Contract Administration - TO COMPLETE Flashcards
Can you explain a few of the key differences between the JCT and NEC suite of contracts?
- NEC uses 6 main options and secondary options / JCT uses separate contracts
- NEC written in laymen terms
- No QS mentioned in NEC only PM
- NEC tries more collab approach
- NEC = CEs / JCT = Variations, L&E and EoT
- NEC had periods of reply
- Programme is a contract doc in NEC
- NEC uses EW (proactive) JCT is more reactive
How is the Programme managed differently in NEC as opposed to JCT?
Programme is a contract document which the contractor has to submit or monies can be withheld.
Can you explain how you would implement a change control procedure in D&B?
Use the change control procedure set out in the contract
- D&B contractor would submit a CRF to myself and the EA
- EA agrees whether change
- I then agree cost and recommend to EA
- EA gets approval from Client and then issues an instruction for the change.
What are the dangers of working on a bespoke contract?
It’s bespoke so less understood to all parties. Great care must be taken when administering
Role of Contract Administrator under JCT?
- Administers the construction contract
- Must act honestly and reasonable
- Issues instructions & EOT
- Certifies sums due
- Assesses delay and grants time and cost relief
How does the role of Employers agent differ from contract administrator?
- EA is seen as clients advisor
- Required to protect clients interest (CA must act impartially)
What is Practical Completion?
The works are generally considered to be practically complete when there are no outstanding defects and the building can be put to its intended use.
What would you do if the contractor has not completed by the pc date?
If I were acting as either the CA or EA I would advise the client to issue a non-completion certificate.
If date fixed after the notice then date cancels out the notice. Issue another if necessary. Client must give notice of intention to the contractor to deduct LAD’s. 5 days before the date of final payment.
Novation
When the rights and obligations of one party are transferred to another party.
Assignment
- Transfer of a right from one party to another.
- E.g. transferring a collateral warranty to a tenant on completion.
Novation vs Assignment
Assignment does not transfer burden, novation transfer both rights and obligations, creates a new contractual relationship
Items in a valuation
- Measured works
- Variations
- Claims ascertained
- On site materials
- Off site materials (if included in the contract provisions)
- Preliminaries
- OH&P
- Retention
- Deductions for previous payments
What are the main parts of JCT
- Recitals
- Articles
- Contract Particulars
- Attestation
- Conditions
- Schedules
How can you accelerate
Change working method, double shifting, extended hours
Difference between CA and employers agent
CA - Traditional
EA - Design and Build
Payment provisions under JCT Standard 2016
Application for payment - No less than 7 days before due date
Due date - 7 days after the application for payment
Interim Certificate - Issue by CA 5 days after the due date
Pay Less Notice – 5 days before final payment
Final Payment - 14 days after due date
Payment under JCT D&B 2016
Same as the standard but the valuation is up to the due date.
Due date - day of valuation and when the valuation it said to valid from
Interim Certificate - Issue by CA 5 days after the due date
Pay Less Notice – 5 days before final payment
Final Payment - 14 days after due date
Payment provisions under JCT D&B 2016
Option A - Stage Payments
Option B - Periodic payment (valuation to date)
Same payment provisions regardless of option
What is included in a payment cert
Due date
Final date for payment
Gross valuation
New valuation
Retention statement
If the project wasn’t completed on PC date, as CA what would you issue?
Certificate of non-completion
What does cert. of non-completion mean to the contractor?
They are liable to pay LAD’s
What does cert. of non-completion mean to the employer?
They can claim for liquidated damages
What must employer issue to claim liquidated damages
Pay less notice
What is a pay less notice
They intend to pay less than the payment notice or contract value
What happens if CA doesn’t issue certificate
MC can issue their own payment request
What is retention?
Retention is a percentage of payment held back typically by a client or main contractor under a construction contract to act as security,
How is retention dealt with under the JCT?
Conditions - Section 4 - Payment
- Retention Statements to be issued
- Held separate bank account, not to be invested by employer
- Typical 3% deduction or that which is defined in contract particulars
- 50% once PC has been reached.
How is retention dealt with under the NEC?
- Optional retention clause (Option X16)
What are the terms for termination under JCT
Conditions - Section 8 - Termination
Use correct contractual notices, first notice notifies of default, second notice notifies of termination.
Three Rules
Notices can not be unreasonable
Termination takes effect on receipt of second notice
Notices 1 and 2 must meet the specific requirements of the contract
Three types of termination
Termination By Employer
Not carrying out instructions
Not complying with CDM
Termination By Contractor
Failure to pay
Termination By Either
Force Majeure
How is possession dealt with under the JCT?
Conditions - Section 2 - Carrying Out The Works
How are fluctuations dealt with under the JCT?
Schedules - Schedule 4 – Fluctuations
Option A - Contribution, levy and tax
Option B - Labour, materials and tax
Option C - Formula adjustment
How is insurance dealt with under the JCT?
Schedules - Schedule 1 – Insurance Options
Option A - New Buildings - All Risk Insurance with Contractor
Option B - New Buildings - All Risk Insurance with Employer
Option C - Existing Buildings - Joint names insurance by the employer. Employer must insure the existing structure.
What must a contractor issue at PC
Operation and Maintenance Guides (O&M)
Health and Safety File
Effect of Issuing PC cert
Defects Starts
Cant claim LAD’s
Retention 1/2
Bonds and guarantees expire
Must insure the works (client)
What is the rectification period?
- Rectification period begins at PC and typically lasts 12 months (or as per the contract particulars)
- During this period, client reports defects that arise to the CA or EA who decides if they are defect or maintenance issues.
- The contractor may be instructed to make good the defects within a reasonable time.
-At the end of the rectification period the CA or EA prepares a schedule of defects listing all of the defects that have not yet been rectified and agrees a date with the contractor for rectification (within a reasonable time).
What happens at end of rectification period
Issue certificate of making good
Retention release
Final Payment Release
What would you do if some defects aren’t completed at end of defects period
- CA to issue defect schedule and give instruction to contractor to complete within 7 days.
- Do not issue certificate of making good at this point.
- If still not complete then cost the remaining and subtract from retention.
What is Partial Possession
When employer decides to take ownership of part of the works prior to PC, not defined in the contract.
What is the effect of partial possession
Defects Starts
Cant claim LAD’s (for that portion of the works)
Retention 1/2 (for that portion of the works)
Bonds and guarantees expire
Must insure the works (client)
Partial Possession challenges
LAD’s to be reduced accordingly
1/2 retention released for that part (could be hard)
Contractor has not programmed for it.
What does CA do at partial possession
CA issued notification of partial possession
What is Sectional Completion
Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works.
This is common on large projects that are completed in sections/phases, allowing the client to take possession of the completed parts whilst construction continues on others. NOT APPLICABLE IN MINOR WORKS
What is the effect of sectional completion
Defects Starts
Cant claim LAD’s
Retention 1/2
Bonds and guarantees expire
Must insure the works (client)
Difference between Partial Possession and Sectional Completion
Partial Possession is un planned and not part of the contract
What does CA do at Sectional Completion
Certificate of sectional completion
Can you explain what is good practice with regards to latent defects as a CA?
If a latent defect are discovered after PC and during the rectification period the contractor will be liable for direct costs reasonably incurred by the client as a result. This will include the cost of any appropriate remedial works and also any loss of profit or such like reasonably suffered by the client.
What is the defects rectification period?
usually 6 or 12 months (contract particulars)
What is a defect?
Works that have been completed but not to an acceptable standard
What is a patent defect?
Patent defects are those which can be discovered by reasonable inspection during the liability period
Example of a patent defect
Cracking in plaster
What is a latent defect?
Latent defects are those which cannot be discovered by reasonable inspection and occur after the liability period ends
Example of a latent defect
Issue with foundations
How can an employer deal with a Latent Defect
Latent defects are outside of terms of the contract and not enforceable by the contract, however the employer can seek redress through breach of contract. 6 years for underhand and 12 as deed..
Defective Premises Act 1972 - Seek redress for damages through breach of contract, or for negligence
The Latent Damage Act 1986 - provides the claimant with three years, from the date when they knew or should have known or a problem, to issue proceedings.
Process for dealing with latent defect
- Client notify of latent defect and ask to rectify.
- If they don’t agree then pursue through legal access.
