***Emily Law 03.06.24 (Forwarded Questions) Flashcards
The following questions are on Key Issue 1
What tender validity period would you advise your client to use for future projects?
Essential question here is ‘what factors need to be considered in determining an appropriate tender validity period?
Answer:
-Market Volatility; Decision Time (funding approval); Statutory Delays; Tenderer Risk Premiums; Tenderer Commitment (really want work?); Seasons (resident/management accommodation); Unforeseen Delays (certainty of tender pack; approvals)
-This Case Study: Validity Period of 4 months.
Procurement Timeline was produced and seemed appropriate - cabinet approval 1.5 month after tender return; another 1.5 month for resubmit/client preparing for work management; 1 month further for float (unforeseen delays).
-Timeline seemed reasonable, in future advise the Client and Project Lead the Validity Period is an important aspect in achieving right balance of achieving procurement timelines and minimising tender risk premium so careful monitoring of expiration date is very important so that deadline is achieved!
The original was for 16 weeks (circa 4 months).
Although not prepared original tender - not too long or too short: (for this project in particular - 3 months minimum, 6 months too long (inflation; contractor other works; factor in need to submit to Cabinet again for another budget approval - say add 6 weeks; MINIMIZE PRICING IN RISK; increase contract contingency/client contingency to cover any increase?)
Considerations for Tender Validity Period:
Project Duration: Match validity with project timeline.
Market Conditions: Account for price volatility.
Client’s Decision Time: Allow enough time for decision-making.
Funding Approval: Ensure alignment with funding timelines.
Regulatory Approvals: Factor in potential delays.
Tendering Costs: Minimize bidder’s risk and cost.
Contractor’s Commitment: Assess willingness to lock in prices.
Seasonal Impact: Consider construction seasons.
Contingency Plans: Include buffer for unforeseen delays.
Clarity in Documentation: Clearly state validity period in tender documents.
Reference answer given in BW and LR Mock Q&A?
Comparing your option 1 & 2 – re-tender and VE, which one would incur more professional fees?
The original professional fees were:
Survey £8k (BS)
Design Works £18k (BS)
RIBA 1 £2k (BS)
RIBA 2 and 3 £12k (say £8k BS; £4k QS)
RIBA 4 and 5 £10k (say £7k BS; £3k QS)
RIBA 6 £20k (say £15k BS; £5k QS)
Total: £70K
RETENDER:
QS - organise, repackage, issue, period, analysis and report. (HIGH RESOURCE BURDEN)
BS - Qualitative analysis (LOW RESOURCE BURDEN)
TIME DURATION - at least say 6 weeks.
RESOURCE INTENSITY - Fairly low.
TOTAL COST- say, £4k
(£3k QS (RIBA 4); £1k BS (RIBA 4)) [based on original costs above]
VALUE ENGINEER: [higher - almost twice!]
QS - Identification of VE suitable works; development of new costs; agreement with the client; agreement of costs with contractor; changes to cost documentation (pricing document; contract adjustments documents); changes to Contract Package (as far as its already been progressed) (HIGH RESOURCE BURDEN)
BS - Identification of VE suitable works; identification of alternatives; agreement with the client; changes to design documentation and other relevant contract documentation; (HIGH RESOURCE BURDEN)
TIME DURATION - at least say 4 weeks (include surveys required)
RESOURCE INTENSITY - High.
TOTAL COST - say, £9k
((£4k QS (RIBA 2/3+4); £5k BS (RIBA 2/3 + 4))
Option 1 – why there would be lower quality of execution of work if you re-tender the works?
Be specific (based on rationale below), however, to ensure budget, recommend some quality retain but minimalised to just 20%.
-There were lower adjusted tender returns than the winner: say £700k; £740k; however these scored lower in quality scoring (ability to carry out the works)
-Re-running the tender again with same scoring basis likely result in winning tenderer being overbudget
-to avoid this, reducing scoring to say 80:20 (rather 60:40) or no quality scoring at all, would result in winning tenderer being selected on less quality capability or no quality capability at all.
Likely outcome therefore, to achieve budget, would be lowering of quality capability to carry out works.
How did you approach - [option - no!] Key Issues 1 and 2, in terms of Client care?
Looking for key words:
Made them feel REASSURED primarily by:
Explaining the problems and their understanding
Confirming Goals and Objectives
Confirming Priorities
Explaining looking in to solutions
Regular discussions
Presented options clearly
Obtained their confident agreement best way forward.
I familiarised myself with: (made them feel reassured I was looking out for their best interests and understood the issues and their priorities)
-the goals and objectives of the client,
-understood their priorities;
-regularly discussed issues with them whenever they occurred;
-reassured them I was aware of the above
-reassured I would look into possible solutions and make recommendations with further discussion
-presented options to client and ensured they understood
-obtained their confident agreement that the solution proposed was the best way forward
Would you consider utilising existing contingency to cover the £100k a feasible option that worth to suggest to the client?
Absolutely not.
The Contingency is there for a reason - to cover unknown risks. If this contingency sum was used, the works would be exposed to risk for which the client had no money!
The 2 scope reductions – the furniture to communal area and alterative treatment to ceiling and flooring which reduces the asbestos removal costs. Will these omissions impact the overall quality of the project?
[Note: the is a question soliciting whether the proposal is scope of works reduction or in actuality value engineering! - if there IS IMPACT on quality, then it IS scope reduction!]
In terms of the furniture - YES (in the long term) - so.. scope reduction!! , this is a reduction in quality - the furniture replacement would eventually have to be done (therefore an omission!!). But, deemed a good mitigating measure as they could continue to be used for a further limited period of time (say a few more years).
In terms of the alternative treatment to flooring and ceiling - YES (in the long term) - so..scope reduction!!, this is a reduction in quality - although there is no loss in quality in terms of the flooring and light fittings themselves, the asbestos would eventually have to be removed (ie the ‘omission’ of requirement to remove asbestos in this project results in savings but is deferred!!)
If not, these changes should be considered VE instead of scope reductions. How do you differentiate between scope reduction and VE in your case?
[This definition of VE was discussed during the session, and the fact that it is scope reduction is identified within the answer above]
The following questions are on Key Issue 2
What advice would you give the client to minimise the errors before going out tender? [in the future]
[Note: apparently there was confusion from reading the case study where the problem actually lay - the fault was in the design data in the tender pack ie the DESIGN DOCUMENTATION identifying the works required was WRONG, badly wrong (the pricing document errors flowed from this). This must have been the result of a very erroneous survey of works undertaken!!!] [This is a Client Care type question]
Answer:
LACK OF CLARITY IN SURVEYOR/CLIENT UNDERSTANDING IN WHAT WORKS WERE REQUIRED!! - MUST BE ELIMINATED!! ie: INTERPRETATIONS OF DESIGN GUIDE AND CONDITION RATINGS DIFFERED BETWEEN SURVEYOR AND CLIENT (or the surveyor made a mistake!)
Designers were internal to Ridge (colleagues)
Advice to Client BEFORE going out to tender (my Case Study involvement was AFTER) then:
-Important that right scope is identified [1. Design Guide, and 2. Grading of conditions for repair/replacement/redecoration. 3. Validation Surveys by client after works on site. Clear that the surveyor’s subjective opinion and client’s subjective opinion differed in terms of what works were required - this lack of clarity in preparation of scope caused the problem - THIS LACK OF CLARITY MUST BE REMOVED!]
-Important that work requirements are clearly expressed and captured by the Client and Designer in discussion
-Important that criteria for identifying specific work requirements are set out and agreed with Designer.
-Important that Designer carries out work/surveys to criteria set, and on producing design specifications/scope of works, demonstrate that they conform to the Criteria set.
-If the Designer has any assumption/exclusions/caveats these need to be clearly stated to the Client.
-Confirmation from the Client and Designer that the scope of works is a good representation of the works required and in accordance with the Criteria.
Internally within Ridge:
As this was an internal affair (Ridge BSs):
-ensure that documents are properly QA’d (have chat with senior member doing the QA’ing that had experience in past, and that important proper vetting and authorisations are carried out)
Myself personally:
In future:
-coordinate with PM that the scope of works needs to be checked!
-advise/require that PM checks with Client that scope is correct - SURVEYOR SUBJECTIVE REVIEW CORRESPONDS WITH THAT OF THE CLIENT’S!
-‘Gateway Documents’?? - ensure that these documents of the client (their processes?) are complied with!
What advice would you give the client to minimise the errors after receiving tender return? [in the future?]
In the future, if things had been left this LATE, but there became reason to doubt the quality of the issued tender information (say, as original circumstance, when new to the project), then:
-when joining project team, notify Client that I am new to the project and will be undertaking quality assurance reviews - confirmation/checks that the tender documentation is correct.
-coordinate with PM that the scope of works has been checked; appropriate time had been allowed to undertake preparation; appropriate competency and diligency of staff where allowed for; effective communication and understanding of the client had been achieved; any outstanding issues/unknowns during the tender preparation period; level of accuracy of scoping required from the client and if this had been achieved.
-advise/require that PM has checked with Client that scope is correct!
FOLLOWING THE ABOVE, TAKE THE NECESSARY ACTIONS/ADJUSTMENTS TO MITIGATE ERRORS AND ADVISE CLIENT.
Using Intermediate Contract should ideally have the design pretty much done before going to tender. Have you advised the client of other possible form of contract/procurement method available?
Yes, the contract would have required that the design is already close to being complete (subject to CDP; PSUMs) and understand this was the intention (not involved in original tender). Another factor is that the works required (repair and refurbishment) are largely subjective and so the Client would want control (in their judgement) as what works should be done (so no contractor determination preferred)!
ANOTHER FORM OF CONTRACT WOULD NOT BE APPROPRIATE FOR THIS TYPE OF WORK ie:
-SCOPING OUT THE WORKS IS THE CRITICAL FACTOR.
-THIS IS SUBJECTIVE.
-CLIENT NEEDS TO DETERMINE SCOPE ACCORDING TO THEIR OWN SUBJECTIVE REQUIREMENTS
-THEREFORE, DESIGNED WORKS NEED TO GO OUT FOR TENDER
-THE EXISTING CONTRACT - JCT INTERMEDIATE WITH CDP!
However, if proposing a contract where the scope was to be determined by the contractor, the ERs would need to be carefully developed so that contractor judgement was strictly controlled - Client Design Guide; Specification Guide; Types of Works to be Carried Out (scope of works in pricing document) (bearing in mind this is only a repair/refurbishment project, the works are still to go out to tender, and the client has cost as priority, time management and care in execution priority, and minimum design standards):
-FAVOURITE!!: JCT without quants (can still mark based on quality; still cost sensitive; contractor responsible for surveying - solves issue!!!!; employer still has good room to issue variations/post contract design control)
-NOT APPROPRIATE: JCT with approximate quants (based on lowest rates - but contractor may strategically price; approximate quants based on a survey so maybe bad idea!!)
-NOT APPROPRIATE: JCT D&B - the ER would basically be the SBC without quants and employer will have less post contract design control
-Others? - MTC not the circumstances!; Prime Cost - not the circumstance (or based on client priorities!); …
Option 1: Could you talk me through the termination process? With what reason/ground under the JCT can the client terminate the contract?
First off: Why have you included Termination as an option? (drastic measure):
When the project appears to have gone very badly wrong this would be an automatic reaction that the client would have (especially when design liability can become a legal matter - and client may sue for costs!!) I therefore needed to consider this as an option should the client require this in their consideration of pursuit of legal action; to have an answer for the client as to the consequences (potentially severe).
[aware this is not my COMPETENCY AREA and would advise this is the case and legal counsel required, however, my case study noted possibility of dispute and that contractor may claim costs. I was therefore giving the Client an idea of the possibility but with potential worse case scenario!! - dispute by the contractor by reference to a Repudiated contract under which they can claim loss and/or expense]
The Termination process, generally:
Client termination….
Contractor termination….
Both can terminate….
In this case, the grounds proposed would be a Frustrated contract. Under English Common Law, when the contract becomes impossible to fulfill, the contract is deemed Frustrated and the contract is automatically Terminated.
The JCT contract has no clauses related to Frustration because it is a matter under English Common Law and would be subject to interpretation.
The clauses most closely related to Frustration are those relating to …‘Specified Perils’ and this clause is…the process being…., however, in this instance with Frustration, I would discuss with the client the issue, advise that they obtain legal counsel to determine if they possibly have a case and if this action could be taken.
Despite any legal counsel, I would suggest a Notification be sent to the contractor stating Frustration has occured, the reasons behind this, the contract is therefore automatically Terminated, and they are to cease works
and any remaining obligations they have under the contract [what does the JCT contract state in relation to Termination by force majeure/specified perils??…….This could be the basis for further Notices, time periods, etc that are required]
Chat GPT:
If frustration occurs during building works under a JCT Intermediate Building Contract 2016, it results in the contract being automatically terminated. Frustration is a common law concept where an unforeseen event renders the contract impossible to perform, illegal, or radically different from what was originally contemplated by the parties. Here’s the process of termination due to frustration under this scenario:
Process of Termination Due to Frustration
Identification of Frustration Event:
An unforeseen event occurs that makes the performance of the contract impossible, illegal, or fundamentally different from what was agreed upon.
This event must not be due to the fault of either party and must be outside the scope of risks the contract intended to cover.
Automatic Termination:
Under the doctrine of frustration, the contract is automatically terminated at the point when the frustrating event occurs.
No formal notice of termination is required, as the frustration itself ends the contract.
Communication and Acknowledgement:
Although the contract is terminated automatically, both parties should communicate and acknowledge the occurrence of the frustrating event.
This helps to formally recognize that the contract has ended due to frustration.
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MY JCT NOTES FROM THE CONTRACT BELOW:
-Termination on three grounds but these will not apply.
-Automatic Termination as a result of Frustration - an English Common Law doctrine (contract has unforeseen event occurs that makes the performance of the contract impossible, illegal, or FUNDAMENTALLY DIFFERENT from what was AGREED UPON).
Notification by Employer sent to Contractor stating Frustration has occured, giving reasons, and the contract is automatically terminated.
Contractor’s employment is terminated, contractor to prepare an account - amounts as follows: works properly executed; reasonable cost for removal; cost of materials properly ordered.
If contractor disagrees frustration has occured:
-If contractor disagrees frustration has occured, then they can issue a notice to the employer of a Notice of Default ie the contract has been repudiated (no reasonable grounds).
-in this situation a dispute will have arisen and if not resolved by alternative dispute methods (negotiation, mediation, conciliation), then can be escalated to ultimately the courts.
If it is identified the contract is repudiated, then, the contractor in addition to the above costs also entitled to L&E as a result of the termination.
The above is obviously a legalistic matter and the contractor and the client should obtain professional legal advise on how to proceed.
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Assessment of Work Done and Payment:
Both parties assess the work completed up to the date of frustration.
Payments are usually due for work done up to the point of frustration, based on a fair valuation or quantum meruit (reasonable value of services).
Site Handover and Demobilization:
The contractor will demobilize from the site.
Any remaining materials and equipment should be dealt with as per the terms that can be reasonably inferred from the contract, subject to fair treatment and negotiations between parties.
Legal and Financial Settlements:
Any financial settlements required to close out the contract are addressed.
Both parties may need to settle any outstanding payments or return deposits as applicable.
Points to Consider
Insurance: Review the insurance policies in place, as some may cover losses due to frustration events.
Dispute Resolution: If there is any disagreement on whether the event constitutes frustration or the valuation of work done, the dispute resolution mechanisms outlined in the contract should be followed.
Legal Advice: Seeking legal advice is prudent to ensure that all steps are handled correctly and that both parties understand their rights and obligations under the law of frustration.
The JCT Intermediate Building Contract 2016 itself does not explicitly mention the process for frustration, as it is a common law principle. Therefore, understanding the legal framework and seeking legal advice is crucial in such situations.
