WK5PM - Valuations

Question 1

Q1. Why do construction projects have interim valuations carried out?

Answer 1

Housing grants & Construction acts – Have to pay instalments to aid subcontractors cash flow on projects longer than 45 days. Either paid monthly or on agreed dates.

Question 2

Q3. What items are included in an interim valuation giving a brief description of each.

Answer 2

Measured works – physical progress on site / Preliminaries / Variations / Day work / measurements on and off site / Retention / provisional sums or prime cost sums / fluctuations / loss and expense

Question 3

Q4. What is the difference between the fluctuation clauses under JCT SBC 16? Why might you recommend a Client to use the different fluctuation clauses?

Answer 3

JCT 2011 – stated all fluctuations / JCT 2016 – add as an amendment

Fluctuation A – Government tax’s and levies – only applicable if bought in before the base date.

Fluctuation B – Labour and Material costs and tax – Option A – based on basic list which client will include which are on fluctuation prices.

Fluctuation C – Formula adjustment – base rate and new

Question 4

Q5. What are the ways in which a contract sum can be adjusted giving examples under JCT SBC16?

Answer 4

• Variations / postponements
• Fluctuations
• Loss and Expense

Question 5

Q6. What are the requirements for paying Materials On Site and Off site under JCT SBC 16? 7. What is the difference between a defined provisional sum and an undefined provisional sum?

Answer 5

Materials on site – Must be able to see that they are there, secure, protected, that the contractor has paid for them and must be incorporated in to the works within a month
Materials off site – Has a resting certificate, insurance against specified perils, must be clearly identified with name on.

Question 6

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Answer 6

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Question 7

Q8. What is retention? Why is it used? How is retention treated under JCT 16?

Answer 7

Retention is a percentage held back by the client to ensure works are completed to the right standard.
Automatically 3% if not amended.
e.g. ½ Final cost, ½ warranty release, ½ on Project Completion, ½ on final certificate

Question 8

Q9. What is a payless notice - what are the rules for using one?

Answer 8

A certificate of what will be paid – Valuation minus liquidated damages etc.

• The C must issue a PLN within 5 days of the payment.
• Must set out basis for calculation
• Notified sum payable by final date of payment.
• If C fails to issue PLN, C may issue a default payment notice. The final date is extended by the period between when client should have issued and when C issued payment notice.

Question 9

Q10. What is a final account?

Answer 9

The final payment - Contract sum +/- Architects instructions +/- Loss & Expense +/- Fluctuations

Question 10

Q11. What is the effect of a final certificate (JCT)?

Answer 10

Instigates the release of the retention – all monies will be paid
States the value of the project and what contractor will be paid & stated the contractor has meet all obligations.

Question 11

Q12. Can you explain how you value preliminaries for an Interim Valuation (IV) under JCT SBC 2016?

Answer 11

Using prelim rates given with the tender.

Question 12

Q13. If a project is delayed how do you amend the preliminaries value in the next IV?

Answer 12

• Either based on weekly rates – BOQ

* Or as an agreed sum