Contract Practice Flashcards
What are the differences between JCT and NEC?
Programme – contractual document under NEC, dates only (such as commencement/PC) in JCT
Practical Completion – Subjective in JCT, well defined in NEC
Provisional Sums – none in NEC, unknown items valued as compensation events, client’s risk
Early Warnings – large part of NEC, incentive for contractor as affects cost/time award down the line
Collaboration – less adversarial approach, focus on early warnings, risk registers, risk sharing etc.
Claims – EoT for time and loss of expense for cost under JCT; both are compensation events NEC
Do you know of other forms of contract?
ACA (Association of Consultant Architects)
CIB (Chartered Institute of Building)
FIDIC
What is a collateral warranty?
An agreement where a contractual link between two parties is extended to a third party.
How does a collateral warranty work?
For example, an Employer may wish to enter into a collateral warranty with the M&E subcontractor (if the M&E subcontractor is undertaking design works) should any defects arise or if the Contractor becomes insolvent.
Collateral Warranties may include “step-in” rights to allow the beneficiary to step into the role of the Client.
What are Third Party Rights?
The Contracts (Rights of Third Parties) Act 1999 – created in part to reduce time and cost associated with CWs.
Provides that a third party may enforce a term of the contract if the contract expressly provides that they may.
Only applicable if stated in the contract (usually excluded).
What is the difference between CWs and Third Party Rights
They do largely the same thing, but CWs have been around longer than TPRs.
CWs are separate documents which are time consuming to produce but Client’s prefer a separate document.
TPRs don’t directly deal with step-in rights or assignment.
Tell me about a time you’ve prepared contract documentation? What did you incorporate?
Volume 1 - Contract Conditions
Contract Amendments
Particulars
PCG / PB
CW
Deed of Novation
Volume 2 – Employers Requirements
Drawings & Specification
Surveys
Planning Permissions
Pre-Construction H&S Information
BREEAM Info (If any)
Client Policies
Derogation Schedule
Volume 3 – Contractors Proposals
Volume 4 – Contract Sum Analysis
How do you value variations?
The JCT Valuation Rules
If the work is of similar character under similar conditions, use CSA rates
If work is of similar character but not under similar conditions, use CSA rates as basis and then amend quants or rates as required to make a fair valuation
If work is not similar in character or condition to CSA, a fair and reasonable assessment is to be made.
If the work cannot be assessed by any of these methods, dayworks sheets may be used.
What is the difference between an EA and CA?
EA acts on behalf of the Client – usually found in D&B contracts
CA – doesn’t act on behalf of any party – simply administers contractual mechanisms
What are the required valuation timescales for a JCT D&B 2016?
Found in Section 4 of Contract
Interim Valuation Date – as stated in the Contract (usually last business day of the month)
Due Date = 7 days after the valuation date
Payment Notice to be issued 5 days after the due date
Final date for payment = 14 days after the due date (usually amended to 21 days to aid Client cashflow)
Payless notice = 5 days prior to final date for payment
What are the timescales for agreeing a final account?
Under a typical JCT contract, the final account should be agreed no later than 3 months after the receipt of all information from the Contractor by the CA, which should not arrive later than 6 months after the PC certificate.
What is the advantage of splitting out enabling works and main works?
It allows the enabling works to progress on site whilst the design for the main works is finalised.
However, you will be paying costs for mobilisation and demobilisation of a contractor in two instances. Also, if separate contractors complete the enabling and main works there could be issues around responsibility of defective work.
What contractual mechanisms are not in place on a Minor Works that are available on an IBC/SBC/D&B
Mechanisms for sectional completion
Sub-letting to named subcontractors
Detailed rules for valuation of variations
Mechanism for payment of off-site materials
refer to the “Deciding on the appropriate JCT contract 2016” practice note.
When would it be appropriate it to use a MW, IBC, SBC or D&B contract?
Standard Building Contract with Quantities
- For larger works designed/detailed on behalf of client, where detailed contract provisions are necessary and
- Client is to provide contractor with drawings, with BoQ to define quantity/quality of work
- Where architect/CA and QS are to administer conditions
- Price based on lump sum with monthly interim payments unless otherwise stated
- Contract also includes provisions relating to BIM, collaborative working and sustainability
Standard Building Contract without Quantities
As above but either a specification or work schedules provided to define scope and quality of work and degree of complexity does not require BoQ
Intermediate Building Contract
- Appropriate for simple works/basic trades without complex MEP etc.
- Works designed on behalf of client, drawings provided to contractor with BoQ
- More detailed than MW but less than SBC
- If contractor design required use MW with Contractor’s Design
Minor Works Building Contract
- Work is simple and designed by client/their team
- No BoQ, specifications and work schedules provided to define quantity and quality of work
- If contractor design required use MW with Contractor’s Design
Design and Build Contract
- Appropriate where detailed contract provisions required and ERs have been given to contractor
- Contractor is not only to carry out and complete works but design them too
- Employer employs EA to administer conditions
- If contractor is only to design small part of works then consider traditional route with CDP
- Time and care needed to compile ERs, if they conflict with CPs then CPs take precedent however this is often
- Amended in favour of ERs
- Adequate time needed to check CPs when evaluating tenders, contract specifies that client accepts CPs
What makes up the contract particulars and preliminaries?
Contract Particulars – sets out the specifics of the contract relating to the project. Sets out the contract conditions without altering the intention of the clauses. They include:
Contract Sum
Retention Percentage
Interim Payment Period
Contract Base Date
Contract Completion Date
Contract Preliminaries – provide a description of the project and any general conditions to allow a contractor to price their prelims. They include:
Pre-construction information
Description of planning conditions
Quality management procedures
Samples required
Requirements for performance bonds, warranties and guarantees
