Level 3 - Offsite Materials Flashcards
Using a JCT D&B 2016, what are the requirements to value off-site materials?
Items need to be listed in the Contract
Materials need to be ready for incorporation in the works
Offsite materials would need to be vested, supported by a vesting certificate
Insured, incase materials are lost or damaged
Materials clearly identify the name of the employer and location of the works
What are the risks associated with offsite materials?
Potential insolvency of any relevant Contractor (ie Materials being paid for but not delivered to site)
Damage to materials in storage or in transit to site
How can the Client protect itself against the risks of offsite materials payments?
O-I-I-I-O
OWNERSHIP - (supported by a Vesting Certificate)
IDENTIFYING THE MATERIALS - (materials segregated and specifically marked as the Clients property)
INSPECTION - (Access allowed to where materials are being held to inspect the quality of the goods)
INSURANCE - (Risk of damage to materials should be covered by insurance and employer named on the policy)
OFFSITE MATERIALS BOND - (Allowing the Client to claim under the bond should the materials not be delivered to site)
You advised the Client on the benefits of assisting the contractor with offsite materials, what were the benefits?
Alleviate contractors cashflow pressures and develop a good working relationship with the contractor.
It was important to develop the relationship as we was going into a negotiated tender with the contractor to procure additional works
What is included on a Vesting Certificate?
Information about the two parties
Project address and materials storage address
Insurance certificate against loss or damage
Schedule of Quantities - Cost and materials
What’s the difference between uniquely listed and non-uniquely listed items?
Uniquely listed - specific for the project and do not require off-site materials bond
Non Uniquely listed items - are not project specific and require a bond to be in place
You mention you also advised on a advance payment, What did you actually advise?
The contractor was experiencing cashflow problems due to upfront payments from suppliers.
I advised that advance payments are common to assist contractors with significant upfront procurement costs.
I advised that the client would be protected using an on demand bond and that assisting the contractor would develop a good working relationship
Why would you advise the Client to make offsite payments or advance payments if it wasn’t required under the contract?
It was an oversite from the contractor and demands from the supply chain was causing cashflow problems for them
By making advance payment ensured that the materials would be procured and in the spirit or teamwork and collaboration alleviated the financial issues of the contractor
Do you put your client at risk if you are making offsite materials payments and no materials have been listed in the contract?
There is a risk with offsite materials, however it can be minimized provided the materials are vested and insured and that an offsite materials bond is in place.
The offsite bond would protect the client in the event of insolvency
What would happen if the Contractor became insolvent and you had already paid for materials off site?
Would have to make arrangements for materials to be delivered to site
contract liquidated / administrators and recover materials that have been paid for
Claim under the bond
What is the supply of goods and services act 1982?
Legislation that requires traders to provide services to a proper standard of workmanship
CHECK - The Act applies to “relevant contracts for the transfer of goods”, being those where one person agrees to transfer property in goods, i.e. ownership of the goods, to another person;[3]
