Contract Practice (SD)

Question 1

What is the RICS black book?

Answer 1

The ‘Black Book’ is a suite of guidance notes that define good technical standards for quantity surveying and construction professionals. These standards are essential development tools for younger professionals working through their APC and useful guides to best practice for more experienced professionals.

Question 2

What types of bonds are available in Construction Contracts and when are they appropriate?

Answer 2

Performance bond - used as a means of insuring a client against the risk of a contractor failing to fulfil contractual obligations to the client

Advance payment bond - client agrees to make an advance payment to the contractor, (for example where the contractor incurs significant start up and procurement costs before construction begins)

Off site materials bond - where a contractor has made a large payment for plant or materials that have yet to be delivered to site

Retention bond - a bond is provided to secure the amount that would have been retained via retention. Helps with cash flow.

Defects liability bond - (used to ensure that the contractor continues to provide services, rectifying defects)

Question 3

What is a Collateral warranty and when are they used?

Answer 3

• Collateral warranties are agreements which are associated with another ‘primary’ contract. They provide for a duty of care to be extended by one of the contracting parties to a third party (tenant, purchaser, funder) who is not party to the original contract.
• For example the tenant of a residential property undertaken by a Housing Association or developer.
• May also contain ‘step-in’ rights in the case of a funder to take the role of the client if a developer becomes insolvent.

Question 4

Do you Know any case law relating to collateral warranties?

Answer 4

• Parkwood leisure v Laing 2013
• It was found that Parkwood Leisure’s Collateral warranty was in the eyes of the court in fact a construction contract and therefore the provisions within the Housing Grants, Construction and Regeneration Act would apply.

Question 5

What are 3rd party rights?

Answer 5

They allow a third party to be written into a contract.
Introduced as part of the Contracts (Third Party Rights) Act 1999.
An alternative to collateral warranties.

Question 6

· What are the component parts of a standard JCT traditional contract?

Answer 6

Articles of agreement
Conditions
Schedules

Question 7

· How do you determine what contract to use on a building project?

Answer 7

There are various factors to consider;

• Type of procurement route used
• Size of project
• Type of client (preferences by lawyers, used it before etc)
• Type of works

Question 8

Which documents have you read that can guide you?

Answer 8

RICS appropriate contract selection

JCT deciding on the appropriate JCT contact

Question 9

What private study did you do to improve your level 1 knowledge of NEC contracts?

Answer 9

Obtained a copy of an NEC ECC contract, read through the main headings with my director. Also read various chapters in books discussing contracts include Duncan Cartllidge CPM and QS pocket book.

Question 10

What are the main differences between NEC3 and JCT contracts?

Answer 10

Programme – None in JCT, integral to NEC

Extension of time/Loss and expense vs Early warnings/Compensation events

Provisional Sums

Ground risk

Question 11

What is the main set up of NEC Option A?

Answer 11

Priced contract with Activity Schedule
Option A is a priced contract with an activity schedule, which relates to a programme where each activity is allocated a price and interim payments are made against the completion of each activity.

Question 12

What are the common amendments to contracts?

Answer 12

I would advise my client that they should liaise with a construction lawyer to recommend and carry out amendments specific to their situation and the project. I would advise my client that they should raise the following:

1. JCT recommended amendments for the new CDM Regulations (in the case of the 2011 documents I have used previously)
2. Include an order of precedence clause which states that the Employer’s Requirements take precedence ahead of the Contractor’s Proposals in case of a divergence.

Question 13

What do you know about the new elements to the JCT 2016 edition?

Answer 13

• Updated the complete suite of documents to provide essential amendments and consistency within the suite of contracts and documents.
• Various changes and updates including;
• • CDM 2015 provisions included
• • Reflects the Public-Sector Regulations 2015
• • Payment provisions updated

Question 14

What are the main changes compared to the 2011 edition?

Answer 14

CDM 2015 provisions included
Reflects the Public-Sector Regulations 2015
Payment provisions updated
- Monthly due date which continues after PC
- Prompt assessment of Loss and Expense claims

Question 15

What are the main updates to the NEC4 June 2017 edition?

Answer 15

Two new contracts added (DBO and Alliance)
Contractors are obliged to submit payment applications rather than PM to assess
Risk register changed to ‘Early warnings register’ (ECContract)

Question 16

What is a framework contract?

Answer 16

Framework contract is overarching agreement that allows a client to invite tenders from suppliers of goods and services to be carried out over a period of time on a call-off basis as and when required.

Question 17

How do framework contracts work?

Answer 17

Framework contract is overarching agreement that allows a client to invite tenders from suppliers of goods and services to be carried out over a period of time on a call-off basis as and when required.

Question 18

Explain the process of a framework agreement.

Answer 18

Framework agreement is a flexible procurement arrangement between parties, which states that work, services or supplies of a specific nature or provided in accordance with agreed terms and conditions when selected or ‘called off’ for a particular need. The maximum duration of a framework under current EC rules is 4 years.

Question 19

What did you learn at the RICS seminar on Practical Completion?

Answer 19

The practical completion process for a typical JCT project. Issues that have been encountered in the courts around this and general good practice guidance.

Question 20

What publications would you refer to in the ‘Black Book’ suite?

Answer 20

Any guidance appropriate to my work and technical scope of work.

• Appropriate Contract Selection
• Procurement strategy
• Loss and expense
• Employers agent: Design and Build