Contract Administration Flashcards
What are the certificates in the Intermediate contract? (5)
1 - Interim Certificate 2-Certificate of making good defects 3-Certificate of practical completion 4 - Final Certificate 5-Certificate of non-completion
What is the process for making good defects? (3)
1-These should be notified by the CA/Archi to the Contractor
2-The CA should issue a schedule within 14 days of PC.
3- When CA is satisfied all defects are made good only then can ‘Certificate of making food defects’ be made.
What is the criteria for Practical Complete? (2)
1-Practical Completion of the works is achieved
2-contractor has sufficiently complied with clause 3.18 (supply of information required for Health and Safety File’.
What is the procedure for PC in the Intermediate contract?
There is no procedure it is however for the CA to issue the certificate i the criteria for PC is met.
What is the procedure if practical completion is not met?
The CA must issue certificate, this is a prerequisite for deduction of Liquidated Damages.
Once certificate is issued the contractor is in ‘Culpable Delay’.
When are Liquidated Damages claimed and how?
Subsequent interim valuation or reclaim sum as debt.
What are the preconditions for claiming Liquidated Damages? (4)
1-Contractor failed to complete works by date of completion
2- CA must have issued cert for non completion
3-CA must have fulfilled all duties with respect to the award of an extension of time
4-Employer must give contractor written notice of its intention prior date of final cert
Why would a CA issue CAI?
1 - Discrepancies in contract docs
2- Variations
What are the five underpinning requirements to create a contract?
1-Offer 2-Acceptance 3-Consideration 4-Mutual Obligation 5-Competency and Capacity
What is traditional Procurement?
Design and construction is separate
Full documentation provided to contractor at RIBA stage 4.
Competitive tender process
Independant CA
Valuation/Payment obligated by employer
What are the advantages of traditional procurement?
Certainty of design
Clarity on project requirements
flexibility through variations
What are the disadvantages of traditional procurement?
Slow commencement
No contractor involvement for complex build issues
What is design and build?
Contractor is responsible for both design and construction of work in return for a lump sum
What are the advantages of Design and Build?
Speed as design and construction overlaps
Early start on site
Increased cost control
Increased time control
What are the disadvantages of Design and Build?
Contractor may exploit quality
Design variations have significant cost and time implications
When is the Intermediate Contract Suitable?
When works are simple
When works are designed on behalf of the employer
Where CA/Archi is required to monitor the works
Where partial possession/sectional completion required
Where collateral Warranties are required
What are the clients key drives?
cost
time
quality
What was the clients key driver for Liberation House remediation?
Quality
In relation to a JCT contract, what mechanisms impact on time?
relevant events
What is a relevant event?
Incidents which can create a delay for a contractor who can then be entitled to an extension of time. (e.g impediment by the client / late information from consultant).
Why is it important that a contractor gets an extension of time?
Mitigate LADs
Additional costs to the contractor (prelims, labour)
Name some relevant events?
Variations
CAI
Impediment by employer
Exceptionally Adverse weather
In relation to relevant events, what is ‘Deferment of Possession’?
This is when the client does not handover site on contracted date.
L1 - You note that the contractor was not paid on time, what is this called and what is process the contractor can apply in this situation?
Suspension by contractor (if contractor has not been paid by employer)
Contractor must notify CA/Archi
Not paid within 7 days he can suspend the works.
If that causes a delay he is entitled to an extension
For LW4 you note that the deflection caused the works to stop? What contractual mechanism deals with this?
Relevant events - Variation / impediment by employer
What is the process if the contractor is in delay?
Notice in writing (recorded delivery)
Sent when it becomes ‘reasonable apparent’
Identify relevant event
Is there a time bar on relevant event claims?
No only when it becomes reasonably apparent - they can be late but it is good practice to have these done early
What should the CA do if it receives notice of contractors extension of time request?
Give if reasonable notify contractor give reasons within 12 weeks State extension of time relating to each relevant event Fix new completion date
What are liquidated Damages and are these penalties?
pre determined loss a client would incur as a result of project completing late - this is not a penalty
Are liquidated damages a penalty?
No
What is a payment notice?
Informing contractor of payment value (within 5 days)
What is a lay less notice?
Deduction for poor workmanship or overvalued valuation.
What are the three ways valuations of variations can be carried out?
1-Quotation clause
2-Measure & Price
3-Daywork’s Clause
If you were building a tower block and the ground floor external paving blocks (50 pound per meter) were to used at the roof garden (decided as a variation), which way would this be valued?
Measure and price - Pro rata (adjust rate for additional labour / remove rubble, etc).
What pricing method was applied to the additional works at Liberation House?
Measure and price (no prices in bills of quants therefore there was a build up of first principles).
What is a relevant matter?
Relevant events caused by the client. The client must pay loss and expense.
How is loss and expense calculated?
This is ascertained, it is not in a pricing book it is actual money in which the contractor is out of pocket. This excludes profits.
What is the process for loss and expense?
1-Contractor makes application as soon as apparent
2-Archi/CA instructs QS to ascertain
3-Contractor provides further info and QS ascertains loss and expense
What is the process for instructions under JCT contracts?
1-Archi/CA issues verbal instruction
2-Contractor confirms in writing to CA within 7 days
3-If CA does not reject in seven days it stands
Tell me about opening up to check work? Who has responsibility for paying?
If works are not to standard contractor pays
If works are correct the client pays
What are the main consequences of practical completion?
Possession of site reverts to employer Employer must not insure works First part of retention is released Rectification period begins Contractors Liability to LADS ceases Contractor has 6 months for final account
Advise the client on requirements of a valid contract?
1-Offer
2-Acceptance
3-Consideration
For a 5M pound project what JTC contract is suitable and why?
JTC standard Building Contract
Traditional Procurement - quality
Regarding remediation works to 43 Bath Street your client questions why you did not advise Design and Build? He seeks pros and cons.
It does have higher levels of price surety
1-Listing/Historic implications
2-Design and Build has less control over
quality
3-Client has les control over building work with D&B
During the works to LW4 you instructed additional works to the riser enclosures, how were these works valued?
Measure and price and build up of fair principles.
For the additional single ply membrane to Liberation House, how was the single ply valued?
Existing bills of quantities.
I see that the materials were late on the construction of the Riser Enclosure, what would be the contractual mechanism for this?
It was ascertained that the employer provided sufficient time for the contractor to complete works prior scaffold canopy strike, this was documented in Progress meeting minutes. Therefore this is not impediment of the employer
On LW4 if variation works to the Riser Enclosures were found to cause a delay what would you expect the contractor to do?
Claim for loss and expense.
On LW4, if the variation to the risers were claimed as a relevant event and you received a claim for loss and expense, what would you do next?
Instruct the QS to ascertain exact loss.
On LW4, if you decided to open up to inspect works to check the insulation was installed as specified which was found to be incorrectly installed resulting in a significant delay, What are the consequences for the contractor or client?
Contractor has to pay liquidated damages.
On LW4 note that your client did not pay the contractor an Interim Valuation - advise the client on the potential consequences?
If not paid within seven days suspension of works.
On LW4 you note that you advised the client of PC and the release of retention, what other factors did you advise?
I advised
- Insurance is to be transferred to the employer
- Contractors exposure to LADs ends
- Rectification period commences
- Possession of Site reverts to Employer
For Liberation House, who was the nominated individual for disputes (contractor / Employer) and why is someone nominated who is far removed from contract?
Employer - The client rep (AT)
Contractor - The Companies MD
The reasons for someone being fa removed is that they should not be emotionally attached.
What are potential barriers to negotiation?
Conflicts of Interest
Bribery
Human Factor
To many people involved (Human dynamics)
What are the processes for dispute resolution in the JCT intermediate contract?
Mediation
Adjudication
Arbitration
If a dispute went straight to court what would the judge assess first?
If the contract facilitated ADR as a first means.
Regarding the delay on the roof remediation, what was the process the contractor took regarding the relevant event?
Delay notice
Cause of delay
Identify relevant event
(sent via recorded delivery and email)
When should the contractor send the delay notice to the CA?
As soon as it is reasonably apparent
What did you as the CA do when you received notice of the ‘Delay Notice’?
GIve extension of time that is reasonable
Notify as soon as practical
Give reasons within 12 weeks
State extension of time relating to each relevant event
Fix new completion date
Regarding the variation for the LW4 roof remediation, what was the valuation method?
Measure and price with rates being built up by first principles on plant, labour and materials. This was then negotiated by project QS.
You state that the additional cost was the scaffold, were there any other additional costs?
Yes, labour and plant.
On Liberation House, for the extension of time, how was pricing for the scaffold, plant and labour calculated?
The items such as scaffold and labour was calculated off existing bills of quantities
The new plant deck was calculated off build up of fair principles on materials, labour and plant.
What is the definition of pc?
There no definitions but it could be described as completion of the works in accordance with building contract with minor defects which do not effect use.
What is a latent defect? Can this hold up pc?
Hidden defect (no one knows about it and cannot preclude pc).
What is force majeure ?
Limited remedies available to break contract therefore a clause is included to provide for relevant extraordinary circumstances
What is the force majeure provisions in the JCT contracts?
- Specific relevant event (for force majeure)
- Description of event (force majeure -no definition)
- notice requirements
- relief provided (time or/both money)
What is a relevant matter / relevant event?
RM - entitles contractor to loss and expense
RE - time only events
(there are different notification procedures for each)
Is covid 19 a relevant event or relevant matter?
Depends on what has happened on specific project.
What have you learnt from the RICS CA GN?
-CA roles and responsibilities
-appointment requirements of the CA
-general administrations roles
(financial, supervisions, mics)
-Make records of progress on site
What are the risks of using a letter of intent?
!!!
What is the difference between relevant event and relevant matter?
Relevant event (caused by client or nuetral event not caused by either party) and entitles contractor to extension of time
- variatons
- exceptionally adverse weather
- failure to provide info (client)
Relevant matter (client responsible for effect on progress of work) contractor can claim loss and / or expense
- failure to provide contractor with possession
- delays in receiving instructions
- disruption caused by client
- CDM issues
What can be claimed related to relevant matter and relevant events?
Relevant matter (MONEY) loss and expense
Relevant event (time) extension of time
How are liquidated damages calculated?
Calculated on the loss the client is likely to incur if the contractor fails to meet the completion date (e.g rent)
How do you assess practical completion?
-ensure all express services are complete in accordance with contract
What important considerations are given at PC?
https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/construction/black-book/defining-completion-of-construction-works-1st-edition-rics.pdf
Documentation
Insurance
Retention
What are the duties of the CA?
- familiarisation (understand project)
- General admin (ensure all info present, supply documents) (certify certs) (supervise and approve)
- Site Inspections
- Meetings
- Reporting to the client
L1 - What is the significance of certificate of non-completion?
The JCT contract requires this to be issued as a prerequisite to claiming liquidated and ascertained damges.
L1 - What happens at Practical Complete?
Half of retention released
Ends constractors liabilityfor LADS
Defects rectification period commences
Insurance transfered to employer
L1 - What documentation should be issued to the client on certification of PC?
Draft O&MS
H&S file
L1 - When does a Payment Notice need to be issued?
?
L2 - At Ldubs, what works were the contractors design portion?
Smoke extract fan
L2 - At Ldubs, Why could those parts of the works not be designed pre-contract at design state?
??
L2 - Can you list some of the variations on the contract to Ldubs?
Insulation to new roof
Riser enclosures
L2, What PS for Ldubs did you issue instructions for and why?
PS for balcony repairs
- lose railings
- corroded fittings
PS for brise soleil
-lose fittings which were corroded needed replacing
L2 - What process did you follow for approving variations prior to formal instruction?
written (email and post)
L2 - Why was the fund administrator paying the contractor and not your client?
The fund administrator as the holding company for the property. As the client was a property fund they had multiple holding companies.
L2 - Explain how you assessed the contractors application for payment?
?
L2 - Did you always agree with the contractors valuation of the works completed?
?
L2 - Following the valuation date, in what timeframe did you have to issue your payment notice?
?
L2 - When you state that the contractor threatened to claim interest for lack of payment in the stipulated timbe frame, did they or should they have provided you with any formal notice>
?
L2 - When your client was in breach of contract for late payment , what recourse did the contractor have under the terms of the JCT Contract?
?
L2 - If your client had not agreed with your valuation of the works (hence late payment), what should they have done rather than not pay?
?
L3 - When assessing PC at Ldubs, explain how you did this and what advice you gave about works being practically complete?
?
L3 - Why was retention money held released by half?
At PC 2.5% is released, and at the end of the rectification perriod the remaining is halved.
2.5 %
L3 - Would you expect retention to be 2.5% always or would you expect different amounts?
The IC has a 5% for retention by default. Other amounts could be entered but it is important to consider the correct amount in relation to the size of the works and the potential defects and their implications on the building and its users.
L3 - How long was the rectification period and what advice did you provide your client regarding what would happen during the rectification period?
12 months
I advised my client that during this period they would be responsible for reporting defects which arise to the CA. I would then have the responsibility to decide if these were defects, which i would then issue instructions to the contractor to make them good within reasonable time?
L3 - Did you offer your client advice in relation to insurances at PC?
I advised that insurance which they had taken out of the works and the building (option c) would be ending and that they would need to ensure this part of the building was covered by them.
L3 - Is there any way you could have mitigated the cost of the scaffold for the three months the project was on hold?
I negotiated a lower rate as effectively the contractor was not doing any additional work for this and they were taking their standard mark up of 12.5% each month.
L3 - Was the delay a result of a relevant matter of relevant event and what did you advise your client regarding the implications?
Relevant event (e=event=time) this is a delay to the completion date caused by the client.
The relevant event was ‘variation’.
The contractor provided a notice of delay.
I advised my client that the relevant event being claimed was valid under the contract and the contractor was entitled to an extension of time.
L3 - Explain your review of critical path and how you subsequently agreed relevant time delay?
Once the SE had provided drawings for the plant deck the contractor provided programme NO2 which showed that the works would require an additional three months in total. This included the works being on stop.
L3 - Did you agree with the contractors assessment of the delay and costs?
?
L1 - what is the two functions of the CA?
Agency Funciton
Decisions making function
L1 - What are the keys tasks of the CA?
Advising methods of procurements Preping contract doucs CHairing meetings Giving instructions Determining Extensions of time Issuing certs
L1 - For a CA appointment, what information should be included?
1-dat and party info 2-Scope of sevices 3-Payment provisions and fees 4-INcapacity procedures 5-Termination 6-Dispute reso 7-Insurance provisions
L2, What documents were included in the Ldubs contract docs?
1-Articles of agreement 2-JTC contract 3-Working drawings 4-Spec 5-BOQ 6-Info release schedule 7-Warranties
L1 - What are the advantages of traditional procurement?
Competitive Design led Cost certainty Audit-able Well known Easy CAI variations
L1 - What are the disadvantages of traditional procurement?
Incomplete drawings render inaccurate pricing
Time increases to get to tender stage
No design input from contractor
No VE incentive
L1 - when is a minor works contract not suitable?
When there is
1-BOQ
2 - Sectional completion required
3-Provisions for subbies
L1 - When is the IC/CPD appropriate?
simple works which require control of contractual provisions
Requires named subies
Retention held in trust
Collateral Warranties
L3 - What advice did you give to the client regarding insurance? CRUCIAL!!!!
I advised they liaise with their insurance provider.
L1 - tell me about fluctuations?
These a contractual mechanisms that deal with effects of inflation.
L2 - Regarding Ldubs, for the north stair works was this partial possession or sectional completion? How is this different to partial possession?
Sectional completion
In contrast to partial possession this is pre determined.
L2, on Ldubs why were CW’s chosen over Third Part rights?
The CW is more well known
The CW is easier
L2 - Provide an example of a relevant evant you dealt with?
Queens - Delay in possession due to the tenant not yielding up in time. 1 week delay mitigated in programme float.
L2 - on your project at Ldubs, when was a pay less notice used and what was the process?
Original scaffold claim prior to negotiating less price.
This is to be issued client side five days prior to final date of payment.
L1 - In relation to time and cost, what would yo categorise Covid-19 as?
Relevant event
