Contracts - Section 4 - Payment Flashcards
What is a Contract Sum?
Price agreed by the Employer to pay the Contractor to carry out the works
In what ways would the Contract Sum be adjusted?
- Variations
- Acceptance of an Acceleration
- Quotation
- Loss and/or Expense
- Fluctuation Provision
- Provisional Sums
What is the Fluctuations Provision?
Optional clause which allows adjustment to the CSA to account for inflation
What are the different options under the Fluctuations Provision?
Option A - Contribution, Levy and Tax Fluctuations
Option B - Labour, Materials and Tax Fluctuations
Option C - Formula Adjustment
No Fluctuation Provisions
What is an Acceleration Quotation?
A quotation from the Contractor for acceleration in the carrying out of the Works
What is the process for Acceleration Quotation?
- Employer decides they would like to accelerate the programme
- Contract Administrator invites proposal from Contractor
- Contractor provides response within 21 days either explaining why it would be impracticable or the quote
- Employer to accept or reject within 7 days of receipt
What should be included in an Acceleration Quotation?
Identification of the time that can be saved
Adjustment to the Contract Sum
Details of adjustment in terms of claims for loss and/or expense
Conditions to the acceleration
Fee for the preparation of the quote
What happens if the Acceleration Quotation is not accepted?
Employer to pay fair and reasonable fee fot Contractor preparing the quotation
How do JCT SBC and D&B deal with Acceleration Quotations?
SBC - Express provision in Schedule 2
D&B - Supplemental provision (Part 2 of Schedule 2)
What is CIS?
Contractor Industry Scheme
A UK tax scheme for the Construction Industry. Contractors deduct 20% of subcontractors payment and pass directly to HMRC. Subcontractors notorious for tax evasion
In which part of the contract are advanced payments agreed?
Contract Particulars
What are ‘Listed Items’ within a Contract?
Off-site materials listed in the Contract
Items which have not yet been delivered to site but are required to complete the works
What is required to pay for materials off-site?
- Needs to be for listed items in the Contract
- Vesting certificate signed by both parties
- Items are not damaged
- Labelled with employer and project names
- Insured by the Contractor
- Off site materials bond to be in place
What is included in a Vesting Certificate?
- Dated certificate from the supplier with item details, value and pictures
- Ownership of the goods to be passed to the Employer once paid
What is the difference between Stage and Interim Payments?
Stage Payments are amounts paid on agreed dates or milestones
Interim Payments are where payments are made periodically each month (agreed timeline in Contract Particulars)
How do SBC and D&B contracts deal with Stage and Interim Payments?
Stage Payments an option only in D&B
Interim Payments an option in D&B and only option in SBC
Why would Stage Payments be in a D&B and not SBC?
Agreed amounts mean the works don’t have to be valued by a QS and therefore easier.
D&B does not require a QS as a role within the Contract
What are the timescales for interim payments?
Interim Valuation Date - Receive Contractors Application
7 days til the Due Date, QS to review and assess works
5 days for CA to issue Interim Certificate
14 days after is Final Date for Payment
5 days before Final Date for Payment, Employer can issue Pay Less Notice
