Contract Practice Flashcards
What are LDs? What would you say to a Client who is unsure what rate of LDs to include?
LD’s are a genuine pre-estimate of loss incurred by the Client for Contractor delay.
Whilst I cannot advise the Client on what I think their LD’s are, I can inform them of what is typically included to calculate the LD’s, such as loss of revenue, extension of professional services, funding costs etc.
Can you name 3 examples of typical Construction contract insurances?
Professional Indemnity
Public liability
Employers Liability
Can you tell me a payment timeline for a JCT contract?
JCT D&B Contract:
Application Date
7 days after is the Due Date
5 days from the due date is the final date for payment notice.
14 days from the due date is final date for payment
5 days before final date for payment is final date for pay less.
What is the legislation for payment in the Contract?
The Construction Act 1996
Which payment date is listed in the contract?
Application date
Which payment date can’t be amended?
Final date for payment notice/certificate
Can you give 4 differences between JCT and NEC?
1) NEC is in layman’s terms
2) NEC doesn’t have provisional sums
3) NEC puts time restrictions for agreeing variations with the Contractor.
4) NEC the programme is a contract document.
Can you give me 3 different types of LoI?
1) Comfort Letter
2) Instruction to Proceed
3) Recognition of Contract
Can you list the documents included in the Chigwell contract index?
Contract documents such as:
- JCT D&B Contract
- Amendments
- Prelims
There was also the Employer’s Requirements, such as pre construction information, planning, drawings, site logistics and requirements, surveys.
And the Contractor’s Proposals
In a Contract, do ER’s or CP’s take precedent?
Contactor’s Proposals.
What documents do you typically produce and how do you do so?
Prelims - using NBS chorus and previous projects of a similar nature.
Index of Contract Docs - using Microsoft Excel
Contract Particulars - Using the JCT software or printing the contract and writing the particulars.
What are Contract preliminaries?
Contract preliminaries refer to the initial sections of a construction contract that outline the general conditions and requirements applicable to the project. They include:
- Project info
- Site conditions
- Contractor’s obligations
What are contract particulars?
Details in the Contract specific to that project. They include:
- Project details
- Contract sum
- Parties to the contract
- Payment timelines
What are contract recitals?
Contract recitals are introductory statements found at the beginning of a contract that provide context and background information about the agreement. They are not legally binding clauses but serve to outline the intentions and motivations of the parties entering into the contract.
Can you explain to me which form of contract lends itself best to cost certainty?
Fixed price lump sum.
What is the process of dealing with a Relevant Event/Matter?
It’s for the CA / EA to determine the extent of the delay, however I would assist the Client in valuing the loss and expense incurred from a relevant matter.
What advice can you give to protect a Client from unstable Contractors pre-contract?
1) Using a PQQ
2) Performance bond
3) Checking their credit score
Given the Contractor’s struggles on Reading, and the recent insolvency of ISG, can you tell me what role you think the PQS plays in assisting stability of all players in the industry?
I aim to act fairly and reasonably in all of my assessments. For example, if the Contractor misses an item in their application for payment, or misses OH&P in their variation cost, then I will raise this with them and adjust accordingly. Similarly, I act with integrity and adhere to the Contract, such as using the JCT valuation rules, to ensure I protect my Client financially.
What should be weighed up when choosing between PCG and Performance Bond pre-contract?
1) Cost to the Client
2) Stability of parent company
3) What the Client would prefer in terms of protection, as PB will provide 10% of contract sum whereas PCG means the Parent will finish the works.
What would your advice have been had the contractor not been able to secure a PB?
I would advise my Client to consult with their legal team as the Contract would not have been adhering to the Contract.
What are the steps involved in valuing off-site materials?
1) Check the materials being claimed for are listed in the Contract
2) Confirm with the EA/Contractor that the bond (if any) has been obtained
3) Ensure there is signed vesting documentation
4) Count the materials being stored on site
5) Make sure the materials are listed as property of the Client and stored away from other materials in a safe and secure location.
6) Value the works in accordance with the CSA.
What are signs of Contractor insolvency?
1) Slowing down works
2) Supply of materials drying up
3) Increase in defective work
4) Changes in management
5) Inflated / additional payment requests
6) Complaints from subcontractors.
What is the process for valuing off-site materials?
Insurances, listed items in the contract, vesting certificates, visual inspection, checking the contractor’s application matches CSA.
Where are they off-site materials identified in the contract?
Listed items.
So, the Contractor went bust, what other signs and metrics could have given you an early indication it was heading this way rather than just progress on site? As this could just be down to delay?
1) Lack of progress
2) Poor quality workmanship
3) Overvalued applications / variations
4) Lack of resource on site
5) Complaints from subcontractors
What mitigation measures did you employ to protect your Client from Contractor insolvency?
1) Advised on the need for performance bond
2) Valuation of prelims was in accordance with the delay.
What other payment security measures would you advise you client they could consider pre-contract?
1) Performance bond
2) Retention
3) PCG
4) Advance payment bond
What are alternatives to using materials off-site?
Advanced payment.
What insurances need to be in place to value off-site materials?
Contractor all risk
- Must protect against specified perils (fire, theft, flood).
