Contract Administration Flashcards
What is the role of the QS under JCT D&B?
Does not exist, only a supporting role to EA.
Do you issue valuation certificates under the JCT D&B contract?
When I am acting as the Employers Agent I would, acting in my role as a Quantity Surveyor, I would not. I would issue a recommendation for payment to the EA to allow them to issue the formal certificate.
What are the timescales for payment under JCT D&B contract?
Interim Valuation Dates (IVD) are agreed in the contract particulars and occur monthly.
The due date for interim payment is 7 days after the IVD.
Contractor must submit an interim application for payment by the IVD, due date is 7 days from IVD.
Payment Notice issued within 5 days from Due Date
Final Date for Payment is 14 days from Due Date
Pay less notice should be issued no later than 5 days prior to Final Date for Payment
What is an Extension of Time (EoT)?
Provision that allows the CA to ‘adjust the completion date’, prevent time from becoming ‘at large’ and thereby postponing the employer’ right to recover liquidated damages.
What is the procedure for claiming an EoT?
Contractor write to CA as soon as reasonably apparent that a delay has occurred. Notification should identify a Relevant Event and give an indication of the delay.
What are some of the Relevant Events under JCT?
Variations
Instructions
Civil commotion
Any impediment, prevention or default by the client
Deferment of possession of site by Client
Statutory undertakers work
Force Majeure
Discrepancies in ER’s
How long does the EA have to assess a an Extension of Time under JCT?
12 weeks from receipt.
How would you assess a loss and expense claim?
Review the issue to see if it was a Relevant Matter
Review against the Contract
Seek to value the works and ascertain that everything included was necessary to the claim
If appropriate EA could then respond formally.
Timescale is 28 days.
What are some of the Relevant Matters under JCT?
Issues relating to CDM.
Instructions relating to the expenditure of provisional sums.
Discrepancies in contract documents.
Failure to give contractor possession of or access to site.
What are the timescales surrounding an Loss & Expense claim under JCT?
28 days for the EA or CA to review and agree.
How do you manage change control when acting as the EA?
No formal timescales - JCT Valuation Rules and RICS Valuing Change document both advise that cost of changes should be agreed prior to the works being carried out. (This isn’t always the case and can result in disputes)
Contractor/Client issue proposal for change.
Contractor provides cost in the form of CPFC.
EA/QS will assess the cost using the Valuation Rules.
If agreed, EAI is issued and the cost becomes part of the contract sum.
What is ‘Time at Large’?
When there is no revised PC date
What are the implications of issuing a Practical Completion certificate?
- 50% retention released
- Client’s opportunity to levy LAD’s ceases
- Insurance & security switches from Contractor to Client
- Defects liability period begins
What must be in place before issuing Practical Completion?
Building Control must be signed off then PC certificate can be issued.
Can you name some of the contracts within the NEC suite of contracts?
○ Option A - Priced contract with Activity Schedule
○ Option B - Priced contract with BoQ
○ Option C - Target contract with Activity Schedule
○ Option D - Target contract with BoQ
○ Option E - Cost Reimbursable
○ Option F - Management Contract
○ Option G - Term Contract (Only for consultants - appointment document)
Can you name some of the contracts within the JCT suite of contracts?
○ JCT Design & Build
○ JCT Minor Works
○ JCT Intermediate
○ JCT Pre-Construction Services Agreement
○ JCT Major Projects Agreement
○ JCT Measured Term
○ JCT Standard Building (with quant/wo /approx)
○ JCT Framework Agreement
What would you advise a client who came to you with insurance queries regarding the contract?
I cannot advise on insurances as I am not qualified nor covered by the PI insurance of T&T.
Can you identify a few differences between the JCT and NEC contracts?
○ NEC includes time and cost in changes
○ Programme is a contract document under NEC
○ NEC is more collaborative in theory but more administrative heavy
○ NEC puts timescales on its change control procedures.
○ JCT has Provisional Sums
○ NEC has early warning notices
Differences:
Risk Allocation: JCT Design & Build tends to allocate more risk to the contractor, while NEC contracts promote a more collaborative approach to risk management.
Programme Management: NEC contracts require a detailed and regularly updated programme, which is a central document in the contract. JCT contracts do not treat the programme as a contractual document.
Compensation Events: NEC contracts use compensation events to manage changes, which are intended to be dealt with in real-time. JCT contracts handle changes through variations and extensions of time
What is the procedure for termination?
Notice of Default: The employer must issue a notice specifying the default and requiring the contractor to remedy it within a specified period (usually 14 days) (Clause 8.4.2)
Termination Notice: If the contractor fails to remedy the default within the specified period, the employer can issue a termination notice, effectively ending the contractor’s employment under the contract (Clause 8.4.3)
What is needed for a contract to be formed?
○ Capacity
○ Intent
○ Offer
○ Consideration
○ Acceptance
○ Legality
What is time at large?
MC has not fulfilled their obligations under the contract, but a non-completion certificate hasn’t been issued so there is no set completion date. LAD’s can’t be claimed as the non-completion certificate hasn’t been issued.
What is a letter of intent?
Expression in writing of present intention to enter into a formal contract
What are the different types of letters of intent?
1) Comfort letter
2) Instruction to proceed with intent to spend (Intent to spend)
3) Recognition of contract
What is a collateral warranty?
Formal contractual agreement which runs alongside another one.
Purpose is to create a contractual relationship/link between two parties.
What is the difference between 3rd party rights and a collateral warranty?
No difference with rights.
Collateral Warranty is a separate physical document, 3rd party rights are listed in the documents to no separate one is required.
What are the methods of executing a contracts?
- Under hand - simple contracts that are typically signed by an authorized representative of the company, clear offer, acceptance, consideration (something of value exchanged), and mutual intention to be legally bound, claim can be brought is six years from the date of the breach
- As a deed - more formal and do not require consideration to be legally binding,Requires valid execution, typically by two directors or a director and the company secretary, period within which a claim can be brought is twelve years from the date of the breach
What are the responsibilities of the Contract Administrator?
- Administering the contract
- Determining EoT & L&E claims
- Issuing Practical Completion statements
- Certifying interim payments to the contractor
- Issuing instructions to expend Prov Sums
- Notifying partial possession
- Certifying sectional completion
- Certifying non-completion
Who is responsible for administering the building contract?
JCT D&B - Employer’s Agent (EA)
JCT MW, Int, Stnd - Contract Administrator (named in contract)
NEC3&4 - Project Manager (named in contract)
How are LADs calculated?
Genuine pre-estimate loss suffered by the client due to late completion of the works.
Should be calculated by the client.
Should not be a penalty.
What do you use to value change on your projects?
JCT Valuation Rules or RICS Valuing Change guidance
What are stage, interim and milestone payments?
Interim - contractor is paid for works progressed during the period.
Stage - contractor is paid at agreed stages at a previously agreed cost, regardless of progress.
Milestone - contractor is only paid for work packages when the package is complete.
What are the different types of performance security available to a client?
Performance Bond - Form of security provided by a contractor to an employer. A bank or insurance company will make a payment to the employer if the contractor defaults under the contract.
Parent Company Guarantee - The parent company, who has a small contractor that defaults on their obligations, would take over the contractual responsibilities and obligations.”
What are the two forms of performance bond?
- On Demand (no need to provide information)
- Default (need to evidence the default made by the contractor).
What form of NEC contract is most broadly aligned with JCT D&B?
Option C - Target Contract with Activity Schedule
Similarities:
Design Responsibility: Both contracts place significant design responsibility on the contractor.
Fixed Price: Both can be structured as fixed-price contracts, although NEC Option C is typically a target cost contract.
What are patent and latent defects?
Patent - observable from a reasonable inspection t the time (defective finish or incorrect paint color)
Latent - hidden from reasonable inspection and may come to light at a later date (structural defects)
When does the contractor become liable for liquidated damages?
If a non-completion notice is issued.
Written notice notifying the contractor that they are liable is issued by the Employer, not the EA, as they make the deduction. There is also no obligation to do so if the Employer doesn’t want to.
What are the grounds for termination from the client under JCT D&B?
If the contractor:
○ fails to proceed regularly and diligently with the works
○ suspends the carrying out of the works without reasonable cause
○ fails to comply with an instruction from the employer or the employer’s representative
○ fails to comply with CDM regulations
○ becomes insolvent
○ commits a material breach of contract
What are the Valuation Rules for the JCT Design & Build Contract?
Outlined in Clauses 5.4 to 5.7.
- Similar Work and Conditions: If the additional or substituted work is similar and carried out under similar conditions to the original work, the rates included in the contract should be used.
- Different Conditions or Dissimilar Work: If the work is carried out under different conditions or is not similar to the original work, fair rates and prices should be applied.
- Notification and Instructions: While it’s not a specific requirement for the contractor to notify the employer of a variation/change, it’s recommended to maintain good practice and do so to avoid ambiguity. Instructions from the employer should ideally be in writing.
What aspects should you consider when advising on the likely valuation of change under the contract?
- Changes in character (change of material, method of fixing, change of background)
- Changes in conditions (varied depth - excavations, seasonal variation - winter v summer, working in completed areas - protection)
- Valuing prelims (supervision, out of hours working, access equipment)
- Dayworks (Opening up works, emergency works, repairing damage)
- General considerations (Effects on other works caused by the variation, costs part of Loss & Expense claim?, Exclusions and Assumptions clearly set out)
