PRM SEM 01 - 14. Contract Administration Flashcards
Contract Administration: Supervision and Observation Roles
It’s important that the client realises that the architect “observes” the site works and “administers” the contract. Architects cannot be on site all the time. We do not use words such as supervise or inspect to describe what we do.
The Building Act 2004 states it is the builder’s job to build in accordance with the Building Code and it is the TA (Territorial Authority/ Council)’s job to inspect the building works for compliance with the Building Code and Consents (they issue the Certificate of Code Compliance after all!). This doesn’t let the architect off the hook though in terms of liability.
If you have no contract or supervision role you should stay away from the building site to
avoid liability. This will be explored more in semester 2 Practice Management.
The role of the architect can change from job to job. These notes below are based on the
NZIA SCC 2014 NZIA Standard Construction Contract with an architect administering. If
a project manager is involved it is also likely the contracts and architect’s obligations will
be different.
Admin: Before the Contractor Starts on Site what are the individual party responsibilities?
Prior to starting on site the Contractor will gear up, organise his workers and subcontractors, arrange security and temporary services to the site etc.
The Contractor is to issue a programme of work to the Architect and it is wise to discuss “critical path” items and to set up regular meetings and establish lines of communication. The Contractor may want the Architect to check “shop drawings” (architects drawings redrawn in a format useful to joiners, steel workers etc)
The Architect may issue new or additional “For Construction” documents.
The Architect should advise the client to check their insurance cover in the case of alterations (for a new building the contractor arranges insurance, for an alteration the client does).
The Contract doesn’t mention Site Meetings but its wise to have these regularly (say once a week) and keep Minutes (notes of the meeting) that are copied to everyone including Consultants not present.
This is the place to monitor progress apart from formal Directions and Variations. Minutes can cover us in the event of trouble brewing or disputes arising.
The Contract is also vague on the subject of Building Consent inspections and the monitoring of Resource Consent Conditions. Most architects generally do not attend TA (Council) Building Consent inspections; again discuss this with the Contractor. Note that the Council records inspections and issues and you can see these in the Building Consent set on site.
What are the main Contract Administration tasks?
The main contract administration tasks after the signing of the Contract Documents are to: check insurances are in place, observe the building works, have regular meetings with all parties and consultants, control variations (changes/ amendments) and make progress payments (deducting retentions).
It’s handy to look at the project through sections of the NZIA SCC 2014 NZIA Standard
Construction Contract
SCC General Conditions | Section 1: Main Obligations
Discusses the role and obligations of the Principal (client), Architect and Contractor
(builder) and the relationships The contractor’s is “to do the work required by the
Contract Documents”. The principal’s is “to pay”- The architect’s is to “issue all
directions” and “administer the contract impartially”.
Directions to the Contractor come from the architect, not the Principal, and are in writing.
Note well: the client does not give instructions to the
SCC General Conditions | Section 2: The Documents
Note that the Building Consent set of drawings must be kept on site, but the Architect often issues a “For Construction” set, while the Contractor is keen to keep track of what they quoted for in the Tender or Contract Documents! Even the “For Construction” set is regularly updated with the resolution of details, finishes, variations etc. And there could even be Building Consent Amendments as well! In the future BIM (Building Information Modeling / Management) will be useful in tracking changes.
SCC General Conditions | Section 3: Bonds
Only if required by the Specific Conditions and uncommon these days. Provides a sum of money to rectify the works in the event of a major problem with a party failing or breaching the Contract.
Note that a Party’s performance can be affected by issues unrelated to the Contract eg other work.
Bonds are provided by banks, insurance companies and bondsmen, usually to 10-15% of the Contract Sum, usually only on major projects. (However these days larger contracts are usually of a different nature and more tailor made for the project, as briefly discussed at the end of the lecture on Procurement).
A Contractors Bond lasts until Practical Completion.
A Contractors Bond in lieu of Retentions lasts until Defects Liability obligations are met.
A Principals Bond lasts until Final Payment.
SCC General Conditions | Section 4: Administration
Also discusses the role and obligations of the Principal, Architect and Contractor and their relationships.
The Contractor “supervises the building works” and ensures they are built in accordance with the Contract Documents and “directions of the architect”.
If there is a clash in the drawings or with Building Code requirements, then the Contractor seeks the architect’s direction on what to do.
The Principal (through the architect of course) is responsible for getting all consents and
approvals (Building and Resource Consent etc).
The Contractor gets all temporary consents and approvals and pays for them (eg
footpath protection bond, electricity supply).
SCC General Conditions | Section 5: Indemnity and Section 6: Insurance:
Indemnity from liability and insurance of the building works to a value nominated by the Architect. However get the client/ principal to obtain advice from an Insurance Company, architects are not experts in this area.
The Contractor insures a new building for damage or loss to the Contract Works plus costs such as demolition, fees, often to 125% of the Contract Sum.
The Principal insures an existing building for damage or loss similarly.
The Contractor must have Public Liability insurance, generally $2million plus (for accidental damage to neighbouring properties), third party vehicle insurance, plant and equipment insurance and if asked for in Specific Conditions, Professional Indemnity insurance for Contractor’s Design. Evidence of Insurance must be provided to the Architect.
SCC General Conditions | Section 7: The Site
The Contractor must have access by nominated date, at which point the Contract Period
starts.
The Principal (Client) must locate the boundaries using a Surveyor, but the Contractor must set out the building at their expense. Even if the Architect checks the set-out the Contractor is still responsible!
The Principal and Architect can access the site and off site workshops at “reasonable times”.
The Contractor must notify the Architect as soon as possible of any “unforeseeable physical conditions”.
The Contractor must keep the site safe and clean and clear up at the end.
SCC General Conditions | Section 8: Contract Works
Reiterates that the contractor will “supply all labour, materials, services necessary” and that they can appoint sub-contractors. It also allows the principal to run other contracts concurrently on site (eg landscaping).
It’s the Contractors job to keep the site safe.
SCC General Conditions | Section 9: Variations
Variations are “any change to the Contract Works” including additional work, changes of
position, timing, omissions etc.
They must only be carried out “with the Architect’s written Direction” and “when its value
.. has been agreed”, with a few exceptions.
Most architects use a Variation Price Request (VPR) form for clarity.
Note that not all written Directions are Variations, a Direction could be a clarification or
change in priorities.
The Contractor has 10 working days to price the variation and there are procedures if the
value can’t be agreed.
The cost of the Variation is added to the Contract Price.
The Council/ TA doesn’t like significant variations from the Building Consent and may
ask for an Amendment to Building Consent to be lodged.
SCC General Conditions | Section 10: Monetary Allowances
PC Sums (don’t include labour), Provisional Sums (do include labour), Contingency Sums were discussed in the lecture Procurement.
SCC General Conditions | Section 11: Time for Completion
“The Contractor must start within 5 days of being given possession of the Site or when directed by the Architect”, as stated in the Specific Conditions, at which point the Contract Period starts.
Contract Period / Time for Completion is nominated in the Specific Conditions.
The Contractor is to issue a Construction Programme to the Architect.
The Contract Period is adjusted by Extensions of Time the Contractor claims in writing
(and the Architect grants) eg weather, variations, problems beyond the Contractor’s
control etc
One interesting point 11.5.4.(b): When considering an application for extension of time,
the Architect is not allowed to take into account whether the Contractor can make up lost
time by using more resources.
SCC General Conditions | Section 12: Practical Completion and 13: Defects Liability:
Will be discussed in the lecture Practical Completion
SCC General Conditions | Section 14: Payments -17: Disputes
will be discussed in the next lecture Progress Payments.
