Interim Valuations and Payment Provisions

Question 1

What is the purpose of a valuation?

Answer 1

To provide advice to the certifier on value to allow them to issue their interim certificate

Question 2

Regarding valuations how is ’The Housing Grants, Construction and Regeneration Act 1996’ relevant?

Answer 2

It contains statutory requirements relating to interval and procedure for contracts that have a duration of over 45 days

Specifically stating that a party to a construction contract is entitled to interim or stage payments coming from interim valuations or pre-determined amounts at project milestones or specified dates.

Question 3

Relevant to valuation what happens if a contract does not contain the provisions required by the Construction Act?

Answer 3

The Scheme for Construction Contracts will apply to fill the gaps

Question 4

What are the main elements of a valuation?

(7 main elements)

Answer 4

a) Preliminaries
b) Measured work
c) Variations
d) Materials on site
e) Materials off site
f) Loss and expense
g) Retention

Question 5

What are the six steps to a valuation set out within Interim Valuations and Payment, 1st edition (August 2015) ?

Answer 5

1. Planning
2. Pre-Valuation
3. Valuation
4. Valuation Document
5. Issue Valuation
6. Post Valuation

Question 6

Why is it important to visit site as part of a valuation?

Answer 6

In order to conduct a fair assessment to ascertain a valuation - going to site allows you to objectively and accurately determine what has been done and what has not. It also allows you question the contractor face to face about any disparities you may imminently see.

Question 7

Which two pieces of legislation impact valuations?

Answer 7

1. ’The Housing Grants, Construction and Regeneration Act 1996’
2. ‘The Local Democracy, Economic Development and Construction (LDEDC) Act 2009’

Question 8

What year did ’The Housing Grants, Construction and Regeneration Act’ take effect?

Answer 8

1996

Question 9

What year did ‘The Local Democracy, Economic Development and Construction (LDEDC) Act’ take effect?

Answer 9

2009

Question 10

Regarding valuations, written in legislation how many days after a due date must an employer issue a notified sum (payment notice)?

Answer 10

5 Days

Question 11

Regarding valuations, if an employer fails to issue a payment notice will the contractor be entitled to payment?

Answer 11

Yes, legislation states that if the employer hasn’t issued a payment notice within 5 days of the due date the payee can issue their own notice providing that there is a basis to which the sum is calculated.

Question 12

Regarding valuations, when must an employer pay the amount on the payment certificate?

Answer 12

The employer must pay the contractor on or before the final date for payment unless a pay less notice has been issued - in which case they would pay the amount on that.

Question 13

What must a pay less notice have?

Answer 13

A basis of calculation.

e.g. a breakdown of costs, this could be by using a CSA

Question 14

If an employer fails to submit a payment notice and the payee gives their own notice, can the employer still submit a pay less notice?

Answer 14

Yes

So long as they base the pay less notice on the payee’s notice.

Question 15

Regarding interim valuations, how many days before a final payment can a pay less notice be issued?

Answer 15

It depends on the contract. in JCT it is typically 5 but this can be changed on agreement. If there is no agreement on this within the contract then the Scheme for Construction Contracts will take president and it would be fixed at 7 days.

Question 16

Within a valuation period, if a pay less notice is issued - to what date would work be valued?

Answer 16

To the date of the pay less notice

Question 17

As part of a valuation is it possible for a notified sum or pay less notice to be £0

Answer 17

Yes, but only if there is a basis to which the sum is calculated.

Question 18

An interim valuation represents value of the “work properly executed by the contractor” - who is responsible for determining weather a job has been completed properly and to the standard specified in the contract?

Answer 18

The Contract Administrator

Question 19

Regarding valuations, what are the sub steps of the Planning stage?

Interim Valuations and Payment, 1st edition (August 2015)

Answer 19

a. Understanding the requirements
b. Employers’ specific requirements
c. Review pricing document
d. Liaise with contractor
e. Liaise with consultants
f. Liaise with clerk of works

The planning stage of valuation will be done before the contract begins. It is only done once. It is about being prepared and communicating with relevant people about their different roles within the valuation process.

Question 20

Regarding valuations, what are the sub steps of the 2. Pre-Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

Answer 20

a. Receive contractors’ interim application for payment

The pre-valuation is somewhat of a formality. This is the stage where you simply receive the contractor’s interim application for payment check all is in accordance with the contract administrator and do basic initial checks that all is in order.

Question 21

Regarding valuations, what are the sub steps of the Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

Answer 21

a. Fair assessment
b. Ascertain valuation
c. Collect information

This is when you gather information to inform your valuation by inspecting the works etc and calculate the valuation.

Question 22

Regarding valuations, what are the sub steps of the Valuation Document stage?

Interim Valuations and Payment, 1st edition (August 2015)

Answer 22

a. Check valuation
b. Complete valuation documentation
c. Record valuation

Valuation documents is about checking your valuation and collating it into documents and the proper forms.

Question 23

Regarding valuations, what are the sub steps of the Issue Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

Answer 23

a. Assemble valuation documentation
b. Review valuation
c. Sign valuation
d. Issue valuation

Issuing the valuation is about collecting up the document, checking everything is there, signing it and issuing it to the appropriate people.

Question 24

Regarding valuations, what are the sub steps of the Post Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

Answer 24

a. Maintain records
b. Manage discrepancies
c. Record payment

Post-valuation is simply about maintaining records of the valuation and managing any discrepancies

Question 25

Does an interim valuation measure the value of total works or the value of works completed within the valuation period?

Answer 25

An interim valuation measures the total value of works complete

This will be compared to the previous period to get the notified sum