Contract Administration (L2) Flashcards
Who is responsible for administering the building contract?
Under the NEC3 & NEC4 Engineering and Construction Contracts - The Project Manager.
Under the JCT Design and Build Contract 2016 - Employer’s Agent (EA).
Under the JCT Minor Works, Intermediate, Standard Building Contracts - Contract Administrator.
Please detail some of the key responsibilities of the contract administrator under a JCT contract?
The CA is responsible for administering the terms of the building contract between the contracting parties, responsibilities include, but are not limited to:
- Determining extension of time claims
- Determining loss and expense claims
- Issuing practical completion statements
- Issuing instructions to change the scope of works
- Issuing instructions to expend provisional sums
- Certifying interim payments to the contractor
- Administering change control procedures
- Collating and issuing schedules of defects
- Issuing the certificate of making good defects
- Notifying partial possession
- Certifying sectional completion
- Certifying non-completion
Do you know how the employer’s agent role differs from the contract administrator role?
Contract administrator - This is a party who is specifically identified within the contract and is solely responsible for administering the contract for the employer. It is an impartial role and only exists at the point the contract is entered into.
Employer’s agent - This is a party who is identified within the contract and who acts on behalf of the employer in all matters, effectively as if the employer’s agent were the employer. When carrying out certification and decision making functions under the contract, the employer’s agent should act impartially.
What is practical completion under the JCT?
Generally, it is the point at which a building project is complete, except for minor defects and outstanding works that can be put right without undue interference or disturbance to an occupier.
Some refer to it as the point when a building is ‘capable of beneficial occupation and use’ by the Employer.
Can you rescind the PC statement once issued under the JCT?
No, once issued it remains final and binding and cannot be revoked.
Once the PC statement has been issued, what are the consequences under the JCT?
50% of retention is usually released (subject to the contract terms)
The defect rectification period starts
The employer is usually required to start insuring and securing the building
The employer’s ability to levy liquidated damages ends
What is a non-completion certificate under the JCT?
The certificate of non-completion gives formal written notice that the contractor has failed to complete the works described in the contract by the completion date.
What are the consequences of a non-completion notice under the JCT?
Triggers the right for the employer to levy liquidated damages, three key documents required to do so:
- Certificate of non-completion.
- The employer must write to the contractor, notifying their intent to levy liquidated damages.
- The employer must issue a pay less notice to recover the LD’s.
How is completion defined under NEC ECC contracts?
NEC3 ECC definition:
- Once the Contractor has done all the work which the Works Information states by the Completion Date and
- Corrected notified Defects which would have prevented the Employer from using the works and Others from doing their work.
NEC4 ECC definition:
- Once the Contractor has done all the work which the Scope states by the Completion Date and
- Corrected notified Defects which would have prevented the Employer from using the works and Others from doing their work.
Why might the employer’s agent instruct the contractor to ‘open up’ work that has been covered up?
If the EA suspects work has not been completed ‘in a proper and workmanlike manner’ or ‘believes materials, goods or work are not in accordance’ with the contract, the EA may issue an instruction to open up the area for inspection.
If works are not defective, the contractor is paid for opening up and may be entitled to an adjustment of the completion date. If works are defective, the contractor remedies at their own expense, the EA can then instruct the contractor to open up similar work, if similar work is defective, no payment or adjustment of the completion date. If similar works are not defective, the completion date may be adjusted but still no payment.
What is an Extension of Time (JCT Contracts)?
The EoT provision allows for the contract administrator to ‘adjust the completion date’, preventing time from becoming ‘at large’ and thereby postponing the employer’s right to recover liquidated damages. This provision is used in instances where the delay is not the contractor’s responsibility or fault.
What is the procedure for claiming an EoT (JCT Contracts)?
As soon as it becomes reasonably apparent that a delay has occurred or is likely to occur, the contractor should write to the contract administrator and notify them.
The notification should identify the Relevant Event that has occurred and give and indication of the extent of the delay. Usually shown on a programme to demonstrate the cause and effect.
The contractor is required to submit the information requested by the CA to determine the claim
The CA will ultimately notify the contractor of their decision. Should the claim be in accordance with the contract and the period of delay adequately demonstrated, the contract completion date will be adjusted.
From a Contract Administrator’s point of view, what are the time periods related to assessing Relevant Events and adjusting the completion date? (JCT Contracts)
The contract administrator/EA must notify the contractor within 12 weeks of receipt of the required particulars (or sooner if the completion date is less than 12 weeks away) and state the extension awarded.
Assuming the contractor successfully demonstrates a relevant event and the contract administrator/EA subsequently adjusts the completion date, is the contractor due additional preliminaries?
No, the contractor is required to demonstrate a ‘relevant matter’ for a loss and expense claim.
