Contract Administrator, Contract Delay + LC Questions Flashcards
Outline the roles and responsibilities of the contract administrator?
- The overall role is to administer the contract between the employer and the contractor.
- Key tasks include:
o Chairing meetings.
o Periodically inspecting the works.
o Issuing instructions relating to variations.
o Authorising interim payments to the contractor.
o Determining applications for extensions of time.
o Certifying practical completion.
What are the key qualities required of a contract administrator?
- Knowledge of relevant contract provisions.
- Knowledge of construction in order to assess changes and the impact of changes.
- Ability to act in an independent and impartial manner when making decisions.
- Be able to maintain accurate records.
What is the difference between a contract administrator and an employer’s agent?
- Contract administrator is identified within traditional forms of contract and is responsible for administering the terms of the contract between the parties. The decision-making function is impartial meaning either party can challenge the decision of the contract administrator.
- Employer’s agent is identified within the design and build contract and acts on behalf of the employer on all matters. The employer is not normally able to challenge the decision of the employer’s agent.
As Contract Administrator, what certificates may you issue under a JCT minor works/intermediate/standard building contract?
- Contract administrator’s instruction – issued to formally alter the contractual works in relation to additional, unforeseen or amended works.
- Interim certificate for payment – issued to certify the amount due to a contractor as part of an interim payment.
- Certificate of practical completion – issued to confirm the works have achieved practical completion.
- Certificate of sectional completion - issued to confirm the works to a specified section have achieved practical completion.
- Certificate of making good – issued to confirm all outstanding patent defects relating to the contractual works have been remedied and the retention should be released.
- Final certificate – issued to certify the contract has been fully completed.
2) If a project does not proceed as planned, what certificates may you issue under a JCT minor works/intermediate/standard building contract?
- Extension of time certificate – issued to formally alter the contract completion date due to delay caused by the client or a neutral event.
- Certificate of non-completion – issued to confirm the contractor has not completed the contractual works by the contract completion date and is necessary prerequisite to claiming liquidated damages.
- Pay less notice – issued by the client if they intend to pay less than detailed within the payment notice.
- Certificate of partial possession – issued in an ad-hoc manner to confirm agreed section of works has achieved practical completion.
What is an extension of time?
- An extension of time formally alters the contract completion date and may be issued if there is a delay to the contract completion date caused by the client or a neutral event.
Why might a contractor be entitled to an extension of time?
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Why did you issue an extension of time on this project?
- An extension of time may be issued to the contractor if there is a delay to the contract completion date caused by the client or by a neutral event.
- Such events are listed as ‘relevant event’s under the JCT Standard Building Contract 2016.
- A ‘relevant event’ can include:
o Variations
o Failure to give contractor possession of site
o Exceptionally adverse weather
o Terrorism
o Strikes
How did you determine an extension of time should be issued on this project?
- Referred to the JCT contract to review procedures relating to extensions of time.
- Request written notice from the Contractor detailing the request and reasons for the request.
- Review the written notice to determine if there is a connection between the delay and relevant event.
- Report the delay and causes to the employer.
- Issue an extension of time certificate to formally alter the contract completion date.
The JCT MW 2016 Contract does not make reference to ‘relevant events’ and so how would you determine if an extension of time should be issued?
- Firstly, the JCT MW 2016 contracts detail that an extension of time should be issued whereby a delay is beyond the control of the contractor.
- For guidance on events deemed beyond the control of the contractor, I would review events listed as ‘relevant events’ under the Standard Building Control 2016.
What is a relevant event?
- Relevant event causes a delay to the contract completion date and is caused by the client or a neutral event.
- Relevant event entitles the contractor to claim an extension of time.
- Relevant event does not necessarily entitle the contractor to claim direct loss and expense.
- Examples include specified perils, exceptionally adverse weather, variations, failure to give contractor possession of site.
What are concurrent delays and why might such concurrent delays cause issues when assessing extensions of time?
- Concurrent delays refers to two or more delaying events occurring simultaneously.
- If concurrent delays comprise of a delay caused by the client and a delay caused by the contractor, there can may be difficulty in determining how long the extension of time should cover.
- Case law suggests an extension of time should be given for the full length of the delay caused by the employer, as opposed to ‘splitting the difference’ on the extension of time.
What is the process for issuing an extension of time?
- The contractor needs to give notice to the employer when it becomes reasonably apparent that progress of the works will be delayed, including the cause of the delay and effect on the completion date.
- The contract administrator needs to assess the notice and determine if there is a clear link between the relevant event and the delay to the completion date.
Are extensions of time for the benefit of the employer, the contractor or both?
- Extensions of time can be beneficial to both the employer and the contractor.
- An extension of time will benefit the contractor as they will not liable for liquidated damages for the contract delay in question.
- An extension of time will benefit the employer as failure to issue the extension of time means the contractor has to complete the works within a ‘reasonable time’ and the employer loses the ability to claim liquidated damages.
What is loss and expense and would a contractor be entitled to loss and expense if an extension of time is given?
- Loss and expense refers to additional costs incurred by the contractor as a result of work progress being materially affected.
- Such costs may include site offices, welfare facilities, plant hire, insurances or site security.
- The contractor may be entitled to loss and expense if the delay to the contract completion date was caused by the client as opposed to a neutral event.
- The contractor needs to give notice to the employer when it becomes reasonably apparent that he is likely to suffer loss and expense.
- The contract administrator needs to assess if there is a clear link between the delay and the loss and expense costs.
What is a relevant matter?
- Relevant matters materially affects progress of works but do not necessarily cause a delay to the completion date and are caused by the client.
- Relevant matter may entitle the contractor to claim direct loss and expense that has occurred.
- Failure to give contractor possession of site, variations, delay in giving contractor instructions.
What are specified perils?
- Specified perils are significant events that would cause significant damage such as fire, earthquakes, flooding, riot and civil commotion.
What remedies are available for a contractor if a client causes a disruption or delay?
The contractor is entitled to claim for loss and expense is there is disruption to the works or a delay to the completion date is caused by the client. The contractor must provide a written application (with sufficient information) to the contract administrator as soon as it becomes apparent they have or are likely to incur a direct loss.
What remedies are available for a client if the contractor causes a delay to the completion date?
The client is entitled to claim for liquidated damages which are detailed within the construction contract.
What are liquidated damages and how are they calculated?
Liquidated damages pre-agreed in the contract and are a genuine pre-estimate of the client’s loss. If the damages are not a genuine pre-estimate, they be considered a penalty by the courts and will be unenforceable.
Various factors are considered when calculating liquidated damages including:
- Loss of rent.
- Loss of income.
- Storage costs.
- Rental costs.
What is the procedure for claiming liquidated damages?
Unliquidated damages are damages that are payable for a breach of contract, the exact amount of which has not been pre-agreed.
What is the risk of inserting ‘nil’, ‘n/a’ or ‘none’ for the rate of liquidated damages in the contract?
This may be interpreted as specifying liquidated damages at zero meaning the employer is not entitled to claim unliquidated damages.
Employers should specify ‘unliquidated damages are to apply’ or delete the liquidated damages clause completely.
What are the implications of issuing Practical Completion?
- The rectification period starts (clause 2.30);
- half of the retention will be released (clause 4.9.1). This puts the employer at significant risk, as the 2.5% retention is only intended to cover latent defects;
- possession of the site now passes to the employer, and the contractor will no longer cover the insurance of the works;
- the contractor’s liability for liquidated damages ends;
- the employer will be the ‘occupier’ for the purposes of the Occupiers’ Liability Acts 1957 and 1984 and may also be subject to health and safety claims.
Define Practical Completion?
- Not defined within JCT contracts.
- The point at which all works described within the construction contract are complete, there are no patent defects except for minor defects that do not affect beneficial occupation and the contractor has supplied required for the health and safety file.
What is the difference between Latent and Patent defects?
- Patent defects can be identified by reasonable inspection.
- Latent defects cannot be identified by reasonable inspection like a failed concrete slab.
What documents would you expect to have in place at Practical Completion?
- H&S File
- O&M Manual
- Building Control Final Certificate
- As-built Drawings
- Warranties/Guarantees
How do you determine final account and resolve any disputes?
- Agree Provisional sums (which can only be expended by issue of a contact instruction)
- Agree prime cost sums (where applicable)
- Agree any loss and expense associated with extensions of time
- Agree Contract Instructions.
- Agree anticipated instructions (which must be formalised before agreeing the final account
- Any items which haven’t been formally instructed should be dealt with by a ‘wrap up’ instruction to formalise any outstanding works.
- Relationships are key to a successful outcome, and the principles of fairness and reasonableness should always apply. Above all else, parties must act ethically. Any negotiation will be aided by the preparation of both parties.
- The standard JCT contract (for example) states that the final account should be ascertained no later than 3 months after receipt by the architect/contract administrator of information supplied by the contractor (which itself should not arrive any later than 6 months after issue of the practical completion certificate).
RICS Guidance Note – Final Account Procedures 1st Edition 2015
What would you do if the client disagreed with a valuation after you had already issued the payment cert?
- I would advise my client that the valuation was reviewed by the quantity surveyor on the value of works undertaken, materials/goods on site and any off-site materials which have been listed at the time of the due date.
- As CA, I need to act impartially and issue the payment certificate within the interim valuation timescales stipulated.
- If there was an error in the valuation, a pay less notice may be issued at least 5 days before the final date for payment stating the client intends to pay less than the amount set out in the payment notice.
Unit 10 Covent Garden Market
How do you access a contractor’s variation claim?
- Find out what the variant works are.
- Determine the severity of the works.
- Find out costs and how this effects the contract sum/programme etc.
- Speak with the client depending on the variation.
- Review costs and if alternative actions can be undertaken.
- Instruct using a contract instruction certificate.
How long is the rectification period and why is required?
- 12 months, allows the contractor to make good any faults or items which fail to perform suitably after PC.
Why is the rectification period 12 months?
To go through all seasons - spring summer, autumn and winter - to ensure the works ‘hold up’ when contraction and expanding.
