If the contractor was to complete 2 weeks late but they have only been granted a 1-week Extension of Time – what would be the implications?

A
  • I would issue a “non-completion certificate” when the contractor failed to complete by the extended completion date (of 1 week)
  • Implications – technically the client could levy liquidated damages for that 1 week’s delay
33
Q

Liquidated damages – what is your understanding of them?

A
  • They are a genuine pre-estimated loss that the client will incur should the works not be complete by PC
  • They are not a penalty
34
Q

Liquidated damages – how and when can they be deducted

A
  • Client will levy them in the form of a pay less notice (I would not deduct them from my payment certificate
  • They can only be claimed when a non-completion certificate is issued, for the delay beyond the completion date
35
Q

3For your project at Barningham Primary school, how did you calculate the liquidated damages?

A
  • I would never calculate damages on behalf of the client
  • I provided an estimation for the client, which was based upon the likely hire cost for temporary classroom space if it were found to be needed due to a programme delay.
36
Q

Can “reputational damage” be included within liquidated damages estimate?

A

YES - Damages can seek to protect one party’s ‘legitimate interests’, which can include:
 Reputational issues and goodwill

37
Q

Under the contract, where it states the amount and rate if liquidated damages – what are the implications if this section is left blank?

A

The client may still be able to seek liquidated damages (based on actual loss in the absence of pre-estimated loss), unless:
o Zero or Nil is specifically stated

38
Q

If your client is very inexperienced within the industry – they are unaware if liquidated damages and asked you to assist, how would you respond to them?

A
  • I would only assist by explaining what liquidated damages are i.e “a genuine pre estimated loss” / costs you incur should the contractor fail to meet practical completion
  • But with regards to costed rates, this is outside of my area of expertise (I am not familiar with their business)
39
Q

What is “partial possession”?

A
  • Not pre-defined before entering into contract, client decides they would like to “take possession” of part of the works before practical completion
  • Contractor’s consent is required
40
Q

With regards to this RICS competency (Contract Administration) – what are the relevant RICS Guidance Notes?

A
  • “Contract Administration” Guidance Note
  • “Employer’s agent: design and build” Guidance Note
  • Others which are relevant:
    o “Extensions of Time” Guidance Note
    o “Interim valuations and payment” Guidance Note
    o “Acceleration” Guidance Note
    o “Final account procedures” Guidance Note
    o “Valuing change” Guidance Note
41
Q

Can you name the sections of a JCT Contract?

A
  • Agreement = date it was made, between which parties?
  • Recitals = what are the contract works / contract drawings, specs?
  • Articles = Set out what is agreed between the parties?
  • Contract Particulars = Aspects of the contract specific to the project
  • Attestation = Signing section; as a deed or underhand
  • Conditions = The conditions of contract (standard form clauses)
  • Schedules = cover some of the more commonly used ‘add-ons’ to a contract
42
Q

Beyond the JCT contract, what other contracts would form the full set of contract documents?

A
  • Pricing Document
  • Preliminaries
  • Contract Drawings and Specifications
  • Employer’s Requirements for CDP items
  • Site surveys / site information
43
Q

What types of insurances are there under the JCT suite of contracts?

A
  • Works Insurance (typically referred to as “All Risks”)
  • Contractor’s Public Liability Insurance (covers injury to persons or property)
  • Professional Indemnity Insurance (for Contractor’s design works / negligence)
  • Employers’ Liability Insurance (may be required)
44
Q

How would you ensure the most suitable type of contract is selected for a project?

A

By considering the project specifics:
- the procurement route,
- risk allocation,
- size,
- complexity of the project

RICS APC 2024 (22 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions