Contract Administration Flashcards
Why did you not consider a Standard form contract for this project (Forest Academy), would that have been appropriate?
- The contract sum was only circa £200k (Standard contracts are typically used upward of £1million+)
- Plus, the works were not particularly complex in nature and did not warrant a Standard contract.
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 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
Can you just name some other JCT contract forms?
- Minor Works Building Contract
- Intermediate Building Contract
- Standard Building Contract
- Design and Build Contract
- Measured Term Contract
For your Forst Academy Extension project, what defects liability period did you select following issue of the practical completion certificate?
12 months, as this gave the building a full yearly cycle of weather and use.
Could you have recommended another suite of contract, in lieu of the JCT?
There are other forms of contract such as the NEC, however, my client is not familiar with the NEC
Can you set out some key differences between the NEC and the JCT?
- 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)
What is a Pay Less Notice / do you know the timescales for this?
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)
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?
The JCT contract states that the “CA” is required to issue the payment notice 5 days after the due date
What would happen if you were late and subsequently the CA was late in issuing their payment notice?
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
What is a contract?
A legally binding agreement between two or more parties
What is a PCG?
- 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
What is a bond?
- An arrangement where a contractual duty owed by one party to another is backed up by a third party
Name at least 4 types of bonds?
- Performance bond
- Retention bond
- Materials off-site bond
- Advance payment bond
What is a performance bond?
- 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)
What is a collateral warranty?
A side agreement which establishes a contractual link between two parties which would not otherwise exist (sub-contractor and Client)
What are third party rights?
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. For example
What is assignment?
- Transfer of contractual rights only (not obligations)
- i.e., where a developer transfers rights for claiming defects to a purchaser
What is insolvency?
Insolvency is concerned with the inability to pay debts
What is termination?
Where the contract works are lawfully stopped under the contract
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?
- I reviewed the notice of delay issued by the contractor alongside relevant supporting information.
- 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’.
- I compared actual and planned progress alongside the critical path.
- I ensured the EOT decision was issued within 12 weeks.
Can you talk me through the timescales for your valuations on your Forest Academy project?
- 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
How did you deem that Practical completion had been achieved on Forest Academy?
- 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
