Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

APC > Contract practice > Flashcards

Contract practice Flashcards

1
Q

What contracts have you primarily used in your industry experience?

A

In my industry experience, I’ve primarily used JCT contracts but am familiar with other UK contract forms like NEC.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How familiar are you with other UK contract forms besides JCT?

A

I am familiar with other UK contract forms like NEC, understanding the differences in responsibilities, terminology, and obligations between these contracts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What international contract forms are you aware of?

A

I am aware of international contract forms like FIDIC and ICE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How do you recognize the pivotal role of contracts in construction?

A

I understand how various aspects in construction, such as retention, valuations, change orders, delays, and rectification periods, are tied to contractual agreements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What do you emphasize in terms of project management related to contracts?

A

I emphasize the need for clear responsibilities, risk allocation, pricing options, and specific clauses for effective project management in construction contracts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a JCT Contract ?

A

A JCT (Joint Contracts Tribunal) Contract is a standardized agreement commonly used in the construction industry in the UK to outline terms and conditions between parties involved in a construction project.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the main elements of a JCT contract?

A

The main elements of a JCT contract typically include provisions regarding project scope, payment terms, completion deadlines, responsibilities of parties, dispute resolution mechanisms, and insurance requirements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What does JCT stand for?

A

Joint Contracts Tribunal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is NEC ?

A

It is a suite of contracts used primarily in the construction industry, known for its flexibility, clarity, and emphasis on collaboration and risk management.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What does NEC stand for?

A

NEC stands for New Engineering Contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the main elements of NEC?

A

The main elements of NEC contracts include clear roles, detailed project specifications, change management procedures, risk management, dispute resolution mechanisms, and collaborative working principles.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference in responsibilities in JCT and NEC ?

A

In JCT contracts, responsibilities are traditionally allocated and defined among parties, whereas NEC contracts emphasize collaborative working, shared risk management, and proactive problem-solving.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the difference in terminology in JCT and NEC ?

A

In JCT contracts, you’ll often encounter terms like “employer” and “contractor,” whereas NEC contracts commonly use terms like “client” and “contractor.” Additionally, JCT contracts may refer to “practical completion,” while NEC contracts use the term “completion.” JCT also tends to use more traditional legal language, whereas NEC employs simpler, clearer terminology aimed at facilitating collaboration and understanding among project participants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the difference in obligations in JCT and NEC ?

A

In JCT contracts, obligations are often more rigidly defined, focusing on specific duties and responsibilities outlined in the contract documents. In contrast, NEC contracts emphasize a collaborative approach where parties are obliged to work together to achieve project objectives, manage risks, and promptly address issues as they arise, often through mechanisms like early warning notices and compensation events.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the advantages of NEC contracts ?

A
  1. Flexibility
  2. Clarity and simplicity
  3. Emphasis on collaboration
  4. Effective risk management
  5. Transparency
  6. Promotion of innovation
  7. Timely dispute resolution
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the disadvantages of NEC contracts ?

A
  1. Complexity of administration
  2. Emphasis on collaboration may not suit all parties
  3. Potential for increased administrative burden
  4. Risk allocation concerns
  5. Limited precedent and case law
  6. Requirement for active project management
  7. Cost implications
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are the advantages of JCT contracts ?

A

1.Familiarity
2.Comprehensive documentation
3.Clear allocation of responsibilities
4.Certainty and predictability
5.Established precedent and case law
6.Structured payment mechanisms
7.Proven track record

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the disadvantages of JCT contracts ?

A
  1. Rigidity
  2. Complexity
  3. Potential for disputes
  4. Limited adaptability
  5. Risk allocation concerns
  6. Cost implications
  7. Dependence on precedent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is FIDIC ?

A

It is an organization that produces standard forms of contracts for the construction industry, widely used internationally to govern the relationships between the various parties involved in construction projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are FIDIC contracts recognized for?

A

recognized for their fairness, clarity, and flexibility in addressing the diverse needs of construction projects around the world.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What does FIDC stand for?

A

FIDIC stands for the International Federation of Consulting Engineers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the advantages of FIDIC contracts?

A

1.International recognition
2.Fairness and balance
3.Flexibility
4.Clarity and comprehensiveness
5.Risk management
6.Promotion of best practices
7.Support for project success

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What type of JCT contract do you use most often ?

A

In the UK fit-out sector, the most commonly used JCT contract is typically the JCT Standard Building Contract with Quantities (SBC/Q), sometimes supplemented with bespoke amendments or additional provisions tailored to fit-out projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is retention?

A

A common practice in construction contracts where a portion of the payment due to a contractor or subcontractor is withheld by the client or main contractor until the satisfactory completion of the project.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What are valuations ?

A

the process of assessing and determining the value of work done by contractors or subcontractors on a construction project.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What are change orders?

A

Change orders refer to formal documents that authorize changes to the scope of work, specifications, or contract terms agreed upon in the original construction contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What are contractual delays?

A

situations where the completion of a construction project is delayed beyond the agreed-upon timeframe specified in the contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is a rectification period ?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

How is retention tied to contractual agreements ?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

How are valuations tied to contractual agreements ?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

How are change orders tied to contractual agreements ?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

How are delays tied to contractual agreements ?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

How are rectification periods tied to contractual agreements ?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Why is it important that various construction aspects tied into contractual agreements?

A
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What does tying construction aspects to construction agreements emphasize ?

A

This emphasizes the need for clear responsibilities, risk allocation, pricing options, and specific clauses for effective project management.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Do NEC contracts work on large scale projects?

A

the benefits of NEC contracts outweigh the challenges, particularly in complex or large-scale construction projects where collaboration, flexibility, and effective risk management are paramount.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

NEC advantage; flexibility

A

NEC contracts are highly adaptable to various project types, sizes, and complexities, allowing for customization to meet specific needs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

NEC advantage; Clarity and simplicity

A

The contracts use clear, straightforward language and terminology, reducing the likelihood of misunderstandings or disputes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

NEC advantage; Emphasis on collaboration

A

NEC contracts promote collaborative working relationships among parties, fostering cooperation, communication, and problem-solving throughout the project lifecycle.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

NEC advantage; effective risk management

A

The contracts include mechanisms for early identification and management of risks, such as early warning notices and compensation events, enabling proactive risk mitigation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

NEC advantage; Transparency

A

NEC contracts promote transparency in project processes, costs, and decision-making, enhancing trust and accountability among project participants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

NEC advantage; Promotion of innovation

A

The contracts encourage innovation and efficiency by allowing for flexible project management approaches and incentivizing performance improvement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

NEC advantage; Timely dispute resolution

A

NEC contracts provide clear procedures for resolving disputes promptly and fairly, minimizing project delays and associated costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

NEC drawbacks: Complexity of administration

A

Despite their aim for simplicity, NEC contracts can still be complex to administer, requiring a thorough understanding of the contract terms and procedures.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

NEC drawbacks: Emphasis on collaboration may not suit all parties

A

Some parties may prefer more traditional contract structures with clearly defined roles and responsibilities, which may not align well with the collaborative approach of NEC contracts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

NEC drawbacks: Potential for increased administrative burden

A

The mechanisms for risk management and dispute resolution in NEC contracts may require more administrative effort compared to other contract forms, potentially increasing project overheads.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

NEC drawbacks: Risk allocation concerns

A

While NEC contracts promote risk-sharing among parties, there may be instances where one party feels unfairly burdened with risks or liabilities, leading to disputes or dissatisfaction.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

NEC drawbacks: Limited precedent and case law

A

Compared to more established contract forms like JCT, NEC contracts may have less precedent and case law to guide interpretation and application, potentially leading to uncertainty in certain situations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

NEC drawbacks: Requirement for active project management

A

NEC contracts necessitate proactive project management and collaboration among parties, which may pose challenges if there are disagreements or conflicts among stakeholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

NEC drawbacks: Cost implications

A

While NEC contracts aim to promote transparency and efficiency, the administrative requirements and potential for disputes could result in increased project costs if not managed effectively.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

JCT Advantages; Familiarity

A

JCT contracts are widely used in the UK construction industry, making them familiar to many parties involved in construction projects, including contractors, subcontractors, and consultants.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

JCT Advantages; Comprehensive documentation

A

JCT contracts provide comprehensive documentation that covers various aspects of the construction process, including scope of work, payment terms, responsibilities of parties, and dispute resolution mechanisms.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

JCT Advantages; Clear allocation of responsibilities

A

JCT contracts typically include well-defined roles and responsibilities for each party involved in the project, reducing the likelihood of misunderstandings or disputes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

JCT Advantages; Certainty and predictability

A

The standardized nature of JCT contracts provides a level of certainty and predictability for project participants, helping to manage expectations and mitigate risks.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

JCT Advantages; Established precedent and case law

A

JCT contracts have a long history of use in the construction industry, resulting in a substantial body of precedent and case law that can guide interpretation and application, reducing uncertainty.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

JCT Advantages; Structured payment mechanisms

A

JCT contracts include structured payment mechanisms, such as interim payments and retention provisions, which help to ensure that contractors are paid fairly and promptly for work done.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

JCT Advantages; Proven track record

A

Many construction professionals trust JCT contracts due to their long-standing reputation for fairness, balance, and effectiveness in facilitating construction projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

Overall advantage of NEC contracts?

A

Overall, NEC contracts are valued for their adaptability, clarity, collaborative nature, and effectiveness in managing risks and resolving issues in construction projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

JCT Disadvantages: Rigidity

A

JCT contracts can be seen as relatively rigid compared to other contract forms, with less flexibility to accommodate unique project requirements or changes in circumstances.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

JCT Disadvantages: Complexity

A

Some parties may find JCT contracts to be complex and lengthy, requiring careful review and interpretation, particularly for those unfamiliar with the contract format or legal terminology.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

JCT Disadvantages: Potential for disputes

A

Despite the clear allocation of responsibilities, disputes can still arise under JCT contracts, especially if there are ambiguities in contract terms or unforeseen circumstances during the project.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

JCT Disadvantages: Limited adaptability

A

While JCT contracts provide a comprehensive framework for construction projects, they may not easily adapt to emerging project management practices or evolving industry standards without significant modifications.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

JCT Disadvantages: Risk allocation concerns

A

The allocation of risks in JCT contracts may not always be perceived as equitable by all parties, potentially leading to disagreements or disputes over liability for unforeseen events or delays.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

JCT Disadvantages: Cost implications

A

JCT contracts may involve higher administrative costs due to their comprehensive documentation and potential for disputes, which could impact project budgets and timelines if not managed effectively.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

JCT Disadvantages: Dependence on precedent

A

While the established precedent and case law associated with JCT contracts can provide guidance, it may also limit innovation and flexibility in contract interpretation and application.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

What are the disadvantages of FIDIC contracts?

A

1.Complexity
2.Potential for disputes
3.Limited applicability
4.Cost implications
5.Dependence on contract administration
6.Cultural and jurisdictional differences
7.Limited standardization of practices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

FIDIC Advantage: International recognition

A

FIDIC contracts are widely recognized and used across the globe, providing consistency and familiarity for parties involved in international construction projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

FIDIC Advantage: Fairness and balance

A

FIDIC contracts are drafted with input from industry experts and aim to achieve a balanced allocation of risks and responsibilities among parties, promoting fairness and equity in contractual relationships.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
69
Q

FIDIC Advantage: Flexibility

A

FIDIC contracts offer a range of contract forms and options that can be tailored to suit the specific needs and complexities of different construction projects, allowing for customization while maintaining a common framework.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
70
Q

FIDIC Advantage: Clarity and comprehensiveness

A

FIDIC contracts are known for their clear and comprehensive documentation, which helps to minimize misunderstandings and disputes by clearly defining the rights, obligations, and procedures of each party.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
71
Q

FIDIC Advantage: Risk management

A

FIDIC contracts include mechanisms for managing risks and resolving disputes in a fair and efficient manner, such as provisions for claims, variations, and dispute resolution procedures.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
72
Q

FIDIC Advantage: Promotion of best practices

A

FIDIC contracts incorporate industry best practices and standards, helping to promote professionalism, efficiency, and quality in construction projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
73
Q

FIDIC Advantage: Support for project success

A

By providing a structured framework for project management and contractual relationships, FIDIC contracts help to reduce uncertainty, manage expectations, and facilitate the successful delivery of construction projects.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
74
Q

FIDIC Disadvantage: Complexity

A

FIDIC contracts can be complex and lengthy, requiring careful review and interpretation, particularly for parties who are not familiar with the contract format or legal terminology.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
75
Q

FIDIC Disadvantage: Potential for disputes

A

Despite the clarity and comprehensiveness of FIDIC contracts, disputes can still arise, especially if there are ambiguities in contract terms or disagreements over interpretation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
76
Q

FIDIC Disadvantage: Limited applicability

A

While FIDIC contracts are widely used internationally, they may not always be suitable for certain types of projects or jurisdictions with specific legal or regulatory requirements.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
77
Q

FIDIC Disadvantage: Cost implications

A

FIDIC contracts may involve higher administrative costs due to their comprehensive documentation and potential for disputes, which could impact project budgets and timelines if not managed effectively.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
78
Q

FIDIC Disadvantage: Dependence on contract administration

A

The successful implementation of FIDIC contracts relies heavily on effective contract administration and project management practices, which may pose challenges if not adequately resourced or experienced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
79
Q

FIDIC Disadvantage: Cultural and jurisdictional differences

A

FIDIC contracts may need to be adapted to accommodate cultural differences or specific legal requirements in different jurisdictions, which could introduce complexities and uncertainties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
80
Q

FIDIC Disadvantage: Limited standardization of practices

A

While FIDIC contracts provide a common framework for construction projects, variations in industry practices and interpretations may still exist, leading to inconsistencies in contract administration and implementation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
81
Q

What is the benefit of retention on the clients behalf ?

A

It serves as security against defects or incomplete work and is typically released upon achieving certain milestones, such as practical completion or the rectification of defects during the defects liability period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
82
Q

How is Retention an incentive to contractors ?

A

Retention aims to incentivize contractors to complete their work to a high standard and address any outstanding issues promptly, providing assurance to the client or main contractor that the project will be completed satisfactorily.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
83
Q

What are the two main incentives of Retention?

A
  1. Security for the client
  2. Incentive for the contractor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
84
Q

What do valuations typically involve ?

A
  1. Quantifying the completed work according to the terms of the contract
  2. Assessment of completed milestones or stages
  3. Valuation of variations or additional works
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
85
Q

Why are valuations important?

A

Valuations play a crucial role in ensuring that payments are made fairly and accurately in accordance with the progress of the construction works.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
86
Q

What are valuations used to calculate ?

A

These valuations are used to calculate payments due to contractors or subcontractors, including interim payments and final account settlements, based on the agreed pricing mechanisms outlined in the contract documents.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
87
Q

Why may change orders be initiated?

A

due to various reasons, such as design modifications, unforeseen site conditions, or client requests for additional or altered work.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
88
Q

What do change orders typically outline?

A

the details of the proposed changes, including any adjustments to the contract price, contract duration, or other contractual terms impacted by the change

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
89
Q

Who needs to approve change orders ?

A

all relevant parties, such as the client, main contractor, and subcontractors, before implementation

90
Q

What crucial role do change orders play in construction projects ?

A

maintaining clear communication among project stakeholders, and ensuring that the project remains on track in terms of budget, schedule, and quality.

91
Q

7 reasons why delays can occur

A

1.Unforeseen site conditions
2.Design changes or errors
3.Delayed approvals or permits
4.Weather conditions
5.Labor shortages or disputes
6.Material shortages or delays
7.Changes in project scope

92
Q

Contractual delays: Unforeseen site conditions

A

Unexpected issues encountered during construction, such as ground conditions, archaeological discoveries, or environmental factors, can cause delays.

93
Q

Contractual delays: Design changes or errors

A

Revisions to the project design, errors or omissions in the initial design, or late issuance of design information can lead to delays in construction.

94
Q

Contractual delays: Delayed approvals or permits

A

Delays in obtaining necessary approvals, permits, or permissions from regulatory authorities can impede progress on the project.

95
Q

Contractual delays: Weather conditions

A

Adverse weather conditions, such as heavy rain, snow, or extreme temperatures, can disrupt construction activities and cause delays.

96
Q

Contractual delays: Labor shortages or disputes

A

Shortages of skilled labor, industrial action, or labor disputes can hinder progress on construction sites.

97
Q

Contractual delays: Material shortages or delays

A

Delays in the delivery of construction materials, shortages of critical materials, or changes in material specifications can impact construction schedules.

98
Q

Contractual delays: Changes in project scope

A

Changes to the project scope, such as additional work or variations, can affect the project timeline if not properly managed.

99
Q

How are contractual delays addressed in construction contracts?

A

through provisions outlining procedures for notifying parties of delays, assessing responsibility for delays, and determining any associated consequences, such as extensions of time or compensation for additional costs incurred as a result of the delay.

100
Q

What are extensions of time?

A

Extensions of time adjust the completion date and relieves the contractor’s liability to pay liquidated damages for the period of the extension.

101
Q

What are liquidated damages?

A

A genuine pre-estimate of the likely loss incurred by the employer should the completion date not be
met.

102
Q

What are the benefits of being able to grant an extension of time?

A
  • It relieves the contractor’s liability for liquidated damages for a delay that they did not cause.
  • It enables another completion date to be set, which maintains the employer’s ability to deduct
    liquidated damages if another delay occurs.
103
Q

What happens when ‘time is at large’?

A
  • There is no set completion date.
  • The contractor only has the
    obligation to complete the works in a ‘reasonable time’.
  • Liquidated damages cannot be claimed as there is no date to take them from.
104
Q

What are Relevant Events in a JCT form of Contract?

A
  • They are events that entitle the contractor to an extension of time.
105
Q

How many relevant events are set out in JCT forms?

A

13

106
Q

Please give 4 of the 13 relevant clauses in the JCT forms ?

A

o Variations.
o Instructions.
o Execution of an approx. quantity that is not a reasonably accurate forecast.
o Deferment of possession of the site.

107
Q

What are the main elements you would include within an interim
valuation?

A
  • Preliminaries.
  • Measured work.
  • Variations.
  • Materials on site.
  • Materials off site.
  • Loss and expense.
  • Retention.
108
Q

What needs to be in place for you to include payments for materials on site?

A
  • The materials should be for the works.
  • They should be adequately protected.
  • Delivered to programme.
  • In a reasonable quantity.
109
Q

What is a retention of title clause?

A

A clause where the sub-contractor or supplier retains ownership of materials until they are paid for by the contractor.

109
Q

What needs to be in place for you to include payments for materials
off site?

A
  • Proof that ownership will transfer to the employer upon payment (vesting certificate).
  • Insurance until materials arrive at site.
  • Materials are clearly labelled as for the site and set apart from other materials.
  • A materials off site bond has been provided if required.
110
Q

Why are vesting certificates important in relation to a retention of title clause?

A

They ensure the employer does not pay for materials that are not owned by the contractor.

111
Q

What can the legal principle of retention of title lead to in the event of insolvency?

A

It can lead to disputes.

112
Q

How do you evaluate interim valuations?

A
  • Go to site and inspect the works to form a view on the percentage of works undertaken.
  • Check for materials on site and materials off site.
  • Value time related and fixed preliminaries items undertaken.
  • Value any agreed variations and claims.
  • The valuation amount is presented as the gross valuation, less previous payment made and retention
  • Finally I would send my recommendation to the Architect or Contract Administrator for them to
    prepare the payment certificate.
113
Q

How do stage payments work?

A
  • The stages and their values are set out in the contract particulars.
  • The stages are usually related to the completion of significant design items for example completion of
    the substructure.
114
Q

What is the interim certificate conclusive of?

A
  • Interim certificates are not conclusive.
  • They carry no contractual significance to state that the quality of materials or workmanship is
    satisfactory.
  • It is only the final certificate that is conclusive.
115
Q

What is retention?

A
  • It is a percentage of each interim certificate deducted and retained by the employer from each interim
    payment to the contractor.
116
Q

What is the purpose of retention?

A
  • It provides an incentive for the contractor to rectify any defects within the contract defects liability
    period.
  • It provides some financial security to the employer in the event of a contractor default.
116
Q

When is the retention released to the contractor?

A
  • Half of the retention is released in the interim certificate after Practical Completion.
  • The remaining retention is released in the final certificate after the certificate of making good defects is issued.
117
Q

What is a typical retention percentage under JCT contracts?

A

Usually retention is between 3% or 5% depending on the form in use.

118
Q

What is a retention bond?

A

A bond provided by the contractor in lieu of taking retention from interim payments.

119
Q

How much should a retention bond be equal to?

A

It should be equal to the same value as the retention deducted.

120
Q

Where should the requirement for a retention bond be stated?

A

In the contract particulars.

121
Q

Is there a standard form for a retention bond?

A

Yes, a standard form is provided in the JCT contract schedules.

121
Q

What happens if the contractor does not maintain the retention bond?

A

The employer can deduct retention from interim payments.

122
Q

Why might a retention bond be used?

A

It may be used in difficult market conditions to aid the contractor’s cashflow.

123
Q

What are the disadvantages of a retention bond?

A
  • The employer would have to pay the premium for taking out the bond.
  • It may reduce the contractor’s incentive to complete making good defects promptly.
  • It reduces the employer’s cashflow.
124
Q

What is acceleration?

A
  • Acceleration is the completion of works in a shorter time frame than that anticipated at tender or the
    act of programme recovery by the contractor if they are in delay.
125
Q

What options may be considered to achieve acceleration?

A
  • Re-sequencing the works or making sequential activities parallel.
  • Increasing the working time by using working longer hours.
  • Increasing the resources employed by using larger gangs.
126
Q

Which are the most and least efficient options to achieve acceleration? ?

A
  • Re-sequencing the works can be the most cost effective and efficient.
  • The least efficient is usually increasing the working time and increasing the resources employed which usually results in lower productivity.
127
Q

What is a fixed price contract?

A
  • Where adjustments of the contract sum are limited to changes in statutory contributions, taxes and
    levies.
128
Q

What is a fluctuating price contract?

A

Where the contract sum is adjusted for changes in the costs of materials and labour as well as statutory
contributions, taxes and levies.

129
Q

What right does the employer surrender at practical completion?

A

The right to apply liquidated damages.

129
Q

What is practical completion?

A

When the works are substantially complete with minor defects only.

129
Q

What does practical completion allow the employer to do?

A

Gain beneficial occupancy of the development.

129
Q

What is the date for completion?

A

The date fixed and stated in the contract particulars.

130
Q

What does it mean when ‘time is at large’?

A
  • There is no fixed completion date.
  • The contractor must only complete the works in a reasonable time.
131
Q

What happens to the retention upon practical completion?

A

Half of the retention is released.

132
Q

What is sectional completion?

A

The completion and handover of the works to the employer in agreed stages.

133
Q

Who takes back possession of the works at practical completion and what are they responsible for?

A

The employer takes back possession of the works and is responsible for arranging insurances.

134
Q

How is practical completion defined in JCT contracts?

A

It is not defined in JCT contracts.

134
Q

Do the works have to be totally completed before practical or sectional completion is achieved?

A

No, practical completion is a vague concept and does not require total completion.

135
Q

What determines practical completion?

A

It relies on the architect’s opinion that the works are complete.

136
Q

Should practical completion be conditional?

A

No, it should not be conditional.

137
Q

When is practical completion commonly granted?

A

When the works are substantially complete with minor defects or omissions that do not prevent the employer from taking beneficial occupancy.

137
Q

What is partial possession?

A

Where the employer requests and the contractor consents to the employer taking possession of the
works or part of the works before the date for practical or sectional completion.

138
Q

What is the difference between partial possession and sectional
completion?

A

Sectional completion is a contractual obligation to hand over the section at the stated date, partial possession relies on the contractor’s consent.

139
Q

What does the architect have to do at partial possession?

A

What does the architect have to do at partial possession?

140
Q

What is the rectification period?

A

The contractor has an obligation to make good any defects, shrinkages or other faults that arise during
this period of time.

141
Q

What is a non-completion certificate?

A

This is issued by the architect to certify that the works or works section have not been completed by
the relevant completion date.

141
Q

How long is the rectification period?

A

It depends on the forms of contract is place but is typically 12 months so the building can be observed
in all seasons.

142
Q

What are the consequences of a non-completion certificate?

A

The employer has the right to withhold liquidated damages, as long as a withholding notice has been given.

143
Q

What are the different certificates you are aware of under JCT forms of contract?

A
  • Interim certificates.
  • Practical completion or sectional completion certificates.
  • Non completion certificates.
  • Certification of Making Good.
  • Final Certificate.
143
Q

What are the three ways that benefits can be transferred under JCT contracts?

A
  • Collateral warranties.
  • Third party rights.
  • Assignment.
144
Q

What are collateral warranties?

A

They create contractual relationships between the main parties of a contract and an external third party, which would not exist due to privity of contract.

145
Q

Why are collateral warranties used?

A

They are used to give remedies to external third parties that would not otherwise have them due to the principle of privity of contract.

146
Q

Who might want a collateral warranty?

A

Any third party with a financial investment in a project but not party to the main contract, such as funding institutions, future tenants, or purchasers.

147
Q

Why might an employer want a collateral warranty with key subcontractors or suppliers?

A

In case the main contractor goes into liquidation, the employer would have no contractual link with them for redress in case of defective workmanship.

148
Q

What should the obligations in collateral warranties mirror?

A

They should mirror those of the main agreement, meaning a breach of the main agreement would also be a breach of the warranty.

149
Q

What are common clauses/terms in collateral warranties?

A

Common terms include:

Limitation of liability.
Reasonable skill and care or fitness for purpose.
Requirements for PI insurance.
Assignment rights.
Novation rights.

150
Q

Name some standard forms of collateral warranty that may be used

A
  • CWa/F – JCT standard form of collateral warranty for a funder.
  • CWa/P&T – JCT standard form of collateral warranty for a future purchaser or tenant.
151
Q

What is assignment?

A
  • Where the rights and benefits of one contractual party are transferred to a third party.
152
Q

What is the standard commercial position regarding assignment?

A
  • It is standard to allow assignment of rights twice without consent.
  • The assignment should be notified in writing to the other party.
153
Q

What is novation?

A

Novation is where a new contract transfers the rights and obligations of one contractual party to a new
third party.

154
Q

What is the key issue after a design team has been novated?

A

Whether the new party has the right to take action against the novated party for breaches that occurred
before the novation.

155
Q

How does novation affect the employer’s rights?

A
  • They lose all contractual relations with the novated party and therefore the right to take action for a breach.
  • It is therefore common for there to be a collateral warranty between the employer and novated party.
156
Q

What is available to protect clients from sub-contractors failing?

A
  • In the event that the subcontractor fails to carry out his obligations the employer can have a contractual remedy to sue the subcontractor for breach of contract.
  • They could also use a performance bond.
156
Q

What is a limitation clause?

A

These are clauses that limit a party’s liability for potential losses

157
Q

What are some examples of limitation clauses ?

A

o Limitation to a fixed sum.
o Limitation to the extent of PI insurance.
o Exclusion of consequential loss.
o Limitation to loss that can be recovered from a third party.
o Limitation to responsibility or a net contribution clause.

158
Q

What is reasonable skill and care?

A

The ordinary skill and care expected of an ordinary competent man carrying out the particular service.

159
Q

What is fitness for purpose?

A

The provision of a service that is suitable for the employer’s intended purpose.

160
Q

What is a bond?

A

A surety bond ensures the main contractor’s obligations are met and provides financial compensation to the employer if the contractor fails, but it does not guarantee project completion.

161
Q

What form must a bond be in?

A

It must be in writing, and it is common for it to be executed as a deed. It will contain a duration, usually until practical completion, and a financial limit.

162
Q

What form must a bond be in?

A

It must be in writing, it is common for it to be executed as a deed.

163
Q

What is a Retention Bond?

A

An alternative to standard contractual retention provisions where the Employer holds retention money from the Contractor, which can negatively impact the Contractor’s cash flow.

164
Q

How does the value of a Retention Bond change throughout a project?

A

The bond’s value increases from the start of a project to mirror the retention normally held throughout the project

165
Q

What happens to the value of a Retention Bond upon project completion?

A

The value may decrease upon completion.

165
Q

What should clients be wary of when opting for a Retention Bond?

A

Hidden costs to the employer, such as lost interest on retained monies and the cost of the retention bond being passed to the Employer through the tender price.

166
Q

ow can a Retention Bond benefit the Contractor?

A

A bond can benefit the Contractor’s cash flow.

166
Q

When would you use a retention bond?

A

When the client does not wish to hold retention on the contractor, but requires some assurance or
financial cover for rectifying defects at the end of the contract in the event that the contractor fails to
return and correct them himself

166
Q

What is a Parent Company Guarantee?

A

An arrangement where the contractual performance of one company in a corporate group is underwritten by other members of that corporate group.

167
Q

What does a Parent Company Guarantee ensure?

A

It ensures that the company must either complete the works itself if it can or pay the financial equivalent.

168
Q

Which is the most common type in the construction industry?

A

Performance bonds.

169
Q

Who typically provides performance bonds?

A

Banks or insurance companies

170
Q

What is the purpose of a performance bond?

A

To give the employer a guarantee of payment up to a stated amount of money if they suffer a loss due to the contractor’s breach of contractual obligations.

171
Q

What protection does a performance bond offer the employer?

A

It provides a financial guarantee up to a specified amount for losses resulting from the contractor’s failure to fulfill their contractual obligations.

172
Q

What is the standard value of a performance bond?

A

10% of the contract value, the premium for taking out the bond is added to the contract sum.

173
Q

How can the employer call for payment?

A

They have to prove that the contractor has defaulted in their obligations under the main contract and that loss has been suffered

174
Q

What is the purpose of a tender bond?

A

This covers the party inviting the tender if the lowest tenderer refuses to enter into a contract with
them.

175
Q

What is a Notional Final Account?

A

A final account that is prepared when the Main Contractor is facing insolvency.

176
Q

What is the standard value?

A

1-5% of the tender sum.

177
Q

What is the purpose of a materials off site bond?

A

It covers the employer against loss or damage to materials already paid for through interim valuations
before the materials are delivered to site.

178
Q

What are the arguments against requesting bonds?

A

They shouldn’t really be needed if the tenderer selection process is operated effectively as only reliable
and capable contractors are then selected.

179
Q

Where might bonds be appropriate?

A

If the contractor is new or unproven.

In a difficult economic climate, when the risk of insolvency is higher

180
Q

What is an ‘on demand’ bond?

A

An ‘on demand’ bond is one which is paid straight away upon the default occurring and request for
payment.

181
Q

What is a Highway Bond?

A

A Developer who undertakes speculative housing developments will frequently be required to enter
into an agreement with a Local Authority for the adoption of roads and sewers.

182
Q

What provisions are available for ensuring Contractor carries out
works properly?

A

Performance Bond may be provided.

Parent Company Guarantee
(PCG)

183
Q

What is insurance?

A

A transfer of a defined risk to an insurance company in exchange of a premium.

184
Q

What are the two main types of insurance?

A

Liability and loss insurance

185
Q

What is liability insurance?

A

Financial cover for the legal liabilities that the insured party owes to others.

186
Q

What is loss insurance?

A

Financial cover for losses that fall directly on the insured party.

187
Q

What is subrogation?

A

A legal technique where the insurer steps into the shoes of the insured in order to take the benefit of
any legal rights or remedies they may have against a third party responsible for the loss.

188
Q

What does ‘joint names’ mean?

A
  • Where the employer and contractor are insured under the same policy.
  • It stops the insurer having the right of subrogation against the other party if they caused the loss.
189
Q

Is an LOI that includes a spend limit any use to a contractor?

A
  • It is only useful to the contractor if the LOI is legally binding.
  • In order for an LOI to be legally binding it must have the basis of a simple contract (offer, acceptance
    & consideration) & both parties must intend to create legal relations.
189
Q

What are LOI’s ?

A

Letters of Intent

190
Q

Are LOI’s legally binding?

A
  • There is no legal significance of letters of intent.
  • The courts will look at all the correspondence between the parties to establish if a contract has been formed.
190
Q

When are LOI’s used?

A
  • Letters of Intent are used when an early start on site is required.
  • They can be used to instruct initial design or survey works to be carried out or procurement of
    materials on a tight programme.
191
Q

Three Differences Between JCT and NEC

A

Risk Allocation: JCT places more risk on the contractor, while NEC encourages shared risk management.

Flexibility: NEC contracts are more flexible and adaptive to changes, whereas JCT contracts are more rigid.

Communication: NEC emphasizes proactive communication and collaboration, unlike the more traditional structure of JCT.

192
Q

Changes in the 2024 JCT Suite Compared to the 2016 Suite

A

Digital Integration: Better integration with digital tools, including BIM.

Updated Payment Provisions: Streamlined payment processes to comply with new legislation.

Sustainability Clauses: New clauses addressing sustainability requirements.

193
Q

Is Retention Fair?

A

Balanced Use: Retention is fair when applied appropriately to ensure project quality without harming the contractor’s cash flow.

Transparency: It should be clearly defined in the contract with transparent terms.

Alternatives: Consider alternatives like performance or retention bonds to balance fairness and security.

194
Q
A
194
Q

What are the risks of an LOI? How did you ensure the client was protected?

A

Risks: LOIs can lead to ambiguity, cost overruns, and disputes if not clearly defined.

Protection: Ensure the LOI specifies scope, value limits, and duration, and limit it to essential work while expediting the final contract.

195
Q

Pleas explain the payment cycle under HGCRA?

A

Payment Notice: Issued within five days of the due date, detailing the amount due.

Final Payment Date: Payment must be made by this date, unless a Pay Less Notice is issued.

Right to Suspend: Contractors can suspend work if payment is not made on time.

195
Q

what does HGCRA stand for ?

A

HGCRA stands for the Housing Grants, Construction and Regeneration Act 1996.

196
Q

How do you value materials off site?

A

Verification: Confirm materials are purchased and allocated to the project.

Ownership and Insurance: Ensure title passes to the client and adequate insurance is in place.

Valuation: Based on cost, including delivery, but excluding installation.

197
Q

What does HGCRA provide?

A

This UK legislation provides a framework for payment practices in the construction industry, including provisions for payment notices, adjudication, and the right to suspend work if payments are not made on time.

198
Q
A
199
Q

How do you incorporate a Schedule of Amendments into a JCT contract?

A

Integration: Attach the Schedule of Amendments to the JCT contract and reference it clearly within the contract document.

Documentation: Accurately document all changes and ensure both parties sign off on the amendments.

Consistency: Reference the schedule consistently to avoid confusion.

199
Q

In what instance would you recommend a JCT Intermediate contract to a client?

A

The choice of contract type should align with the project’s complexity, risk profile, and client needs, as recommended by RICS.

Project Type: Suitable for projects of moderate complexity and duration with some flexibility needed for changes.

Risk Management: Balances risk allocation between client and contractor.

Client Needs: Ideal for clients needing a structured yet adaptable contract for managing both standard and bespoke requirements.

200
Q

When would a Pay Less Notice be issued and who issues it?

A

The HGCRA outlines the requirement for Pay Less Notices to manage disputes over payment amounts and ensure transparency.

Timing: Issued if the payer intends to pay less than the amount stated in the Payment Notice, before the final payment date.

Issuer: The payer (client or representative) is responsible for issuing the notice.

Purpose: Ensures transparency about payment reductions and helps prevent disputes.

201
Q

Explain the process of how Liquidated Damages are deducted?

A

RICS advises that the process for liquidated damages should be clearly outlined in the contract and handled transparently to ensure fairness.
Contract Terms: Pre-agreed penalties for delays are specified in the contract.

Assessment: Calculated based on the rate in the contract if the contractor misses the completion date.

Deduction: Subtracted from the final payment or retention sum, with clear documentation and justification.

APC (20 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions