Contract Practice - Level 2 Flashcards
What documents make up a contract?
Form of Agreement.
Conditions of Contract.
Pricing Document.
Programme of Works.
Scope of Works.
Drawings.
Risk Register.
What are performance bonds?
“Contract of Guarantee” whereby the Guarantor undertakes to pay damages to the Employer arising from breach of contract by the Contractor.
Standard value is 10% of contract sum
To call for payment Employer must prove that the contractor has defaulted in their obligations under the main contract and that loss has been suffered
What other types of bonds are there?
- Performance Bonds.
- Retention Bonds.
- Advanced Payment Bonds.
- Materials off-site bond.
What is the difference between bonds and insurance?
Insurance pays for losses when a claim is made, whereas a bond guarantees obligations are fulfilled.
Insurance is between two parties.
Bond is three parties.
Failure by the principal meet their obligations, will cause the surety to have to payout to the obligee.
What type of contract was in place on the Watford project?
Bespoke NR04 contract for Minor Works.
What was the payment mechanism on the Watford project?
Fixed price contract with periodic applications based on completed quantities in the BoQ.
Talk me through the payment timeline on the Watford project.
Period End - Assessment Date: Contractor submits application.
14 days from Period End - Due Date: Employer’s Representative to Certify by the Due Date.
Final Date for Payment - 7 days from the Due Date.
Payless Notice - upto 1 day before the Final Date for Payment.
21 day payment timescale.
How did you conduct your assessment of the completed works on the Watford project?
Feedback from the site supervisor.
Revewing of shift reports.
Images of completed works on site.
Keltbray’s application missed out some brackets installed on the OLE structure.
What RICS rules of conduct did your behaviour on the Watford project fall under?
- Rule 1: Acting with honesty and integrity.
- Rule 2: providng a quality and diligent service.
- Rule 5: Maintaining public confidence in the profession.
What requirement does the construction act impose on Payment Certificates?
It must specify the amount due and the basis of the assessment.
When would a payless notice be required?
When changing the “certified sum”.
Contractor’s application became the “Certified Sum” and the PM wants to reduce this.
PM issued their Payment Certificate resulting in a “Certified Sum” and then prior to the Final Date for Payment wanted to change their assessment.
What are the payment timescales under a standard NEC4 ECC contract?
- Contractor applies for payment by the assessment date.
- Project Manager certifies payment within 7 days.
- Payment Due Date is 7 days from the Assessment Date.
- Final Date for Payment is 14 days from the Assessment Date.
- Payless Notice – 7 days before the Final Date for Payment.
What was the payment mechanism on the Trilink Interim PMO project?
Cost Reimbursable - time charge and associated expenses.
When does a payless notice have to be issued by for it to take effect?
The Construction Act states it must be issued within the “Prescribed Period” as agreed by the parites.
Under a standard NEC4 ECC this is 7 days prior to Final Date for Payment.
Under NR04 this is 1 day before the Final Date for Payment.
What were the payment timescales on the Trilink project?
Assessment Day - Consultant submits application for payment.
Client certifies within 12 days of Assessment Day.
Consultant submits invoice within 2 days of payment certification.
Due date is the later of:
- 14 days from the Assessment day
- Date invoice is received.
Final Date for Payment is within 7 days of the Due Date.
