Contracts Flashcards

1
Q

Advising on contract modifications

A

SOAF: Advised on using X20 (KPI) in place of X7 (Delay Damages). Two reasons:
- X20 creates a collaborative atmosphere as everyone is more invested in finishing early
- Difficult to give a genuine pre-estimation of damages, so anything could look like a punishment.

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2
Q

Provided reasoned advice on a contract

A

I advised my client that the Contractors Activity Schedule under an NEC Option A contract needed to be adjusted.

The set up resulted in only 3 payments being made, but each were high volumes and could cause issues with cash flow. I advised for the Contractor to break down their activities into smaller milestones to make a smoother process.

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3
Q

Selecting form of contract

A

I have not, but main things I would consider are:
- Clients experience
- project sector - NEC is UK governments recommended form of Contract
- Client’s attitude towards change control
- Type of project - not a guarantee, but often times NEC = engineering projects.

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4
Q

Contract amendments - what would I do?

A

Medina ECC Contract. Contractor wanted to include existing assets to be client risk. I discussed with legal team & client team. my recommendation was that this would still be covered in the case of accidental damage, it would not create any additional risk for the client.
- Discuss with legal team as I am not a solicitor.
- Assess the impact of this amendment to the client. Does it open additional risk, or does it mitigate risk?
- Discuss rationale for inclusion

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5
Q

Systems for managing risk

A

I created a tool using Smartsheet for the contractor to upload early warnings and notifications of compensation events. This allowed the client to retain control of the early warning register and be notified of any compensation events as soon as.

I would recommend that having an early warning/risk register is key, and to have weekly sessions to review potential risks, mititgate them, and discuss any identified compensation events.

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6
Q

Ambiguity in a contract

A

I have not dealt with this personally. However, what I would look to do is:
- Discuss with client legal team to understand the impacts
- Conduct a workshop to understand the impacts of amending the Contract
- Propose an amendment to the Contract to provide clarity

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7
Q

Client only works with bespoke contracts

A

I would advise the client against this, but ultimately if they insisted they would only work with them I would oblige.

Reasons why I would advise against it:
- More people are familiar with standard forms
- More case law on standard forms
- Faster to use standard forms
- More comprehensive risk management associated with standard forms

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8
Q

Have I advised client on Liquidated Damages?

A

I advised that on the Brede project that liquidated damages should be used.

Rationale: myself and many others worked for consultants, and thus in the case of any delay, our rates would need to paid for in order to continue working.

Method: i used a standard tool to collate the expected number of people (and their rates) and created a daily rate.

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9
Q

Have I advised client on warranties

A

I have not advised a client on warranties before. However, in that situation, I would do the following:
- Gain an understanding of the parties in the project - is a parent company guarantee applicable
- Identify any parties that would need collateral warranties. For example, my Brede project had collateral warranties established with the Contractor’s designer.

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10
Q

When would I advise a client to enter into a PCSA

A

I would advise the client to enter into a PCSA if they are going with a two-stage tendering approach, or they require bringing in a contractor/other party to provide buildability advice/design input.

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11
Q

When would I advise a client to issue a letter of intent

A

I have advised a client very recently to enter into a letter of intent as there was a risk of delayed completion date should we not begin promptly. I advised the client that issuing a letter of intent while final negotiations were ongoing would allow the Contractor to mobilise and keep on their prorgramme.

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12
Q

When Contractor breached programme, what do?

A

On my large scale mains replacement project, the Contractor was not producing a programme when required. This was a breach of contract under an NEC ECC Option C contract.

My response: I reminded the Contractor of their requirements under the NEC Clause 31.3. I highlighted that any compensations events they submitted would be subject to my own assessment, and payment could be withheld as without an updated programme I could not guarantee milestones had been completed.

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13
Q

How have I produced contract documentation

A

Drafted an NEC4 ECC Option A contract (with previously agreed amendments) for my Medina Eel Screen project. I collaborated with the Contractor to get the relevant information for the Contract Data, and I populated the Works Information.

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14
Q

Have I carried out contractual mechanisms/procedures such as variations (CEs)

A

Medina Eel Screens: The Contractor identified that additional surveys were required to ensure their design process was as robust as possible. I instructed them to carry out these surveys, which was a compensation event under the contract (60.1) - they provided a cost, I reviewed alongside the commercial team, and accepted this cost.

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15
Q

How have I selected a suitable contract based on procurement

A

I have not - however I have typically worked with NEC contracts which were designed to be flexible enough to work across different procurement routes.

If the client preferred to go down a design and build procurement route, I would ensure that the Contract’s works information included this.

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16
Q

Why have you used a bespoke Contract

A

The client had this in place before I joined. I do not usually recommend using bespoke Contracts, as there are several issues with it.

The rationale behind using the bespoke contract was that the client could set it up in a way that fit the specific needs of their projects.

17
Q

Have I used liquidated/delay damages?

A

Yes - on my Medina Project, as part of drafting the Contract I advised the client to include delay damages as any delay would result in time by various members of the team. I used a template to compile the rates to create a genuine pre-estimate of cost.

18
Q

How have I produced a cash flow based on a contract

A

For the projects in which I have had activity schedules, I typically use this to generate the forecasted cash flow. Example: SOAF.

19
Q

What would I do if I was asked to award practical completion when I did not feel the works were complete

A

I would gather my evidence as to why I did not believe they were complete. This would include any space without beneficial use. An example of this was on my Level 34 refurbishment project, where there was a specific space (pantry) that was not compliant and thus was not able to be used fully.

20
Q

What are the key differences between JCT and NEC?

A

NEC is UK Govt preferred form of contract, and JCT is not. NEC groups time/cost change, and JCT has separate. NEC does not name QS, JCT does. NEC is more flexible and can be used across various procurement routes, JCT CAN be as well, but it’s advised to use for specific.

21
Q

Who do I consult when agreeing changes on a Contract?

A

Upon knowing about the change, I speak to my client representative to alert them to the istuation. Often times this is the project sponsor or programme director. Once I have received the assessment, I speak to the commercial to understand the cost impact, and the design team to understand if this is an appropriate solution.

22
Q

Name some different X clauses under the NEC

A

X7 - Delay Damages
X1 - Changes in the Law
X2 - Inflation
X20 - Key Performance Indicators
X6 - Early Completion
X12

23
Q

What are delay damages

A

A genuine pre estimate of damages should the project not be complete on time. I used on my Medina project, I combined the day rates of all staff that would be required to continue working on the project should it be delayed. This was reviewed by the Client’s legal team.

24
Q

What needs to be met for a contract to be in place

A

Offer
Acceptance
Awareness
Consideration
Capacity
Legality

25
Q

How is risk allocated under the NEC

A

Options: Estimating risk remains with Contractor under Option A/B (lump sum). Pain/gain mechanism means more risk is shared between parties.

Works information: design risk is designated in this portion of the contract.

Compensation events: certain items are identified within the Contract to be employers risk, others are deemed to be Contractors.

26
Q

Types of bonds

A

Advanced payment bond: bond taken out usually to faciliate the Contractor purchasing high value items in mobilisation/procurement.

Retention bond: a bond taken out against the retention % that protects client in case Contractor does not complete their duties all the way up to making good.

Performance bond: bond taken out to mitigate the risk of a Contractor not complying with their contractual duties.

27
Q

collateral warranties vs third party rights

A

Collateral warranties: agreement between parties where there is no direct contractual link to create one (designers on medina).

Third party rights: Rights of Third Parties (1999) enables enforing a term of contract (not whole) to parties.

TPR can be built into building contracts, subcontracts with a notice, not needing the lengthy agreements of CW. Does not directly deal with step-in rights for funders.

28
Q

Partial possession vs Sectional Completion

A

Sectional Completion: PC of a section, process of completing a building contract in sections.

Partial possession: employer requests use of a specific space prior to Completion of the rest. Contractor must agree.

Differences:
SC is pre-planned and defined in contract documents. Impacts of LADs. No need for Contractor consent.

29
Q

Instructing acceleration under NEC

A

Acceleration quotation needs to be provided by Contractor. This is to include amendment to prices, completion date, key dates, and delay damages would be brought forward as well, thus Contractor would need to price that in, or negotiate it out.

30
Q

Changes from NEC3 - NEC4

A

Changed language to be gender neutral
New form of contract (design build operate)
Acceptance of programme from PM
Optional negoation/escalation period for disputes raised to 4 weeks

31
Q

NEC payment provisions

A

Contractor to submit no less than 7 days before due date. Allows project team 7 day to review assessment.

5 days after due date, interim certificate issue.

Payment must be made 21 calendar days.

This is in Contract but can be amended depending on agreements.

32
Q
A