Contract Practice/Admin Flashcards
What are the benefits of a PCSA?
1.Influencing The Design (ECI)
2.Defining the Contract and Milestones
3.Developing a Partnership with the Contractor
4.Leverage the Contractor’s Experience
5.Recognize Potential Issues
6.Analyze Cost
What is a ‘change’
A change/variation can be defined as a change to the contracted scope of works.
Why might changes occur?
- expediate programme
- Design led change – improved aesthetic or performance
- Value engineering
- Surveys
- Exogenous factors – supply issues etc
What is a deemed change/variation?
Deemed changes or variations are also known as necessary changes. In the JCT Standard Form of Building Contract, for example, if there are changes to the statutory requirements after the base date, the contractor is obliged to alter its work to comply with the change. Such a deemed change would require a formal variation notice.
What is the process if the contractor does not implement the deemed change/variation?
Should the Contractor not implement the instruction, the Employer has the right to issue a notice to the Contractor which after 7 days allows the Employer to employ others to complete the instruction and the additional costs can be deducted from the Contractor.
What is your company’s process for change control?
We use Smartsheets for change control. The change will be logged on the system, and include a reason for the change, designer/contractor comments required and any supplementary information (1 day). It is then reviewed by the contractor, designer (2 days) and the QS (2 days) before being presented to the client for approval (1 day). Once approved, a CAI or EAI is issued. We aim to approve all changes within 1 week of them being raised, but will expediate this depending on the nature of the change.
What contracts are in the JCT suite?
13:
- Homeowners Contract
- Minor Works Building Contract
- Intermediate Building Contract
- Standard Building Contract
- Design and Build Contract
- Major Project Construction Contract
- Management Building Contract
- Construction Management Contract
- Measured Term Contract
- Prime Cost Building Contract
- Repair and Maintenance Contract
- Constructing Excellence Contract
- Framework Agreement
What is a parent company guarantee?
the parent company takes on the obligations of the subsidiary company under the contract. Whilst this provides an element security for the client, they have no power to choose the members of the team for the project. There is no cost to the client.
What is a performance bond?
alternative to PCG, typically 10% of the contract sum. This is a issued by an independent financial surety paid for by the contractor, and likely recovered in the contract sum. Although there is a cost to the client, they have greater control over the selection of the project team. However, this may cause additional delay to the project through receiving the funds, tendering for a new contractor and mobilising on site
What is a contract ‘underhand’
does not have to be in writing, but requires consideration (the price paid by each party to be defined. They have a statutory length of 6 years.
What is a deed?
must be written, must state that there is an intention to be a deed, but does not require consideration to be valid. A deed requires a witness to observation the formation (signature). A deed has a statutory length of 12 years.
What are the insurance options under JCT?
- Option A – in reference to new developments, the contractor takes out and maintains a joint names all risk insurance for the works
- Option B – in reference to new developments, the employer takes out and maintains all risk insurance of the works
- Option C – in reference to renovations involving existing buildings, the employer takes out and maintains a joint names all risk insurance for the works, and the policy also insures the existing structure and contents against ‘specified perils’
What is all risk insurance?
An insurance policy that covers all risk such as loss or damage, fire, theft, terrorism etc
What is a schedule of derogations?
A schedule of exemptions or relaxation of items specified in the Contract.
What are specified perils?
“Specified Perils” are events that are likely to cause significant damage, such as fire, explosions, earthquakes and flooding. The standard position under JCT contracts is that a “Relevant Event” (which includes “Specified Perils”) is an employer’s risk and that a contractor will be entitled to an extension of time where completion is delayed by a “Relevant Event”.
What is a relevant matter?
Outlined in clause 4.21 of the JCT contract, a relevant matter is a matter for which the client is responsible for affecting the progress of the works. This may enable the contractor to claim direct loss and/or expense that has been incurred. Relevant matters might include:
Failure to give the contractor possession of the site.
Failure to give the contractor access to and from the site.
Delays in receiving instructions.
Opening up works or testing works that then prove to have been carried out in accordance with the contract.
Discrepancies in the contract documents.
Disruption caused by works being carried out by the client.
Failure by the client to supply goods or materials.
Instructions relating to variations and expenditure of provisional sums.
Inaccurate forecasting of works described by approximate quantities.
Issues relating to CDM.
What is a relevant event?
Events that cause a delay to the completion date, which is caused by the client, or a neutral event not caused by either party. The contract should set out what constitutes a relevant event in clause 2.26. Relevant events entitle the contractor to claim an extension of time. An extension of time is a request for the completion date to be moved. Relevant events might include:
Variations.
Exceptionally adverse weather.
Civil commotion or terrorism.
Failure to provide information.
Delay on the part of a nominated sub-contractor.
Statutory undertaker’s work.
Delay in giving the contractor possession of the site.
Force majeure (such as a war or an epidemic).
Loss from a specified peril such as a flood
The supply of materials and goods by the client.
National strikes.
Changes in statutory requirements.
Delays in receiving permissions that the contractor has taken reasonable steps to avoid.
What is a waiver of subrogation?
A waiver of subrogation is a contractual provision whereby an insured party waives the right of their insurance carrier seek compensation for losses from a negligent third party. Typically, insurers charge an additional fee for a waiver of subrogation endorsement. This allows the insured party to manage risk in the form of protecting their insurance premium/costs.
What is the purpose of construction contracts?
A contract legally defines the parties’ obligations to each other and determines how risks will be shared or divided on the project.
What are the typical elements of a ‘project’ that need to be considered when selecting a form of contract?
- The uncertainty of scope (level of pre-construction contractor involvement required)
- the client’s appetite for risk - who carries risk and unexpected cost increases
- the programme
- the need for cost certainty
- the level of client experience
What does NEC stand for?
New Engineering Contract. (NEC4 is most recent). Established in 1991.
When would you use NEC?
Generally aimed at engineering projects, but are easily adapted to building projects. Unlike JCT, NEC was drafted for use internationally as well as in the UK.
What does JCT stand for?
Joint Contracts Tribunal. (JCT 2016 most recent). Established in 1931.
When would you use JCT?
Generally aimed at building projects, but can be easily adapted for engineering projects. JCT is considered the market standard, and thus people are more familiar with its use.
What are the key differences between JCT and NEC?
- JCT is more widely adopted
- NEC is seen as more collaborative. For example, NEC requires the PM to generate an ‘early warnings register’, but does not allocate them to a particular party. JCT, on the other hand, seeks to allocate and define risks at the point of entering into contract.
- NEC is generally more flexible.
What does FIDIC stand for?
International Federation of Consulting Engineers. In French - Fédération Internationale Des Ingénieurs-Conseils.
When would you use FIDIC contracts?
Aimed at the international construction industry. International projects.
What is the Housing Grants, Construction and Regeneration Act (HGRA) 1996?
Also known as the Construction Act, it is intended to ensure that payments are made promptly throughout the supply chain and that disputes are resolved quickly. It applies to all contracts for construction operations including consultant appointments.
What are the key provisions of the Housing Grants, Construction and Regeneration Act 1996?
- the right to interim payments
- the right to be informed about payment due
- the right to be informed of any amounts being withheld
- the right to suspend performance for non-payment
the right adjudication - disallowing pay when paid clauses.
What happens if a contract fails to comply with the Housing Grants, Construction and Regeneration Act 1996?
The Scheme for Construction Contracts applies.
What is the Scheme for Construction Contracts?
Supplements the provisions of a contract where it has deficiencies relative to the requirements of the Housing Grants, Construction and Regeneration Act 1996.
What updates were made to the Housing Grants, Construction and Regeneration Act in 2011?
Updated to include construction contracts that are not in writing, although adjudication clauses must still be in writing. It is no longer allowable to define within a contract who must bear the cost of adjudication, and adjudicators have the right to correct errors within contracts within 5 days of delivering a decision. There were also changes made with regard to making payments.
What is a vesting clause or a vesting certificate?
A vesting clause is a contractual term which deals with the transfer of ownership of goods and materials and a vesting certificate is a document evidencing that transfer of ownership of those goods or materials.
What is a purchase order?
A purchase order is a commercial source document that is issued by a business’ purchasing department when placing an order with its vendors or suppliers. The document indicates the details on the items that are to be purchased, such as the types of goods, quantity, and price.
What is an advance payment?
Advance payments are made before receiving a good or service. In many cases, advance payments protect the seller against nonpayment in case the buyer doesn’t come and pay at the time of delivery. Companies record advance payments as assets on their balance sheets. This could be made to allow early procurement of materials for example.
What are the Employer’s Requirements?
They provide a description of the client’s requirements, including; the specification for the building, the scope of services required from the contractor and an allocation of risk for unknown items.
What are the Contractors Proposals?
The contractor responds to the Employer’s Requirements with the contractors proposals, setting out the manner in which it proposes to design and construct the works
What are the contract documents in JCT D&B?
- The printed form of contract
- The employer’s requirements
- The contractor’s proposals
- The contract sum analysis
The BIM protocol (where applicable).
