Employers agent Flashcards
what are employers agent duties
to recieve and issue applications, consents from employer, instructions, notices
when is EA employed?
they should be identified in the PCSA document, they will assit employer in selection and appointment of design team and principal contractor/designer
define right of suspension
under housing grants, construction act gives a party to a construction contract the right to suspend performance of his obligations if he is not paid.
if contractor fails to complete works by completion date
the ea will issue a non completion notice to that effect
termination by employer
employer to give notice specifying each default. if it continues for 14 days after recipt of notice, the employer may within the 21 days of expiry of that period terminate contract.
once pc cert is issued by ea
rectification period commences and half of the retention is released
EA responsibility to contractor
ea not to hinder or obstruct contractors work. they’re responsible for checking that contractor has complied with contractors obligations to complete contract in accordance with ER’s
EA’s responsibiltiy to employer
not to divulge any information of confidential matter given by employer//warning employer of possible breaches in contract and provide advice on his/her knowledge
where is EA role defined
defined in their appointment document, introduction of PID(project initiation doc) or pep (project execution plan)
what are contractors proposals
this is in response to ER’s these proposals prevail under JCT. if employer requires something not in the contractors proposals then its defined as a change
it is responsibility of ea to check er’s cover the following:
details of site, its boundaries, purpose of the building, specific requirements as to finishes, access restrictions.
who is PCG prepared by? and how is it executed- ads and dis
by employer and executed as a deed
Ads don’t need to be paid for they’re responsible for performance and payment
Dis- they’re not as secure as bonds
if a performance bond is being provided is a PCG required as well?
depending on the project often in complex projects both will be required.
difference between bonds and pcg
bonds provide access to a pot of money to cover the cost of appointing a substitute contractor if the original contractor becomes insolvent. PCG guarantees attempt to ensure that the parent will see to it that their subsidiary performs in a default situation. If contractor doesn’t have a pcg then a bond can be sought.
purpose of bond
employer will wish to have sufficient secrutiy in place in case of insolvency. bonds provides short term cover for a contractor default.
who is a bond executed by?
by both bondsman and contractor executed as a deed.
dis for contractor on collateral warranty
issue can arise where contractor has to procure subcontractor warranties. this is due to agreement of subcontract terms only takes place following completion of building contract. as a result contractor is agrreing to procure subc warranties which they have not agreed with subbies yet.
what is collateral warranty limiting clause
most cw’s include clause limiting the period during which the beneficary may make a claim against the warrantor. often it is 12 years from pc.
cw clause for professional indemnity
warrantor to obtain pi insurance cover often for 12 years from pc. provided that the warrantor has a design obligation. level of insurance stated in underlying contract.
step in right meaning
step in right allows a funder to take over the employers role in a project.
difference between warranties executed under hand vs warranties executed as a deed
warranties under hand are subject to a 6 year period of limitation of action (i.e. legal proceedings have to be instituted within 6 yrs of the breach complained) whereas as a deed are subject to a 12 year limitation period
define third party rights
rights provided under the TPR act( third parties act 1999) which allows an interested third party beneficiary to enforce the terms of a building contract, sub-contract-subconsultant. such rights can create a contractual relationship in the same manner as cw.
ads and dis of 3rd party rights
may help reduce paperwork, save time on construction projects. dis party may still be reluctant to accept third party rights instead of receiving hard copy, signed and dated cw.
define latents defects insurance policy
is a non-cancellable policy covering the cost of rectifying certain types of defects that may arise in a building during a 10 or 12 year period. covers owners tenants
why would a budget evolve?
=tender addendums: depending on procruement route client may issue changes to a contract after contract has been signed.
=variations: throughout the contract there will be changes to manage
=value eng: detailed estimate may have been priced a certain way but during the job its had to be delivered another way i.e. concrete pumps might be used to save on labour and reduce time on site.
how is company overheads calculated
determined by expressing the budgeted annual overheads as a percentage of budgeted turnover and applied as a proportion of the cost of indivudal contracts
what is reverse of value engineering
design growth which is the reverse and is effectively scope creep. Without a proactive discipline in the commercial team, additional costs resulting from design
growth may not be picked up and affect the profitability of the project for the contracting
organisation. This, in turn, may result in disputes with the client.
how does supply chain insurance effect mc
when the supply chain has insurance at a particular level, this effectively indemnifies the main contractor for this
amount for the works undertaken in the wider project, subject to the terms of the policy.
define contractural indemnity
is an agreement by one party to reimburse another party for any
loss suffered as a result of specified items that the indemnity covers, thereby transferring the risk to the party providing the indemnity.
define insurance
Insurance is a separate contract (usually called a policy), taken out with a third-party insurer
after the payment of a premium, to provide a party with certain costs and expenses to cover
a legal liability that the party may owe to another party, or to cover the party’s own costs and
expenses suffered as a result of a particular event. The risk in this case is transferred to the
insurer.
what to consider when procuring with subbies
The programme: it is worth stressing that programme requirements and dates should be documented and accepted prior to finalising any further agreement.
Attendances: it is worth reconfirming and checking attendances, as not only will there be a cost implication if there is any confusion, but also a potential impact on the programme, if the attendance items are not readily available.
common forms of security requested by employer.accrual define
pcg and performance bonds.n to represent the difference between the total liability assessed as owed to a subcontractor and the amount already paid to that subcontractor.
how does cvr help commercially
CVR data allows the commercial manager to make decisions on people and equipment resource levels, construction methods, programme and preliminaries, as well as to develop
recovery strategies in terms of contractual claims or procurement.
how to retain cashflor
Any advance, mobilisation or other pre-contract payments for contract set-up or mobilisation will improve cash flow.extend the payment terms to their supply chain.: it is certainly not best practice. RICS’ construction policy calls for prompt
payment.
how to bring costs down
=consider a change of construction methodology (such as subcontract or self-deliver)
=carry out a review of material specification (for example, is masonry or steel cheaper than concrete).
=consider re-tendering subcontract and material packages, looking for economies of scale by using suppliers company-wide, rather than just per project
cost report should always include VAT?
report costs but exclude VAT(value added tax). The liability to pay VAT is determined by customer VAT registration/corporate entity/nature of construction/prevailing tax rules
define direct works and prime cost sums
direct= work undertaken by client
prime cost= quantities of work whose extent is known but whose specification has yet to be determined.
what is PC
In commercial contracts- performance under the contract is not complete until all obligations imposed by contract have been satisfied, can include o&m’s to be provided. Normally done by Contract administrator, if contractor disagrees can go to adjudication.
test for pc
de minimis principle limited test of reasonableness means pc should not be refused if there are only minor defects in the works. Neville vs william press contractor had fulfilled obligation where very minor de minimis had been carried out, but if there was patent defects the architect would not have given pc.
why would a building control officer not give pc vs CA
building= due to desing issues imposed by client or design team
ca= defects in finishing trades may cause refusal of PC cert.
why would a final account have to be settled in the middle of a project?
10 contractor/employer going into liquidation/administration
20 contract being terminated due to performance or other reasons in accordance with the contract by the employer
30 contract being terminated by the contractor
risk of fluctuating prices can be dealt by
1) contractor to price the risk (a fixed or firm price contract)
2) allow provision for contractor to recover full or limited fluctuations on certain prices
indices to help with pricing fluctuations
-tender price indices (TPI) which reflect changes in tenders submitted for similar types of work
- resource cost indices (rci) which measure changes in the cost of certain materials or labour
-output cost indices which measure the changes in contract final accounts
define retention
retention is a sum deducted at each monthly payment notice to ensure the contractor returns to correct defects during defect correction period. if the contractor doesn’t return then that retention money is kept for others to correct defects
when is retention awarded
portion is released upon completion of works the remainder is released when rectification period or defects liability period has expired certificate of making good awarded.
does jct db do retention bond which jct doesnt
db yes but not for local authority or public . held at 3% typically. jct minor works no retention bond, retention held at 5% typically. If contractor doesn’t maintain retention bond employer can deduct from interim. If bond is taken out the retention deducted must be repaid to contractor
where is % of retention bond written?diff between retention bond and performan bond
in contract particulars. performance bond provides surety for non performance rather than failure to rectify defects.
what VAT notice works in construction?
to this. Information about these exceptions can be found in VAT Notice 708 (Buildings and Construction),issued by HMRC, which is continually updated.
This notice explains:
* When building work can be zero-rated or reduced rated.
* When building materials can be zero-rated or reduced-rated.
* When the sale, or long lease, in a building is zero rated.
purpose of lads
The genuine purpose must be to compensate the employer rather than punish the contractor
roles of employer contractor qs and ea
employer= payer
contractor- payee
employers agent- certifier
quantity surveyor= valuer
if subcontractor lives abroad what law do you follow?
JCT DB Sub 2016 states that the governing law is the law of England (clause 1.10) and that the English courts have jurisdiction (article 6), although this jurisdiction is subject to any rights the parties may have to refer a dispute to adjudication or arbitration
The types of damages that the main contractor may suffer if the subcontractor fails to complete the subcontract works on time may include:
=time-related damages for which the main contractor is liable to the employer under the main contract (e.g. general damages or, perhaps more often, liquidated damages)
=time-related site running/administration costs (e.g. preliminaries)
=additional time-related costs of retention being withheld under the main contract
what happens in interview if you don’t know the answer?
I would check with a senior collegaue or refer to the relevant contract document or rics guidance note.
sorry i don’t know the answer today, but i know i can find out by looking
what is LCC and what is it used for. what are the sources for this?
life cycle costing= carried out to predict a cash flow or carry out an option appraisal, happens during design development. LCC costs include construction costs, maintenance costs and operation costs.sources include estate managers or bcis
what are wlc and what are these costs?
wlc= whole life costing= non construction costs(land acquistion fees, rental costs) or income
ads and dis of BOQs how will bim
dis= they can promote a us and them mentality as the bills can only be carried out at the end of the design process and reduce the chances for contractor input. but can be argued boq production required project design to be analysed for accuracy this results in a more competent and complete set of tender information. In the future bim will assist in the production of the bill
does two stage tendering promote collaboration?
for 2 stage to work it has to allow time for the contractor to sit with the design team and go through significant amount of design to show their influence. if first stage is carried out too late in the process there will not be enough design time to let contractor have an influence on design.
dis of 2 stage tendering
there is the risk that contractors see a 2 stage tendering process as the opportunity to become ingrained in a project and then negotiate the price of the project higher than market value.
what happens in the 2nd stage of two stage tendering?
there are many ways of carrying out the second stage of the tender. it varies on the amount of contractor input thats required. if the reason for the 2 stage is a simple pricing exercise to use for a quicker start date then the contractors input on design will be minimal. on the other hand the contractor may become the lead designer and fully responsible for design and package tendering. the responsibilites should be set out in the PCSA.
How to avoid contractor negotiating a higher price in second stage?
introduce target cost as part of the tender. this is similar to management contracting but can be applied to 2 stage tendering. where the contractor is rewarded for beating the target cost which incentivises them to work to target cost.
how to agree contract conditions
its worth trying to agree contract conditions as part of the pre-qaulification questionnaire. similarly repeat clients contracts conditions may be similar to previous projects so if these can be agreed beforehand this can reduce tender analysis period.
what impact does bim have on tendering?
as bim begins to extract quantities it will provide more detailed and accurate bills of quantities for tenderers to price. At level 3 promises a fully integrated and collaborative prcoess.
in insolvency contract situation main contractor/subcontractor should consider the following 5
withhold retention monies and payments/ secure the site and make it safe/write and issue a completion final account/obtain legal advice on termination of the contract/make an inspection of site and record progress accurately
define notional final account
Final account prepared when contractor is facing insolvency. 1-5% of tender sum- is higher then normal final account as u price client having to get another contractor in place
how can a surveyor help a company that is insolvent
may be able to assist in the administration process in recording, scheduling and valuing individual assets.
what happens if no lads or completion date is in contract?
time is at large and damages cannot be deducted. if contract is left blank unliquidated damages will apply. the employer and representative will collate records and prove actual loss.
case law for lads
triple point vs PTT public company supreme court confirmed that the right to liquidated damages for non completion continues until the termination of the contract, and afterwards general damages may be sought.
how to calculate lads
persons calculating damages is advised to consider issues such as occupany levels, likely room charges, income from rent, utility costs. employer cannot revisit and increase level of damages.
jct minor works vs jct db for lads
minor works= non completion is not required no cap for delay damages.
jct db= non completion notice must be isued as must appropriate payment notices. method of payment of damages varies but normally deducted from sums due to the contractor through a payless notice.
what are some relevant events in jct and what clause refers to delay avoidance
variations/instructions/deferment of possession of the site. 2.28.6.1 the contractor is required to constantly use his best endeavours to prevent delay- sc have similar obligations. When delays occur first thing to do is always check the contract.
good method of delay analysis
simple method is to compare actual progress achieved with the planned progress shown. the use of critical path analysis works well on a new build where links between programme activities are likely to reflect works being done. but less likely to work on a refurb project where delays to work in one part of an existing building may well have little or no direct impact on the rest of the building.
how to use bim for delay assesements
by linking 3d model of a building to the programming software it is possible to create a model comparing planned and actual progress of works. helps to understand the consequences of a delay event.
delay assessments must identify
the cause of the delay, the period of the delay, and whether the delay event will have an impact on overall completion date.
if the valuation for a particular month is significantly lower than the cashflow forecast
this could be due to site conditions or adverse weather, materials being stored off site and not being claimed for. project progressing slower than anticipated
reasons for a contractor to be ahead of cashflow
front end loading/being ahead of programme by working faster or by sequencing or the inclusion of variations
risk factors on cash flow forecasting
circumstances can change, there could be an effect of changes in design specification (may change sequencing works) effect of inflation (value of money may be different at the time of payment to the time of production)effect of interest and exchange rate (where supplies or labourer being sourced from overseas.
effect of VAT on cashflow forecast
in most cases vat is added to the invoice and paid by the employer but may then be claimed back from hmrc at a later date. the effect on the cashflow is therefore considerable as the employer will be without funds for a period of time. this may cause a dip in the cashflow near the end of the project where the vat is paid back to the employer from hmrc.
what if no defects rectification period in contract
if no period is stated the default period is six months from pc of works
breach of contract must be brought within
6 years from the date of the breach
what consitutes as pc
in JCT pc is when works are in a state which are complete in all aspects and free from defects.
certifying completion why is biased when you have jct
we had Kevin from Silva as the architect was novated over the client wanted to ensure no biased occured so had to have an impartial third party to come in and inspect
what is DPA
Defective premises act, a claim under this accrues from the time when the dwelling is completed. The limitation period is 6 years.
how else to cover costs of rectifying defects
latent defects insurance is increasingly available to cover the cost of rectifying defects that emerge post completion. such insurance covers defects arising from workmanship or design
summary of limitation period for defects to be recitifed by
simple contract/deed/tort/dpa= from date of breach 6 years.
building safety act= 15 years from completion of the building
difference between tender docs vs csa
contract is a legal document that binds the two parties under specified terms and conditions. the contract is drawn after the tendering process is complete and used for interim valuations. tender id outline of scope to get quotes.
complaints handling timeframe
firm should acknowldge within 7 days.
firm should complete investigation and provide a response within 28 days of recieving complaint. if dissatisfied they can redress.
