Technical - Level 2 Flashcards
Contract Admin
Dunmore Road
What was in the PM’s Instruction?
Project name
PM name
Date
Contractor name
Contractor personnel names
Reference to EWN (if applicable)
Reference to CEN (if not a client led change)
Description
ISSUED on contractor communication system where issued to correct parties
(With PM’s signed approval)
I produced PMI’s for eg
1 Instruction for quotation following contractor CE Notification (eg delay costs caused by client delay in providing site access/inflrmation)
2 Instruction for quotation following contractor EWN* (eg ground conditions, pipe clashing)
3 Instruction to change works (eg new temp works design, stop works)
Note: PM can instruct a quotation without a separate CE notification, but the instruction must state within it both that it is a valid CE and to request a quotation
Contract Admin
Dunmore Road
What instructions are not compensation events?
Clause 15.2 – an instruction to attend an early warning meeting
Clause 32.2 – an instruction to submit a revised programme
Clause 40.3 – an instruction to correct a failure to comply with their quality plan
Clause 60.1(1) – an instruction to change Scope provided by the Contractor that does not comply with the original Client Scope
Clause 24.2 – an instruction to remove a Contractor’s person from site
Contract Admin
Dunmore Road
How were payment provisions dealt with in this project?
This project was a target cost project:
Option C - open book, agreed changes amend the target cost, same as Option E
Differs from:
Option A - paid on completion of activities
Contract Admin
Dunmore Road
How did you ensure the Housing Grants, Construction and Regeneration Act 1996 was followed?
Summary:
7
5
14 or 17
7 or 5
——
-Contractor to submit interim application at least 7 days beforeduedate
-Employer to issue payment notice within 5 days AFTERduedate
-14 days AFTERduedateis finaldatefor payment (for NEC)… or 17 days in The Scheme
-Employer to issue pay less notice within 7 days BEFORE finaldatefor payment
NOTE: when the contractor issues an AFP, this is the payment notice, so if TW pay same amount they issue a CONFIRMING payment notice, but if they want to pay less they issue a pay less notice
7, 5, 14, 7
-If employer fails to issue payment notice within the 5 days, the contractor can issue their own any time. How long they take is how long finaldatefor payment is postponed. So if do it 1 day after then finaldatefor payment is pushed back 1 day.
-Though if contractor made an application for payment this automatically becomes the payment notice after the 5 days instead (this happens at TW) and the employer would have to issue a pay less notice if they disagree
-If pay less notice window is missed (within 7 days BEFORE finaldatefor payment) then that amount is due to contractor
Contract Admin
Dunmore Road
How did you undertake a cross sectional audit?
Summary:
-Subcontract invoices
-Staff timesheets
-Costs already included in fee
-All done with ‘common sense’ audit, focusing on areas which larger variances to target cost
———
As the paymentmechanisminvolvesadirectcostsplusfeearrangement,undertakingdetailedauditsofcostsclaimedwillinvolvethefollowing:
-Directaccesstothesuppliersfinancialsystems
-Auditofthesuppliersinternalgovernancetoestablishthatcostsbookedtoaparticularcontractarecorrectandcanbetracedbacktothesource.
-Establishmentandclearrepresentationoftheallowableanddisallowablecostsinaccordancewiththecontract.
-Anycoststhataredeemedtobeincludedinotherfeeswillneedtobesetasidee.g.financecharges.
-Checkthatsubcontractcostshavebeenpaidinaccordancewiththeirsubcontractsorelsethesecouldfallintothecategoryofdisallowedcosts.
-Audit accounts and records such as staff salaries and other defined costs in accordance with schedule of cost components
-The amount audited varied depending on cost category:
Subcontract 20%
Labour 15%
Rest 10%
Extra clause in contract saying how this is done at ‘TW’s discretion’
I requested substantiation for and then validated: staff timesheet reports (ME2J), on-site allocation sheets, invoices eg for materials/plant hire/subcontracted costs, submitted expenses,
Open book accounting:
-Use ‘common sense’ audit, so you audit the applied costs to a reasonable amount or only deep dive into certain areas where variance between planned and actual expenditure.
-By understanding how these costs are being incurred as they come in, will make assessing compensation events much easier
Contract Admin
Dunmore Road
What is the NEC early warning meeting procedure?
Summary:
-Clause 15
-Either party can instruct
-Both have obligation to early warn, but meeting not mandatory m
-First register within 1 week of starting date, first meeting within 2
-Then meeting intervals stated in contract data
———
Clause 15.1 states that: “The Contractor and the PM give an early warning by notifying the other as soon as either becomes aware of any issues that could affect cost, timing, or quality.
In relation to this, both parties have an obligation to early warn, but the meeting isn’t mandatory.
Either party can always instruct the other to attend an additional meeting as required, if something specific has arisen that cannot wait until the next scheduled one.
Under clause 15.2 the first Early Warning Register should be produced within one week of the starting date and the first meeting held within two weeks of the starting date. Subsequent meetings should be held at the new “early warning interval” which is identified within contract data (part 1) at tender stage.
Contract Admin
Dunmore Road
What is the final account procedure?
Summary:
-Following completion, 12 months to defects date
-Within this, defects correction periods (2 weeks)
-Defects certificate issued after the 12 months
-Within 4 weeks, PM goes through final account process by issuing final assessment setting out how much contractor paid (and any adjustments)
(Adjustments could be retention, withheld retention for defects, withheld cost no substantiation)
-Then has to be paid in 3 weeks
-Contractor has 4 weeks to appeal cost
———
-Defects date* for TW is 12 months after completion.
-Within this there are little ‘Defects Correction Periods’ which at TW is within 2 days for H&S related and 2 weeks for standard issues
-On the ‘defects date’ the ‘defects certificate’ is issued (listing any outstanding defects if there are any) or soon after (providing all defects corrected).
-Within 4 weeks of defects date have to go through final account process which requires PM to issue final assessment to set out how much contractor will be paid. Includes extra adjustments not relevant to actual/customer’s costs (project account. This could be eg any retention to be paid to contractor minus disallowed amounts for not correcting defects.
-This then has to be paid within 3 weeks
- If the PM fails to do so, the contractor can submit their own assessment
NOTE: Under clause 50.3 If contractor not happy with amount then have to challenge it within 4 weeks. If not challenged then deemed accepted and cannot go to adjudication/ arbitration etc. Draws a line under project
*Defects date and defects correction period can be amended in contract data part 1. Also note that ‘defects liability period’ is not a term used in NEC
Value of the adjustment to the final account must be agreed between the employer and the contractor and will form part the statement of final account
NEC/TW final account includes: costs taken from retention for defects, release of retention, amounts still withheld from no substantiation, liquidated damages, compensation events (should be done prior but e.g Radley College didn’t)
Note: RETENTION NOT TAKEN FROM SUBCONTRCT COSTS
53 - final assessment: new under NEC4 which DOES have a final account whereas NEC3 didn’t
Contract Admin
HS2 Audit
What are the changes between NEC3 and NEC4?
-Final account introduced (where PM has to assess final amount due within 4 weeks of Defects Certificate)
-‘Dividing Date’ introduced for CE’s (which divides when defined and forecast cost is used)
-Contractor now HAS to submit an application for payment (didn’t have to before)
-Changes in terminology eg ‘client’ instead of ‘employer’
-Contractor can recover costs for preparing CE’s
-Gender neutral wording
Contract Admin
HS2 Audit
How did you audit NEC Option A costs?
Summary:
CE’s implemented without:
-accepted notification or PM instruction
-accepted quotation
Extra activities without orders
Contractor claiming for expenses not listed in Contract Data Part 2
Invalid CE’s for ground conditions when taken into account site info
————-
CE’s without the proper procedure being followed, eg:
-implemented without accepted quotation/PM assessment
-Implemented without initial PM instruction
-Implemented in timescales beyond the NEC change control timescales
-Activity additions without proper works order being
-CE’s implemented for unchartered services in ground despite works information stating contractor had a geotechnical baseline report and had considered the risks
-Contractor claiming for expenses not listed in Contract Data Part 2
Contract Admin
HS2 Audit
How did you audit NEC Option E costs?
Summary:
-PM not notified of proposed contractors (no clause 26 mobilisation forms) that hadn’t been tendered competitively
-As above, staff rate changes with no forms
-Payment notices not within contract/construction act timelines
-No challenge of open book costs and timesheets not reconciling
-Contractor claiming for expenses not listed in Contract Data Part 2
————
-In many instances the PM had not been notified of proposed subcontractors under Clause 26 notices (mobilisation forms).. where names and contract conditions of any proposed subcontractors are submitted and reviewed. So these were unauthorised costs because they were being instructed under the existing contracts with highest STAFF rates and and did not allow chance to be competitively tendered
-As above, staff rate changes without a Clause 26 form
-Large date variance between payment application, due date and payment notices. The contractor and subcontractor were same company and did not follow Construction Act
-Also cases where payment applications dated/recorded in system after the payment notice .. which makes no sense!
-No assessment/cost being allowed from applications for payment, so payment notice never different
- Lack of detail of activities staff members undertook
-Timesheet hours did not reconcile with ADO
-Contractor claiming for expenses not listed in Contract Data Part 2
Contract Admin
HS2 Audit
How did you audit NEC PSC costs?
Summary:
-No clause 26 mobilisation forms for new staff and subcontractors (not competitively tendered)
-Contractor claiming for extra expenses on top of staff rates x days by using NEC4 method of using defined cost + fee….but was NEC3 and in this only entitled to staff rate x days ONLY
(Only possible if listed under expenses, but they weren’t)
-Also not entitled to fee percentage on staff
———
-In many instances the PM had not been notified of proposed subcontractors under Clause 26 notices (mobilisation forms).. where names and contract conditions of any proposed subcontractors are submitted and reviewed. So these were unauthorised costs because they were being instructed under the existing contracts with highest STAFF rates and and did not allow chance to be competitively tendered
-Contractor claiming for staff costs as defined cost under schedule of cost components (which is what happens in NEC4 Contracts). However, NEC3 was being used so only allowed to do:
Staff Rate x No. of Days
So were claiming extra costs on top of the pre-agreed all-inclusive staff rates, as well as overheads. See other flash card for more detail
**SO MY AUDIT REVEALED THE CONTRACTOR WAS FOLLOWING THE NEC3 CORRECTLY IN TERMS OF USING PRE AGREED STAFF RATES, BUT WERE THEN GETTING THESE EXTRA EXPENSES ON TOP (WHICH WEREN’T LISTED) WHICH IS AN NEC4 MECHANISM ONLY
***ALSO REVEALED CONTRACTOR SHOULD NOT BE GETTING FEE PERCENTAGE ON THEIR DIRECT STAFF
-Contractor claiming for expenses not listed in Contract Data Part 2
Contract Admin
HS2 Audit
How does the mechanism for staff costs differ between PSC NEC 3 and NEC 4?
In NEC3 PSC a “time charge” refers toa payment method where a contractor is paid based on the actual time spent working on a project, calculated by multiplying the hourly rate of their staff by the number of hours worked, representing the cost of labor based on time spent
NEC4 pays these costs on a “defined cost plus fee” system where the contractor’s costs are assessed based on a detailed breakdown of allowable expenses listed in the Schedule of Cost Components, not just their time spent.
Both NEC4 and NEC3 PSC still have rates tendered for the consultant’s own people. The difference is that in NEC4 PSC these ‘people rates’ are subject to the fee percentage*. In NEC3 PSC, actual payments to subcontractors (called subconsultants) could be paid only if listed as an ‘expense’ by the client in contract data part one.In NEC4 PSC the amount due to subcontractors is always part of defined cost.
**SO MY AUDIT REVEALED THE CONTRACTOR WAS FOLLOWING THE NEC3 CORRECTLY IN TERMS OF USING PRE AGREED STAFF RATES, BUT WERE GETTING THESE EXTRA EXPENSES ON TOP (WHICH WEREN’T LISTED) WHICH IS AN NEC4 MECHANISM ONLY
***ALSO REVEALED CONTRACTOR SHOULD NOT BE GETTING FEE PERCENTAGE ON THEIR DIRECT STAFF
Note that these rules apply to the contractor claiming subcontract costs. In this audit, every cost was subcontracted. These were actually PSC subcontracts.
Common for clients to use NEC3 PSC way even on NEC4 contracts
Risk
What are the two projects?
1 Didcot Valley Park (FRAMEWORK)
As a framework (target cost) project, TW worked with the contractor to produce a pre-contract risk register
2 Woodstock WBS (COMPETITIVE)
In this project I calculated risks for the client at the estimate and cost planning stages.
Risk
Didcot Valley Park
How does root cause analysis work?
Root cause analysis is process of discovering root cause of problems to identify APPROPRIATE SOLUTIONS. It is more effective to prevent and solve underlying issues systematically than treating ad-hoc risks as they happen
So you:
-Note down a trigger/activator event
-Then what would cause that to happen, and its consequence on time and cost
Risk
Didcot Valley Park
How did you use root-cause analysis to identify project risks?
Workshops with PM and contractor
1 Note down a trigger/activator event
2 Then what would cause that to happen, and its consequence on time and cost
1 Line Stop Installation delay (more complicated than normal connections)
2 Failure of materials, delay from long lead materials, flow velocity too high
1 Ground remediation (flooding)
2 Rain due to work done in winter
1 Ground remediation (unstable ground)
2 Unstable soil conditions
*Need approval in advance of exact dates from both parties to shut off water supplies for planned maintenance
Risk
Didcot Valley Park
How did you identify generic project risks?
Used historical data to identify risks and then added a bespoke percentage
-Additional scope / scope changes eg design
-Delay to issue permit
-Unexpected ground conditions
-Not enough space for site compound
-Traffic management
Same percentages:
-Changes to legislation/standards eg H&S regulations for TW/Network Rail, TW asset design standards
-1:10 year weather event
Risk
Didcot Valley Park
How did you establish the risk ‘owner’ in line with standard risk allocation, and why did you do this?
Some events such as linesrop had different risk owners eg;
-Line Stop failure
CONTRACTOR RISK
-Undertake shut
CLIENT RISK CE(2)
-Supply of long lead materials (line stop)
CLIENT RISK (free issued) CE(3)
-Gas Mains
CONTRACTOR RISK for work, CLIENT RISK for accurate surveys CE(12) + 60.3
Flooding
CONTRACTOR RISK
Client owned risks/valid CE’s:
60.1(1) - PM instruction to change Scope (except…)
-60.1(2) - Client does not allow access by later of access date, or date on Accepted programme (AP)
-60.1(3) - Client does not provide something by date on AP
-60.1(4) - PM instruction to stop (or not start) work, to change Key Date
-60.1(5) - Client or Others do not work as per AP
-60.1(6) - PM or Supervisor does not reply within period required by contract
-60.1(7) - PM instruction dealing with objective of value or historical interest
-60.1(8) - PM or Supervisor changes a decision
-60.1(9) - PM withholds acceptance for a reason not stated in contract
-60.1(10) - Supervisor instruction to search for non-existent Defect (unless)
-60.1(11) - Supervisor test or inspection causes unnecessary delay
-60.1(12) - Contractor encounters physical conditions which…
-60.1(13) - One in ten year weather event
-60.1(14) - Client liability (seelistat clause 80.1)
-60.1(15) - PM certifies take over of part of the works before Completion
-60.1(16) - Client does not provide things for tests and inspections as per Scope
-60.1(17) - PM notifies the Contractor of a correction to an assumption
-60.1(18) - Client breaches the contract
-60.1(19) - Prevention event occurs-60.1(20) - PM notifies the Contractor that proposed instruction is not accepted
-60.1(21) - Additionalcompensationevents listed in Contract Data part one
——-
Did this because costs of contractor risks would go into target cost
TS owned risks would not, and only be added to target cost if they occur as CE’s
Note: customer also pays a % of contingency in estimate
Risk
Didcot Valley Park
How did you determine appropriate risk STRATEGIES?
Summary:
-Transfer: eg client better to hold ground conditions risk, or pay contractor to take risk on design portion eg WBS
-Reduction - site investigation eg client did this and reduced risk, hence transferring it to them
-Retain: client retained risk of delay
-Leftover risk is RISK RETENTION
—-
-Reduction: eg further site investigation to improve information, different materials/suppliers to avoid long lead times, using different construction methods.
-Whatever is the cost of leftover cost of the risk is the amount of risk RETENTION
-Transfer: Determine if worth paying a premium for contractor take on risk
On this project, TW retained risk for line stop delay
But transferred risk to client for ground conditions/remediation as client knew site well and confident they were good conditions
Risk
Didcot Valley Park
How did you mitigate the risks?
Summary:
-Site investigation for ground conditions
-Line stop: order long lead materials early, backup materials and protected
-Line stop delay: close coordination with operations, plan shut well in advance d
-flood risk: dewatering pumps on standby
————
-Long lead materials for line stop
Order materials in advance, have backup materials/suppliers in case of issues with main choice, keep materials protected on/off site or even order backup materials to keep
-Line Stop Installation delay (more complicated than normal connections)
See above, constant contact with operations/authorities as reducing flow a certain amount will require a shut from OFTWAT/council*
-Flooding risk due to rain from work done in winter
Dewatering pumps
-Ground remediation (unstable ground)
3 Inject into soil (soil stabilisation)
-Unchartered services
Extra site surveys
-Undertake connection shut
Focus resources on programme management and constant communication with operations
-Working around gas mains
Clearly set out areas where can excavate based on drawings, GPR surveys
*Need approval in advance of exact dates from both parties to shut off water supplies for planned maintenance
Risk
Didcot Valley Park
What is the use of the post-contract risk register?
Summary:
-Pre contract risks (contract data part 1 and 2) included in post contract EWN register (doesn’t assign liability)
Post contract risk register:
-can assign liability
-Risk allowance against each risk
-‘Close’ passed risks
Post the contract EWN register
-doesn’t assign liability
-Mitigafion plan against each risk
-Can add in new EWN’s
-Can add in new mitigation proposals and decisions made
——-
Prior to construction:
All the risks identified pre-contract are included in a post contract Early Warning Register. As this is a framework project we don’t have ones in Contract Data part 1 (client identified) and part 2 (contractor identified).. it’s just included in ‘works order’
Each risk includes:
-a description of the risk
-description of the actions which are to be taken to avoid or reduce the risk.
New early early warnings/risks that occur during the project:
-The Project Manager enters early warning matters in the Early Warning Register.
-deciding which risks have now been avoided or have passed and can be removed from
the Early Warning Register.
The Project Manager records the proposals considered at a risk reduction meeting and,
where decisions are taken at the risk reduction meeting, revises the Early Warning Register to record the decisions made and issues the revised Early Warning Register to the Contractor.
If a decision needs a change to the Works Information, the Project Manager instructs the change at the same time as he issues the revised Early Warning Register.
The Works Information requires the Employer and the Contractor to maintain other risk
registers. These other risk registers are not the Early Warning Register.
Contract Data Part 1 AND 2 allows both parties to list matters to be in EW register
Client could propose to add:
-Poor ground conditions
-Buried services
-Contamination
-Condition of existing assets
What is the benefit of listing them?:
-Collaboration, each party being upfront about what could happen and risks that need to be managed so both can work toward mitigation. Entering them into the Contract Data means both parties are aware before entering into the contract.
It does not assign liability.
SO THE RISKS I IDENTIFIED HELPED CONTRACTOR TOO.
Even if listed in contract data it still needs to be early warned.
Clause 15.2 requires PM to prepare the first Early Warning Register, so whilst the matter will be on the register, it won’t technically have been notified as an early warning,
It does not assign liability for the matters.
Does this mean early warnings are not needed for these items?:
Clause 15.1 says an early warning needs to be notified by theContractororProject Manager(noClientmentioned), if an even could increase cost, cause delay, or affect performance. The problem is, if you have an item in the Contract Data does it count as a notified early warning?
No.
The contract gets unclear here, but reading the wording provides clarity.
Contract Data - “The following matters will be included in the Early Warning Register”
Clause 15.1 - “The C and the PMgive an early warning by notifying the other…”
I.e. just because its in the Contract Data, doesn’t mean it has complied with the need to notify the early warning.
Why this impactsContractor’sspecifically
The problem is that if a compensation event occurs, and theContractornotifies it, theProject Managerwill check Clause 61.5 and if theContractor“did not give an early warning of the event which an experienced contractor could have given”…theProject Managerstates this in the instruction to submit quotes.
This means if theContractorhas had something happen which is an entirely valid compensation event, the PM can still determine that they didn’t notify an early warning about it (if they didn’t!) and totally change the assessments…
Jump to Clause 63.7 “the compensation event is assessed as if theContractorhad given the early warning”
Stop.
The compensation event is now assessed as if the early warning had been notified and the impact could have been mitigated, this puts theContractorin a very different position and they could lose out on costs they have incurred because the risk wasn’t mitigated.
How to deal with matters in Contract Data
First of all, as soon as the contract is executed and the contract has started, both theProject Manager, andContractorshould notify each other of all the matters included in the Contract Data!
This passes the first test of “give an early warning”
Protecting theContractorand ensuring Clauses 61.5 and 63.7 do not apply!
Clause 15.2 requires theProject Managerto prepare the first Early Warning Register, so whilst the matter will be on the register, it won’t technically have been notified as an early warning, and that is a must for the process to be properly administered.
Subsequent early warnings are then notified as per standard practice under Clause 15!
But wait, I also get penalised if its Option C or D?
Yes, if you are aContractorunder Option C or D, costs can be disallowed if they were “incurred only because theContractordid not give an early warning which the contract required it to give.”
https://www.linkedin.com/pulse/early-warnings-contract-data-why-wont-protect-you-contractinstruct-jkfje?trk=organization_guest_main-feed-card_feed-article-content
Risk
Didcot Valley Park
What is the benefit of listing risks in pre-contract early warning register?
Summary:
-Collaborative effort for both parties to help aware and work together to mitigate risk
——-
-Risks identified by the Project Manager go in Part 1, those identified by Contractor go in Part 2.. to form EWN register
This provides:
-Collaboration, as each party is being upfront about what could happen and risks that need to be managed so both can work toward mitigation. Entering into Contract Data means both parties will be contractually aware to manage them
-Even if its listed in the Early Warning Register/Contract Data, if the risk occurs it still needs to be early warned as its in these to facilitate collaboration/addressing risks
-For example, client could benefit contractor/project by adding early warning information on: poor ground conditions, buried services, ground contamination, condition of existing pipes
-Note that this early warning register does NOT assign liability, the risk register to do this/calculate cost is separate
-However in the case of this framework project, TW/contractor worked together to quantify risks anyway.
Risk
Didcot Valley Park
How does the early warning register work post-contract?
Summary:
-Post contract EWN register (mitigation plan) differs from post contract risk register (quantified risk allowance, risk owner)
-EWN register updated with new risks and mitigation plans
-EWN Register only requires
description of the risk, and action to avoid/mitigate it – is there to help project and DOES NOT ASSIGN LIABILITY.
———
-The PM enters early warning matters (from contractor or themselves) in the Early Warning Register.
-If risks have been avoided or have passed, they can be removed from the Early Warning Register.
-On register, the PM records the proposals considered/decisions made at early warning meetings. Revised register is then issued to contractor.
-If a decision needs a change to the Works Information, the PM instructs the change at the same time as he issues the revised Early Warning Register.
Note: Early Warning Register only requires the description of the risk, and the action to be taken to avoid or mitigate the risk – it is there to help project and DOES NOT ASSIGN LIABILITY.
There is a separate risk register (done pre-contract) that does this and includes the cost impact, programme impact, likelihood, severity, revised likelihood/severity post mitigation etc. This is also updated during construction but more for expending allowances / closing risks
Even if early warning is in the register, if it occurs it STILL HAS TO BE NOTIFIED AS AN EWN otherwise contractor won’t be entitled to CE
During construction, contractor should identify and mitigate risks on site to help project. Overheads and key rates will be pre agreed at tender to stop both parties from taking advantage of each other when risks occur
Risk
Woodstock WBS
What are pre-contract risk you identified and quantified using event tree analysis?
Summary:
-Event tree analysis to QUANTIFY the probability
-need for dewatering: heavy rain, open excavations
-more TM: portion of project located in Road, main road
-change pipe route: poor ground conditions, utilities present
———-
Risk of design changing: so risk accounts for overspend on design activities. I advised client on potential risks of the design such as them not achieving planning permission for WBS location or changing pipe route due to ground conditions
So in event tree analysis, calculate probability by:
Change Pipe Route
Poor ground conditions - 0.5
Unable to remediate - 0.2
….0.5 x 0.2 = 10% probability
Need for Dewatering
Heavy rain in winter - 0.3
Open excavations - 0.8
… 0.3 x 0.8 = 24% probability
Need for significant TM
Proportion located in road - 0.4
Main road - 0.3
….0.4 x 0.3 = 12% probability
Note: These risks differ from post contract risks such as a CE for something in ground that wasn’t picked up by surveys and caused delay to completion date
Risk
Woodstock WBS
How does an event tree analysis work?
-Find possible outcomes from an initial event
-Start with small event and how it can cause an actual risk
-Similar to root cause analysis, but that identifies known risks and finds small events that cause it
———
Similar to root cause analysis but used to quantify the probability of each event to get a final probability at end of sequence
Risk
Woodstock WBS
How do you deal with changes in risk apportion?
Summary:
-Impacts risk register and therefore tender value
-ie contractor own risks go into target cost, so if they take on a risk it will increase target
————
The quantified risks impact the tender value depending on who owns risk.
-Contractor risks go into target cost
-Client risk only paid out as CE’s
Best for whoever is best placed to control risk but standard apportion usually covers this unless want to transfer eg ground conditions/remediation risk to client as confident it won’t occur
Risk
Woodstock WBS
What categories did you allot each risk into and why?
Summary:
-Design development
-Employer change
-Construction
-Other
-Done because each real risk that was identified needed a category, so it could offset the cost of that category’s risk allowance (which was originally calculated as % of project cost)
————-
Needed to be allotted to each cost category as just had an initial percentage at Stage 0 (feasibility) and so these specific risk took over these percentages. I did this to prevent overlap
These categories were allowances for:
-Design development risks: for use during the design process eg changes in estimating data, third party risks (e.g. planning requirements, environmental issues), statutory requirements, procurement methodology and delays in tendering.
• Construction risks: for use during the construction process to provide for the risks associated with site conditions (e.g. access restrictions/limitations, existing buildings, boundaries), ground conditions, existing services l
• Employer change risks: for use during both the design process and construction process e.g. changes in scope of works or brief, changes in quality and changes in time
• Employer other risks: e.g. early handover, postponement, acceleration, availability of funds, liquidated damages or premiums on other contracts, unconventional tender action, special contract arrangements
Can also allot into categories to help decide mitigation action:
-H&S <- CRITICAL
-Construction <-CONTROLLABLE
-Design <-CONTROLLABLE
-Environmental <-INFLUENCABLE
-Legal/Regulatory <-UNCONTROLLABLE
So:
-Critical risks have: mitigation plans
-Controllable/influenceable risks have: mitigation plan + risk allowance,
-Uncontrollable risks have: risk allowance
Risks will be added and closed before construction, but some may still be a live risk during construction. This forms a risk pot for the client to use in the event that the risks materialise.
Any risks that remain at the construction stage are monitored by the QS for the client by using the cost report. As the construction project progresses the project team will identify whether the risks can be closed out
Risk
Woodstock WBS
How did you attribute a qualitative magnitude score to produce a cost impact?
Summary
-Some risks had fixed cost impacts
-Rest given a cost depending on if impact was v low, low, medium, high, v high (see below)
—-
SOME risks have a fixed cost that can be quantified e.g surveys / traffic management.
For the rest, cost impact calculated by giving a qualitative magnitude score that calculates its own cost impact:
Magnitude:
Very low - 0.25% project cost, 0.25% programme
Low - 0.5% project cost, 0.75% programme
Medium - 1% project cost, 1.5% programme
High - 1.5% project cost, 3% programme
Very high - 2% project cost, 5% programme
MAGNITUDE METHOD % ONLY USED AT COST PLAN STAGE FOR COMPETITIVELY TENDERED JOBS
Negotiated framework jobs (Didcot Valley Park) don’t have cost plan and risk done collaboratively (TW and contractor risks priced together)
Risk
Woodstock WBS
How did risk estimates develop in subsequent cost planning stage?
Summary:
-Stage 0: percentages against NRM1 categories
-Stage 1: cost impact of specific risks of probability x magnitude
-Stage 2: cost impact of specific risks of probability x actual risk estimate
——-
Determine more accurate costs for dewatering as will know programme, amount of excavation open, specific prices of pumps
Stage 0: percentages against NRM1 stages
Stage 1: cost impact of specific risks determined by qualitative magnitude score of overall cost, multiplied by probability
Stage 2: actual estimate of cost impact, multiplied by probability
Design Econ
SOR Inflation Uplift
What was the forecasted construction cost index?
General Building Cost Index
2.8%…..
Used for: Subcontract and Reinstatement
(Costs paid to nominated subcontractor)
Design Econ
SOR Inflation Uplift
What was the current inflation index?
CPIH
2.46%…..
Firmed at REVIEW DATE (when the next quarter starts)
Used for: plant, labour, materials
Design Econ
SOR Inflation Uplift
Why did you use BCIS General Bullding Cost Index for subcontract and reinstatement costs?
Summary:
-GBCI is a COST index so good for plant, labour, materials et
-GBCI was used for subcontract costs (not related to TW framework contractor) so OFWAT happy this be used for the CONSTRUCTION SPECIFIC costs
-Could be used for everything, but OFWAT preferred CPIH for rest of costs as better reflected inflation that customers face
————
Indices can be:
-Tender (like TPI) which measures changes in prices at ‘commit to construct’ stage after agreed tender. Used for COST PLANS
-Cost (like GBCI) which measures changes in costs of resources purchased by constructors at any point
BCIS General Bullding Cost Index (GBC|)
measures the change in costs to the contractor for obtaining their input costs of labor and materials. This index tracks the trend of contractors pricing levels in accepted tenders, providing a more tailored reflection of inflationary pressures specific to the sector.
General Building Cost Index measures
average cost from all buildings from a basket of labour, plant and materials (the contractors Internal costs of cotaining these inputs) This is a COST index (so more specific) while TPl s a TENDER (price) index (more broad eg including risk)
There are other subdivision indices like BCIS steel frame index
Both indices forecast 5 years ahead
GBCI less volatile/erratic/dependent on market conditions than TPI, partly as TPI is for entire tender and includes risk allowances
Design Econ
SOR Inflation Uplift
How is an index uplift calculated?
Take index for future month and divide it by the index of the current month
Eg 372.8 / 334.6 = 1.114
This is what you multiply by the current rate
Design Econ
SOR Inflation Uplift
Why was CPIH used?
Summary
-OFWAT determined should be used
as better reflects the inflation rate that customers face….. So TW used this.
-GBCI was used for subcontract costs (not related to TW framework contractor) so OFWAT happy this be used for the CONSTRUCTION SPECIFIC costs
———
Used because OFWAT determined that CPIH be used as the inflation measurement for index price controls, stating it better reflects the inflation rate that customers face….. So TW used this.
It is also the primary focus of the Office of National Statistics, as the most comprehensive measure of inflation.
CPIH is a measure of the costs associated with owning, maintaining and living in one’s own home, known as owner occupiers’ housing costs (OOH), along with council tax.
However GBCI was used for subcontract costs because it was CONSTRUCTION SPECIFIC and costs move differently to general inflation
Note: PAFI not used as wasn’t a trade index for specifically water
Design Econ
Eversholt Street
Why was a cost plan needed for these costs for the client at RIBA stage 2?
Summary:
-Contribute to overall cost plan
-Provide client with expected staff costs over entire project
-Internal staff is TW and external is consultants, although TW staff basically consultants to the client too
————-
To contribute to the overall cost plan, providing an estimate for the client of mandatory costs to run the project from start to finish, and effectively the equivalent of fees a consultancy charges
Internal staff = TW staff because standard forms of appointment are NOT USED
External staff = design consultants
Design Econ
Eversholt Street
How did you analyse historic data to produce benchmarked percentages?
Summary:
-Average of FINAL COSTS from similar projects
-Costs of each staff category depending on project value
-Eg project is £500k then PM is 4% of costs, design is 5% of costs, operations (eg site management) is 2%
-Similarly if a £100k project then proportions larger
———-
Used estimating system to gather similar projects to produce average percentages of TW (internal and external) costs in comparison to overall cost.
This produced differing percentages of costs for each increment of cost
For example, the increments were:
£20k
£20-50k
£50-150k
£150-500k
£500k-1m
£1-2m
With each one having a different percentage for: PM, Design, Commercial, Construction Management, Operations, Gen OPCs, Overheads
For example:
For up to £20k
PM=21.01, Design=36.88, Commercial=11.54, CM=9.29, Operations= 3.95, Gen OPCs=2.38, Overheads=11.3
Total: 85.05%
For £150-500k
PM=3.74, Design=4.92, Commercial=2.52, CM=5.32, Operations= 1.88, Gen OPCs=6.95, Overheads=9.53
This shows how the total % of TW costs within the total build cost (contractor cost) reduces the bigger the overall project value.
-Initially, design is the biggest cost of total cost,but by £2m projects it’s only 4%
-PM goes from 25% to 5%, not as big a drop
-Commercial and Operations stay similar in proportion to total project cost
-CM costs in proportion increase from 11% to 25%
The only actual one that grows slightly in actual percentage is General OPCs from 2.38 to 7%. This translates to 3% to 54% of
Note: OPC = other project costs (has PO attached to it) and is e/g land agent costs, surveys
Design Econ
Eversholt Street
How did you produce a more accurate cost plan figure for the staff costs at RIBA stage 4?
Summary:
-actual (committed) cost reports of timesheets for each staff category
-design costs are actual cost and should have no more at construction
-commercial and PM use actual cost, PLUS forecasted costs for construction stage
-Labour using historical data as all costs during construction stage
————
Using actual (committed) cost reports to determine:
The cost of staff so far: eg QS’s, designers, estimators at the cost plan/design stage
I then forecasted costs for during the construction stage using the current costs PLUS forecasts based on historical data from similar scope projects/values, such as:
-QS costs doing AFP’s and CE’s
-PM costs for construction which will vary depending on project value/scope
-Labour PM costs for construction which will vary depending on project value/scope
-Estimated contractor preliminaries which will vary depending on project value/scope
Did a prediction using judgement and looking at CJI3 for other similar projects on how many hours needed each month for AFP’s or PM on site
Should be no more for designers unless design change
—
I then got all of these costs and worked out the percentage breakdown of each staff category. This could then be submitted for RIBA stage 1 estimates of future projects
Note: Although, as this was a £1m project the costs could only be submitted for the £500-1m category
Construction Tech
Water Processes
What are diversions and requisitions you saw on site visits?
Diversion
Section 185 places a duty on TW to divert pipes in land upon receipt of interested party to allow them to carry out work. Does not apply to streets (that’s NRSWA). Often can be done by developer but strategic ones have to be done by TW.
Funded by customer
Requisition
Connection to TW sewer and can’t do it themselves e.g it needs to go through a third party’s land to get to TW’s sewer. TW then selects suitable route, does design and constructs a lateral sewer/drain
Funded by customer
NRSWA
Done by highway authority defined in NRSWA and carrying out road works in street, TW will contribute to costs of diverting their assets if they’re affected by your work. Can be diversion or requisition.
TW contribution of 18%
Waste Water - Network Reinforcement
Section 94 of the Water Industry Act 1991 places a duty on sewerage companies to maintain their sewers to ensure that their area is effectually drained
Funded by TW (from infrastructure charges)
—
Note: Infrastructure charges are a one off charge, charged by all water companies for first time connections. Each new connection that adds a demand to our water and sewerage network will incur these costs.
Every servs/main job has infrastructure charge of £885 for clean and £455 for wastewater added to each job
Construction Tech
Water Processes
What are the water pipe materials?
Clean water
-Medium density polyethylene
-Ductile iron for larger diameters
Waste water
-High density polyethylene
-Vitrified clay due to long life and resistance to domestic/industrial sewage, particularly the sulfuric acid.
-Ductile iron for larger diameters
Concrete also used for very large sewers.
Old jobs used case iron and ductile iron for both clean/waste.
Construction Tech
Water Processes
What are some water pipe fittings?
Gate Valve/sluicevalve, - opens by lifting a barrier (gate) out of the path of the fluid
Washout - used to empty a pipeline or dam of sediment
District meter - section of a water distribution network,allowing utilities to monitor the flow of water into and out of that specific area, helping them identify leaks, assess water consumption patterns, and manage water losses within that zone
Flange: how ductile iron pipes are connected
Construction Tech
Water Processes
What are the different water pipe connections?
Under Pressure Tee/Fitting (UPT / UPF) – used when:
-want pipe connection to go directly above pipe
-when don’t want to shut off large length of pipe eg hospital, used as linestops as has no interruption to customers or supply
-No water contamination issues
-No drain down time
-No planning works for reconfiguring supply to customers
-Rapid installation
-No customer warning (System not being depressurised)
-Time and cost savings:UPTs can be used under live conditions, so there is no need to disrupt supplies.
-Reduced excavations:Only a small amount of working space is required.
Isa type of pipe that allows for live branch utility connections without shutting off the supply.
UPTs are designed to be efficient to install without having to remove studs to prevent contamination of threads and dropping
Cut out connection
-less maintenance required/chance of leak
-you are actually replacing the pipe rather than clamping on old one so improving the network
Small SoR connection
Line Stop
Isolates leaks (to fix) or if want to shut off main to make connection
Construction Tech
Water Processes
What are different water pipe activities?
Summary:
-Abandoning methods (cut/cap, grouting, removal)
-Thrust blocks
-Excavation: stepped, open excavation (with trench support), moling
Different ways to abandon a main:
-cut and cap,grouting, or even just removing pipe
-Thrust blocks to prevent pipe pulling away
-Different excavation types depending on ground conditions e.g stepped or trench support
-Commissioning methods
Servs jobs:
-drilling into a ductile iron mains pipe
Required Excavation, connect with developer, see images.
Construction Tech
Water Processes
What was the normal and atypical scenarios of cut-out connections?
Summary:
-Normal: cut both ends and put in a tee
-New pipe: no cutting required
-Back to back: half cutting required
-Linestop: full cutting required + 2 UPF’s
————
To determine whether a cut-out is payable when installed on:
1 Normal scenario of cutting both ends and putting in a tee
Atypical scenarios:
2 Installed on a newly laid mains pipe by, and if this is deemed to be included within the ‘mainlaying’ rate.
3 If a back-to-back connection is installed onto an existing main.
4 Line stop: contractor also applying for cut-out on the inner cutting portion of a linestop (and then two UPF’s do bypass)
Construction Tech
Water Processes
How did you advise on the labour and plant allocations of the normal and atypical scenarios of cut-out connections?
Summary:
-Normal: full cutting so full labour and plant, fitting cost
-New pipe: no cutting, fitting cost,
Labour for fixing (not cutting) and drain down time, some plant, less time for TM as not shutting down main
NEW RATE
-Back to back: ….. half cutting/labour/plant required
NEW RATE.
-Linestop: full labour, plant, mat for cut out, plus 1 or 2 UPF rates
———
1 Normal scenario of cutting both ends and putting in a tee
-FULL LABOUR
Atypical scenarios:
2 Installed on a newly laid mains pipe, and if this should be included within the ‘mainlaying’ rate.
…. no cutting required = fixing only labour and no extra plant so could argue included in mainlaying rate… and less time needed for TM as not spending it shutting down/isolating main but agree new rate as labour for: standing time spent requesting NST to shut main, wait for shut main to drain down, the actual fitting - NEW RATE NEEDED
3 If a back-to-back connection is installed onto an existing main.
….. only half cutting required = half labour. But labour is required to provide the shut and flush out of the existing main, or to maintain a flow between the developer’s and TW’s main Washout to prevent the need for a shut. - NEW RATE NEEDED. Further factors can affect how suitable a cut-out connection rate is when applied to a back-to-back connection. For example, if the existing main is ductile iron and the new main is PPE then a simpler ‘unbolting’ and flange is needed to make the connection, removing the need for any cutting out to be performed and making the process more attributable to a that of mainlaying. Also need TM time to isolate/shut down pipe. Extra plant needed
4 Line stop: contractor also applying for cut-out on the inner cutting portion of a linestop (and then two UPF’s do bypass)
…. inner cutting portions still more akin to UPF’s - highlighted a need for a linestop rate to be created (fittings only as labour is sucontracted)
Construction Tech
Mechanical Processes
What duct types are used for differing systems/rooms?
Flex -
Good for: tight spaces (eg wall cavities), short duct runs, temporary use, unusual spaces,
Bad as: more prone to air leakage at seams so lower HVAC system performance, prone to tangling/crushing in tight spaces
Rect ductwork -
Good for: tight spaces, on ceilings, better for low pressure systems, look better generally especially if exposed like warehouses
Bas as: noisier, cost more initially, less efficient as square has less flow at corners (compared to more efficient circle)
Circ ductwork -
Good for: more common and generally easier to install (e.g join pieces together or connect to fans.. ,much better if lots of bends, and easier to drill a round hole ), quick installation, increased airflow, quieter, cheaper
Bad as: take up more height so bad in tight spaces, less efficient with space, inefficient for low pressure systems, unappealing to eye when connecting to main rectangular duct
Flameshield - Used in ventilation and extraction systems, such as kitchen, smoke, and car park extraction systems, Used in stair pressurization systems to prevent smoke from entering critical areas, Used in buildings where building codes require 2–4 hours of fire resistance(Lambeth College).
Flame shield insulation is usedin areas where there is a high risk of fire, such as in multi-story buildings, stairwells, and escape routes.It can also be used to protect ductwork and stoves.
https://www.gardnerco.net/applications/smoke-extraction-systems/
Plastic duct
Good for: exteriors (especially in area where metal could be corroded or interior chlorine treatment rooms), space is tight (toilets)
Bad as: flammable areas, high pressure systems, high dust particles
At Gardner used for industrial fume.
Toilet extract = axial, centrifugal, and inline fans
Construction Tech
Mechanical Processes
What are the different dampers?
Smoke Dampers - specifically designed and installed in the ductwork and air transfer openings toprevent the passage of smoke between sections
Volume control dampers - help adjust the airflow volume to other parts of your duct system. (NOT FOR SOUND)
Fire damper - prevent spread of fire a typically installed in fire resistant rooms of larger buildings, such as schools, hospitals, factories, and office buildings, triggered to close when smoke detector activates
Construction Tech
Mechanical Processes
What are the different HVAC systems?
Summary:
-AHU
-MVHR
-Air, ground, water source heat pumps
-Fan coil unit
-Axial fan for low pressure systems
———-
For MHVR and AHU’s see level 3
-Centrifugal fan - moves air, which can help improve air quality and remove moisture and odors.
-Axial fan -as above but are low pressure systems and cool electronic equipment, computer rooms, and other spaces.
-Inline fans - mounted in a duct, rather than directly on the wall or ceiling, save space and extra movement
-Fan coil unit - device that heats or cools a room using a fan and a coil
Air Terminals (FO)
-Diffusers - distribute air evenly around a room or in specific directions.They are often used in high-volume rooms, or when it’s difficult to distribute air freely.
-Sound Attentuator’s (FO) - used to control noise from fans, air handling units, and other equipment
-Actuator - device that converts energy into mechanical motion to control or move a system
Contract Practice
Didcot Valley Park
What are the NEC change control timescales?
Contractor CE notification:
-PM has 1 week to assess - reject or instruct
-After 1 week, Contractor can notify and PM has another 2 weeks,and if still no response is deemed to instruct quote
Quotation:
-Contractor has 3 weeks to submit quotation
-PM has 2 weeks to respond, and if still no response then contractor can notify. If still no response after another 2 weeks then quotation is deemed accepted
-If PM does respond they can either instruct contractor to resubmit quotation, notify they will make their own assessment, or accept.
Contract Practice
Didcot Valley Park
When is a compensation event valid?
-Whether EWN/CEN within 8 weeks of becoming aware (note: only CEN stops the 8 week timer)
-In list of NEC CE’s (delay/cost was caused by TW )
-Whether instruction issued following notification
Contract Practice
Didcot Valley Park
What was the clause for the unforeseen ground conditions CE?
The contractor encountered uncharted services not mentioned in Site Information.
60.1(12) Contractor encounters physical (natural or man made) conditions which:
-are within the Site
-are not weather conditions; and
-an experienced contractor (objective test) would have judged at the Contract Date to have a small chance of occurring that it would have been unreasonable for him to have allowed for them
This then needs to be read in conjunction with either: Clauses:
-60.2 (site worse even after contractor has taking into account site information, visual inspection, public and reasonably obtained information)
Or
-60.3 (site information eg borehole log is DIFFERENT to actual site). In this case, it is
So this is a bit different as for information NOT included in Site Information while 60.3 is when it has been included but isn’t accurate
In this case I used 60.2 as contractor would not have known uncharted services were there and couldn’t have allowed for it
So this one (level 2) is 60.1.(12) -> 60.2
Note: Physical conditions is not limited to just ground conditions and, for instance, may apply to an existing building for; the discovery of asbestos, dimensions not being as shown on as-built drawings, structural materials being different to that expected, etc.
Contract Practice
Didcot Valley Park
How was the concrete in washout chamber identified?
During a post-site walk off, it was not picked up prior to completion.
The period up until the final defects date (which follows certification of completion) is not a chance to correct problems apparent at completion, it is the period during which the contractor may be recalled to rectify defects which appear.
If there are defects apparent before, then these should be rectified before completion certificate.
Contract Practice
Didcot Valley Park
What is the NEC defects procedure?
Summary
-Defects date typically 12 or 24 months after completion
-Within this are mini defects correction periods eg 2 weeks
-if not done in that time then client can get someone else to do it and recover cost from contractor
———-
-Defects date is 12 months after completion
-2 week mini defect rectification periods
-Unless health & safety related then it’s 2 days
If defects notified before job is finished, they have to be corrected before end of defects correction period, which starts at completion of project. These are basically the snags that you see, eg you walk the site off and able to say work has been completed but there’s a list of things that still need to be corrected
If further defects arise after completion, then the timeframe starts the date the defect is notified.
Note: JCT doesn’t have these Defects Correction Periods.
Contract Practice
Didcot Valley Park
What defects procedure did you recommend after the defect wasn’t fixed before end of mini defect correction period?
Summary:
-46.1: contractor WAS given access but didn’t correct defect.
-So PM assesses cost to client of getting someone else to assess that defect and recovers it from contractor
-Didn’t choose: 46.2 as this is when you don’t give contractor chance to rectify. Usually recover less cost as can only recover cost of contractor doing it (not someone else)
———-
What I chose:
-Contractor WAS given access but did not correct defect > Clause 46.1 PM assesses thecost to the client of having defect corrected by othersand contractor pays that amount > Clause 46.1
(Scope treated as having been changed to accept defect)
E.g Bring in another painter and assess costs of how much to bring in that new painter and contractor has to pay that
What I didn’t choose:
-Contractor WAS NOT given access to correct defect > Clause 46.2 PM assesses thecost to the contractorof correcting the defect and contractor pays this amount > Clause 46.2
(Scope treated as having been changed to accepted defect)
E.g If didn’t give contractor fair opportunity to come back. The defect still has to be fixed but different when it comes to assessment: assess it as if contractor came back themselves to fix it themselves even if they didn’t, which would be lower than bringing in someone else ie no profit margin and likely less efficient than contractor doing it
Contract Practice
Didcot Valley Park
What is the final account process?
Summary:
-Defects date typically 12 or 24 months after completion
-Within this are little ‘Defects Correction Periods
-Defects certificate at end of 12/24 months
-PM 4 weeks for final account assessment
- PM has to pay within 3 weeks
-contractor 3 weeks to dispute
——-
-Defects date* for TW is 12 months after completion.
-Within this there are little ‘Defects Correction Periods’ which at TW is within 2 days for H&S related and 2 weeks for standard issues
-On the ‘defects date’ the ‘defects certificate’ is issued (listing any outstanding defects if there are any) or soon after (providing all defects corrected).
-Within 4 weeks of defects date have to go through final account process which requires PM to issue final assessment to set out how much contractor will be paid. Includes extra adjustments not relevant to actual/customer’s costs (project account. This could be eg any retention to be paid to contractor minus disallowed amounts for not correcting defects.
-This then has to be paid within 3 weeks
- If the PM fails to do so, the contractor can submit their own assessment
NOTE: Under clause 50.3 If contractor not happy with amount then have to challenge it within 4 weeks. If not challenged then deemed accepted and cannot go to adjudication/ arbitration etc. Draws a line under project
*Defects date and defects correction period can be amended in contract data part 1. Also note that ‘defects liability period’ is not a term used in NEC
Value of the adjustment to the final account must be agreed between the employer and the contractor and will form part the statement of final account
NEC/TW final account includes: costs taken from retention for defects, release of retention, amounts still withheld from no substantiation, liquidated damages, compensation events (should be done prior but e.g Radley College didn’t)
Note: RETENTION NOT TAKEN FROM SUBCONTRCT COSTS
53 - final assessment: new under NEC4 which DOES have a final account whereas NEC3 didn’t
Contract Practice
Didcot Valley Park
How was the uncorrected defect paid for?
Paid for from RETENTION
Retention of 3% from each payment of the amount due to the contractor
Any sum set off against the retention should be fully justified.
NEC issues a defects certificate listing the defects outstanding at the end of the defects period.
——
If the final account has been agreed at the point of completion then the employer can release ‘the part of the retention (typically a percentage) stated in the contract up to the final account settlement figure. However, if the final account has not been agreed and a difference of opinion remains then the employer is entitled to release retention only up to the amount they believe is payable under the contract. When the final account is agreed it is not uncommon for another payment certificate to be issued.
In NEC FA not agreed until after defects liability period anyway
Contract Practice
Brox End
What is in Contract Data Part 1?
Summary:
-main and secondary options
-key/completion/sectional dates
-defects date, correction period
-payment timeline/intervals
-CE information
-client insurances
———-
Section 1: pricing mechanism (main option), secondary options, PM
Sections 2/3: if there are any Key Dates, any sectional completions, starting date, access date(s), Completion Date.
Sections 4 and 5: when the quality plan submitted, defect date, defect correction period, payment intervals, payment timeline, target cost %
Section 6: information related to compensation events eg weather data
additional CE’s, value engineering ratio (for options A&B)
Section 8:, any additional Client liabilities, insurances and levels
Contract Practice
Brox End
How did you draft Ultimate holding (parent) company guarantee (X4)?
Summary:
-details of guarantor (parent company) and beneficiary (current company)
-chose over performance bond (X13) as there WAS a parent company. Usually one of these is required for client protection
———
Chose this over performance bond (X13) as I identified the contractor was a subsidiary:
Normally one of these will be included to give the Client protection on the event of the Contractor defaulting on being able to fulfil their contract works.
X4 means a parent company (the ultimate holding company) will step in to see the works through.
Alternatively, where there is no parent company, an X13 performance bond would pay out a sum of money to allow the Client to get someone else on board to complete the works.
Normally the only issue/risk here is agreeing the wording of the ultimate holding company guarantee that both sets of legal teams are happy with, or for X13 the amount of performance bond the Contractor has to provide and hence consider within their bid.
What I did:
I entered the name of guarantor (Barhale Holdings), beneficiary (Barhale Construction Services Ltd), agreement date, services provided,
Contract Practice
Brox End
How did you draft Retention (X16)?
Allows Client to retain a percentage of the “Price for Work Done to Date” each period cumulatively, with half the amount released at the point the Contractor achieves status of Completion and the other half retained until the Defect Date (to encourage correction of defects).
Contract Practice
Brox End
How did you draft Low performance damages (X17)?
Summary:
-Used when contractor has constructed pipe but is a leakage that prevents hitting minimum flow rate litres per second
-So same principle as delay damages, but lower value, with a estimate of cost for reduced capacity, eg cannot feed as many houses
-Listed in defects certificate
——-
This is where the Client sets a performance specification to be achieved e.g. pipe to deliver X amount of litres per second
If this performance level is not achieved so that it is listed in the Defects Certificate, then damages will be charged to the Contractor for that under performance. Has to be a genuine pre estimate like delay damages.
For most projects this would simply be a defect that is expected to be corrected and hence X17 is not often used but can be quite onerous if it is.
I drafted:
The amount for low performance damages are:
Amount ‘……’ for performance level ‘……’
-For TW any leakages after survey that cause a delay: had a sum of £5,000 per week (same as delay damages as they dp the same thing, basically another way for delay damages to be claimed.)
-If flow velocity not sufficient
All in accordance with asset standards as these are very important
Contract Practice
Brox End
How did you draft limitation of liability (X18?)
Summary:
-Limits contractors liability for delay/performance damages to 10% of total of prices
-Contractor may refuse to tender without it, as could not afford it and insurance may not cover for unlimited liability
———-
Applies to delay damages and performance damages
If X18 is not included then the Contractor has unlimited liability - which is not a risk most want or can afford to take, and they may also find their insurances do not cover them for unlimited liability. Several Contractors/Consultants have refused to tender on this point alone as not a risk they are prepared to take for their business.
Lots of risk in performance damages for poor work, so parties agreed a limitation to their liability for indirect or consequential loss to satisfy the terms of their professional indemnity insurance. I
This contract was a limitation of: 10% of the total of the Prices
Contract Practice
Brox End
How did you value the contractor’s payment applications for the initial phase (Option E)?
Summary:
-Open book
-Against full schedule of cost components
-Option E used when scope not well defined/urgent, and not commercially viable for contractor to price a lump sum
——
Initial phase is ground investigation ie trial holes, uncertain ground conditions, Low value projects
Open book accounting
This option is suitable when the works are very urgent or where the scope is not well defined, or where the risk would be considered so great to the Contractor it may not be commercially viable for a Contractor to price it under a lump sum or even target cost type arrangement.
Valued against FULL schedule of cost components
Compared applied costs against agreed tender
Contract Practice
Brox End
How did you value the contractor’s payment applications for the main works (Option C)?
Summary:
-open book accounting, paid on defined cost plus fee
-C D E F: forecast how much contractor is due up to next assessment period so they aren’t a month in arrears.. facilitates cash flow
-Option A CE’s are new items in activity schedule CJ me
-Option C CE’s adjust target cost
—————
Payment
Options C D E F: forecast how much contractor is due to be paid until next assessment period
The Contractor is paid forecastDefined Cost plus Fee. This is to make Option C effectively cashflow neutral for the Contractor so they aren’t funding the works, without this the Contractor’s payments would be a month in arrears.
The forecast element will be for Defined Cost that has been invoiced but not yet paid at the current assessment date, but is Defined Cost which the Contractor knows they will have paid before the next assessment date.
CE’s
Option A: Compensation events are assessed as the ‘change to the Prices’ in the form of changes to the Activity Schedule, which means that an implemented compensation event is added to the Activity Schedule as an additional item, so that it can be considered for payment purposes.
As they are new activities, the contractor is only paid when the activity is completed
Option C: changes adjust the target cost. Activity schedule doesn’t really have any meaning on target cost once the tender has been agreed
Contract Practice
Brox End
How did you deal with the project at completion?
Summary:
-Release half retention
-End contractor’s liability for delay damage
-Possession of site is now client’s
-Contractor no longer needs to insure works as site/works damage is client’s risk
-period until defects date begins
——-
-Release of 50% retention
-Employer takes possession and control of site/building (or part of it if sectional)
-risk of loss or damage to the works passes to the client, which terminates any further requirement on the contractor to insure and secure the works
-end of any further liability for delay damages, whether liquidated or unliquidated
-commencement of defects period (in NEC is unnamed and goes until Defects Date)
-milestone payment or release of retention monies
-a requirement for an account of the works to be prepared
-obligations under third party agreements e.g funding arrangements, bonds, guarantees, leases, sale agreements, etc.
Sectional completion
In the ECC, if the employer does take over part of the works, it takes on risks in relation to the part of the works because of clause 80.1. This states the employer is liable for loss of or wear or damage to the parts of the works taken over (with a few exceptions). Loss to or wear or damage to the parts of the work taken over is therefore a compensation event under clause 60.1(14). In this case the employer should use secondary option X5, sectional completion and then may use associated delay damages for late completion (secondary option X7).
If the employer does not want to take over a part of the works, then a key date may be appropriate. If so, the employer needs to be aware of the lack of clarity for the bidder on the consequences of it not meeting the key date – and might chose to use a Z clause to put a predetermined amount of damages on not achieving the stated condition by the key date.
Procurement
Bicester Road
Why was the project non-competitively?
In a framework agreement
TW funded projects in framework, and have passed public procurement rules
Procurement
Bicester Road
How did you manage the documents on TW’s communication platform?
-Uploaded tender documents eg drawings and site information to a shared folder for contractor
-Issued to relevant person who had to action it
-During tender negotiation I submitted my assessed tenders on the platform
Procurement
Bicester Road
What assumptions, clarifications, exclusions were there?
Summary:
-Assumed no new trial holes as form part of excavation
-Assume third party access granted
-Assume plant charged continuously but larger plant (13T excavators) off hired to other framework projects
-Assume no topsoil/seed needed
-Assume 9 hr working day
—————
1 Stated item
2 Agreed comment
–
Assumed additional Trial Holes not required as current ones already have logs and new ones and will form part of new excavations
Assumed that the customer allows access to connection point A to enable concrete pour…. Risk included in risk register (TW risk)
Price is based on Saturday only for completion of connection A
Water pumps will be onsite for duration of works (even when no works being undertaken) but 13T machines will be off hired during periods when they are not required to other framework jobs (listed in overall delivery programme)… no change to target cost as will be cost saving on other framework project (unless it’s a CE)
Assume 9 hour working day
Assume no unusual dewatering requirements
Assumed no top soil and seed is required for reinstatement. Bed and Surround and Backfill only.
Steel fixers have been priced using Ganger and Skilled Labour rates as contractor unable to provide actual subcontractor quote before agreement of the Target Cost
Procurement
Bicester Road
How were arithmetical errors dealt with?
Summary:
-Allowed to correct if have a justified reason…. Or threaten integrity/value for money of project
———-
Had meetings with contractor to talk through errors and omissions - as a negotiated tender
-Formula error doubling up of programme
-Incorrect framework rates
-Formula error causing underclaim e.g
Network Plus have divided hire rate by 7. If it is only being claimed for Mon-Fri, it needs to be divided by 5
Allowed contractor to amend errors in accordance with JCT Practice note method 2
Procurement
Bicester Road
How did you produce a tender recommendation report?
Summary:
-Clearly recording cost differences of each iteration
-Comparison between original version, corrected version, and assessed/agreed versions
-Broken down into pricing levels and cost components
-Abnormals/differences compared against benchmarked (stage 1) figure
————
-Outlining the cost differences of each iteration, compared with the contractor’s original price and my standardised/corrected version of arithmetical errors
-All costs broken down by cost component/pricing levels . This allowed value for money to be demonstrated against benchmarked values (same as Design Econ level 3)
Changes made:
-Incorrect quotes Rates,
-ganger/skilled labourer was being subcontracted with no explanation
-Insufficient programme duration allowed for activities,
-Lack of substantiation for subcontract costs.
-Risk allowance very excessive due to several risks priced at 75% probability
-Arithmetical errors causing inflation of target cost.
-Time sensitive costs (Plant, Labour, On-Cost) linked to TWUL assessment of programme duration.
-Re-assessment of risk register.
-Incorrect management fee
-Remeasure excavation
–
Checklist:
Arithmetical Errors
Assumptions and Exclusions
Quoted Rates
Supply Chain Costs (subcontract)
Management Fee
Durations align to Programme
Resource Utilisation
Risk
Comparison with EES
Priced scope aligns with pricing schedule
Procurement
Magdalen College
What documentation did you prepare to be sent within the ITT?
Summary:
-Employer’s requirements
-Project information schedule
-Current design
-Works packages
-Qualitative criteria
-Contract terms
-Preliminaries
———
Project Information Schedule - setting out list of relevant project information
Employer’s requirements
Current design drawings
Works packages required (solution needed from contractor)
Pre construction information
Invitation to tender - see JCT practice note
Form of tender - states contractor has examined: drawings, specs, employer’s requirements, contract, construction phase plan, other documents and states tender sum and programme length
Preliminaries: e.g pre construction information, site waste management plan. Preliminaries provide a description of project that allows contractorto assesscostswhich, whilst they do notformapartof any of thepackageofworksare required by the method and circumstances of theworks.
Conflict of interest statements
Contract Amendments
—-
Sent electronically via IASTA
Procurement
Magdalen College
What questions were asked by tenderers?
Summary
-Surface runoff history record
-Specific suppliers needed
-Relationshio with local council
-Requirement for locally sourced material/staff
-Flexibility/firmness of design/scooe
-Expected key dates
———
-Surface runoff history record
-Specific suppliers or subcontractors that need to be used, or can we source materials and labour independently?
-Relationship with local council
-Need to locally source materials?
-Expected key dates in contract
-Firmness of design/scope
If a question asked then, to be fair, I would maintain a tracker of all questions and issue it so all tenderers could see it (done anonymously)
Also sent this tracker to my internal project team
Procurement
Magdalen College
How did you undertake a comparison of prices for staff and preliminaries?
Summary:
-Compared costs of of labour, staff, prelims, plant for first stage… with an appendix of which ones would be used in second stage
-Did a normalised price against work packages
———
-Labour gang rates for first stage (and used as basis for second stage)
-Specialist staff rates for first stage only
-Site management staff rates ((and used as basis for second stage)
-That prelims had suitable rates and e.g welfare facilities, storage containers were needed on job.
-Costs of producing as-laid drawings
-Also an appendixsetting outallthe items that can be used for second stage
Procurement
Magdalen College
How did you undertake a comparison of prices for pre-construction services works packages?
Summary:
-Normalisation of each works package to determine best price
-These had FLEXIBILITY as measured against vague deliverables
-Deliverables were: sewer infiltration reduction, manhole repair, pipe repair, landscape runoff reduction
-Each one included staff, labour, plant, prelims that applied to those deliverables .. and which would be used for main works in second stage
———
Sewer infiltration reduction (for normal pipes and pipes in pumping station):
Manhole repair and replacement of frames and covers (related to above)
Rectifying poor condition sewers (repairs) - NWP did for smaller pipes
Combined sewer overflow screen
Cleaning and scouring of mains
Installation of pressure monitoring / reducing valves
Wet well cleaning
Surface water separation (separating grassy areas as they are impermeable)
Production of as-laid drawings for early works
Contaminated surface water investigations
These packages included:
-How they fitted into initial activity schedule (would be developed as part of contractor’s services to incorporate main works)
-Specialist staff and rates outside prelims (prelim staff separate)
-Firm subcontract cost
-Firm material cost
-Durations
I check rates, prices, durations of these
Procurement
Magdalen College
How did you undertake a comparison of prices for long lead materials?
Summary:
-Compared quotes of eg trench support, valves, surveys
-associated staff eg site management on site to receive delivery and organise work… and project engineer for drawings
-prevented programme delay/allowed a quicker start on site
-Eased cash flow for contractor
————-
Gaining QUOTES and LEAD TIMES for materials needed for MAIN WORKS
-Line stops with associated thrust blocks to aid network isolation and drain down volumes as indicated in the drawings
-Trench support
-Aquamaster district meter
-Gate valves
Agreeing rates/days for related staff eg:
-Site agent/customer liason manager to organize work and coordinate delivery with all parties against RAMS
-Project engineer - for technical drawings/consulting of temporary works design
-Overhead to cover commercial team (pricing this quote)
Done because:
This prevented programme delay/allowed a quicker start on site
-Eased cash flow for contractor,
Procurement
Magdalen College
How did you use normalisation to do the commercial scoring?
Summary:
-For each work / deliverables packages eg Pipe remedial works, Manhole fixing Surface runoff, Pumping station upgrade
-Lowest price is 100, higher scores are given a score eg 0.96 in comparison
————
Lowest tender price = 100 (normalised score)
Other tenderers =
(Lowest tender price x 100) / Other tender price
E.g
Tenderer 1 - 1,282,000
Tenderer 2 - 1,333,000
Tenderer 3 - 1,925,000
Tenderer 1 will be: 100 (normalised)
Tenderer 2 will be:
(1,282,000 x 100) / 1,333,00 = 96.2
Tenderer 3 will be:
(1,282,000 x 100) / 1,925,000 = 66.6
Maximum score: 100 (same as qualitative)
This has a weighting of 40%
Final score:
So e.g if got score of 96.2 in this (40%) and 83.3 in qualitative (60%) would get a score of:
38.48 + 49.98 = 88.41
—
For TW this is split into packages of:
-Pipe remedial works
-Manhole fixing
-Surface runoff
-Pumping station upgrade
-Cleaning
—
One tenderer was cheaper but required significant normalisation against deliverables … pre-tender estimate ?
Procurement
Magdalen College
How did you consider off/on site materials for the long lead materials?
Summary:
-Materials must be delivered to site
-Ownership transfers to client on PURCHASE with a vesting certificate
-There is no ‘retention of title’ / Romalpa clause
————
Materials delivered on-site:
Materials and goods must be delivered to site, adequately protected
These become the employer’s property once they are paid for.
There is no ‘retention of title’ (Romalpa) clause where contractor owns materials until it’s delivered irrespective of whetherpaymenthas been made.
Instead, because TW ordered materials early, a vesting certificate used so TW could own materials even before delivery.
This vesting certificate was required from contractor to certify that ownership passed to TW at payment
Also confirming that the materials will be properly identified, stored and free from ‘retention of title’ clause.
Although the contractor remains responsible for loss or damage to them
Project Finance
Chesterton Farm
What costs did you report?
Summary
-VOWD = Productivity
-Forecast = Profitability
-Both shown on cumulative line graph
-CERTIFIED Base costs + fee only (costs due to main contractor)
-
————
VOWD = Productivity
Forecast = Profitability
Shown as a:
Cumulative graph = line graph
Report on amount due to main contractor only (construction costs) which is base cost + fees
Unlike MCR which is a project cost report that includes professional fees (e.g design consultants, TW QS’s, PM’s).
-Report on certified values only
-And also must be amount on payment certificate if the PM deems works have not been carried out in accordance with the contract.
Net values used: after deducting retention, advance payments, work not properly executed
—-
Wider PROJECT costs (included in the wider cost report) might include:
-Landorpropertyacquisition.
-Statutory fees.
-Consultantdesign fees
-Projectinsurance,inflation,taxationandfinancing.
Project Finance
Chesterton Farm
How did you report on the progress of the works against the activity schedule?
Summary:
-l got completion % of sub activity (50%) and compared against the budget for that activity (£10,000)
…So VOWD is £5,000
-However certified value for this activity is £6,000… so we are over budget
-If open book accounting doesn’t break costs into activities then can only do OVERALL VOWD
————
Against the activities in activity schedule*, I reported on % progress of each activity (broken down into small sub activities)
So if contractor has done 25% of work but the amount paid is 30% of contract sum then project costs are behind.
However, how fast contractor is working has no bearing on VOWD as just measured progress v cost. So the same activities from activity schedule were linked to the programme to determine progress
Programme has:
Activity name
Original duration
Actual duration
Start date
Finish date
Physical progress %
——
*Note: Activity schedule is how the tender price is determined (contractor puts prices against them) but it then becomes unimportant during construction phase of Option C as only purpose is to ascertain original price.
Option C open book accounting isn’t linked to activities.
Project Finance
Chesterton Farm
How did you calculate that actual costs were exceeding VOWD?
I calculated the VOWD of what had actually been completed on site by:
1-Measure: eg 2x2x2 = excavation volume of 8m3 done
So if we need 16m3 for activity then its 50% done
2-Value: get tendered quantity (£10,000) of that activity and multiply by 50%. So £5,000 is the VALUE of work done for (e.g excavation within Connection 1)*
-These costs can then be compared against corresponding cost applied against activity (£6,000) to see that the progress is £1,000 behind
I plotted on a graph (linked to accepted programme) to determine actual progress v costs
-The more the activities are broken up into smaller ones the easier it is to assess VOWD and also helps contractors cash flow
Option C (open book) is harder to measure progress than Option A (which pays on completion of activities and is either 0 or 100%)
On Option B), it is measured against actual quantities done, so probably a bit easier actually rather than getting activity schedule % (although that will have quantities too)
Another example:
Jan-23
Activity: Install Pipework
Original duration: 5 days
% Complete: 65%
————————–
(Tendered cost: £3,500)
————————–
VOWD: 65% x £3,500 = £2,275
Repeat above for all activities e.g excavate, thrust block to get e.g:
VOWD: £4,215
VOWD: £2,050
————
Total VOWD: £8,540
This will be the VOWD plotted on graph for Jan-23
Project Finance
Chesterton Farm
How did you use the VOWD to forecast the actual outturn cost?
Summary:
-If activity is 50% complete and £6,000 certified, then forecast for that activity is £12,000
-Repeated for all activities to get overall forecasted outturn cost
-If open book accounting does not provide activity cost breakdown, then forecast is done by getting an OVERALL %.
———
-I got all the completion %’s for each sub activity to forecast their final costs. Eg:
If 50% done and £6,000 applied you’ll expect £12,000 compared to the original tendered value of £10,000
This project’s open book accounting HAD APPLIED COSTS IN AFP BROKEN DOWN BY ACTIVITY.
If the open book accounting does not provide this breakdown, then forecast is done by getting an OVERALL %. complete based on programme eg:
-Getting the completion %’s for each sub activity (as normal)
-But this time, comparing it with the original durations to produce an overall % complete of programme , eg:
Pipework 5 days at 65% = 3.25
Excavate 3 days at 85% = 2.55
Thrust block 1 day at 10% = 0.1
————————
So out of original 9 days we are 5.9 days complete. So overall % complete is= 65.6%
-The current applied cost was £13,640. So if we are 65.6% done, the forecast outturn cost is £23,982.42
So in normal open book accounting, fire forecasting costs you have to do an OVERALL % complete (rather than each sub activity) as you cannot distinguish costs for each sub activity as they aren’t linked to activity schedule
Project Finance
Chesterton Farm
How did you identify that the cost overrun was attributed to labour? And why did it happen?
Summary:
-As well as by activity, costs were broken down by cost component eg labour
-The costs exceeding the VOWD was due to high labour costs
-Suggested that PRODUCTIVITY needed to be improved.
-So increased audit of allocation sheets to determine why this was happening
————-
Broken down by activity
AND the usual cost categories eg plant, labour, materials
The extra costs of the activities were attributed mostly to costs of their labour section being exceeded.
Suggested that PRODUCTIVITY needed to be improved.
So the increased audit of allocation sheets allowed it to be determined why this was happening
Project Finance
Chesterton Farm
How was the forecast outturn cost revised following non-expenditure of risk allowances?
Summary:
-Each risk had a trigger activity where once passed, whatever value of inexpensive risk allowance would reduce the outturn cost
-Eg when all excavation complete the risk of ground conditions is expended
————
Not meeting their planned ‘closing out’ dates:
-Each risk has a linked activity that when 100% complete triggers the closing of the risk on the register. And any remaining risk allowance that hasn’t been expended reduces the forecast value.
-These expenditure times can also be used to forecast cash flow as can predict when they’ll be expended.
E.g
-When all excavation complete - risk of ground conditions expended
-Mobilisation complete - risk of unsuitable suit compound space expended
-Temp works complete - risk of enhances temp works/redesign expended
Project Finance
Chesterton Farm
How was the forecast outturn cost revised following early warnings and compensation events?
Summary
-EWN’s: estimated value (done by me) put into cost report to increase outturn cost
-CE’s: same as above, updating estimate following contractor’s quotation, and update again with firm value once agreed
———-
EWN’s: if valid then estimated value to put into cost report and subsequently will affect forecast outturn cost
CE’s: same as above but more firm cost from contractor’s quotation and subsequent accepted figure
The TIME impact was also used for both of these, so could use EWN’s to forecast programme delay and CE’s for firm programme delay. This allowed extra prelim/hire costs to be calculated
Project Finance
Chesterton Farm
How was the outturn cost affected by adjustments at completion?
Summary:
-Release of half retention (1.5%)
-Release withheld amounts after substantiation provided
-Deduct uncorrected defects (only after defects correction period elapses)
————
-Retention
1.5% (half of 3% total)
Lower than standard 5% due to element of trust within framework
-Withheld amounts - Where substantiation provided for audited items
-Deduction for defects
-Any potential received delay damages
Project Finance
Chesterton Farm
What are some cost control measures if forecast outturn cost showed it would exceed budget?
Summary:
-Balance costs against different cost targets
-Identify specific areas of cost increase and increase audit (eg hire costs of plant not being used, inefficient labour)
-Design freeze if caused by CE’s
-Value engineering on specific components or construction strategy
-More frequent cost reporting
———-
-If caused by CE’s (so can do e.g a design freeze)
-Identify specific areas causing increase in cost and increase audit (eg hire costs of plant not being used, inefficient labour)
-Value engineering on overall construction method
Project Finance
Major Projects Framework Tracker
How were the current and forecasted values established?
Summary:
-Current: certified values against target cost to determine pain/gain share
-Forecasted: using VOWD to forecast what the pain/gain share will be
——-
Current
-By seeing current certified value against target cost
-To be able to determine monthly pain/gain value due to contractor
Forecasted
-Forecasted outturn cost (from other level 2)
-This includes forecasted base cost (from VOWD), forecasted EWN’s/CE’s
-To be able to calculate final pain/gain value due to contractor
Project Finance
Major Projects Framework Tracker
How did you use committed and non construction costs to calculate a ‘return of investment’ figure?
Summary:
-Got forecast outturn cost (from VOWD)
-Adjusted for advance payments and payments on account (during project) to contractor
-Then Determined pain/gain share for TW
-Reduced it for committed costs (not attributed to specific element) eg third party costs…..,and non construction costs eg NRSWA funding and internal/external staff
————
1 Firstly got the forecast outturn cost
2 Then made adjustments for committed and non-construction costs
Committed Costs
(Costs related to project but not attributed to specific element):
-Payments through project PO’s e.g: land agent costs (and so not payable to contractor)
-Advance payment to contractor on mobilisation costs (deduct from contractor’s final payment)
-Payment on account during project: unassessed CE’s (deduct from contractor’s final payment)
Non-construction
-Funding stream. E.g in NRSWA jobs TW contribute 18% to Deveoper’s quote.
So if a 200k job then TW charged £36k
On these jobs usually a ‘profit’ not made (deduct from TW profit)
-Internal/external staff determined from timesheets (deduct from TW profit)
Project Finance
Major Projects Framework Tracker
How did you produce the payment notices?
Note: they are actually pay less notices
-This tracker summarised the certified (current) values due to contractor for that month for all framework projects.
This allowed an easy record of multiple payment notices.
Project Finance
Major Projects Framework Tracker
How did you do the payment notice in accordance with the Construction Act timescales?
Summary:
7, 5, 14, 7 - NEC
7, 5, 14, 5 - JCT
7, 5 17, 7 - Con Act (scheme)
-After contractor application I updated tracker with applied and my certified value
-Tracker ensured dates of multiple framework projects not missed
————
Housing Grants, Construction and Regeneration Act 1996
-Contractor to submit interim application at least 7 days beforeduedate
At this point I updated the tracker with contractor’s applied value and my certified value
-Employer to issue payment notice within 5 days AFTERduedate
My tracker allowed multiple projects to be tracked to ensure this date wasn’t missed and with the right values
-14 days AFTERduedateis finaldatefor payment (for NEC) and 17 days in The Scheme)
-Employer to issue pay less notice within 7 days BEFORE finaldatefor payment
NOTE: when the contractor issues an AFP, this is the payment notice, so if TW pay same amount they issue a CONFIRMING payment notice, but if they want to pay less they issue a pay less notice
7, 5, 14, 7
-If employer fails to issue payment notice within the 5 days, the contractor can issue their own any time. How long they take is how long finaldatefor payment is postponed. So if do it 1 day after then finaldatefor payment is pushed back a day.
-Though if contractor made an application for payment this automatically becomes the payment notice after the 5 days instead (this happens at TW)
Quantification
Battersea Phase 2
What was the background to this work?
Summary:
-Subcontractor design portion - design AND build, so produced own drawings
-Management contracting route as submitted to the main contractor (client)
-8 floor project
————
Subcontractor design portion
Package was designed AND constructed by Gardner
So produced their own drawings
Under a Management Contractor procurement route
Project spanned 8 floors
Quantification
Battersea Phase 2
What items did you take off?
Summary:
-NRM2 - section 38. Mechanical Services
-Measurable: Ductwork (m) > material > diameter > fixing location e.g high/low
-Fix only: Duct Ancillaries (nr) > Type > Pipe material fixed to > Fixing method.
Above format applied to:dampers, fans, AHU’s, MHVR’s
-Insuation and fire protection (m2) > Thickness > Material > Duct dimensions
————
Using NRM 2 - 38. Mechanical Services
Not in CESMM4.
Measurable:
Pipework (m) > material > diameter > fixing location e.g high/low
Fix only:
Duct Ancillaries (nr) > Type > Pipe material fixed to > Fixing method.
Or
Insuation and fire protection (m2) > Thickness > Material > Duct dimensions
This can be applied to eg: dampers, fans, AHU’s, MHVR’s
Quantification
Battersea Phase 2
How did you break every item down into a multi-levelled codified structure?
Summary:
-Based on NRM2 elemental breakdown structure
-Mechanical services
-Ventilation / Fire Rated /Industrial Fume
-System: Supply/Extract/Intake
-Sub-element 1: Building section/area
-Sub-element 2: Floor
-Component 1: Vents, Insulation, FO, etc
-Component 2 (vents): shape
-Component 2 (insulation): shape,
-Component 2 (FO): item eg AHU
-Diameter
———-
Based on the NRM2 elemental breakdown structure, but more detailed:
-Level 0: project number
N/A
-Level 1: cost plan number
1.Mechanical Services
-Level 2: group element
1.Mechanical service: (Ventilation, Kitchen Fire Rated, Industrial Fume)
-Level 3: element
1. System: Supply/Extract/Intake
-Level 4: sub-element
1. Building section/area
2. Floor
-Level 5: component
1.Item Category: (Vents, Insulation, Fix Only etc)
2. Vents = Shape (Square/Circular)
Insulation = Shape (Square/Circular)
Fix Only = (item)
3.Diameter
Quantification
Battersea Phase 2
How did you use supplier and in-house data to produce a re-measurable rate?
Summary:
E.g for rectangular ductwork
-First measure quantity
-Supplier data: multiply by supplier rate, less discount (economies of scale), plus supports (25%), plus delivery (6%)
-In-house: plus Labour Rate per m, Plus offloading, Plus testing (hrs per m) , Plus Profit Margin
-Produces final re-measurable rates to be submitted to client
-Lots of different rates for different duct types, diameters etc .. as well as for systems/location.. eg higher floors and kitchen extract more expensive with
Note: %’s will vary supplier discount, and supports …. And in hide labour / margin depending on item
————-
E.g for rectangular ductwork
General:
-Quantity
Supplier data:
-Multiplied by Supplier Rate = Base Cost
-Less Supplier Discount (economies of scale)
-Plus Supplier Supports Rate (25%)
-Plus Supplier Delivery (6%)
In-house data:
-Plus Labour Rate per m
-Plus offloading
-Plus testing (hrs per m)
-Plus Profit Margin
Produces final re-measurable rates to be submitted to client (main contractor).
Lots of different rates as lots of different items AND different rates for different systems/location.. eg higher floors and kitchen extract more expensive with higher fixing and offloading (getting to high floors) cost
——
-Discount: Varies depending of amount ordered (economies of scale)
-Supports: 25% generally but 0% for fix only items/insulation/access doors etc
-Labour: Varies depending on item
-Margin: 20% ductwork/fix only, 45% flame shield, 15% insulation,
Quantification
Battersea Phase 2
How did you produce the contract sum analysis with preliminaries?
Summary:
-Contract sum analysis because although BOQ produced, this was a design and build proposal (for subcontract section)
-Prelims were for construction (PM, QS, Supervisor)
-And pre-construction (same as below + designer)
-Method related items: Mobile towers
Scaffolding, IT
————
Note: Used the term ‘contract sum an analysis’ because although a BOQ was produced, this was designed by Gardner so and submitted as tender so was effectively a detailed contract sum analysis providing a design solution
Preliminaries were:
Pre-construction period:
-Same as below + designer
Construction period:
-Project Manager
-Quantity Surveyor
-Site Supervisor (Basements/Risers)
-Site Supervisor (Fit-out)
-Logistics Manager
-Commissioning Manager
-Safety Consultant
All of above measured in Weeks x Weekly Rate
/Method related items:
Mobile towers
Scaffolding
IT
Quantification
Blunsdon Trunk Main
Why were the CE’s assessed retrospectively?
Summary:
-Project undertaken during close out of 5 year framework
-Contractor winding down staff
-All quotations issued at end
-Instructions made at time by PM
-For each one, during construction the PM extended period for contractor to submit a quotation under Clause 62.5.
-Parties agreed to assess them on actual cost
——-_
Framework project
CE’s weren’t assessed due to close out of framework, the contractor was winding down staff at end of framework
-I assessed their validity in terms of CEN within 8 weeks (and whether they could have mitigated situation by providing an early warning with 8 weeks)
-Contractor did not issue quotations until they issued them all at end of project
-Whether PMI issued
-For each one, during construction the PM extended the period for contractor to submit a quotation under Clause 62.5.
Note: has to be done before 3 weeks timeframe to provide quotation has expired
-Although poor NEC practice, the parties agreed to assess them on actual cost even though they should be assessed as a forecast from the date of instruction (dividing date)
Quantification
Blunsdon Trunk Main
How did the timeline link with the accepted programme?
Summary:
-Basically replicated accepted (as built) programme
-Same number of days
-As no CE’s implemented, completion date effectively came ‘time at large’,
———
Timeline had same number of days as as-built programme.
As-built used of however long contractor took.
As no CE’s implemented, the completion date effectively came ‘time at large’,
Not good practice at all.
Quantification
Blunsdon Trunk Main
How did you identify concurrent delays?
Summary:
-Each CE laid on top of another
-Identified concurrent standing time (2 CE’s at a time)
—————
Each CE was laid ‘on top of eachother’ on the timeline, and I identified:
-Standing time was being applied for 2 CE’s at the same time (same gang)
Big CE (05) - Delay in isolation for the North Connection.
Small CE (06) - Commissioning of Developers Main outside of tendered scope
Quantification
Blunsdon Trunk Main
How did you assess the viability of activity sequencing?
Summary:
-Contractor left site
-Then returned to site prior to PM instruction return, simultaneously doing work on another project
-So disallowed
———
————
CE05 - Delay in isolation of connection
-Contractor left site to be redeployed then returned to site to claim more standing time
-No written instruction from PM to return to site
I disallowed costs when contractor returned
Quantification
Blunsdon Trunk Main
How did you assess that resources could be re-deployed elsewhere under Framework Agreement?
Summary:
-TW caused delay and instructed halt to works to return in 2 weeks time
-Contractor entitled to 2 days delay of gang and then redeployed to another project
-I summarised all work allocation sheets to easily visualise. I essentially created my own accepted programme.
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CE08: - Delay in isolation of connection
When TW caused delay, PM instructed work to be delayed and resumed in 5 working days time.
As per contract, I paid for the first and second days of delay. But contractor was claiming for the whole week so I disallowed this
I achieved this by summarising all work allocation sheets and could easily visualise. I essentially created my own accepted programme.
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CE05 - Delay in isolation of connection
-Contractor left site to be redeployed then returned to site to claim more standing time
-No written instruction from PM to return to site
Disallowed costs when contractor returned
Quantification
Blunsdon Trunk Main
How did you calculate the overall ‘time’ element?
Summary:
-Reduction in EOT (13 days) applied to CE’s in terms of labour, plant/prelim hire, temporary works
——-
-Once I determined the overall EOT (42-13=29) I could use the 13 disallowed days to constrain the programme for how long temporary works and preliminaries could be paid to contractor
-Plant, labour materials done separately for each CE (see other flash card)
they would need to be hired for.
Quantification
Blunsdon Trunk Main
How did you calculate the overall ‘cost’ element?
Summary:
-FRAMEWORK project
-allocation sheets: what work each labour and site management member doing
–plant and prelim durations correct
-plant, prelim, labour rates followed framework rates
-Once entire EOT reduction calculated, used to constrict entire programme and reduce temp works hire
-Done retrospectively so based on DEFINED cost
-all costs allocated under cost component for fee purposes
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I looked at allocation sheets used to determine what staff were on site and what work they were doing as on each day there were different labour staff and sometimes costs claimed when they were on holiday
Staff:
-Ensuring site management rates in accordance with framework
Labour:
-Ensuring labour rates in accordance with framework and work done matches job description
Prelims:
-Durations of vans in line with labour
-No additional van needed if site manager on site,
——
All costs were then allocated to the correct cost component (plant, labour, materials etc) for fee calculation and reporting purposes…..
Fee calculation:
..Management Fee - Subcontract and Other Costs (7.5%)
Management Fee - Associate Personnel (11.3%)
Reported in:
In AFP ‘rolling’ file
Difference between JCT 2016 and 2024
-Employer time to make decision on EOT claim from contractor reduced from
12 to 8 weeks
-‘Epidemics’ now a relevant event (time) and relevant matter (cost) which affect execution of works
-Contractor home has no design liability for design to be ‘fit for purpose’ … ONLY that it is ‘reasonable skill and care’
-Following Building Safety Act 2022, duty holders must be identified
-More wording encouraging collaboration, distinct requirement for the parties to notify each other of a potential dispute
-clarify that where the contractor’s employment has been terminated before the practical completion date the employer’s right to liquidated damages applies up until the date of termination.
What are relevant events and relevant matters?
Relevant event entitles contractor to extra time
Relevant matter entitles contractor to extra payment
Procurement
Bicester Road
How did you ensure competition was apparent / value for money provided on this non competitive tender?
-Done with open book tendering, so contractor provided COMPETITION AT SUBCONTRACTOR LEVEL with subcontractor quotations eg for materials, surveys
-Ensure pre agreed framework rates were used (COMPETITION FOR RATES) eg staff, prelims, plant, labour gangs already done through competitive process
Understand where the competition was ^
-
- -Ensuring value for money even though only one contractor
-Ensure tendered costs align with scope and programme
-Value got money report once agreed
Contract Admin
How NEC act payment timeline differ from construction act and JCT?
-In NEC final date for payment is 14 days after due date, while in Construction Act (scheme) the default is 17.
-In NEC the pay less notice is 7 days before final date for payment, while in JCT it is 5 days
-In Construction act the pay less notice is 5 days before due date
Risk Management
Didcot Valley Park
How did you quantify the ground contamination risk?
-Calculated probability using root cause analysis (Score of 0-100%)
-Calculated impact score: v low, low, med, high, v high (0.25%, 0.5%, 1.5%, 3%, 5% of project cost)
-Probability x impact = risk rating
Eg if project is £1m, then:
0.2 probability x high risk (3%) = £6,000
Risk management
What are the risk strategies?
Avoidance
Reduction
Transfer
Sharing
Accept/retention
Contract admin
Differences NEC 3 and 4
-Requirement for contractor to make payment applications
-Final account mechanism,
-Single overheads fee for compensation defined cost, where NEC3 had lots of little
-Ability for contractor to issue proposals (e.g change scope and accelerate programme)
-Contractor can recover costs for preparing compensation events
-Introduces a ‘Dividing Date’ for CE’s
-Changes in terminology,
-Gender neutral
-Replaces ‘Employer’ with ‘Client’
Construction tech
Different ways pipes can be commissioned?
-Initial flush
-Swabbing (with large cylinder)
-Pressure testing (to ensure leak free)
-Flushing (remaining debris)
-Chlorination
