Experience Area E - Contract Admin and Observations Flashcards
SSC payment claim and payment timelines?
SSC:
Day 0: Payment Claim recieved
Day 5: Issue Payment Schedule
Day 8: Principal amendments
Day 10: Issue replacement payment schedule
Day 17: Last day pricipal has to pay
NZS 3910 payment claim and payment timelines?
3910:
Day 0: Payment Claim recieved
Day 7: Issue Payment Schedule
Day 10: Principal amendments
Day 12: Issue replacement payment schedule
Day 17: Last day pricipal has to pay
What advice should you give to the clients at practical completion?
- Write letter before completion, emphasizing client rights and responsibilities at practical completion with ample notice.
- Limit insurance advice to facts; recommend seeking detailed advice from experts.
- Confirm:
- How you will assess of date of practical completion.
- Cessation of contractor’s insurances.
- Procedures for issuing notice of practical completion.
- Circumstances deeming practical completion.
- Start of defects liability period.
- Timelines for claiming liquidated damages.
- Release of retention moneys, bank guarantees, or bonds triggered by notice of practical completion.
- Advise on:
- Remaining works and conditions.
- Actions taken and proposed.
- Variations and response timelines.
- Works incomplete at practical completion (deffered works)
- Anticipated completion date and potential damages.
- Assessment of moneys to be released or adjustments to bonds.
- Recommend:
- Discussing ongoing insurance with the client’s adviser.
- Implement agreed matters promptly to avoid delays.
- Discuss with the client and confirm discussions in writing.
- Essential for client understanding; failure may cause them to suffer loss.
What advice should you give to the contractor regarding practical completion?
- Write a letter to the contractor after confirming practical completion.
- Remind the contractor that issuing the notice of practical completion starts the defects liability period.
- Enclose the practical completion certificate and payment certificate for retentions.
- Request guarantees, warranties, as-built drawings, maintenance manuals, and other required certificates.
- Advise on finalizing incomplete works per the contract.
What happens next?
- Adjust bank guarantees or bonds, notify clients, and ensure the contractor provides requested information.
What information should you give to the client regarding Defects?
- Note defects during and after practical completion.
- Obtain client agreement on assessments.
- Allow the contractor to rectify defects early.
- Inspect works with the contractor before issuing lists.
- Confirm defects liability period.
- Detail incomplete works and defects.
- Request client advice and acceptance.
- Promptly issue a letter for client input.
- Next steps:
- Follow up with the contractor to formally notify defects.
What information should you give to the contractor regarding Defects?
- Provide defect list during the liability period.
- Notify the contractor of all defects before the period ends.
- Advise defects and incomplete works.
- Instruct the contractor to submit a completion program.
- Agree on a rectification program with the client and contractor.
- Inspect after defects are addressed.
- Issue the defects liability certificate upon completion.
What does practical completion mean?
That the works can be used for their intendd purpose.
This excludes work that is: deffered, minor omission and defects
Who should you not issue practical completion to?
Not to third parties (no one that is not in the contract!!!)
ie. a purchaser shouldnt be issued the practical completion document to purchase a property
The contract notes that “The certificate cannot be relied on for any other purpose.” and “They are NOT issued to any other
party and cannot be relied upon by any other party.”
Can you bring an outside expert to certify Practical Completion?
NO - The Architect can bring outside expertise in but the authority of the final decision/power rests with the Architect
What should you do if someone pressures you to issue PC?
Never issue such certificates prematurely under pressure from anyone.
When does the DLP start?
The Defects Liability Period is the period stated in the Specific Conditions of Contract. It commences from the date on which the Contractor achieved Practical Completion and continues for the stated period ending when the Contractor has completed all omissions, corrected all defects and completed all deferred work.
Can you issue PC with conditions attached?
No - Practical Completion and Defects Liability Period certificates cannot be issued “subject to” or “conditional on” completion of listed items.
a list can be attached listing the minor omissions, minor defects and deferred work that has been agreed with the Contractor. This list is consistent with the definition of Practical Completion.
What do you need to do if you Payment Schedule does not match the Contractors Claim?
be sure to give adequate reasons
What action should members take regarding clients and slow payment or short-payment, and what potential consequences should clients be educated about?
Members should educate Clients about the consequences of slow payment or short-payment so that the client may accommodate the risks as they see fit. They may otherwise seek retribution – on the basis of a latent but un-notified risk - when the Contractor walks off the job or stymies on-sale (or financing arrangements) by exercising their rights under the Act.
Do you need Form 1 for non-residential projects?
Yes now you do - I believe it was previously only for Residential projects.
How does CCA apply differently when it comes to residential vs commercial?
Adjudication processros are differnet.
Adjudicators can approve issuing a charging order (enforcement) over a construction site except under a residential construction contract.
Look at PN 9.501
Maybe go through the CCA here in depth. or in the ACTS and SHIT deck
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What document is required to be issued by the Contractor when making a claim on a residential project under the CCA?
The Construction Contracts Regulations 2003 Form 1 must be issued by the Contractor when making a claim on a residential project
What risks should the architect be aware of when setting the requirement for a warranty, checking its wording, and ensuring its delivery to the client?
Be aware that in setting the requirement for a warranty, in checking the wording of the warranty offered and in ensuring that the signed warranty agreement is obtained from the contractor and delivered to the client, risk exists to the architect.
Be aware that requesting a warranty also incurs a cost addition to the contract sum and this additional cost included in the tender may not offer value.
What challenge may arise for those pursuing a warranty for building work, especially concerning failures in workmanship?
Many who have tried to pursue a warranty for building work have discovered that, although a manufacturer may back up the product, one must look to the installer for a failure in workmanship. Proving the failure and pursuing the installer may take considerable effort.
What potential consequences might architects face if the installer is of no substance and the client relied on the comfort of the warranty?
If it transpires that the installer is of no substance and the client has relied on the comfort of the warranty, there could well follow accusations that the architect’s design was deficient and/or that the architect “failed to adequately supervise.”
What is the definition of a Warrenty?
A warranty is an undertaking by one party to another (to make good defects in the contract works).
What is the defenition of a guarantee?
A guarantee is an undertaking by a third party in favour of the first party, to act in the event that the second party does not fulfil their obligations under the guarantee (to make good defects in the contract works).
What are some examples of Guarantees in the building industry?
Master Builders New Home and Alterations & Additions 7-year Guarantee Agreement.
This is a true guarantee because in the event of the failure of the contractor, Master Build Services are required to make good (third party)
BuiltIn guarantee used at Apple Shed
What are the contrasting arguments regarding the duration of warranties for construction work?
On the one hand there are those who will argue that the contractor or subcontractor should be prepared to warrant their work for the full durability period required under the New Zealand Building Code.
On the other hand it can be argued that as consumers have protection under the Consumers Guarantee Act, Fair Trading Act and the Building Act no warranties should be required.
What factors should architects consider when preparing a list of warranties for a construction contract?
ach architect preparing a list of warranties to be provided as part of a construction contract will have to make their own judgement call. Factors to consider might include:
(a) What period is normally offered?
(b) Client expectation (of warranties)
(c) The strength of the person from whom the warranty is being sought
(d) The likelihood of the warranty being called up.
What are some key construction items for which warranties might be considered in a construction contract?
Key items for which warranties might be considered include those relating to weathertightness, waterproofness, and others related to appearance matters.
This relates to B2 durability 50,15, and 5 year dates
(a) Tanking (bituminous and sheet) 15 years minimum
(b) Curtain walling 5 years minimum
(c) Metal cladding 15 years
(d) Roofing 15 years
(e) Aluminium joinery 2 years
(f) Tiling 2 years
(g) Timber strip and overlay flooring 1 year
(h) Vinyl, linoleum and cork surfacing 5 years
(i) Carpeting 5 years
(j) Painting 2 to 5 years
(k) Specialist protective coatings 5 years minimum
(l) Plumbing systems 2 years
(m) Drainage systems 2 years
(n) Electrical items 1 year
When a warranty is required from a subcontractor (no direct contract link), how should the warranty be executed?
must be executed in the manner required under section 180 of the Companies Act 1993. This will vary from company to company. However as a general guide it might be expected that two directors will normally be required to sign. Where only one authorised person may sign, a witness may also be required.
Why should you be cautious about accepting warrranties by the party wanntenting the work?
Be cautious in accepting warranties written by the party warranting the work. Such warranties are likely to have a generous sprinkling of pre-conditions and escape clauses.
Use the standard form of Warranty Agreement and ensure that contractors and subcontractors sign only these forms with no additions or alterations
What is consequential loss?
For example a plumber may repair a leaking pipe in the wall but who makes good the wall? This case is normally covered by insurance in relation to consequential loss. The insurer will not cover the defect but will provide cover for consequential loss and making good any area affected by the defect.
Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, a breach of contract.
What is the role of the Enginner to the contract/Architect in regards to roles and responsibilities?
- Expert adviser to representative of the owner(s)
- Ordering of variations
- Giving directions on behalf of owner(s)
- Accountable to owner(s)
What are Project Control Group Meetings?
Held monthly to determine project progress, cost status, and authorities’ approvals, to confirm key design decisions, and to discuss user issues.
This refers to the key stakeholders who are involved with your project.
What is the role of the Enginner to the contract/Architect in regards to being the owners representative?
- Acts as agent for owner(s)
- Issues all directions or instructions
- May appoint engineer’s representative
- Issues Certificate of Practical Completion
- Issues Defects Liability Certificate
- Has power to suspend the works
What is the role of the Enginner to the contract/Architect in regards to an Independent third party?
- Impartial decision-maker
- Values the work in progress
- Issues Progress Payment Schedules hedules
- Issues Final Payment Schedule
How can variations arise?
- Request from contractor
- Site Instruction – identify client request items/no cost instructions
- Variation Price Request – quotation, invoice requirements, dayworks, client request items
- Variation Order – varies the contract sum
What is a variation order?
an alteration to the scope of works in a construction contract in the form of an addition, substitution or omission from the original scope of works.
What is the purpose of the CCA?
- To facilitate regular regular and timely payments
- Provide for the speedy resolution of disputes
- Provide remedies for recovery of payment
- Relates to residential construction contracts
- No contracting out of the Act
What can a site pre-start/Initial Meeting include?
- Introduction of representatives
- Communication and site responsibility issues
- Scheduling of Project Control Group meetings
- Confirmation of start date for the works
- Reviewing of contractor’s programme
- Confirmation of insurance cover for the works
- Reviewing Payment Schedules and processes
- Review list of sub-contractors and suppliers
- Outline processes for dealing with Variations
- BCA liaison and inspection requirements
- Site security
- Health and safety matters
- Design clarification or procedural issues
- Owner concerns or questions
What can PCG Meetings include?
- Receive contractor’s progress report
- Review of construction progress against programme
- Relevant quality issues
- Costs and comparison with budget
- Construction activity issues
- Unanticipated delays
- Design clarifications
- Contract variations
- Owner concerns
- Unforeseen variations
- Health and safety matters
- Often held two-weekly or monthly
How can you communicate with the clients regarding Budget updates?
- Comparison of costs against budget
- Explain reasons for cost escalation
- Clearly identify betterment and client request items
- Clearly explain additional fee costs
What is the CCC?
Code Compliance Certificate - A CCC is a formal statement confirming that the council are satisfied all building work has been completed in accordance with the building consent the council issued.
What is a Record of Building Work? Form 6A
If you are an LBP and you have carried out or supervised restricted building work as part of a building consent, you need to complete and submit a Record of Building Work (Memorandum) as soon as possible to avoid delays issuing the Code Compliance Certificate (CCC) to the owner.
When should Warranties and Guarantees be provided?
Warranties and guarantees should be provided prior to
issue of the Defects Liability Certificate and Final
Payment
How do the timelines differ from a normal payment cliam vs a final payment claim?
- be in writing and be endorsed “Final Payment Claim”;
- state that the due date for payment shall be 45 Working Days after the date the final
How do the timelines differ from a normal payment schedule vs a final payment schedule?
The Architect must within 20 Working Days of receiving the Contractor’s final Payment Claim issue a Final Payment Schedule to the Principal.
The Final Payment Schedule must note the date received and the due date for payment which shall be 45 Working Days from the date the final Payment Claim was received by the Architect;
What action must the Architect take if the issue of the Final Payment Schedule exceeds 20 Working Days?
0,5,8,10,17 (this is the same as normal)
Day 0: Payment Claim recieved
Day 5: Issue Payment Schedule
Day 8: Principal amendments
Day 10: Issue replacement payment schedule
Day 17: Last day pricipal has to pay
Should the issue of the Final Payment Schedule take longer than 20 Working Days, the Architect must issue a certificate in the form of a Payment Schedule for all amounts due under the Contract that can be certified at that time.
This must be done within 5 working days
Here payment will be due 12 Working Days from the date the Payment Schedule is issued by the Architect;
The Principal must notify the Architect within 3 Working Days from the date the Payment Schedule was issued by the Architect of any amendments or deductions
5 Working Days from the date of the date the Payment Schedule was issued by the Architect, the Architect must issue a replacement Payment Schedule with the revisions required by that notice.
The Architect must continue to issue such Payment Schedules at monthly intervals until the Final Payment Schedule is issued.
This is what we did for Oratia(unknowingly). There were TWO payment claims after practical compltion!!!
