Contract Administration Flashcards
What is a Contract?
A legally binding agreement between two or more parties with the capacity to agree to fulfil an obligation. Can be written or oral.
What are the key essentials to form a contract?
Offer - Expression of willingness to form a contract
Acceptance - Final expression of agreement to the terms offered
Consideration - Something of value which changes hands (benefit gained & detriment suffered)
Intent - both parties must intend for the agreement to be legally binding
(Also, Capacity - both parties must have the capacity to enter into a contract, e.g. of sound mind & Legality)
Example of case law
Carlill V Carbolic Smoke Ball Co (1892)
Flu busting smoke ball, £100 to anyone who caught flu.
Courts decided that there was a contract - Offer of £100 made, Acceptance by Mrs Carlill by purchasing, CSBC gained money (consideration), Mrs Carlil caught flu. Because CSBC had put £100 in the bank for this offer, there was intention to be bound.
When does the role of Contract Administrator start?
Role of CA doesn’t technically start until a binding contract between the employer and contractor is in place.
What tasks is a Contract Administrator able to perform pre-contract?
Can perform some pre-contract services such as selection of procurement method, calculation of liquidated damages and selection of contract type.
Which party does the Contract Adminstrator work on behalf of?
Neither party. The Contract Administrator works to adminster the contract, and their decision making process must always be impartial.
What is the difference between a Contract Administrator and an Employer’s Agent?
Contract Administrator role is on a traditional contract, they represent both parties to adminster the contract, and must be impartial. Role starts at the point the contract starts.
Employers Agent role is on a Design & Build contract. They represent just the employer. Role begins prior to formation of the contract between contractor and employer.
What are the responsibilities of the Contract Administrator?
Preparing & Issuing contract documentation
Chairing meetings
Inspecting & monitoring works progress
Giving instructions including variations and change orders.
Determining externsions of time
Authoristing interim payments
Certifying practical completion
Confirming the end of the defects liability period
Settling the adjusted contract sum (final account)
How are Contract Administrators & Consultants appointed to a project?
A Form of Appointment is agreed and signed, which forms a contract between the client and consultant.
The RICS publishes standard forms of appointment which can be used - either the Standard Form, or the Short Form (which can be used where services and the construction project is more striaghtforward).
What information should be included in a Form of Appointment between a Client and Consultant?
Date & Party information
Scope of Services
Payment provisions and fees
Details about termination & the dispute resolution process.
Details about insurance provisions and requirments.
What is the difference between execution of a contract Under Hand or by Deed?
Under Hand - Execution requires it is signed by an authorised person for the company. The period for bringing claims under the appointment is limited to 6 years.
By Deed - Execution requires it is signed by two directors and signatures must be witnessed. The period for brinign claims under the appointment is extended to 12 years.
What is JCT?
Joint Contracts Tribunal. Formed by RIBA in 1931 & produces a rande of standard forms of contract for the construction of buildings.
What was the latest update to the JCT suite of contracts?
The JCT suite of contracts were updated in 2024.
The changes include:
Gender neutral language throughout
Inclusion of reference to the Principal Designer and Principal Contractor under the Building Regulations, following the update in 2023.
When would a JCT Minor Works Building Contract be used?
MWBC is generally used for small, straightforward projects, typically less than £250k in value (although JCT does not set a limit).
MW does not include a bill of quantities & has no provision for sectional completion.
MW has no provision for named specialists / subcontractors.
When would a JCT Intermediate Works Building Contract be used?
IWBC bridges the gap between minor works and standard building contracts. Typically used on projects up to £750k.
IW allows for sectional completion and named sub-contractors.
IW should not be used where complicated building services or other specialist works are required.
When would a JCT Standard Building Contract be used?
SBC is used for large or complex projects generally from circa £1million upwards.
SBC allows for detailed contract provisions, sectional completion and named specialists / sub-contractors.
Versions include:
SBC With Quantities (SBC/Q) - uses a BoQ
SBD Without Quantities (SBC/XQ) - no BoQ
SBC With Approximate Quantites (SBC/AQ) - includes a BoQ with approximate quantites.
When would a JCT Design and Build Contract be used?
D&B is for projects following the design and build procurement route where a main contractor is appointed to complete the design of a project and go on to build it.
The client provides Employers Requirements (ERs) to the contractor, who then completes the design.
D&B can offer time & cost savings and reduces the level of risk sat with the employer. However, they have less control over the design.
What is the name of the party that manages the contract in a D&B Contract?
Under D&B there is not a CA, instead there is an employer’s agent (EA) role. They act on behalf of the employer rather than impartially between both parties like a CA.
This is because the contractor takes on the risk and responsibility for both design & construction.
What are the two dirrerent types of Design & Build Contract?
Single Stage D&B - Where all the necessary information is available for the contractor to calculate a realistic price
Two-stage D&B - Where the ERs aren’t sufficiently developed, the contractor tenders a fee for design with a schedule of rates that can then be used to establish the construction price for the second stage tender.
What is a Pre Construction Services Agreement (PCSA)?
A PCSA is the first stage of appointment in a two-stage tender procurement route.
It can be followed by a main contract using Intermediate, Standard or Design & Build.
What is Novation?
Novation is the process where design consultants are initially contracted to the client, but are then ‘novated’ to be contracted to the contractor.
Most common on a D&B contract.
What is an NEC Contract?
New Engineering Contract - created by the Institute of Civil Engineers.
Developed to promote partnering and collaboration as a reaction to other more traditional contracts that were considered to be adversarial.
Includes a ‘good faith’ clause that the parties should act in a ‘spirit of mutual trust and cooperation’.
Use of NEC recommended in Latham Report (1994) which investigated perceived problems in the industry.
What is a Variation?
A variation is an alteration to the scope of works under a construction contract.
Typicallly require an amendment to the contract sum, so CA needs to consider the request & any supporting evidence before issuing a formal variation to the contract.
What is an Instruction?
Instructions come from the employer, via the CA, for variations. They can be for unforseen, additional or omitted works.
What is a Valuation?
A valuation is a detailed breakdown, usually prepared by the contractor, that constitutes an application for part payment for work undertaken since the last valuation.
The application is checked by the clients CA,who often delegates this task to a cost consultant / QS, which usually involves visiting site to check that the work has taken place.
The amount agreed is then entered onto an interim certificate, which the client must then pay within the period stated by the contract.
When are Interim Payments Required?
The Construction Act states that interim payments are due to any party to a construction contract that has a duration of more than 45 days.
The contract will include clauses detailing the timings at which interim payments will be made.
What is a Pay Less Notice?
If the client intends to pay a different amount from what is shown on the interim certificate, they must give notice to the contractor within 5 days of the date for payment. This notice must include the amount they intend to pay and the basis for its calculation.
What is an Extension of Time?
The contractor can request an extension of time where a delay occurs that is not their fault.
The contractor must give written notice of the relevant event to the CA who will then assess the request and determine whether to grant an extension of time, which will alter the contract completion date.
When assessing the EoT - consider whether the reasoning is a relevant event as listed in the contract, and review the programme critical path to see if it has caused a delay.
What is a Relevant Event?
Relevant events may be caused by the client, or may be a neutral event. They will be set out in the contract.
Includes:
-Variations
-Exceptionally adverse weather
-Delay on the part of a nominated sub-contractor
-Statutory undertakers work (e.g electric, gas, water)
-Force majeure (events beyond the reasonable control of a party e.g war or a pandemic)
-Loss from a specified peril (e.g. a flood, fire or earthquake)
-Changes in statutory requirements
Entitles a contractor to request an EoT. A relevant event does not necessarily entitle the contractor to claim for loss and expense, this requires a relevant matter to have occured.
What is a Relevant Matter?
Relevant matters are something which the client is responsible for that materially affects the progress of works.
Includes:
- Failure to give contractor possession of the site
- Delays in receiving instructions
- Discrepancies in the contract documents
- Instructions relating to variations and expenditure of provisional sums
- Issues relating to CDM
Relevant matters do not necessarily result in a delay, and so do not always entitle the contractor to an extension of time.
