Contract administration

Question 1

Have you valued a loss and expense claim, can you tell me how you’ve done that?

Answer 1

Start with Relevant Matter, check if this is correct, what are they submitted, heads of claims, check the contract - what does that allow for these heads of claims and its actuals

a) Prolongation (extra site overheads i.e. preliminaries)
b) Thickening of preliminaries (e.g. extra supervision required due to variations)
c) Disruption (causing plant / labour to be underemployed – hard to prove)
d) Increases in labour / material costs during the period of delay
e) Head office overheads
f) Loss of profit (commonly combined with head office overheads)
g) Finance charges (i.e. interest)
h) Acceleration costs
i) Claim preparation costs

Question 2

“RICS guidance note - Interim valuations and payment

Can you briefly describe what areas this publication covers?

Answer 2

General principles, practical applications and considersations of interim valuations, certificates, notices, payment mechanisms, retention and the likes

Question 3

You mention in our summary of experience that you have acted as an EA and have issued payment notices within the relevant timescales. Can you explain these timescales for an unamended SBCC D&B contract.

Answer 3

The contractor must submit their application for payment on the due date/ (interim valuation date 2016) then payment notice must be issued within 5 days of the due date then final date for payment is 14 days from the due date

Question 4

What’s the difference between SBCC with Quants and D&B when looking at Due dates?

Answer 4

If the contractor doesn’t submit the QS has a duty to value the works.

Question 5

What is in a PEP?

Answer 5

Description of the project
Roles and responsibilities for all involved
Communication procedures
Change Control procedures
Quality management procedures
H&S procedures
Risk Management

Question 6

How would you assess an Extension of Time Claim? How long do you have to assess an EOT claim under the contract? If it has gone past the completion date, what do you do?

Answer 6

I would ascertain if the claim was aligned to a relevant event within the contract and then review the contract programme against the as-built programme accordingly and carry out a critical path analysis and then adjust the contract completion date if required. Under the contract you have 12 weeks to assess an EOT claim however if it has gone past the completion date you must issue a certificate of non-completion and assess the EOT as soon as practically reasonable.

Question 7

What is the difference between PM / CA / EA ?

Answer 7

A PM is not named in SBCC contracts only NEC, however in these contracts a PM would be more involved with management and processes.
A CA administers the terms and conditions of the contract on behalf of the client and has a duty to act impartial.
An EA excecutes the contract on behalf of and acting as the Employer.

Question 8

What are the main SBCC Contract suite?

Answer 8

JCT SBC with and without quantities
JCT D&B
JCT Intermediate
JCT Major Works
JCT Minor Works

Question 9

Why use a standard contract?

Answer 9

Standard forms are contracts drafted with the intention of providing a set of standardised terms and conditions for employers and contractors to contract upon.
Using standard forms should save parties time and money because they are not drafting and negotiating bespoke contracts.
Another benefit of using a standard form is that a professional will become familiar with the terms and conditions over time, and understand the risk allocation within those contracts.

Question 10

Tell me about the role of the contract administrator from when their involvement starts and finishes.

Answer 10

The role of the CA does not technically begin until a building contract is in place between the employer and the contractor.
The CA is responsible for administering the terms of the contract.
The CA will act as the agent of the employer in certain circumstances but when certifying or giving an assessment or decision, they should act in an impartial manner.
The key CA tasks are:
- Chairing meetings
- Inspecting the works
- Giving instructions, including variation and change orders
- Determining extension of time applications
- Authorising interim payments
- Certifying the date of completion
- Settling the final account

Question 11

What are the various certificates that the Contract Administrator issues?

Answer 11

Interim Certificates 
Final Certificate 
Instructions 
Practical Completion Certificate
Certificate of Making Good

Question 12

What is the administrator of the contract called on SBCC D&B contract?

Answer 12

Employers Agent

Question 13

What does the Practical Completion certificate trigger?

Answer 13

Certifying practical completion has the effect of:

1. Releasing half retention
2. Ending contractor’s liability for LAD
3. Beginning the rectification period

Question 14

What does the client/employer need to have in place once PC cert is issued?

Answer 14

Another key effect of PC is the liability to insure the project. Once PC is certified, the risk of loss or damage to the works passes from the contractor to the employer.
It is therefore necessary to insure the works.

Question 15

What is classified as a defect?

Answer 15

Defects are aspects of the works that are not in accordance with the contract.

Question 16

What is a latent defect?

Answer 16

Latent defects are those which cannot be discovered by reasonable inspection, i.e. foundations which may not become apparent for several years.
The building owner must seek redress through the courts in these occasions, as the defects liability period has likely ended the building owner does not have a contractual right to insist the contractor rectified the defects.

Question 17

What role does the programme have in NEC3?

Answer 17

The contract programme is deemed a key tool for successful project management and is sometimes referred to as the heart of the contract.
The NEC demands a more detailed set of documents that make up the programme to be submitted at the regular basis stated by the employer.
The programme under NEC becomes a tool by which the PM
- asses change,
- monitors progress and
- assists the management of EWs and CEs.
Such is the importance of the programme, there are deductions from payments to the contractor for failure to submit the first programme and sanctions thereafter, 25% of the price of work done to date can be withheld.
The JCT requires the contractor to submit a programme as soon as possible after the contract is executed, there are no details as to what the programme should show, or requirements to submit revisions of this programme from time to time or if the programme becomes inconsistent with actual progress on site.

Question 18

When chairing the site meetings what are your key agenda items?

Answer 18

Introductions/ Apologies
H&S
CoW matters
Contractors Reports
Design Report
Client Matters
Employers Agent Matters
Any Other Business
Next Meeting

Question 19

What is a relevant event? (Delay)

Answer 19

Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’ for which the contractor is entitled to an extension of time
When it becomes reasonably apparent that there is a delay, or that there is likely to be a delay that could merit an extension of time, the contractor gives written notice to the contract administrator identifying the relevant event that has caused the delay. If the contract administrator accepts that the delay was caused by a relevant event, then they may grant an extension of time and the completion date is adjusted.

Question 20

What is a relevant matter? (Cost)

Answer 20

A relevant matter is a matter for which the client is responsible that materially effects the progress of the works, this may enable the contractor to claim loss and expense as a result.
A relevant event does not necessarily entitle the contractor to claim loss and expense.
Similarly, a relevant matter need not necessarily result in a delay to the completion date, and so may not always entitle the contractor to an extension of time.

Question 21

What are the various stages of ADR?

Answer 21

• Negotiation
• Mediation/ Conciliation
• Adjudication