Contract Practice & Contract Admin Flashcards
What constitutes a contract?
Offer – Acceptance – Consideration – Intent to create mutual relations - capacity - Legality
What is a contract?
A legally binding agreement between two parties
What is the purpose of having a contract?
Makes the agreement legally binding, sets out the parties obligations, sets out the parameters in terms of time cost and quality.
What are the disadvantages of using a bespoke contract?
No case law, can sway the balance of risk,
Can you name some of the JCT Suite of Contracts?
Standard Building contracts
Design and Build
Intermediate
Minor works
When looking at consideration, what should be thought about?
Record terms of the arrangement
Set out an admin process
Define the obligation of the parties (time, cost, quality)
Creation of a legally binding document
What parties are involved within a contract?
Contractor – Client
Client – Consultant
Contractor - Subcons
Under a Design & Build procurement route, what contracts would be available for consideration?
NEC, JCT D&B, JCT Major projects (not commonly used), JCT Minor projects with D&B add on
What are the benefits of a Letter of Intent?
It shows intent and allows the works to commence.
Why should we look towards using a standard form of contract?
Standard forms of contracts provide a standardised, tried and tested contract which is well known. It provides Case Law to back up issues, specifies the risk allocation and saves time in money in not needing to develop a bespoke contract. Shows willingness of the two parties to enter into a contract.
Latham report*
What are the objectives of an NEC contract?
Clarity, simplicity, removes any objectivity, is written in normal every day ambiguity mitigating room for interpretation and misunderstanding, and it prescribes how a project should be run
What are the key differences between NEC3 & NEC4
- Gender neutral language
- Client replaces employer
- Scope replaces works information
- Early Warning Register replaces Risk Register
- The Contractor’s design replaces limitation of the Contractor’s liability for their design to reasonable skill & care
- Dispute resolution board introduced
Are oral contracts binding?
Yes, this was made a binding contract under the Housing Grant and construction Act 1996
Oral contracts are legally binding with the exception of 3 situations:
* a lease of more than 3 years must be made by a deed
* most contracts for the sale of land must be made in writing
* contracts of guarantee must be made in writing
What is meant by fitness for purpose?
The concept that goods or services must be capable of being used for the intended purpose for which they were purchased.
Puts a large oneness on the supplier, and for Arcadis invalidates our PII.
What are fluctuations and how are they dealt with?
JCT there are 3 ways
NEC x clause
What does entering the defects liability period instigate?
- Releases retention
- Transfers site security to the client
- Ends the rights for the client to deduct delay damages
- Defects liability period commences
What is a construction bond?
A type of surety bond which protects against disruptions or financial loss due to a contractor’s failure to complete a project or failure to meet project specifications.
The three main types of construction bonds are bid, performance, and payment.
What is a conditional bond?
The beneficiary has to prove that the principal has failed to meet their contractual obligations, and as a direct result they themselves have incurred financial losses. Typically take the form of a retention bond, which is issued by the surety to a specified client to guarantee and pay an agreed sum in the event of non-performance or principal insolvency.
What is an On-demand bond and are you aware of any?
The beneficiary simply has to submit the bond and demand payment from the surety. It is not obliged to provide any evidence that the principal has breached or failed to fulfil its contractual obligations, so most principals are therefore reluctant to sign up to terms and conditions with on-demand clauses.
Bid bonds come in the following form: Bid bonds, advance payment bonds, payment bond, roads and drainage bond, off site material bond.
How do different forms of contracts have provision for construction bonds?
- NEC: secondary option clauses for bonds under this form of contract are the X13 performance bond, X14 advance payment bond and X16 retention bond. Bond conditions are specified in the works information section of the contract; failure to provide the bond on the project manager’s instruction will lead to the withholding of a quarter of payment due and, eventually, to contractual termination.
- JCT: the contract particulars contain provisions for using performance, retention, advance payment and bid bonds. These particulars are drafted by the beneficiary, so tend to be on-demand bonds. The principal’s failure to produce the specified bond is deemed a serious breach and may lead to contractual termination.
FIDIC?
FIDIC - FIDIC is the market-leading contract for international construction projects, particularly for infrastructure and energy projects, and is recognised by developers and contractors worldwide
What is a letter of intent?
A letter of intent can be provided when a contract has not yet been signed, but shows intent and allows works to commence whilst contract negotiations are concluded. They are often drafted on the basis that if agreement is not reached on the main contract, the client will reimburse the supplier for their reasonably incurred expenses, often up to the level of a fixed cap.
What types of letters of intent are there?
1) Comfort letters - Expresses the intention of one of the parties to act in a particular way (for example, to enter into a contract, or place an order), but does not create any legal obligation on that party actually to act in that way. The author of the letter will only be liable for deviating from the stated intended course of action if the expressed intention was not actually held at the time that the letter was signed.
2) Instructions to proceed with consent to spend - Instructions to proceed with consent to spend are sometimes referred to as ‘if’ contracts, and usually take the following form: ‘if you commence works pending preparation of the contract documents, then we will reimburse you your reasonable costs should the contract not be entered into.’ These agreements are legally binding contracts which pre-date and are superseded by the principal contract when it is executed. They must be entered into by a duly authorised representative of the party procuring the works.
3) The recognition of the existence of binding contracts - Letters recognising the existence of a binding contract between the parties may be used to execute the contract before the formalities of copying, binding and signing the contract have been completed. Many standard forms of contract, such as the GC/Works family and those produced by the ICE, the NEC and the FIDIC, rely on similar letters as the main means of executing a contract. Or sometimes the parties wish to enter into a binding contract, even though some of the terms are not agreed and negotiations are on-going. In such circumstances a letter referring to the agreed and binding terms could be a useful mechanism to create a binding contract if the final terms are still being developed.
What is assignment under a contract?
The transfer of one parties’ rights / contractual obligations to a another party under a contract.
What are relevant events under JCT?
Events which cause delay to the end date caused by the client or natural event
What is a Compensation Event?
Compensation events are events that change the cost of the work, or the time needed to complete it. As a result, the prices, key dates or the completion date may be reassessed, and in many cases will entitle the contractor to more time or money.
What is run off cover?
A level of cover which you have for a certain period of time after completion of a project, as a sole trader you require run off cover as well as locum.
Can you tell me what is contained within a contract you have for one of your projects?
- Core Clauses
- Main option
- Secondary Option Clauses
- Cost Components
- Contract Data part 1 – Completed by the Client.
Includes options selected, dates, names of parties, roles, delay damages, retention, sharing mechanism, programme. - Contract Data part 2 – Completed by the Contractor
Includes – activity schedule, completed BoQ’s, pricing information, tendered percentages , key people.
Types of insurance
PII, public liability, employers liability, third party liability, building, contents and interruption insurance.
What is Professional indemnity insurance?
Insurance policy which covers the insured party from alleged claims bought against them for negligence or inadequate advice or services provided. Covers the cost of defending the claim, but in the instance of being unsuccessful, it also covers the cost of damages awarded to the claimant.
Benefits of having PII?
- Allows financial support in defending the claim and possibly paying damages. Without PII or the funds to pay damages, a company may have to cease trading.
- Clients comfort in knowing the company has PII
- Provides the insured company with the comfort of going about delivering its services with confidence knowing it is protected financially in the instance of a claim
Why does RICS require regulated firms to have PII?
- To ensure if a firm faces a claim, they are protected from financial loss that it cannot meet from its own resources
- To protect the insured member of the firm against the consequences of liability to pay damages to third parties for breaches of professional duty that it commits through its professional activities
- To ensure a firms client does not suffer financial loss when the firm cannot meet
PII cover required by RICS regulated firms?
- The level of cover is relative to a firms turnover
- Be on an each and every claim basis
- Inclusive of RICS wording
- Be fully retroactive (covers claim irrespective of when the act occurred)
- Be underwritten by a listed insurer
- Cover past and present employees
- Have run off cover
What is the difference between a JCT and NEC contract?
- NEC has add on options, JCT is a suite of contracts
- For NEC, the programme is a contractual document, without it payment can be withheld; in a JCT contract the end date is the only contractual obligation.
- NEC doesn’t mention QS
- NEC uses CE JCT variations NEC calls them CE’s
- JCT is more detailed and prescriptive, while NEC is more concise and flexible.
- NEC looks towards use of collaboration, is written in simpler terms to avoid ambiguity
- JCT deals with Time and money separately
- JCT allocates more risks to the contractor, while NEC shares risks more evenly between the parties.
- JCT is more suitable for smaller and simpler projects, while NEC is more suitable for larger and more complex projects.
Can you list 5 examples of a compensation event?
- Change in scope
- Delay in giving access
- Extreme weather event
- The Client does not provide something which it is to provide by the date shown on the Accepted Programme.
- The Project Manager gives an instruction to stop or not to start any work or to change a Key Date.
What is All works risk?
Also referred to as construction Insurance, is a non-standard insurance policy that provides coverage for accidental physical loss or damage that occurs to a property insured during the construction period. It covers the contract works undertaken by the contractor and sub contractors.
What is an Early Warning Notice?
An EWN is a risk management tool, to be used in the instance of becoming aware of a potential issue that may delay the project, o allow identification an implementation of mitigation.
Net contribution clause?
A net contribution clause may also be known as a proportional liability clause. Such a clause is a common feature in many standard form contracts used in the construction and engineering industry, such as the appointment of an architect or an engineer.
In the context of construction, if there is a problem with a construction project resulting in a loss, this is often the fault of more than one of the parties designing or constructing the project. The party suffering the loss can sue any of the parties at fault and each will be 100% liable for damages, whatever their share of the blame.
Why did the CAMUS project select Single stage Design and Build?
Single stage was the clients decision due to their inhouse experience.
D&B was decided upon due to the desire to hit the set ISD, and this route allows for a quicker start on site that traditional procurement. Secondly, adoption of the NEC and D7b would encourage a collaborative working relationship, and allowed for the contractors input on the specialist technical design and input of their expertise on a highly constrained site.
Why Government projects lean towards using NEC?
NEC creates the conditions for successful project delivery. It is the only standard contract built around proven best practice in project management and a collaborative approach to risk management. Key was the collaboration element of the contract which requires parties to work in a collaborative way under an obligation to act ‘in a spirit of ‘mutual trust and co-operation’, however following reports such as the Latham Report, there is a lean towards use of NEC contracts on government projects.
What is the difference between a Contract Administrator and an Employers Agent?
The primary role of a Contract Administrator is to initiate good communication across the project team, control and manage project changes and oversee financial processes using standard forms and processes required within the individual contract.
The employer’s agent (EA) differs from the role of the CA in that we act on behalf of our clients on all matters. This EA role is exclusive and is usually associated with the specific form of contract known as ‘design and build’. This role starts much earlier than the CA
Egan report
suggested that ‘the industry as a whole is under-achieving’, and called for ‘dramatic improvements
The report identified five drivers of change:
* committed leadership
* a focus on the customer
* integrated processes and teams
* a quality driven agenda
* commitment to people
It proposed:
* integrated project processes
* decent and safe working conditions
* improved management and supervisory skills
* replacing competitive tendering with long term relationships
* that leading public sector bodies should become best practice clients
Latham report
Produced in 1994, the report stated collaborative working practices could achieve a 30% saving in industry over the next 5 years. Stated the clients role is significant and stated a more integrated approach with greater partnering and teamwork was required.
Constructing the Team (1994), commonly known as the Latham report
Stated that widespread adoption of collaborative working practices could achieve a 30% real cost saving within five years. Latham also recognised the significant role of the client in achieving successful construction projects.
Latham proposed that the client should be at the core of the construction process and that the industry should move away from its adversarial structure, adopting a more integrated approach with greater partnering and teamwork.
NEC main options
- Option A Priced contract with activity schedule
- Option B Priced contract with bill of quantities
- Option C Target contract with activity schedule
- Option D Target contract with bill of quantities
- Option E Cost reimbursable contract
- Option F Management contract
NEC payment periods
- The Project Manager assesses the amount due at each assessment date
- The Contractor submits an application for payment to the Project Manager before each assessment date setting out the amount the Contractor considers is due at the assessment date. The Contractor’s application for payment includes details of how the amount has been assessed and is in the form stated in the Scope
- The Project Manager certifies a payment within one week of each assessment date
- Each certified payment is made within three weeks of the assessment date or, if a different period is stated in the Contract Data
Are you aware of certain pieces of certification, and tell me of a time when you have issued some?
- Sectional completion
- Practical Completion
- Payment Certificates
What would you consider before issuing a PC certificate?
That all conditions under the contract have been met, where applicable you’ve had building control sign off, received the commissioning certificate and that you have made the client aware of the changes issuing PC instigates, such as the transfer of securing the site reverts to the client.
Payment timescales?
- The Project Manager assesses the amount due at each assessment date
- The Contractor submits an application for payment to the Project Manager before each assessment date setting out the amount the Contractor considers is due at the assessment date. The Contractor’s application for payment includes details of how the amount has been assessed and is in the form stated in the Scope
- The Project Manager certifies a payment within one week of each assessment date
- Each certified payment is made within three weeks of the assessment date or, if a different period is stated in the Contract Data,
What is a Relevant Event?
An event which would entitle the contractor to apply for an EoT (Liquidated Damages are therefore not applied) Variations Exceptionally adverse weather Force Majeure Deferment of possession of site by the employer The carrying out of work by the statutory
What is a Relevant Matter?
An event which entitles the contractor to make an application for Loss and Expense 5 listed under a JCT contract; Variations Instructions Antiquities discovered Delays in approval / permission for the development control requirement necessary for the works to be carried out Any impediment, prevention or default by the employer authorities, Loss or damages by the specified perils Strike or lock out Civil commotion or terrorism The exercise of any statutory power after the base date by the UK government
What is the difference between a relevant event and a relevant matter?
A relevant event relates to an EOT while a relevant matter relates to loss and expense
What is Loss and Expense?
A method of allowing the contractor to claim direct loss and expense. Works must be directly affected by the relevant matters for which the client is responsible Claims are for direct loss, consequential loss is generally excluded. It is designed to put the contract back into the position it would have been had the relevant matter not occurred
What are the Heads of Claim for Loss and Expense?
Prolongation Insufficient use of Labour, Plant and Materials Increased cost of Labour, Plant and Materials Loss of Profit Head office overheads (disruption may lead to an inadequate return on OH like additional management or stopping resources taking on additional work) Finance charges / interest (may have had to borrow money to fund issue)
Who serves the payment notice for a valuation?
Project Manager, QS serves a payment recommendation
What are Liquidated damages?
Liquidated damages refer to a predetermined amount of money that is agreed upon by parties in a contract as compensation for a specific breach or failure to perform certain obligations. These damages are typically established in advance and specified within the contract,
What are the types of contract breach?
- Material Breach – an event that allows the other party to terminate the contract citing the specified contract obligations
- Non-Material Breach – allows for the correction of the breach under the terms of the contract
What is included within the Contract documents?
- Core Clauses
- Main option
- Secondary Option Clauses
- Cost Components
- Contract Data part 1 – Completed by the Client.
Includes options selected, dates, names of parties, roles, delay damages, retention, sharing mechanism, programme. - Contract Data part 2 – Completed by the Contractor
Includes – activity schedule, completed BoQ’s, pricing information, tendered percentages , key people.
How do clients ensure that future tenants / owners are protected against defective work?
Collateral Warranties, Third Party Rights
What is the need for collateral warranties or third party rights?
Privity of contract – only parties of a contract can enforce its terms Construction Security – allows a lender to claim losses directly from the party who caused them i.e architect or contractor A Claim in tort is unlikely to succeed.
Collateral warranties allow for the use of step in rights which third party rights doesn’t account for
What are step in rights?
Should the developer go insolvent then the collateral warranty will allow the funder to step in and assume the role of the developer. In doing so the third party can honour the payments due to the contractors / consultants and take the project through to completion.
What is are Third Party Rights?
Allow a 3rd party to enforce specified terms of a contract in the same way as a collateral warranty without the need for a separate contract
What is the difference between collateral warranties and third party rights?
Both give effective protection, there is little practical difference. Collateral warranties are more familiar
Does a performance bond remain the same throughout the project?
Usually reduces to 50% of the sum at Completion
What are Day Works?
Means by which a contractor is paid for specifically instructed works. Based upon cost of labour, materials and plant plus a mark-up for OH&P.
What is the JCT Minor Works Contract?
Traditional Procurement Smaller, lower value, simple / basic projects Not suitable if the building is complex enough to require BoQ Uses a CA (contract administrator) 41. How does a JCT Minor Works contract differ from other JCT contracts? No sectional completion Simple / less complex Suits strip-out works
What is time at large?
When time is at large, the contractor is not bound by a specific deadline for completing the project, and the risk of delays is shifted from the contractor to the employer or client.
Under NEC, the completion date specified ithin the contractors first accepted programme would become the baseline.
Are there any parts of a contract you can’t amend?
Parts protected by law such as the right to adjudication
When would you recommend the client obtains a collateral warranty?
For longwearing items / packages Plant Items integral to the building and its functionality
What contract options are available under NEC?
- Option A Priced contract with activity schedule
- Option B Priced contract with bill of quantities
- Option C Target contract with activity schedule
- Option D Target contract with bill of quantities
- Option E Cost reimbursable contract
- Option F Management contract
What is the difference between a JCT and NEC contract?
- NEC has add on options, JCT is a suite of contracts
- For NEC, the programme is a contractual document, without it payment can be withheld; in a JCT contract the end date is the only contractual obligation.
- NEC doesn’t mention QS
- NEC uses CE JCT variations NEC calls them CE’s
- NEC looks towards use of collaboration, is written in simpler terms to avoid ambiguity
- JCT deals with Time and money separately
Under the ECC form of contract what are the ramifications if a contractor fails to issue an EWN that subsequently leads to a CE?
1 - The Contractor and the Project Manager give an early warning by notifying the other as soon
as either becomes aware of any matter which could
* increase the total of the Prices,
* delay Completion,
* delay meeting a Key Date or
* impair the performance of the works in use
2 - If the Project Manager decides that the Contractor did not give an early warning of the event which an experienced contractor could have given, the Project Manager states this in the instruction to the Contractor to submit quotations
3 - If the Project Manager has stated in the instruction to submit quotations that the Contractor did not give an early warning of the event which an experienced contractor could have given, the compensation event is assessed as if the Contractor had given the early warning.
Would you expect to see a claim for loss and expense from the contractor at the end of an ECC contract and why?
No – Time and cost are dealt with as part of any Compensation Event as and when it occurs not at the end therefore you wouldn’t expect a claim for loss and expense at the end of a contract under ECC.
Explain the payment process for monthly valuations on your project?
- Our payment process being pre-contract is invoiced for once certain milestones have been met, opposed to monthly.
- As part of our RFP response, we provide a programme and forecast the milestone payments against it including our design teams as subcons.
- Each month however the subcons invoice Arcadis for works done that month which causes debt for Arcadis until we can invoice against the milestones.
- When the milestone has been met finance collate the invoice which is issued to the client via email communicating that Arcadis will be invoicing for a certain amount in respect to completion of a milestone as well as uploaded onto Exostar (client payment system) for payment within 30 days.
- I am aware however the payment process works differently post contract once a contractor is onboard.
What is a collateral warranties
A collateral warranty is a contract that sits alongside the underlying contract, creating a contractual link between two parties that and grants rights to a third party which can be sued upon, and step in rights in the event of contractor insolvency.
I would advise across my projects utilising NEC the implementation within the contract a requirement of a collarteral warranty between all subcons and the client
What contract would you enter into with NEC pre-contact with your consultants?
Professional services contract - type on NEC contract
What is consideration?
Consideration in contracts refers to the benefit each party receives in exchange for what it gives up in the contract.
What are express terms?
Terms explicitly set out within a contract to be complied with
Implied terms
Terms not within the contract but it is assumed you will comply with them, such as compliance with common law and legislation, i.e H&S at work Act, drivers will comply with the highway code etc
Implications of privity of contract
Privity of contract is who has the rights and obligations under a contract and could therefore be sued but prevents a third party from doing so, if not privy to the contract said party cannot be sued.
What are the implications of signing a contract under hand and as a deed?
A Deed is signed by a witness & traditionally authenticated by a seal. Imposes greater legal obligations Limitation period - Under Hand is 6 years, Deed is 12 years.
Green Book 2022
The Green Book is guidance issued by HM Treasury on how to appraise policies, programmes and projects. It also provides guidance on the design and use of monitoring and evaluation before, during and after implementation.
What is the difference between reasonable skill and care and fitness for purpose?
Fitness for purpose if the expectation what is being built is fit for purpose so there is a larger ownness on the contractor and less often included in a contract. Reasonable skill and care is the expectation of using reasonable skill and care required to the level of a competent professional.
What is meant by fitness for purpose?
when a contractor promises that its works are capable of being used in a way that the principal intends for them to be used.
What are the pros and cons of a letter of intent?
Allows for works to commence whilst the contract is executed and signed
However means the parties do not have the full cover of the contract and it’s terms and conditions
Types of bonds
Performance, bid, off site materials, advance payment bonds
Net contribution clause
If multiple parties are involved it limits the liability relevant to your role
- What did the Housing Grants, Construction and Regeneration Act 1996 introduce?
Housing Grants and Construction Regeneration Act 1996
This is also known as the Construction Act
Applies to all contracts for ‘construction operations’ and sets out requirements relating to payment and
adjudication
* Right to be paid in interim, periodic or stage payments
* Right to be informed of the amount due, or any amounts withheld
* Right to suspend performance for non-payment
* Right to adjudication
* Disallowing pay when paid clauses
Pay less notice under JCT
Pay less notices can be issued by either the employer or the contractor. The purpose of a pay less notice is to provide the employer with a method of notifying the contractor that he or she intends to pay less than the sum stated on a payment notice, or so that the contractor can notify the employer that he or she is demanding a lesser sum than that stated in his or her interim payment notice.
What is an activity schedule?
Essentially a programme in which the activities are identified to be priced against by the contractor.
Are you aware of the changes to the W clause from NEC 3 to NEC 4?
Dispute resolution board introduced
What 3 ways can a contract be executed?
Under hand, under deed, verbally
Can you retract a PC cert?
No once it is certified you cannot change or retract it.
Signs of insolvency?
- Demanding early payment
- Suppliers not being paid, or paid late
- Profit warnings
- Unnecessary claims or variations
- Reduction of performance on site
- Persistent rumours within industry of their financial position
What action should be taken in the event of contractor insolvency?
- Terminate contract
- What happens should a contractor become insolvent
- “Speak to the contractor
- peak to the insolvency/ administrator company
- Speak to the client- Stop all payment s to the contractor
- Notify insurance companies
- Visit and secure site
- Carry out a valuation and assess what works have been carried out to that point
- Go back to the client with options of progressing forward- pick 2nd best contractor etc.”
Contractor insolvency prevention measures?
- Check financial standing of suppliers
- Check rights to materials, plan and equipment
- Collateral warranties (should include step in rights)
- Performance bonds
- Parent company guarantee
Types of insolvency?
- Administration – Aim is to rescue the company through finding a buyer for all or part of it and restructuring
- Liquidations – Company’s assets are sold and company is dissolved
- Company voluntary arrangement – A company makes a voluntary arrangement with its creditors to pay all or an acceptable percentage of their debts
- Administrative Receivership – Company breaches agreement with creditors, instigated by the creditors, company continue to trade
Third party rights Act 1999
The Contracts (Third Party Rights) Act 1999 changed the law of privity of contract.
Third parties may now enforce the terms of a contract where:
* an express right has been granted to do so in the agreement, or
* the contract confers a benefit to a third party
What is a PCSA?
A pre-construction services agreement - Used to appoint a contractor to carry out services before entering into a formal building contract. Used to obtain further design input, buildability advice, technical advice and detailed costs information from a prospective contractor.
What is a BOQ?
A means of measuring works under a contract listing the quantities of materials to cost the works.
What clause is dispute resolution within the NEC contract?
W
Tell me about the dispute resolution under one of your contracts?
One of the following procedures for resolving and avoiding disputes must be selected to
complete the chosen main Option.
* Option W1 Used when adjudication is the method of dispute resolution and the United Kingdom Housing Grants, Construction and Regeneration Act 1996 does not apply
* Option W2 Used when adjudication is the method of dispute resolution and the United Kingdom Housing Grants, Construction and Regeneration Act 1996 applies
* Option W3 Used when a Dispute Avoidance Board is the method of dispute resolution and the United Kingdom Housing Grants, Construction and Regeneration Act 1996 does not apply
* A Party does not refer any dispute under or in connection with the contract to the tribunal unless it has first been referred to the Adjudication
Advantages of a collateral warranty
- Provides a contractual link between the parties
- Gives the contractual link giving the ability to raise a claim
- Can provide the third party with step in rights.
What is a warranty
A warranty is a type of guarantee a manufacturer or supplier provides regarding the condition of the produce, as well as T&C’s in which repairs or exchanges will be made if there is a breach of contract i.e functionality.
How do the different options under NEC influence the payment?
- Activity schedules – Payment upon completion of activities
- BOQ – Quantities completed each month are paid for based on the cost within the BoQ for each item.
- Cost reimbursable - Contractor is paid on a Defined Cost reimbursable basis
- Management contract - Prices are Defined Cost plus Fee. Fees increase if Subcontract prices increase
Rules around values on the framework?(
- Procurement regulations oblige public sector bodies to tender (seek bids) from suppliers when they want to buy goods and services above a certain value. Buying through CCS complies with procurement regulations but simplifies the process for buyers.
- Public Contracts Regulations 2015 to be adhered to before appointing a supplier
- Defence and Security Public Contracts Regulations (DSPCR) 2011 apply
How is an EOT dealt with under JCT?
- contractor must serve notice of a delay to the employer when it becomes ‘reasonably apparent that the progress of the Works or any Section is being or is likely to be delayed
- The contractor must state in its notice to the employer what it considers to be a Relevant Event
- If the reason for the delay does constitute a Relevant Event and completion is likely to be delayed beyond the relevant completion date as a result, the employer must grant an extension of time. The employer must notify the contractor of his decision within 12 weeks
- Time and cost are dealt with separately
How is an EOT dealt with in NEC?
- Raise an EWN
- If the event occurs a CE is submitted under which time and cost are dealt with at the same time.
- The NEC contract sets out clearly what constitutes a CE
Can you tell me about common amendments made to the contract by the client?
- Altering the risk allocation (eg, altering the list of events that the contractor is entitled to an extension of time
- Payment terms (eg, lengthening of time to pay final account)
- Retention
- Defects liability period
- Inserting additional obligations (eg, bonds, guarantees and warranties)
- Removing rights (eg, remove rights for claims if notice is not provided within a specific period)
- Project-specific requirements (a hold point may be added to reflect waiting for funding to be approved
- Design responsibility
X clauses – what they are, their effect, those used in a contract I used?
- Secondary option clauses
- Optional pre-written bolt on clauses
- Used on WB:
- Option X1: Price adjustment for inflation
- Option X4: Ultimate holding company guarantee
- Option X5: Sectional Completion
- Option X7: Delay damages
- Option X8: Undertakings to the Client or Others
- Option X9: Transfer of rights
- Option X10: Information modelling
- Option X13: Performance bond
- Option X15: The Contractor’s design
- Option X16: Retention
- Option X18: Limitation of liability
- Option X20: Key Performance Indicators
- Option X29: Climate Change
Y Clauses – what they are, their effect, those used in a contract I used?
- Optional pre-written bolt on clauses
- Option Y(UK)1: Project Bank Account (not used)
- Option Y(UK)2: The Housing Grants, Construction and Regeneration Act 1996 (Used on WB - If Option Y(UK)2 is used and the final date for payment is not fourteen days after the date on which payment becomes due but 30 days)
- Option Y(UK)3: The Contracts (Rights of Third Parties) Act 1999 (not used)
Z Clauses – what they are, their effect, those used in a contract I used?
- Optional bolt on clauses, Z clauses being completely customisable prior to contractual agreement
- The additional conditions of contract stated in the Contract Data are part of the contract.
- How many CE’s are there under NEC?
21
Other forms of NEC apart from ECC?
- Alliance contract
- Facilities management contract
- Design build and operate
- Dispute resolution service contract
- Professional service contract
Who are the main parties in a contract?
Contractor, client, contract administrator
What is the main role of the contract administrator?
Acting impartially and managing the contract in terms of issuing and instructing certificates for the contract ie payment, practical completion, managing change, and managing project completion
Risk categories used on one of your projects?
- Construction risk
- Design development
- Contract
- H&S
- Design
- Financial
- Procurement
- Programme
- Operational
- Policy
Tell me of a collateral warranty on one of your projects?
I am aware as the Design team are appointed in a sub contract to Arcadis it would be a prime example of the set up for incorporating a collateral warranty between the design team and the client. I however know that this is not the case and a back to back insurance clause is adopted
Once the project is in contract though and the design team have novated, it would be again recommended that a collateral warranty was imposed between the client and design team due to them being liable for developing the design.
Retention
- Retaining a percentage of the contractors money owed and releasing 50% at PC and the remaining amount at the end of the defects period. This acts as an incentive above the contractual obligation and allows the funds to rectify defects in the instance of the contractor not completing them.
- I am also aware that under NEC, retention is optional rather than a core clause
- I would advise the client to go for a higher percentage of retention on lower value projects to ensure a significant enough sum, equally, on larger higher value, I would potentially advise for a lower % if the amount retained will be significant.
What is your view on retention, and do you think it is fair?
It can be viewed as unfair as it is withholding money for works complete, and doesn’t reflect the collaborative nature which projects often adopt however I can appreciate how it acts as an incentive and cover in the instance of the contractor not rectifying the defects.
How is acceleration dealt with under the contract?
Clause 36.1
The Contractor and the Project Manager may propose to the other an acceleration to achieve Completion before the Completion Date. If the Project Manager and Contractor are prepared to consider the proposed change, the Project Manager instructs the Contractor to provide a quotation. The instruction states changes to the Key Dates to be included in the quotation. The Contractor provides a quotation within three weeks of the instruction to do so. The Project Manager replies to the quotation within three weeks. The reply
* a notification that the quotation is accepted or
* a notification that the quotation is not accepted and that the Completion Date and Key Dates are not changed.
A quotation for an acceleration comprises proposed changes to the Prices and a revised programme showing the earlier Completion Date and the changed Key Dates. The Contractor submits details of the assessment with each quotation.
When a quotation for an acceleration is accepted, the Project Manager changes the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme.
CE process
- PM issues an instruction – Submit quotation within 3 weeks – Decision within 2 weeks
- If quotation is not provided PM notifies they will make their own assessment and have 3 weeks
- Contractor is aware of an event and raises CEN within 8 weeks – PM has 1 week to asses if it’s a CE or not and then goes through the process as above.
Practical completion
Practical completion is the point at which the construction works are complete excluding minor works or defects. The PC certificate is issued by the contract administrator, and it initiates release of 50% of retention, hands site responsibility back to the client and the defects liability period commences.
Changes from NEC to NEC 4?
- Introduction of W3 dispute avoidance board
- Risk register replaced by Early Warning Register
- Gender neutral language
- Client replaces employer
- Scope replaces works information
How would you include multiple sites within one contract?
- X5 sectional completion
- Payment would be based on works complete across all three sites each month
- Programme specified data is detailed within the programme, and we had requested in the ITT information for one programme but he information repeated three times over for the multiple sites
- Contract data part 2 – To give consideration to the geographical split and possible variation in labour costs for example, you would expect a cost variance between rates and thus an elongated contract data part 2
Option: A - Priced Contract with Activity Schedule
- Lump Sum contract
- Financial risk of delivery of original scope is the Contractor’s
- The Prices are made up of activities prepared and priced by Contractor at tender
- Payments are based on completion of activities or groups of activities
- Maximum certainty of cost for the original scope
- Risk is included in the Prices and paid regardless of realisation
- Contractor is incentivised to increase profits by minimising costs and maximising efficiency
Option: B - Priced Contract with Bill of Quantities
- Re-measurement contract
- BoQs are prepared by Client and priced by the Contractor to determine the Prices
- Risk of errors in the BoQs is held by the Client
- Financial risk of rates for original scope is borne by the Contractor
- The design should be completed
- Prices for compensation events are not related to tender rates
- Risk is included in the Prices
- Contractor has an incentive to increase profit by minimising costs and maximising his efficiency
Option: C / D - Target Contract with Activity Schedule (C) and BoQ (D)
- Prices are set by either Contractor prepared Activity Schedule or from Client prepared BoQs
- Works need to be sufficiently defined so that the Prices can be reasonably estimated by the Contractor and seen to be realistic by the Client
- The Activity Schedule / BoQs are not used to determine payments
- Payments are made on a “Defined Cost plus Fee” basis
- Requires greater commercial input and audits will be necessary
- Financial risk is shared between Client and Contractor to the extent of the pain-gain share
- Contractors Share or Share range is fundamental to Contractor behaviours in respect of efficiencies and minimising costs
Option: E - Cost Reimbursable Contract
- The initial Prices are based on the known scope
- Contractor is paid on a Defined Cost reimbursable basis
- Client carries the majority of financial risk of any cost increases but will benefit from any savings made
- Limited financial risk of the Contractor (Disallowed Costs)
- Compensation events still apply (must record changes to scope so there is an audit trail for increased costs and time)
- No incentive for the Contractor to save any cost or be efficient
Option: F - Management Contract
- Generally, Contractor does not execute the works
- Contractor appointed before construction commences
- If substantial pre-contract involvement required use NEC4 PSC contract
- All subcontracts are direct to Management Contractor
- Management Contractor tenders Fee plus estimated total Subcontract price
- Subcontractor prices paid as Defined Cost to Management Contractor
- Prices are Defined Cost plus Fee
- Fees increase if Subcontract prices increase
Sectional completion vs partial possession?
- SC – Is agreed before entering into the contract
- PP – Is agreed after the contract is executed
What types of securities are there under a contract?
- Surety bonds
- Insurances
- Parent company guarantee
- Collateral warranties
- Read JCT guidance note
Can you have a parent company guarantee and performance bond?
Yes a performance bond would only be enough to cover the cost of reappointing someone else to complete the works, a parent company guarantee however has the benefit of having another organisation responsible to come and complete the works.
Types of handover
- Sectional completion
- Practical completion
- Partial possession
- Early access – The site remains the contractor’s responsibility, however the client is granted early access, for example early access to commence fit out works.
Who benefits from a collateral warranty
The client, funder and tenants, in that it provides a contractual link for privity of contract, the ability to sue in the instance of breach of duty and the ability to initiate step in rights in the event of contractor insolvency.
X clauses available
- Option X1 Price adjustment for inflation
- Option X2 Changes in the law
- Option X3 Multiple currencies
- Option X4 Ultimate holding company guarantee
- Option X5 Sectional Completion
- Option X6 Bonus for early Completion
- Option X7 Delay damages
- Option X8 Undertakings to the Client or Others
- Option X9 Transfer of rights
- Option X10 Information modelling
- Option X11 Termination by the Client
- Option X12 Multiparty collaboration (not used with Option X20)
- Option X13 Performance bond
- Option X14 Advanced payment to the Contractor
- Option X15 The Contractor’s design
- Option X16 Retention
- Option X17 Low performance damages
- Option X18 Limitation of liability
- Option X20 Key Performance Indicators (not used with Option X12)
- Option X21 Whole life cost
- Option X29 climate change
Have you been involved in risk mitigation?
Programme delay was identified as a risk early on in the project for various reasons, I was involved in manging this risk through managing and monitoring the programme and reviewing this regularly, managing progress of the team, and implementing mitigation when there was delay, for example I identified a delay in achieving the GWR date for sustainability outputs and therefore facilitated stakeholder engagement sessions and ensured provision of all remaining evidence in advance of the GWR to ensure stakeholders were content and expectations managed despite not being completely on target.
Performance bond
A surety bond for the client to support the contractor’s obligations during a contract period providing security against default or non-performance
Stages in risk management
Risk Management involves a set of procedures to mitigate risk. There are 4 stages -
Identify,
Analyse,
Respond,
Review.
If you cant mitigate a risk what do you do?
The response stage involves implementing effective strategy to mitigate the impact of each risk (accept - monitor, reduce - mitigation measures, transfer - insurance / contract, avoid - change design) - In order to effectively manage those risks that cannot ultimately be avoided it must be allocated to the party best able to manage it. It should be regularly reviewed and if the risk occurs it would move to becoming an issue rather than a risk.
Tell me of a time you have managed change control?
Being pre-contract I have limited experience in change control however understand the process. On the WB we have received one Change though which initially was received as a PMI from the DIO PM, this request for a change in our scope was a request for a quotation, I initially assessed the programme implications requesting input from the wider TSP team on their deliverables, I also shared the detailed PMI with the team to get their fee change to input into the quotation. It was agreed this was to be supplied within 2 weeks, opposed to the contractual 3 weeks, and once supplied due to being time sensitive a request for response from the client was required within a week to keep the programme and quotation valid. After it was accepted the scope documents were amended and our finances forecasted.
- What is contractor design apportionment?
An agreement for the contractor to design specific parts of the works. For example this could include listing the specification, but asking the contractor to design the final FFE.
- Can the PM be asked for a collateral warranty.
Yes the client can request a Collateral Warrant from the PM and anyother party who has control or input into the design development.
- Performance bond
- Used to protect the client against the contractor failing to fulfil their contractual obligations
- Usually set at 10% of the contract sum
- Ensures the client has the funds to overcome issued of non performance / funds to appoint a new contractor.
- Bid / Tender bond
- Used to discourage a bidder from abusing the bidding process
- Submitted with a tender and ensured the contractors commitment to start a project
- Can discourage smaller companies from tendering.
- Retention Bond
- Usually 5% of the amount certified due to a contractor on an interim certificate that is retained by the client
- Creates a financial incentive for the contractor to complete the work
- Provides protection for the client in the event of non performance ie rectifying defects not fulfilled by the contractor.
- Advance payment bond
- Used when advanced payment is made for construction goods or services
- Protects the employer in case something goes wrong with the execution of service or good received.
- Off site material bonds
- Used when the contractor pays for materials before they are delivered to site
- Protects the programme against delays
- Defects liability Bond
- Tied to the defects period , ensures the contractor continues to provide a service correcting any defects apparent after completion of the works.
- Adjudication bond
- Bonds requiring the bondsman to pay out based on an adjudicators decision.
- Quantum Merit
a principle that helps determine the appropriate amount of compensation or damages to be awarded when there is no specific contractual agreement in place. Prevents unjust enrichment.
- Contra preferentem
The contra preferentem rule states that if there is ambiguity or a lack of clarity in the language of a contract, the interpretation should be made against the party who drafted the contract or sought to enforce the provision. This principle is based on the idea that the party who creates the contract should bear the responsibility for any ambiguities or uncertainties in its wording. This principle encourages parties to draft clear and unambiguous contracts, as any ambiguity may be interpreted against their interests.
- The purpose of contracts and their relevance in the construction industry
The purpose of contracts in the construction industry is to establish a legally binding agreement between two or more parties involved in a construction project. Contracts play a crucial role in ensuring clarity, defining rights and obligations, allocating risks, and facilitating smooth project execution. They are relevant in allocating responsibilities, defining payment terms, managing change, mitigating risk, legal protection & compliance & regulation.
- What you would expect to see if using an off site material bond and going to location to see the materials?
Materials ladled, stored together, a vesting certificate, insured up to the full value for the purchasers benefit
- Vesting certificate
A legal document that confirms the ownership of an asset or property.
- Considerations when deciding on a form of contract?
- Procurement route
- Size and complexity of the project
- Nature of the works
- Utilisation of a framework and any limitations this imposes
- Clients experience
- Country the project operates in
- If a client or contractor advised they may be going insolvent, what would you advise or what pre-insolvency actions would you take?
- Check companies house
- Undertake a credit check
- Keep document of activities and materials on site
- Investigate verbal evidence within industry
- Temporary relaxation of payment terms (if agreed by all parties)
- Re-let elements of works
- Direct payments (If agreed by all parties)
- Termination of contract
- Who else may want a collateral warranty?
Although not within my projects, landlords may require a collateral warranty from the tenant for example.
- What happens if a contractor doesn’t submit a payment application on time?
If the Contractor does not submit an application for payment before the assessment date, the amount due at the assessment date is the lesser of
* the amount the Project Manager assesses as due at the assessment date, assessed as though the Contractor had submitted an application before the assessment date, and
* the amount due at the previous assessment date
- NEC Main options risk and speed to site for each option?
Risk increases down the list A-E, but quicker to site
A – Least client risk & reward, slowest to site
E – Highest client risk & reward but fastest to site
- Where would you find a collateral warranty
Separate to the contract, appended, signed by parties etc
126. Core causes under NEC 4 ECC
- Core causes under NEC 4 ECC
- General
- The contractor’s responsibilities
- Time
- Quality management
- Payment
- CE’s
- Title
- Liabilities & insurances
- Termination
- Additional X clauses under NEC 4
- Change from Parent Company Guarantee to “Ultimate Holding Guarantee” X4
- Undertakings to the Client and Others, to provide alternative to Collateral Warranties where a Contracts (Rights of Third Parties) Act 1999 does not exist. X8
- Transfer of rights. X9
- Information modelling. X10
- Termination by the Client. X11
- Multiparty collaboration. X12
- Whole life cost. X21
- Early contractor involvement. X22
- X Clauses used on Trenchard
- X1 – Price adjustment for inflation
- X5 – Sectional Completion
- X7 – Delay Damages
- X13 – Performance bond
- X16 – Retention
- X18 – Limitation of liability
- X20 – KPI’s
- What implications does a fitness for purpose clause have on Arcadis’ PII.
On Battlesbury during the bid process a fitness for purpose clause was identified, this was queries with the client as to if it would be imposed, as if imposed it void’s arcadis’ PII. Fitness for purpose is more onerous than reasonable skill and care, and if something we not ‘fit for purpose’ arcadis would be more vulnerable to claims being bought against us.
- What is contained within the contract on one of your projects?
On Trenchard this includes:
* Main terms
i. Date of agreement & parties in the contract
ii. What agreements the contractor provides their work against
iii. Termination of the contract in relation to The Public Contract Regulations 2015
iv. Dispute resolution procedure
v. That the contract was executed as a deed & signatures
* Part 1 - Core clauses
i. The Contractor’s Main Responsibilities
ii. Time
iii. Testing and Defects
iv. Payment
v. CE’s
vi. Risk & insurance
vii. Termination
* Part 2 - Main option Clauses
i. Option A: Priced Contract with Activity Schedule
(Identified and defined terms, programme, Acceleration, The Activity Schedule, Assessing compensation events, Implementing compensation events, Payment on termination
* Part 3 - X clauses (Secondary option clauses)
i. X1 – Price adjustment for inflation
ii. X5 – Sectional Completion
iii. X7 – Delay Damages
iv. X13 – Performance bond
v. X16 – Retention
vi. X18 – Limitation of liability
vii. X20 – KPI’s
* Part 4 - Z clauses
i. Form of guarantee
* Part 5 - Schedules
i. Insurance schedule
ii. JSP
iii. GDPR
Trenchard main contract: Main terms
i. Date of agreement & parties in the contract
ii. What agreements the contractor provides their work against
iii. Termination of the contract in relation to The Public Contract Regulations 2015
iv. Dispute resolution procedure
v. That the contract was executed as a deed & signatures
Trenchard contract - * Part 1 - Core clauses
i. The Contractor’s Main Responsibilities
ii. Time
iii. Testing and Defects
iv. Payment
v. CE’s
vi. Risk & insurance
vii. Termination
Trenchard contract - * Part 2 - Main option Clauses
i. Option A: Priced Contract with Activity Schedule
(Identified and defined terms, programme, Acceleration, The Activity Schedule, Assessing compensation events, Implementing compensation events, Payment on termination
Trenchard contract - * part 3 - X clauses (Secondary option clauses)
i. X1 – Price adjustment for inflation
ii. X5 – Sectional Completion
iii. X7 – Delay Damages
iv. X13 – Performance bond
v. X16 – Retention
vi. X18 – Limitation of liability
vii. X20 – KPI’s
Trenchard contract - * Part 4 - Z clauses
i. Form of guarantee
Trenchard contract -Part 5 - Schedules
i. Insurance schedule
ii. JSP
iii. GDPR
Trenchard contract - Part 6 – DEFFORMS
i. DEFFORM 10B (Acceptance of Offer of Amendment to Contract)
ii. chedule 10 - DEFFORM 539A (Tenderer’s Commercially Sensitive Information Form)
- Consultant switch
The end of an agreement between a client and consultant and a new contract between the consultant and contractor
- Schedule of amendments
A document used to track and record changes made to a contract, agreement, or any other formal document. It provides a clear and organized record of the modifications, additions, or deletions made to the original document
- Derogation
The act of deviating from or departing from the standard or prescribed construction practices, regulations, or specifications.
- Levels of PII
- Turnover & min limit
- £100K or less : £250K
- £100,001 - £200K : £500K
- £200,001 + : £1mil
- What % is retention?
- 3 % standard
- 2.5% on WB
- Would you advice your client to use a letter of intent
- Not as rigorous as having a full contract in place
- client opens themselves up to risk
- risk of misunderstandings or misinterpretations
- parties involved are not legally obligated to follow through with the terms outlined in the LOI. This lack of enforceability can lead to uncertainties and potential disagreements if parties fail to reach a final agreement.
- What forms of protection are there under an NEC contract
- Surety Bonds – Advance payment, bid / tender, performance, retention
- Insurance – PII, Employer, contractor & public liability, All works risk,
- Parent Company Guarantee
- Collateral Warranties
- EA vs PM
- The project manager is typically responsible for the overall planning, coordination, and execution of a construction project, employed for all RIBA stages.
- Employer’s Agent: The employer’s agent acts on behalf of the client or employer to administer the contract
- How do you make an NEC contract D&B?
Specify within the the contractual documents z clauses
- In what court would a construction dispute be heard?
- Technology and Construction Court - deals specifically with construction and engineering disputes, including those related to contracts, professional negligence, defects, and other construction-related matters.
- County Court: The County Court is a lower-level court that handles civil disputes, including construction-related cases. It typically deals with cases involving lower monetary values or less complex matters
- Common collateral warranties you would expect to see in a contract?
- Client & design team
- MEP team
- Civils / Structural team especially where there’s a basement
- Steel manufacturers
- what is a Payless notice? And how is it used ?
- Outlined in Clause 50.2
- Purpose: The pay less notice is used by the employer to exercise their right to pay less than the amount applied for by the contractor in a payment application. It is typically issued when the employer believes that the amount claimed is incorrect or that there are valid reasons to withhold payment.
- If either Party intends to pay less than the notified sum, it notifies the other Party not later than seven days (the prescribed period) before the final date for payment by stating the amount considered to be due and the basis on which that sum is calculated
- The notice must be in writing and must clearly state the amount that the employer intends to pay and the reasons for paying less than the amount claimed by the contractor.
- Defined roles under NEC?
- Employer
- Project Manager
- Supervisor
- Adjudicator
- EWN clause in contract?
Clause 15
- Payment clause in contract?
50
- Compensations Events clause in contract
60
- What you would do if a contractor raised a CE?
- Assess if it is on of the 21 CE’s listed out within clause 60 f the contract
- Review if there is an associated EWN
- PM decides it’s valid and requests a quotation
- Contractor has 3 weeks to provide quotation
- PM has 2 weeks to review and request a revise quotation or accept and implement CE
- What you would do if a contractor raised a EWN?
- Call a EWN meeting
- Discuss and agree the mitigation
- Record EWN on the EWN register
- Pros of retention
- Acts as an incentive for the contractor to complete the works to the cost, time and quality expected.
- Provides funds to rectify defects in the instance of the contractor not attending to them.
- Cons of retention
- Retention can have a significant impact on the contractor’s cash flow, which can create financial strain, particularly for smaller contractors.
- Can sometimes create an adversarial relationship, leading to disputes and potential strain on the working relationship.
- Withholding money the contractor is owed due to completing elements of work, and can be viewed as non-collaborative.
- Does not guarantee that the contractor reacts to the incentives regarding quality, correcting defects.
- Possibility for disagreements or delays in the release process.
- Why you would terminate a contract?
- Clause 91 specifies reason for termination of a contract, for termination of the contractors contract this can include:
- presented an application for bankruptcy
- had an administration order made against them
- Substantially failed to comply with its obligations
- Not provided a bond or guarantee which the contract requires
- Substantially broken a health or safety regulation
2024 update to JCT
New suite of contract, main changes include
Modernising & streamlining - Ie use of gender neutral language
EoT - New relevant events
Loss & expense
Liquidated damages
Disputes
Fluctuations
Legislative changes
Future proofing
New form of contract
Conditions the contractor has to meet before suspending works for non payment
For Trenchard Conditions are outlined in Clause 91.3 of the NEC3 ECC Option A contract, these include:
- Issuing a warning notice: The contractor must issue a warning notice to the project manager, stating their intention to suspend performance due to non-payment. The notice must specify the amount that is outstanding and the date by which payment should have been made.
- Allowing a reasonable period: The contractor must allow a reasonable period of time after issuing the warning notice for the project manager to make the payment. The specific length of this period may depend on the circumstances and the terms of the contract.
- Compliance with the dispute resolution procedure: The contractor must comply with the dispute resolution procedure outlined in the contract. This may involve attempting to resolve the payment dispute through negotiation or other prescribed methods before resorting to suspension of performance.
- Giving notice of suspension: If the payment is not made within the specified period after issuing the warning notice, the contractor must give a further notice to the project manager stating their intention to suspend performance. This notice should specify the date from which performance will be suspended.
- Immediate termination restriction: The contractor is restricted from immediately terminating the contract due to non-payment. Suspension of performance is the prescribed remedy in this situation.
What is a bond
A bond is a form of guarantee which for clients can be called upon in the instance of breach against the relative bond
Reasons for rejecting a contractors notification of a CE
- arises from a fault of the Contractor,
- has not happened and is not expected to happen,
- has not been notified within the timescales set out in these conditions of contract,
- has no effect upon Defined Cost, Completion or meeting a Key Date or
- is not one of the compensation events stated in the contract
Project Manager notifies the Contractor that the Prices, the Completion Date and the
Key Dates are not to be changed and states the reasons in the notification.
