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APE Part 02 > CONTRACTS > Flashcards

CONTRACTS Flashcards

1
Q

Guarantee vs Warrantee

A

1). Guarantees are covered by a guarantor (bank or insurer)

  • Common method of security

2). Warrantees are covered by the party in which the claim is made to

  • Exists in contracts & legislation (domestic builders leg. & consumer guarantees)
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2
Q

Collateral Warranty

A

Guarantees by third party’s or subconsultants

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3
Q

Role of Specifications

A
  • Precise quantitative descriptions of how the work is to be conducted trade by trade
  • Insures compliance
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4
Q

Correct Procedure for Reviewing Shop Drawings

A
  • Mark up what is wrong only
  • Descriptive not Prescriptive
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5
Q

Key difference between ABIC SW and MASTER BUILDER Contract

A
  • No provision for administrator in the MB (therefore no ability for architect to assess claims and make instructions)
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6
Q

Role of Administrator/Superintendent vs Role of Contractor

A
  • Administrator/Superintendent ensures proper contract execution
  • Contractor constructs & supervises.

Never use the word supervise in relation to the Architect’s role.

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7
Q

Hold Point vs Verification Point

A

Hold Point - approval & inspection required before advancement

Verification Point - Evidence to be supplied by contractor (useful for remote sites)

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8
Q

Opening Up Works & Instructions to Rectify

A
  • Architect has authority to request rectification & opening up of works
  • Architect must act independently
  • Client to cover associated cost if no defect found (opening up of works)
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9
Q

Latent Conditions

A

Undocumented physical conditions unforeseeable during tender period entitling contractor to claim time extension w/ cost

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10
Q

Implication of Valuable Item Discovered On Site

A

Contractor entitled to extention of time w/ costs and item belongs to owner

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11
Q

Key Consideration when selecting substitutions

A

1). Law (compliance & permits)
2). Design Implications
3). Required Approvals (RBS, Client, Consultants)

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12
Q

Clauses to include when CA is excluded from scope of services

A

1). Limit scope of inspections and liability
2). Architect to have no obligation to ensure proper contract execution

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13
Q

Responsible party for Statutory Approvals required for commencement of construction

A

The party who engages the Architect.

ie. in TFPLS - Owner, in D&C - Contractor

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14
Q

Responsible Party for Occupancy Certificates

A

Always the Contractor

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15
Q

Principle

A

Owner/Client

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16
Q

Contract Price

A

Cost of works inc. GST

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17
Q

Security in ABIC

A

Bank Guarantee or Cash Retention valued at nominated percentage of Initial Contract Price

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18
Q

Insurances to be held by contractor and for how long

A

Public Liability
Workers Compensation
Contract Works Insurance (can be held by owner instead)

Until Final Certificate

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19
Q

Insurances typically held by Owner (pending building class and requirements) and when are they required

A

Public Liability
Workers Compensation
Building & Contents

From Practical Completion Onwards

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20
Q

Whose insurance covers damages incurred between PC & FC

A

Depends on the nature of the scenario. The insurances held by the contractor only cover damages directly linked to their work, workers or subcontractors.

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21
Q

Bank Guarantee vs Cash Retention (Security Available to Principle)

A
  • Cash Retention is accumulated as a percentage of each progress claim, security increases over time
  • Bank Guarantees are available in full from commencement, security is maximized throughout
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22
Q

Contract Works Insurance

A
  • Covers loss/damage resulting from unrectified/incomplete work, not the work itself.
  • Also includes damage from extreme weather events or circumstances out of the contractors control
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23
Q

Who covers the cost of Discrepancies (Errors, Omissions, Ambiguity)

A
  • If it should have been avoided by a “Reasonable” architect:

At Architect’s Cost

  • If it is the result of ordinary construction processes:

At Client’s Cost (Ideally captured in a contingency)

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24
Q

Types of Contingencies and their functions

A

Design Contingency:
Budgeted contingency during design phase

Construction Contingency:
Allowance for discrepancies, latent conditions and unresolved scope. Either separate to contract or listed as a provisional sum.

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25
Q

Two Main Types of Variations

A

1). Unforeseen
- Statutory
- Latent Conditions
- Discrepancies

2). Client Issued
- Design Change

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26
Q

Process for Releasing Security

A
  • 50% at PC
  • 50% at FC
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27
Q

How long should a Bank Guarantee be valid for

A

Until end of FC + a reasonable buffer period

28
Q

Signs of Builder Insolvency

A
  • Overclaiming
  • Pressure to Pay
  • Underperforming
29
Q

Prime Cost Sum

A

Allowance for the supply of material or equipment or for payment to a authority not full known

30
Q

Provisional Sum

A

Allowance for the performance of necessary work including supply of materials not full known

Includes infrastructure connection to services from site

31
Q

Adjustment for Provisional or Prime Cost Calculation

A

Overspend:

TotalCost = (ActualCost−Allowance)(1+Builder’sMarginRate)(1+GSTRate)

Underspend Calculation:

TotalCredit=(Allowance−ActualCost)(1+GSTRate)

Note: Agreed margin schedule for provision & prime costs is often different then the agreed margin for general contract adjustments

32
Q

Causes for Claims to Adjust Contract

A

Variations
Delays
Provisional Sum Adjustment
Prime Cost Adjustment

33
Q

Procedure for Claims to Adjust Contract

A

1). Contractor Claim to Architect
2). Architect’s Certificate approving claim
3). Tax Invoice to Clients

34
Q

Architect’s Obligations to Act Independently

A

1). Contractual (Administrator)
2). Statutory (NCC Compliance)

35
Q

Set Off Monies

A

Money owed to client

Ex: Client supplied material under builder’s scope

36
Q

Main Certificates Issued by Superintendent

A
  • Progress Certificate (in response to monthly progress claims)
  • Practical Completion Certificate
  • Final Certificate
37
Q

Security of Payment Act

A

Ensures timely payment for construction work through claims, adjudication, and dispute resolution processes.

38
Q

Architects Role When Contractor Requests Payment under SOP

A
  • Continue contractual obligations in contract in parallel
  • SOP may override contract if more favorable but client to consult Lawyer, Architect has no duty in process
39
Q

Practical Completion

A
  • Contract works are deemed substantially complete by the Architect
  • Remaining items or defects must not unreasonably affect occupancy
  • All authority approvals must have been obtained prior.
40
Q

Procedure for Staged Practical Completion

A
  • Use suitable contract such as ABIC MW
  • Consider implications to approvals, insurances and occupation
41
Q

Procedure for Completion of Works (PC)

A

1). Contractor Inspection:

Prior to scheduled PC (10 WD in ABIC), contractor to provide defects list and timetable for correction

2). Notification to Architect

Contractor to Notify Architect of completion w/ updated defects list

3). Architect to conduct Inspection

4). Architect to provide PC Certificate * If Deemed PC and all official docs received *

5). Owner to return 50% security

42
Q

Possession of Works before PC

A

PC deemed as reached and Contractor can make a claim to adjust contract. 50% Security to be released.

43
Q

Architect fails to issue notice of PC

A

PC deemed as reached and Contractor can make a claim to adjust contract. 50% Security to be released.

44
Q

Works not complete by PC

A

Client is entitled to enforce Liquidated Damages at any point up until 20 days after PC (ABIC)

45
Q

Liquidated Damages

A

Daily rate as specified in contract claimable by client in the event that the works are not complete by PC.

Rate must be a clear & genuine estimate of damages

46
Q

Adjustment of Time With Cost

A
  • Delays due to uncontrollable circumstances affecting the critical path.
  • Only includes delays that are not weather related or covered by time delay allowances.
47
Q

Adjustment of Time Without Costs

A
  • Delays impacting critical path due to weather or circumstances listed as not entitled to adjustment of costs
48
Q

Architects Obligation When Aware of a Time Delay

A

Administrator must offer a time extension even if the claim is not initially made by the contractor

49
Q

Potential Drawbacks for Including Too Many Time Allowances (Provisional Period For Delay)

A
  • Inflate price
  • Increased admin when assessing adjustment claims
  • Extended timeframe if allowance is overestimated
50
Q

Critical Path

A

Sequence of critical events that determine the minimum project timeline

51
Q

Defect Liability and default length

A

Period between PC and FC where contractor is obliged to rectify outstanding and new defects.

Usually 12 months

52
Q

Course of action if Contractor does not rectify issues within agreed time (pre or post PC)

A

1). Owner may engage separate contractor to fix defects
2). Owner can make claim to adjust contract
3). Architect to Assess Claim
4). Client can invoice contractor
5). No pay = grounds for termination and access to security

53
Q

Extension of Defects Liability Period

A

The rectification of certain defects may trigger a new defects liability for that item only, extending the date of FC

54
Q

Course of Action if a Design Issue is uncovered

A

Do not admit fault and contact PI

55
Q

Manuals and Official Documents at PC

A

Contractor’s Obligation

56
Q

Role of Programs in ABIC

A
  • Not Contractual
  • Required to be provide within 10 day of possession
  • Required to be updated when PC adjusted by 5+ days
57
Q

Ipso Facto

A

Prevents right to terminate for certain insolvency events

58
Q

Architect fails to assess claim

A

Claim becomes payable in full and architect can revise w/ final cert

59
Q

Measures to take if contractor wants to claim offsite items

A

Ask for bank guarantee, proof of ownership or insurance

60
Q

Process when contractor is not paid

A
  • Interest can be claimed
  • Suspension possible after 2 x notices as per contract
  • Must keep working until that point
  • Architect stays out of it (except for progress claims and assessments)
61
Q

When can security be drawn

A

When Contract has been terminated

62
Q

Calculation for Extension of Time w/ Costs

A

(# of days in extension)(Scheduled Adjustment of Time Cost/Day at Relevant Stage)

63
Q

Where are Particular Persons nominated in the ABIC

A

Attached to specific prime or provisional costs

64
Q

Warranty for Owner Supplied Materials

A

Owner warrants compliance only if contractor checks and informs them if non-compliant

65
Q

Procedure when Discrepancies are Found (ABIC)

A

1). Refer to Order of Precedence
2). If Order of Precedence does not provide clarity - contractor can claim a variation

APE Part 02 (12 decks)

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