Contract Administration Flashcards
When would there be a requirement for a performance bond and what does it mean?
Performance bonds and guarantees are commonly used to ensure that contractors fulfil their obligations, offering a level of protection against risk and uncertainties.
The bond typically covers a percentage of the contract value. It is a common requirement for most major construction contracts, especially for public sector projects, as it provides reassurance to the project developer that the contractor can fulfil its contractual obligations.
What is a collateral warranty and how does it work?
A collateral warranty creates a contractual relationship between two parties that are not linked via the contract.
They are used as a supporting document to a primary contract where an agreement needs to be put in place with a third party outside of the primary contract.
It can also provide the third-party contractual rights enabling it to claim for losses which would not otherwise be recoverable.
Can you please expand on what the role of a Contract Administrator is?
Their responsibility is to administer construction contract between client and contractor, and carry out activities such as site visits, reports, variations, issue instructions, valuations and certificates etc.
Can you expand on your knowledge of the JCT Intermediate contract?
The intermediate contract allows for a number of additional elements in comparison to the JCT MW including:
Clerk or works
Sectional completion
Partial possession
The use of bonds.
Nominated sub-contractors
Can you expand on your knowledge of the JCT Standard Building Contract?
The JCT SBC allows for additional elements to the intermediate contract such as:
Employers representative, listed sub contractors, retention bonds, variation and acceleration quotations, third party rights.
What contract allow for sectional completion and named sub contractors ?
Intermediate and standard building contract.
What JCT contracts allow for a clerk of works ?
JCT Standard building contract
JCT Intermediate Contract
Not JCT MW
What is a traditional lump sum contract ?
A lump sum contract is the traditional means of procuring construction, and involves a single ‘lump sum’ price for all the works being agreed before the works begin.
This means that the contractor is able to accurately price the works they are being asked to carry out.
What is a contract variation and how would you deal with it ?
In simple terms, a contract variation occurs when the parties agree to do something differently from the way they originally agreed, whilst the remainder of the contract otherwise operates unchanged.
Such an agreement, if valid, would amount to a variation of the existing contract.
What is a letter of intent?
A letter of intent is a document outlining the understanding between two or more parties which they intend to formalise in a legally binding agreement.
Under JCT MW does the programme form part of the contract?
No however the contract promotes the use of one for reference generally.
What is the base date?
Base date: the base date is usually set at around the time of return of tenders.
It is a reference date from which changes in conditions can be assessed.
Does JCT MW make reference to a possession date?
MW16 does not refer to the contractor being given ‘possession’ of the site, but states simply that ‘The Works may be commenced’ on the date stated in the contract
What are the grounds for termination?
Insolvency
CDM breaches
Corruption of the contractor
Contractor failing to proceed regularly and diligently
Employer failing to pay amounts
Either party can terminate if the works are suspended for a period of more than one month due to neutral events
Does JCT MW require a contract programme?
MW16 does not require the contractor to produce a programme.
Although there would be nothing to prevent such a requirement being included in the specification; a programme might be very useful to the contract administrator, particularly when monitoring progress and assessing extensions of time.
Why is it important to define a completion date?
The significance of having a completion date is that it provides a fixed point from which damages may be payable in the event of non-completion.
Generally in construction contracts the damages are ‘liquidated’, and usually expressed as a rate per week of overrun.
What is the reason for an extension of time?
One important reason for an extension of time clause is to preserve the employer’s right to liquidated damages in the event that the contractor fails to complete on time due wholly or in part to some action for which the employer is responsible.
When must a contractor give written notice regarding an extension of time ?
Under MW16 the contractor must give written notice to the contract administrator - ‘If it becomes apparent that the Works will not be completed by the Date for Completion’ (cl 2.7)
The notice must be given regardless of the reason for the delay, i.e. whether it is caused by the employer, by a neutral event (such as bad weather) or by the contractor itself.
When would you issue a certificate of non completion?
If the completion date is not achieved, under JCT MW the certificate is not required but this failure should be recorded and circulated to all.
What triggers practical completion?
Under clause 2.9 the contract administrator is obliged to certify the date at which, in the contract administrator’s opinion, works have reached practical completion and the contractor has complied sufficiently with clause 3.9 (its CDM obligations, for example the supply of information required for the health and safety file).
It is implied that it will be a fair and reasonable exercise of professional judgment.
However, the contract administrator can certify practical completion where there are very minor items of work left incomplete, on de minimis principles.
What does practical completion trigger?
Start of the rectification period.
release of half of the retention.
Employer takes responsibility of the site.
liability for liquidated damages ends.
What is culpable delay ?
Culpable delay (sometimes referred to as ‘contractor delay’) on the other hand is a delay that is entirely the fault of the contractor. Where the contractor is culpable for a delay, they have no entitlement to an extension of time or loss and expense.
How and where would you process liquidated damages ?
May deduct damages from the amount due under the next certificate or reclaim the sum as a debt.
Under MW16 the contract administrator is not required to certify non-completion, but it may be prudent to record the failure in a letter to both the employer and the contractor.
Once the date for completion has passed, the contractor is said to be in ‘culpable delay’.
What notice would you need to submit if you are planning to recoup liquidated damages form a payment?
A pay less notice.
What are the key powers of the contract administrator JCT MW?
Agree variations
Issue a pay less notice on behalf of the client
issue certificates
certify practical completion making good defects
At what point can you no longer issue variations under the contract?
Following practical completion/Final account.
