Contract administration (L1) Flashcards
What standard forms of contract are you aware of?
- NEC
- JCT
- FIDIC
- IChemE
Can you name some contracts from the JCT suite of contracts?
- JCT Standard Building Contract (with Qunats, Without Qunats or with Approx Quants versions)
- JCT Intermediate Building Contract (with Contractor’s Design version)
- JCT Minor Works Contract (with Contractor’s Design version)
- JCT Design and Build Contract
- JCT Major Project Construction Contract
- JCT Management Building Contract
- JCT Construction Management Contract
Contract families contain main and sub-contracts
Can you name some contracts from the NEC suite of contracts?
- NEC Engineering and Construction Contract (ECC) - Main Options A-F
- NEC Engineering and Construction Subcontract (ECS) - Main Options A-E
- NEC Engineering and Construction Short Contract (ECSC) - Hybrid between Option A and Option B
- NEC Engineering and Construction Short Subcontract (ECSS) - Hybrid between Option A and Option B
- NEC Professional Services Contract (PSC) - Main Options A, C and E
Note: The client can include the requirement for the Contractor to be doing some element or all of the design by including such requirements within the scope/ works information. This avoids the need for a separate ‘design and build’ option within the NEC family of contracts.
What are the Main Option clauses under the NEC Engineering and Construction Contract?
There are 6:
- Main Option A: Priced contract with Activity Schedule
- Main Option B: Priced contract with Bills of Quantities
- Main Option C: Target contract with Activity Schedule
- Main Option D: Target contract with Bill of Quantities
- Main Option E: Cost reimbursable contract
- Main Option F: Management contract
Can you give me some examples of Secondary Option clauses under the NEC Engineering and Construction Contract?
- X5: Sectional completion
- X6: Bonus for early completion
- X7: Delay Damages
- X16: Retention
What are the core clauses of an NEC3 ECC contract?
1 - General
2 - The Contractor’s main responsibilities
3 - Time
4 - Testing and Defects
5 - Payment
6 - Compensation Events
7 - Title
8 - Risks and Insurance
9 - Termination
Describe the difference between statutory provisions and contract provisions?
- Statutory provisions are set out by law
- Contract provisions relate to the contract in questions and therefore only apply to a specific project
What is the difference between NEC and JCT?
- The main difference between the 2 forms is its usage
- NEC can be used for building and civil engineering projects whereas JCT is specifically for building projects
How is a contract under hand different from a deed?
- A deed is signed by the parties and witnesses, whereas a simple contract under hand is signed just by the parties
- The other main difference is the limitation period - simple contracts under hand have a limitation period of 6 years from when the breach occurred whereas a deed has 12 years
What is your understanding of a latent defect?
- Latent defects are defects that are not readily identifiable upon inspection and only come to fruition some time after completion and may take some years to become identifiable
- A claim in contract can only be brought within the limitation period from when the breach occurred which is 6 years if the contract is under hand and 12 years if the contract was executed as a deed
What are the main parts of the JCT contract?
- Recitals
- Articles
- Contract particulars
- Attestation
- Conditions divided into 9 sections (7 for minor works)
- Schedules
What are the sections of a JCT Standard Building Contract ?
Section 1- Definition and interpretation
Section 2 - Carrying out the works
Section 3- Control of the works
Section 4 - Payment
Section 5 - Variations
Section 6 - Injury, damage and insurance
Section 7 - Assignment, Thurs Party Rights and collateral Warranties
Section 8 - Termination
Section 9 - Settlement of disputes
What is set-off/ contra-charge?
Set off/ contra-charge are any monies owed to the employer by the contractor which are deducted against any payment due to the contractor
What are the role and responsibilities of the Project Manager under NEC?
- Contract Data Part One identifies who the PM is
- They play a key role in administering the contract on behalf of the client
- Duty to act impartially and in accordance with the contract
- Acceptance of submissions from the Contractor e.g. design and programme or if not accepting give reasons as to why
- Giving instructions e,g. for additional work or to stop work
- Replying to, notifying, assessing and implementing CEs
- Responding to and notifying early warnings and updating the risk/ early warning register
- Assessing the amount due at each assessment date
- The Project Manager can also delegate their actions after notifying the Contractor
What are the main elements that could be issued to the Project Manager for acceptance under NEC4?
- Design
- Programme
- Subcontractor and contract conditions
- CE Quotations
- Revised Activity Schedule (Option A only)
- Additional Working Areas
- Changes in Key Perons
- Acceleration Quotations
What is the role of the quantity surveyor under the NEC?
- The role of a QS is not specifically mentioned in the NEC
- However, actions of the Project Manager can be delegated under clause 14.2
- We issue a delegated authority matrix as a GC at the start of all projects setting out those actions of the Project Manager that are delegated to the Quantity Surveyor which includes for example:
- Assessment of the amount due at each assessment date
- Assessment of compensation events
What is the difference between a contractual process and mechanism?
- For example, the early warning PROCESS under an NEC contract is MECHANISM for managing potential risks to the project e.g. early warning notification, meeting, actions, mange
- the payment PROCESS is a MECHANISM for the Contractor be paid e.g. application, assessment, certification, payment
What are the different roles under JCT Standard Building Contract?
- Architect/ Contract Administrator
- Quantity Surveyor
- Contractor
What is the role and responsibilities of the quantity surveyor under the JCT standard building contract?
They help manage the financial aspect of a project including:
- Preparation of interim valuations
- Valuation of variations
- Assessment of Loss and Expense
- Final account preparation
What is the role and responsibilities of the architect/ contract administrator under the JCT standard building contract?
- They manage the contract and oversee execution of the works including:
- Issuing instructions for Variations
- Issuing of certificates such as interim, practical completion, making good defects certificate and final certificate
- Instructing an inspection
- Granting extension of time
- Determination of Practical Completion
What is the NEC Engineering and Construction Short Contract (ECSC)?
- It is an alternative to NEC3 Engineering and Construction Contract and used when a project is relatively straight forward and low risk and thus does not require sophisticated management techniques
- There is no main Option - it is a hybrid of ECC option A & B
- There is no choice of secondary options although the equivalent of some are included by default into Contract Data (e.g. Delay Damages and Retention)
- There is no Project Manager or Supervisor role, the works are managed by the Client
What is a Price list under NEC Engineering and Construction Short Contract (ECSC)?
- It is created by the client or contractor or jointly at tender stage
- It can be a combination of ‘Lump sum’ items and ‘quantity’ related items hence why it is a hybrid between Option A and B
- The ‘quantity’ related items will be remeasured
What is a relevant even under JCT?
- It is an event which if it occurs and causes delay entitles the Contractor to claim an extension of time; which involves a move to the Completion Date
Relevant events include:
- Variations
- Adverse weather (neutral event)
- Delay in giving contractor possession of the site
- Relevant events do not necessarily entitle the Contractor to claim loss and/ or expense. This is triggered by the occurrence of a relevant matter
What is a relevant matter under JCT?
- It is a matter which if it occurs and effect the progress of the works entitles the Contractor to claim loss and/ or expense that has been incurred
Relevant matters include:
- Delay in giving contractor possession of the site
- Variations
- Discrepancies
What is a neutral event under JCT?
- It is an event which causes a delay but is not the fault of either the Contractor or Client
- If an neutral event occurs the Contractor is entitled time but not money
- An example of a natural even is adverse weather or terrorism
How is changed valued under JCT Standard Building Contract (without quants, without and approx. quants)?
- The valuation rules reflect a sliding scale of options based on how closely the varied work resembles the work that is part of the Contract Documents
- The valuation of change is typically done using the following approaches:
- Agreed Rates/ Prices - If work is of similar character then valuation should be consistent with rates, prices and amounts in the Priced Document
- Fair and Reasonable Valuation - If it is not similar then it should be valued at fair rates and prices which may involve negotiation
- Daywork - If the work is difficult to quantify (e.g. repair of damage), it can be valued on a dayworks basis which will involve records of labour, plant and materials used in the operation
What are the key differences between JCT Standard, Minor Works, Intermediate and D&B Contracts?
- Minor works only has 7 sections of conditions instead of 9
- No mention of QS in minor works and D&B unlike intermediate and standard contract
- Minor works has not provision for sectional completion or partial possession
- D&B is administered by Employers Agent as opposed to Contract Administrator
- In minor works no relevant events listed for EOT instead referred to as ‘anything outside contractors control
What is a payless notice?
- It is a statutory tool under the HGCRA 1996/ LDEDCA 2009
- It allows a payer (e.g. employer) to notify the payee (e.g. contractor) if their intention to pay less than the amount stated in a payment notice (issued by the Project Manager for example) or default payment notice (e.g., contractors payment application if payment notice not issued by Project Manager)
- Must be served within the perscribed period before the final date for payment which is usually 7 days
What should a payless notice contain?
- The specified sum and
- The basis on which the sum has been calculated
The timing of a payless notice is crucial
When should a payless notice be served?
It must be served no later than the period prescribed by the construction act, which is usually 7 days before the final date for payment
What is Practical Completion?
o Practical Completion is a term used to describe a milestone reached in building works that has various commercial consequences
o Despite no definition, PC is considered to be achieved when
all construction work is complete,
there are no apparent defects expect for those that are very minor and
the building can be put to its intended use
Can you outline the role and responsibilities of the contact administrator?
o The CA’s principle role is to administration the contract, supervise the works and provide sufficient design information (to allow the contractor to carry out and complete the works)
o Responsibilities include:
Granting extension of time
Issuing sectional/ practical completion certificates/ non-completion certificates
Notifying defects
Interim certificates and the final certificate
Ascertaining the amount of loss and/ or expenses to be added to the contract sum
Issuing variations
What is sectional completion and how does this differ from Practical completion?
o Sectional Completion is completion of a pre-defined part of the works which once complete is taken over and used by the employer and
any damages for that section cease
o Practical Completion refers to completion of the entire project or the whole of the works
which under NEC triggers release of half of retention
cessation of damages and
start of the defects liability period
How does this differ from partial possession?
o Sectional completion is pre-defined (in NEC in Contract Part One) whereas
o Partial position/ early take over is not pre-defined
What key aspects did you learn from your course on the roles and responsibilities of the PM under NEC
o The Project Manager plays a key role in administering the contract on behalf of the Client and has numerous responsibilities including
Acting impartially and as stated in the contract
Responding to the Contractors submissions e.g. Cl 32 programme
Issuing instruction such as changes to Scope
Managing the compensation event process
Managing the Early Warning process
Assessing the amount due
Issuing certificates such as Completion certificate
What are the main differences between NEC3 and 4?
- Gender neutral language
- Revised terminology
*Client changed from Employer
*Scope changed from Works Information - New section called Quality Management
- Value Engineering proposals shared through %
- W3 Dispute Boards
- Senior representatives prior to adjudication
- New secondary option clauses e.g. X22 ECI
