Technical - Contract Administration

Question 1

What is the role of the Contract Administrator under the JCT contract?

Answer 1

The person responsible for administering the contract.
Has to act honestly and reasonably as their decisions can be questioned under the dispute resolution procedure.
Issues timely information and pre-agreed information.
Issues instructions, variations and extensions of time.
Assesses delays and claims.
Works with the QS to review and approve monthly valuations, variations and loss and expense.
Issues the payment certificate.

Question 2

What if a contractor does not comply with an instruction issued under a JCT contract?

Answer 2

The contract states that ‘The contractor shall forthwith comply…’ so if they don’t the CA must issue a notice requesting compliance with their previously issued construction.
Failure to comply within 7 days of the instruction means that the CA can get another firm to carry out the work and deduct the amount from the contract sum.
Ongoing failures can lead to the termination of the contract.
A contractor is not obligated to carry out a variation if it is dangerous or such work that is materially different from the agreed contract works. If that is the case then the contractor must notify the CA of their decision in writing.

Question 3

What is an Employer’s Agent role?

Answer 3

Usually for Design & Build contracts and they are appointed by the client to manage the project on their behalf. They act as Project Manager and Cost Manager. They are the lead consultant on the project but appoint other consultants under them. Their duties include:
Develop the client’s brief.
Carry out a pre-tender estimate.
Develop and monitor the programme.
Lead the professional team.
Compile the tender docs.
Manage the tender process and award the contract.
Sign off the contractor’s detailed design.
Chair and record meetings.
Monitor the quality of a project.
Manage the budget.
Carry out valuations and instruct variations.
Organise handover/ soft landings.

Question 4

What is the difference between an Employer’s Agent and a Contract Administrator?

Answer 4

The EA is the client’s advisor and is required to protect the client’s interests whereas the CA must act impartially, making decisions even if they are detrimental to the client.

Question 5

What status does the programme have in a JCT contract?

Answer 5

None.

Question 6

What is practical completion?

Answer 6

The point at which the contractor has completed the project and hands it over to the client.
The building is fit for use although there may be some outstanding defects and small works that need to be completed.
But it must be used for its intended purpose and be safe to occupy. I usually include a list of requirements in the tender and contract documentation that the contractor must complete to achieve practical completion.

Question 7

Can the Practical Completion certificate be rescinded once issued?

Answer 7

No.

Question 8

What happens when Practical Completion is issued?

Answer 8

Usually 50% of the retention is released.
The 12-month defect period starts.
The client must take over responsibility for insuring the building.
The ability to impose liquidate damages stops.

Question 9

What is a non-completion certificate?

Answer 9

Issued by the Contract Administrator to certify that the works, or section of works, have not been completed by the contractual completion date.

Question 10

What are the consequences of a non-completion certificate?

Answer 10

The employer has the right to withhold liquidated damages if they follow the process of:
1. Issuing a non-completion certificate.
2. Write to the contractor to state their intention of withholding LADs.
3. Issue a pay-less notice.

Question 11

What are LADs (Liquidated and Ascertained Damages)?

Answer 11

Allow the client to recover losses as the result of the contractor not fulfilling their duties. They cannot be punitive and must be an accurate assessment of the loss experience by the client because of the delay.

Question 12

What happens if the Contract Administrator thinks the construction work has been carried out incorrectly or that there is a defect?

Answer 12

They can issue an instruction for the contractor to open-up the area in question to inspect the area or carry out further tests.

Question 13

Who bears the costs of these opening-up works?

Answer 13

The client unless the contractor is found to have no carried out the works in accordance with the contract documents. Then the contractor must pay for the opening works and rectification of the defect.

Question 14

What is an extension of time?

Answer 14

The Contract Administrator is able to extend the completion date so that the client postpones their ability to claim liquidated damages, and the contractor is not worrying that their completion date is at large.

Question 15

What is the procedure for claiming an extension of time?

Answer 15

The contractor should write to the Contract Administrator to inform them of a likely delay as soon as they think one will occur.
They should identify the cause of the delay, stipulate the relevant event and propose a revised completion date.
The Contract Administrator must reply to the contractor in writing with their decision.
The contractor must take all efforts to mitigate the effect of the delay.

Question 16

How long does the Contract Administrator have to decide whether to award the extension of time?

Answer 16

12 weeks unless there’s less than 12 weeks until practical completion. Then they should try to decide before PC.

Question 17

Why have an extension of time?

Answer 17

The contract has a completion date so that the client can plan for occupation of the building. If we don’t adhere to the completion date then the construction work can go on and on. If the Contract Administrator doesn’t think the extension of time request is valid then the client is entitled to claim LADs.

Question 18

Does the extension of time automatically give the Contractor the right to apply for additional prelims?

Answer 18

No.

Question 19

What is a Relevant Event?

Answer 19

An event that causes a delay to the completion date that is not the fault of the client, or is caused by a neutral event. Examples include force majeure, exceptionally adverse weather, flood or strikes. It does not entitle the contractor to claim for loss and expense.

Question 20

What is a Relevant Matter?

Answer 20

An event that causes a delay to the completion date that is the fault of the client. This enables the contractor to claim for loss and expense. Examples include not giving the contractor possession of the site, delays in issuing instructions, instructions relating to variations or expending provisional sums.

Question 21

What is Loss and Expense?

Answer 21

A claim from the contractor for direct loss as the result of a delay due to a relevant matter. The contractor must give written notice of a claim as soon as it becomes apparent.

Question 22

What are the JCT payment rules?

Answer 22

Contractor submits their application.
The QS has 7 days until the Due Date to issue their valuation certificate.
The Contract Administrator then has 5 days to issue their payment notice.
The contractor can then issue their invoice and the client must pay.
The whole process should take 21 days.
Payment schedule as part of the contract documents.

Question 23

Name some JCT contracts.

Answer 23

Minor works.
Intermediate.
Standard.
Design and Build.
They also do sub-contractor contracts and collateral warranties.

Question 24

What is a collateral warranty?

Answer 24

Creates a contractual link between sub-contractor and the client. Allows the client to sue the sub-contractor if there’s a breach of contract.

Question 25

What are Interim valuations?

Answer 25

Regular payments made to the contractor for works completed as the contract progresses. Helps maintain the contractors cash flow and stops them from having to finance the entire project.

Question 26

How often do I carry out interim valuations for a project?

Answer 26

Monthly.

Question 27

What are Instructions?

Answer 27

Best practise is a written order from the Contract Administrator to the Contractor to vary the works. Instructions can be given verbally but it is best practise to follow this up in writing with a Confirmation of Verbal Instruction.

Question 28

What are Variations?

Answer 28

An alteration to the contracted works either by adding works, omitting works or substituting works or materials. The works must be materially similar to the contracted works to constitute a variation, otherwise it should be a new contract.

Question 29

What is an RFI?

Answer 29

Request for Information. From the Contractor to the Design Team or Contract Administrator for clarity on details of the project – usually drawings or materials. A response to an RFI is not an instruction.