Contract Administration Level 3 Flashcards
What is a Collateral Warranty?
A collateral warranty is a contract under which a party involved in the works warrants to a third party beneficiary that it has fulfilled its obligations under its underlying building contract, subcontract or professional appointment
Creates a contractual link where maybe there wasn’t one previously.
What is the benefit of a collateral warranties?
They avoid issues of bringing a claim
When a contractor is working on a Building who insures the existing building?
The employer
What is a letter of intent?
Used when it is not commercially feasible to delay the commencement of works awaiting full agreement of the contract.
Why do we have letters of intent? -
Ensuring works can start on site promptly but only in certain circumstances.
When contract work scope and price are agreed or mechanism in place for doing so
T&Cs are going to be agreed (or likely)
Start and finish dates are broadly agreed
Good reasons for the works to be commenced in advance of the contract
What are the risks with letters of intent?
Not legally defined terminology
May or may not create a binging contract and there is often some confusion, uncertain or differing terms whether (and on what terms) contracts have been created.
Real risk of actual contract not been completed once the works have started
What would go into a letter of intent
Limiting the scope of the letter (i.e in time and money)
Should the contractor stop working once limit is reached if no full contract in place
Works to take place
Levels of insurance/ Warranties
What is the risk of not paying the contractor in time?
cash flow/ subcontractor payments
What is the differences between the JCT contract and the NEC3 contract?
As many will be aware, the JCT contract focuses on liabilities and risk in the manner of a traditional contract.
NEC requires and enables a more proactive and collaborative approach to managing the contract.
JCT = Contract Administrator NEC= Project Manager
JCT = Master Programme NEC = Update programme regularly
Insight and cost clarity is better with NEC
-Why did you advise on 90/10 price evaluation model?
Gauge the effort and thought the contractor has put in. Encourages the contractor to think about the element of quality.
Mark it accordingly
Price only means price only and that’s it.
Only 90/10 because we have a framework for works where we have greater control over the contractors.
What quality elements did you assess?
Programme (check they could meet the date)
Method Statement (What they were going to do and how)
ESP - Encouraging into construction, impact on local economy and opportunities for young people.
How did you deal with the purchase of the materials?
Materials on site - clear on payment certificate.
Carried out inspection checked materials were on site.
If not on site would be dealt with via a vesting certificate
Withholding retention what is your thoughts?
Way of ensuring the contractor complies with the contract during defects period or defects date
For example in a heating system you would want the equipment to go through a full cycle (12 months)
When would not bother to hold retention?
Whether to hold retention would be such as
Nature/ Complexity
Value
Risk
What are they trying to do with retention nationally ?
Remove retention practices
Old fashioned methods and potentially could be increasing prices. Contractors may be allowing the additional incase they do not get the retention back at the end of the defects period.
