Contract Practice Flashcards
How do variation requests work?
Variations are formal instructions issued by the Employer’s Agent, Contract Administrator, or Project Manager to change the scope of works. This could include changes in design, materials, or sequencing.
Process:
A variation is identified and instructed under the contract (e.g., JCT Clause 3.12 or NEC Clause 60.1(1)).
The contractor assesses the cost and time impact, submitting a quotation.
The CA/PM assesses and agrees or negotiates the valuation.
The variation is recorded in interim valuations and reflected in the Final Account
What are the JCT suite of contract options?
The JCT suite includes:
JCT Standard Building Contract (with/without quantities).
JCT Design and Build Contract.
JCT Intermediate Building Contract.
JCT Minor Works Contract.
JCT Management Building Contract.
JCT Measured Term Contract
NEC alternatives?
The NEC suite includes:
NEC4 Engineering and Construction Contract (ECC).
NEC4 Engineering and Construction Short Contract.
NEC4 Term Service Contract.
NEC4 Framework Contract.
NEC4 Professional Service Contract (PSC).
NEC Subcontract equivalents.
How do the two suites of contracts differ?
JCT is prescriptive and reactive, with traditional roles like Contract Administrator and fixed processes (e.g., valuation certificates).
NEC is proactive and collaborative, with early warning notices, compensation events, and real-time risk management.
NEC focuses on project management principles, while JCT leans toward legal frameworks and traditional workflows.
How does a standardised contract benefit a project?
Provides a clear and widely understood risk allocation.
Saves time versus drafting bespoke contracts.
Aligns with industry best practice and case law.
Offers predictability for all parties.
What typical amendments have you encountered?
Common amendments include:
Changes to payment terms (e.g., Longer payment periods).
Contractor taking responsibilities of ER’s
Do you agree with them?
Some amendments are reasonable if they:
Reflect project-specific risks.
Are clearly explained to both parties.
What if you were asked to provide advice?
I would:
Review the contract and proposed amendments carefully.
Advise on commercial risks, including potential cost or programme implications.
Recommend seeking legal advice for heavily amended clauses.
Present this advice to the client clearly, balancing risk with project priorities.
What is the significance of the Local Democracy, Economic Development and Construction Act 2009?
It amended the Housing Grants, Construction and Regeneration Act 1996 (Construction Act) by:
Clarifying payment mechanisms (e.g., pay less notices).
Prohibiting unfair contract terms (e.g., conditional payment clauses).
Making adjudication available for oral contracts.
It ensures fairer payment and dispute resolution within the UK construction industry.
What changes did it bring to the construction industry?
Mandatory notice procedures for payments and pay-less notices.
Outlawed “pay when paid” clauses.
Widened adjudication access.
Enhanced contractor cash flow protection.
How is it recognised in standard forms of construction contracts?
Including clear payment schedules.
Allowing adjudication as a dispute resolution option.
Complying with payment notice protocols.
What are the essential components of a valid contract?
Offer (Tender)
acceptance. (both parties signing)
Intention to create legal relations. (Signing)
Consideration (e.g., Contract Sum).
By way of examples can you tell me how these requirements find their way into a JCT construction contract?
Offer: Tender
acceptance: Signing the JCT agreement.
Consideration: The contract sum.
Certainty of terms: Defined scope of works, payment terms, and programme.
Legal intention: The formal agreement under seal or signature.
Capacity: Confirmed by the parties entering into the contract (e.g., company directors).
What is the principal difference between a parent company guarantee and a performance bond?
A parent company guarantee (PCG) is a corporate guarantee from the parent company for the obligations of its subsidiary (the contractor).
A performance bond is a financial instrument (usually 10% of the contract value) provided by a surety (insurer) to protect against contractor default.
Can you name 2 types of performance bond?
On-demand bond: Payable upon demand, regardless of breach.
Conditional (default) bond: Payable only upon proven default by the contractor.
What current challenges is Covid and/or Brexit bringing to Contract Practice?
Force majeure and delay claims linked to supply chain disruptions.
Labour shortages, increasing contractor resource risks.
Greater emphasis on material price fluctuation clauses.
Increased need for early contractor involvement to mitigate risk through collaborative procurement.
How did you compile the contract documents for this project?
I created a clear and structured folder system separating:
JCT Contract Conditions (compiled using JCT Online).
Design and specification information, including coordinated drawings and schedules.
Preliminaries Document
Pre construction information
Contract Sum Analysis
Contractors Proposal
Employer’s Requirements (ERs), particularly relating to Contractor’s Design Portions (CDP).
Talk me through how you went through doing a valuation for this project?
I followed the JCT valuation process:
Reviewed the contractor’s interim application alongside site progress.
Assessed works completed to date, referencing the contract’s pricing document
Verified materials on site
Applied retention percentages.
Accounted for any variations or loss and expense claims agreed within the valuation period.
Issued an Interim Certificate in line with contract timelines (e.g., typically 5 days post-valuation).
How did you manage the CDP element for this project?
I had a CDP schedule which included each works package, the collateral warranties required, when the contractor is required to issue their proposal and when the client is to approve/ comment by to ensure a smooth process.
How did you make the contractor aware of CDP elements?
A CDP schedule was apart of the contract, additional CDP was apart of the agenda for PTM allowing all parties to stay up to date with their responsibilities.
How did you manage CDP during construction?
Ensured all CDP design deliverables were programmed with submission dates.
Reviewed contractor’s designs alongside the design team for compliance with the ERs.
Monitored CDP approvals via a design tracker to avoid delays to critical path works.
Included regular CDP review discussions within monthly progress meetings
What takes precedence, the ERs or CP?
In an unamended JCT Design & Build contract, the Contractor’s Proposals (CP) take precedence over the Employer’s Requirements (ERs) in the event of a discrepancy. However, the ERs provide the baseline brief, and CPs must still satisfy those requirements.
What was the timeline for valuations?
Valuation date: end of each month.
Assessment within 7 days of due date.
Certificate within 5 days of due date
Payment due date: 14 post certificate
What was issued when the valuation was agreed?
An Interim Certificate (JCT).
An accompanying Payment Notice
How did you create a change control procedure?
I established a Change Control Register at the start of the project.
All changes were issued via Contract Instructions (CI) or Architect’s Instructions (AI).
Variations were logged and priced by the myself
I reviewed and sought approval from the client before formal instruction.
The register was monitored at weekly meetings
How did you value & agree variations?
Ensure the rates used was in accordance with contract rate.
Carry out my own measure to ensure consistency
Did you pay for variations in valuation if the cost wasn’t agreed?
Payment on account was made, then I ensured cost were agreed before the next valuation so adjustments can be made if necessary.
Why did you advise the Client that half retention shouldn’t be released?
I advised against releasing half of the retention as practical completion had not been formally achieved. In accordance with JCT contract provisions, retention is generally released:
50% upon certification of practical completion.
The remaining 50% at the end of the defects liability period (typically 6-12 months later).
Premature release would expose the client to financial risk without assurance that the works were complete and defect-free.
When should the retention be released?
Retention should be released:
First half at practical completion when the contract administrator issues the Practical Completion Certificate confirming the works are substantially complete and fit for occupation or use.
Final half at the end of the defects liability period, following satisfactory completion of defect rectifications and issuing of the Certificate of Making Good Defects.
What did you do when practical completion wasn’t met?
When practical completion wasn’t met, I followed a formal contract administration process:
I withheld the Practical Completion Certificate as the works were not complete.
I issued a Non-Completion Certificate under JCT Clause 2.32, confirming that the contractor failed to achieve practical completion by the agreed date.
I immediately advised the client on their contractual entitlement to apply Liquidated and Ascertained Damages
Why didn’t you see no allowance for paving wasn’t allowed for during tender?
During the tender analysis the landscaping works were given as a lump sum and when reconciling against the PTE it was similar so did not flag up as any scope missing from cost.
How did you check it was included?
I checked the landscaping design within the contract documents and saw it was included. additionally I checked to see if there were any tender clarifications relating to this.
Why did the contractor think it wasn’t included?
The contractor didn’t think it wasn’t included, they made a mistake on their pricing and failed to include it and did not recognise it until it was time to order materials.
