1
Q
How does the role of a CA differ from that of an EA?
A
The CA administers the contract, while the EA is responsible for all duties the employer would usually perform.
The CA is impartial.
2
Q
What happens at practical completion regarding retention?
A
50% retention is released and the 12 months defects period starts.
The ability to impose Liquidated Damages ceases.
3
Q
What is a performance bond?
A
A performance bond is issued as a guarantee against the failure of one party to meet obligations in the contract.
4
Q
When may a performance bond be required?
A
- To reduce the risk of non-performance of the contractor
- When the contractor doesn’t have a parent company
- If the contractor is new to working with this client
- During an ongoing economic crisis
5
Q
What types of performance bond are there?
A
- On demand – payable immediately on beneficiary’s demand
- Conditional – requires certain conditions to be met.
6
Q
What is time at large?
A
There is no current fixed date for completing works.
7
Q
What is loss and expense in contract terms?
A
Contractor can claim loss and expense due to Employers’ error.
8
Q
What are relevant matters in contract claims?
A
They entitle the contractor to claim loss and expense.
Examples include variations, instructions, and impediment by the Employer.
9
Q
What is a Relevant Event?
A
Entitles the Contractor to an Extension of Time (EoT).
10
Q
What are some examples of Relevant Events?
A
- Deferment of Possession
- Variations
- Impediment by the Employer
- Exceptionally adverse weather conditions
- Covid-19/global pandemics in the new JCT suite
- Force majeure
11
Q
What is force majeure?
A
Act of God.
12
Q
If there are concurrent delays, is there an entitlement?
A
There are no clear rules; each case must be judged separately.
13
Q
How is the construction Act relevant?
A
It contains statutory provisions relating to all projects over 45 days.
14
Q
What is the purpose of retention?
A
An amount deducted from payment to the contractor, retained until practical completion and end of Making Good Defects (EoMGD).
15
Q
What is an alternative to retention?
A
Retention bond, provided by the contractor for the same value.
16
Q
What happens when practical completion (PC) is granted?
A
- Half of retention is released
- Rectification period begins
- Employer must insure building
- Liability for Liquidated Damages (LADs) ends
17
Q
What happens at the end of the rectification period?
A
A statement is issued for any defects, and a Certificate of Making Good is issued, triggering final valuation and release of retention.
18
Q
What does the final certificate represent?
A
Agreement that all contractor works are complete, contract sum is agreed, and any EOTs and L&E has been closed out.
19
Q
What’s the difference between termination and suspension?
A
Termination is lawful stopping of contract works; suspension is where the contractor stops works.
20
Q
What are the advantages of using a JCT Design & Build (D&B)?
A
- Contractor is responsible for design and construction
- Considered quicker than traditional contracts
- Provision for quotations to be requested.
21
Q
What are the disadvantages of using a JCT D&B?
A
- Client loses control of design
- Risk priced into costs due to contractor responsibility.
22
Q
What is the vesting process?
A
Pre-contract, a vesting certificate is drawn up, signed by both parties, and materials are itemized and documented post-contract signing.
23
Q
How can payment be made under the rugby utilities work?
A
- Alternative A – Stage payments
- Alternative B – Periodic Payments
24
Q
What is the form of contract used on the rugby utilities work?
A
JCT MW 2016 with milestone-based payment terms.
25
How do you review an Extension of Time?
Assess the cause of the claim, progress of works, and how the critical path has been affected.
26
What must occur for Practical Completion?
Architect must confirm completion, a snagging list completed, and a practical completion certificate issued.
27
How are LADs deducted under JCT D&B?
Issue a non-completion certificate and a notice that monies are going to be withheld.
28
What if the Employer suffered no loss regarding LADs?
Doesn’t matter; LADs can still be deducted.
29
What would you do if the contractor claims for paint in his first valuation?
Assess the claim on site to see if any painting had been done.
30
You mention that you issued the Practical Completion Certificate on the UoB Building Demolition project, What if the contractor had not completed by PC date?
A Non-Completion Notice should be issued. The Employer then has the right to deduct Liquidated Damages through a Pay Less Notice. The Employer deducts, we must only advise them of their right to do so.
31
What are liquidated damages?
Pre-agreed remedy for contractor failing to achieve PC by the date within the contract. Not a penalty – genuine pre-estimate of loss – i.e. loss of rent/ loss of income/ fees and fines imposed by third parties etc. I.e. on MLP we had LD’s of Nil per week for four weeks, rising to £130,000 or part thereof in week 5- this was back to back with the Agreement for Lease costs the client would incur.
32
What if LAD’s inserted as nil in the contract?
Then they will not be able to claim liquidated damages but may still claim for Unliquidated damages (payable for a breach), however I would advise that they use Liquidated Damages if a loss is expected.
33
What did you include within a Contract Instruction?
I would include:
-Issue Date
-Contract Instruction Number
-Address Contractor/ EA/ Employer
-Contract condition relevant to instruction
-Description of change
-Cost of change – Add and Omit
-Distribution list
-Signatory Box for EA to sign once approved
-Plus and drawing references etc.
34
What is nomination?
- Selection of a particular subcontractor to carry out works, manufacture or supply of materials
- This provides the architect and client with greater control of material choice and thereby quality
- It is often used when there are long lead in times with the employer placing orders prior to the Main contract award which reduces potential delays on site
- The Main contractor is relieved of liability of design and compliance with the performance spec in addition to subcontractor delays in respect of the works that have been nominated
35
Do nominated subcontractors get paid separately?
Nominated contractors are normally paid via the Main contract with sums identified separately
36
Can the contractor object to a nominated subcontractor?
- Any objections must be made during the tender period
- There are specific exclusions and grounds for an objection
37
If there are problems with the design, after Novation of the architects, who would be responsible?
- At the point of novation, the client would agree the level of design was satisfactory and would be signed off by all parties
- The contractor would then become responsible for the Architect and his design should any problems arise during construction
- Disputes may arise where it becomes unclear when problems have arisen, either prior to the transfer of services of afterwards
38
What is the difference between Novation and Assignment?
Novation is a mechanism whereby one party can transfer all its obligations under a contract and all benefits arising from the contract to a third party
Assignment is where contractual benefits are assigned however contractual burdens cannot be transferred under assignment.
39
What is set-off?
Set-off are any monies owed to the employer by the contractor which are deducted against any payments due to the contractor
40
Describe differences between statutory provisions and contract provisions?
Statutory provisions are set out by law and must be complied with whereas contract provisions relate to the contract in question and therefore only apply to a specific project
41
What is a domestic subcontractor?
A standard appointment of a subcontractor by the main contractor.
42
What are named subcontractors?
Clients provide the Main contractor with a choice of named subcontractors for a portion of the works
Once appointed they become a domestic subcontractor in terms of the conditions of contract.
Additional names may be added if approved by all parties
This allows the client a level of control over the quality of the works packages and in some cases cost
43
After valuation and certificate are issued, the client advised that they don't have sufficient funding to make the payment - what would you do?
Once the certificate has been issued to the contractor, the client is obliged to honour payment of the certificate and cannot withhold money without a valid reason.
If this were the case, I would contact the client and contractor ASAP to arrange some form of payment. It may be the case that the client has insufficient funds available in time for the final date for payment and it may be possible to defer payment by 1-2 days.
Failing this or if the contractor is unwilling to delay the payment the client would need to finance the payment through other funds to honour the certificate.
44
What items do you include for on a valuation?
- Prelims
- Measured works
- Materials on/off site
- Variations
- Claims
- (less) Retention
- (less) Previous Payments
45
If an instruction was issued during the contract which involved the fabrication of a substantial amount of materials off site would you pay for them as off site materials within the valuation?
There is no obligation on the client to pay for materials off site if this is not identified in the contract.
However in the scenario where the client wishes to pay for them I would ultimately check with the client before paying or rejecting them.
46
How would you deal with urgent verbal instructions?
If the instruction affects the critical path or programme in general I would review the instruction with the contract administrator, client and contractor
If the instruction is valid under the contract I would ensure this is converted into a formal written instruction asap
47
What documents would be required in incorporating a contract design portion supplement into a project?
Within a design and build project, the documentation to be included would be the Employers Requirements including the scope, specification, drawings, contractors proposals along with any insurances.
48
Could an email constitute a contract document?
Yes providing there is offer, acceptance, intention to create legal relations and the responding email does not vary the conditions, a contract will be created.
49
What is your opinion of oral contracts?
Whilst they are legally binding the difficulty lies in proving the specific terms and conditions of the agreement
It is for this reason why the HGCRA only applies to written contracts
50
What is the difference between NEC and JCT?
- The main difference between the 2 forms is usage
NEC - Used for building/civil engineering projects whereas JCT is specifically for building projects
NEC can be adopted to a number of bespoke contract strategies due to the various options available whereas JCT has a standard set of clauses.
51
What is frustration?
Frustration occurs when any event or circumstances beyond control of both parties changes the contractual obligations/ makes it impossible or illegal to fulfil their contractual obligations. The happening of such events automatically discharges the contract.
52
What is the defects liability period?
The duration at the end of the contract after the practical completion certificate has been issued where the contractor undertakes works to rectify any defects that arise within the structure at the contractors expense, providing they were due to materials and workmanship not being in accordance with the contract.
In the event that the contractor failed to rectify any defects the employer may employ another contractor to carry out the works and recover the cost of doing so from the main contractor.
The retention money retained may be used to cover the costs of making good.
53
How is a contract under hand different from a deed?
A deed is signed by a witness and traditionally authenticated by a seal.
The limitation period of under hand is 6 years whereas a deed is 12 years.
54
What is your understanding of latent defects and what contractual issues are associated with them?
Latent defects are defects which are not readily identifiable upon inspection and only come to fruition some time after building completion and may take many years to become identifiable
A claim in contract can only be brought about within the limitation period of the contract, 6 or 12 years depending on whether the contract was executed as a deed or underhand.
55
What should the architect do when latent defects are discovered?
The architect should issue an instruction as necessary to instruct the contractor what to do if they are identified
This can include telling them to comply with a third party who is examining or opening up the works to identify the defect.
56
If the works or materials are not in accordance with the contract what options does the architect have available to them?
The architect may:
- Instruct the contractor to remove all defective work, materials and goods at their expense and time.
- They can notify in writing that they can remain with an appropriate deduction being made from the contract sum.
- Issue instructions for variations that are necessary as a result of the work. If they are necessary there should be no additional costs or extensions of time given.
- Instruct the contractor to open up and test further work to determine the extent of any non-compliance.
57
When issuing instructions for further opening up and testing to determine the extent of non-compliance what sort of things the architect consider?
- The significance of the non-compliance
- Consequences of further non-compliance on building owners and users
- Consequences of further non-compliance on adjoining properties and the public
- Reason for the non-compliance
- Level of supervision and control employed by the contractor
- Currently recognised testing methods
- Time and consequential costs of further opening up
58
What is a provisional sum?
A sum of money included in the contract for work that cannot be fully designed and costed at the time of tender or CSA
59
What types of provisional sum are there, what are they and where are they defined?
DEFINED AND UNDEFINED
NRM
DEFINED: A sum included in the contract for work that has not been completely designed at the time of contract sum agreement but for which certain specified information can be given about the extent of the works, its quantity, duration of installation and fixing to the building.
The contractor can make reasonable allowance for the works in their prelims and programme - Not entitled to an extension of time/prelims for carrying out the works should there be delay or additional cost.
UNDEFINED: A sum included for work for which there is minimal or no information at the time of contract sum agreement. The location, quantity and time associated for the installation of the works is not fully known. The contractor is not deemed to have allowed for anything and there may be additional time/cost as a result of carrying out the works.
60
When dealing with a defined prov sum, what if the actual work does not closely resemble the prov sum?
- If the description is not accurate it has to be amended
- This will be treated as a variation
- This will entitle the contractor to an extension of time and extra prelims if appropriate
61
How can a provisional sum be expended?
The architect has to issue an instruction for its expenditure.
62
How are provisional sums dealt with in the final account?
The provisional sums included in the contract are deducted and the actual amount substituted.
63
What are the risks associated with provisional sums?
The actual cost and time exceeds that allowed for in the provisional sum because of the nature of the item changes between tender and instruction.
64
What are the main types of construction contract?
- JCT
- NEC 3/4
- ECC
- ICE
- FIDIC
65
What does JCT stand for?
Joint Contracts Tribunal
66
What does NEC stand for?
New Engineering Contract
67
What does ECC stand for?
Engineering and Construction Contract
68
What does FIDIC stand for?
Federation Internationale des Ingenieurs Civils
- International Engineers Federation
69
What does ICE stand for?
Institution of Civil Engineers
70
What are the main parts of the JCT contracts?
- Recitals
- Articles
- Contract Particulars (A20)
- Attestation
- Conditions (divided into 9 sections, 7 for minor works)
- Schedules
71
Name the 9 sections (conditions) in a JCT contract?
Definition and Interpretation
Carrying out the works
Control of the works
Payment
Variations
Injury, damage and insurance
Assignment, Third Party Rights and collateral warranties
Termination
Settlement of disputes
72
Name the main types of JCT Contract?
- Minor Works (With or without quants)
- Intermediate
- Standard Building Contract
- Major Projects
- Design and Build
- Prime Cost Contract
- Measured Term Contract
- Construction Management Agreement
- Management contract
- Framework Agreement
73
When would you use JCT Minor works?
- Projects that are short in duration on a small scale with a straight forward construction
- JCT guidance is for value up to £200,000 but it has to also be simple in nature
- It is a lump sum form where design should be completed prior to execution
- The employer or their team is to provide specifications, drawings and a schedule of works.
74
When would you use JCT Intermediate Contract?
The Intermediate form is recommended for projects that do not exceed a one year duration.
The project should be simple in content and require only basic skills and trades where services are not complex but the works are already designed.
75
When would you use a JCT Standard Building Contract with quantities?
A JCT SBC would be used where the work has already been designed for execution.
It is suitable for use with a BQ and is a lump sum form.
The contractors risk is limited to price only.
The employer takes the risk of errors in the bill.
76
When would you use a standard building contract without quantities?
- This is suitable where work has been designed prior to contract however there in no bill of quantities
- The contract documents will include spec, drawings and a schedule of rates
- It is a lump sum form of contract
- The contractors risk includes both price and quantities
77
When would you use a standard building contract with approximate quantities?
- This is a remeasurement form of contract
- There is no fixed contract sum
- It is used where the design is not completed at the time of execution
- An approximate BQ will have been prepared
- Construction is aimed to commence prior to the design being completed
78
When would you use JCT DB?
- When the contractor is responsible for design and construction
- The project should be similar in complexity to that of standard building contracts
- The contractors proposals form the basis of the contract
- There is no mention of an architect or QS instead this role is replaced by the title of Employers Agent
79
What are the key differences between JCT Minor Works, Intermediate and DB contracts?
- The MW only has 7 sections of conditions instead of 9. Variations are included within the control of the works section and there is no assignment and collateral warranties provision.
- There is no mention of the QS in MW or DB contract but there is in Intermediate
- MW also has no provision for sectional completion/partial possession
- In MW there are no relevant events listed for extension of time, it is referred to as 'anything outside the contractor's control'
- The standard rectification period is 3 months for MW but 6 months for DB and Intermediate
- The standard retention is 5% for MW and Intermediate and 3% for DB
- DB is administered by an EA whereas others are CA
- In MW and Intermediated, CDP can be included where the contractor is responsible for a discrete part of the design whereas in DB the contractor is responsible for completing the overall design
- In DB the EA may request a quotation prior to instructing a change
- There is no fluctuation mechanism for labour and materials costs in MW and Intermediate forms
- Payments are made at regular intervals in MW and Intermediate whereas DB gives the option of stage payments
- In MW there is no option for the employer to take out a joint name al risk policy, only options A and C
- There is no provision for third party rights in MW or Intermediate forms
80
What is a bespoke contract?
Contract conditions that are drafted specifically for a particular project.
81
What are the advantages of standard forms over bespoke contracts?
- They are written by legal experts
- Rights and obligations of each party are clearly set out to the required level of detail
- Risks should have been allocated appropriately between the parties
- Parties should be familiar with the provisions in the form providing greater consistency in application and fewer unforeseen anomalies
- The time and expense of preparing a fresh document for each occasion is avoided.
- Case law is built up over time and provides a good source of knowledge and clarity of the terms.
82
What are the disadvantages of standard forms over bespoke contracts?
- Apportionment of risks is rarely questioned and therefore becomes implicit meaning it is not reviewed on whether it is appropriate
- They may not be appropriate to the needs of a particular project or client
- Using an inappropriate standard form will cancel out any advantages
83
When would you use a bespoke contract over a standard form?
- They should generally be used for major projects with novel obligations
- When specialist advisors can undertake the amendments as this requires great skill and knowledge
- Drafting from first principles is too daunting for most in the industry
84
Can you have an EOT without an L&E claim?
- Yes an EOT does not automatically mean entitlement to L&E
85
When pricing an EOT what would you include for and what rates?
- When pricing an EOT I would include costs for prolongation of site cabins, site utilities, welfare facilities, management staff, security, cleaners, inefficient use of labour & plant resources, subcontractor mobilisation costs, head office, finance charge and loss of profit
86
If a project was due to finish before Christmas, but an EOT was given meaning the contractor finishes after the Christmas break, is the contractor entitled to costs over the Christmas break, which is normally 2 weeks?
- It would depend on why the EOT had been issued, the contractor would be entitled to costs for prelims over the Christmas break if the EOT allows the contractor to claim L&E
87
Would you get involved in helping the architect assess the EOT?
Yes, as a QS my role would be in assessing the financial implications of the EOT if applicable
88
Explain the relative advantages of NEC?
- They are applicable to a variety of procurement strategies
They offer clarity and simplicity by using:
- ordinary language (minimal legal jargon)
- flow charts to support users
They act as a stimulus to good management through maintaining:
- frequently updating programmes which are required to be clear and precise
- Provision of early warning procedures and risk registers
- They embody key features of project partnering
- Assessment of compensation events by applying a rolling final account
89
Explain the relative disadvantages of NEC?
They are often only considered to be used for civil engineering projects and partnerships
They have limited exposure to the market: not tried and tested with supporting case law
90
Explain the relative advantages of JCT?
- Considered industry standard so offer familiarity to client and design team
- Cover most forms of procurement and building types through various ancillary documents that support the main forms
- They are comprehensive in detail and considered by many to be fair and reasonable and not loaded in favour of either party
91
Explain the relative disadvantages of JCT?
- They are sometimes through to 'compromise conditions', in which they try to satisfy the interests of all parties
- They can be considered as unnecessarily long and complex (lots of jargon)
92
What are the key differences between NEC and JCT?
- NEC is concise and written in plain English
- There are a number of optional clauses in NEC so less need for amendments than JCT
- Project manager in NEC - presented with options to deal with problems as soon as they become apparent
- Provision of early warning procedure and risk register encourage a proactive approach to the management of the project whereas JCT is more reactive
- Compensation events deal with issues affecting both cost and money under NEC whereas under JCT L&E deals with time, variations deals with time
- Changes are based on rolling final account under NEC but under JCT agreeing costs can be left to the end
- Cost of compensation events are calculated using schedules of actual costs rather than bill rates under JCT
- There is no QS or EA in NEC, just a PM
-The programme is a contract document under NEC with 25% of money being deducted on interim payments if the contractor does not submit an accepted programme at contract stage
- The NEC has no provision for nomination of subcontractors but preferred sub-contractors can be listed within the works information
- The defects correction period has different periods specified depending on the impact of the defect under NEC where the contractor must make good in this period. This approach is different to JCT rectification period
- Short periods of reply are essential under NEC which incentivise the parties to respond to each other.
- NEC = more collaborative
- NEC = very administrative heavy
- Retention and delay damages are optional clauses under NEC
93
What are the roles of the parties in the NEC?
Project Manager - can be employer's organisation or an external consultant
- they represent the client and has full authority to make decisions, unless the employer has restricted his authority. PM has a duty to be impartial and apply the contract
- Designers prepare the work information and are not named in the NEC
- Supervisor can be employer's organisation or an external consultant
- Supervisors role is to check the works are being carried out as described in the contract.
- They have a similar role to clerk of works with authority such as instructing searches or issuing defect certs
94
What is the role of the QS under NEC?
- Not mentioned in the contract
- QS can adopt a supporting role to contractor and PM to agree cost of compensation events
- Options B and D involve quantities and measurement
- Target costs under options C and D require an audit role in open book accounting in target contracts which the QS may be responsible for.
95
How is risk management dealt with under the NEC?
- A risk register should be produced asap and regularly updated; defined in clause 11.2 (14)
- It should include the description of the risk and the mitigation measure not the value of the owner
- Employer's risks are listed in the compensation events (Clause 60) and in the contract data (additional employer's risks). Everything else is deemed to be a contractor's risk.
- If ownership is stated in the risk register it must match the contract conditions or it will create conflict. Compensation events can be deleted or added in Z clauses. Additional employers risks are listed in the contract data.
- Where there is discrepancy between the risk register and terms of the contract, it will be read in the favour of the party who didn't prepare the risk register.
- If a sum is stated in the risk register neither party can claim for savings or compensation if the cost or risk turns ut to be more or less
- Risks can only be transferred against a lump of money by modifying the contract conditions. Risk register is not contractual.
96
What is a compensation event?
Events which if they do not arise from the fault of the contractor's, entitle the contractor to be compensated for effect on the prices, key dates and completion date.
There are 19no compensation events listed in clause 60.1
97
What are early warning notices under an NEC contract and what are their purpose?
They are notices given by the PM or the contractor of any matter which could potentially have an impact on cost, completion date, key dates or performance of the works in use
- Their purpose is to give the parties sufficient time to consider the options available to prevent or mitigate the issue and collaboratively find the best solution to meet the employer's interests.
98
How are early warnings dealt with?
- The PM and contractor have duties to give each other early warnings for inclusion in the risk register as soon as they become aware of an event that may:
- Increase the total price
- Delay completion
- Delay meeting a key date/ impair performance of works in use
The PM is to record all early warnings in the risk register
Any party can call for a risk reduction meeting to review the early warning notices and collaboratively find the best solutions to meet the employer's interests
As early warnings are resolved, they are removed from the risk register
99
If there is a discrepancy between the ERs and CPS under DB which prevail?
Unless the contract is amended the CPs
100
What is the contractors design liability under JCT contracts?
The same as an independently employed architect with the duty to offer reasonable skill and care
101
Can you rescind the PC statement once it has been issued?
No - once issued, it’s final and binding on the employer
102
If a project was due to finish before Christmas, but an extension of time was given which meant the contractor finished after Christmas, is the contractor entitled to costs over the Christmas break, which is normally 2 weeks?
Yes unless otherwise stated, as it is non-working they cannot claim for workers but they can claim for site cabins etc.
The CE that took it into the non-working Christmas week should have shown that it was (say) a 5 working day delay which equates to 12 calendar days due to the non-work period. Any additional cost (such as the site cabins being on site for an extra week even if no one is on site) should have been included within that quotation.
103
If the contractor successfully demonstrates a relevant event and CA adjusts the completion date, is the Contractor due additional preliminaries?
Although prolongation costs are often seen as the financial side of a “delay claim”, there is no automatic entitlement to loss and expense or damages even if a right to an extension of time is established.”
The “excusable delay”, in respect of which the Contractor is entitled to an extension of time, may be different to the “compensable delay” in respect of which the Contractor is entitled to its prolongation costs.
There would also be an entitlement to associated prolongation costs. This should compensate the contractor for the additional preliminaries, site and head office overheads incurred during the period of delay. In this case, I would recommend the submission of two or three claims:
1. The claim for the additional work would form one claim. This is because an agreement would be straightforward to achieve, and would usually be agreed by the quantity surveyor.
2. The claim for the extension of time would usually require the input of planners and contractual personnel. It might possibly need a more analytical approach, so I would submit this as a separate stand-alone claim.
3. Similarly, the claim for prolongation costs would flow from the extension of time. Preparation and evaluation would be by different personnel, so I would submit this separately.
RICS
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CONSTRUCTION TECHNOLOGY176
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Diversity, inclusion & Teamworking/Inclusive Environments22
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Ethics136
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Client Care18
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Communication and negotiation15
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Health and Safety52
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Accounting principles and procedures65
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Business Planning30
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Conflict avoidance, management and dispute resolution33
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Data management34
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Sustainability45
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Design economics and cost planning96
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Contract practice160
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Procurement and Tendering118
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Project Financial Control and Reporting79
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Quantification and costing63
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Contract Admin103
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Risk Management41
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HOT TOPICS APC S1 202533
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Case study13
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MOCK QUESTIONS256
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Paul B Questions11
