Contract Admin and Practice

Question 1

What is practical completion?

Answer 1

Practical completion is the date in which the contractor completes the works. Different from Completion Date which is the target date set in the contract.

Question 2

How is a JCT Contract built up?

Answer 2

Agreement: Date of agreement, Employers details, Contractors details; Recitals: Intro, Works descriptions, Drawings, Pricing schedule; Articles: Names the parties, ADR, Obligations; Contract particulars: Retention, Liquidated damages, Insurance, Listed items; Attestation: Signatures, As a deed or underhand, Deed – 12 years limitation period, Underhand 6 years limitation period.

Question 3

What is the role of the Contract Administrator?

Answer 3

Manages the contract, Issues instructions, Reviews claim entitlement.

Question 4

What is retention?

Answer 4

A portion of money set aside from each interim payment to act as an incentive for the contractor to return and rectify any defects during the defect period.

Question 5

What is a retention bond?

Answer 5

Financial guarantee that the client withholds.

Question 6

What is the defects period?

Answer 6

A period of 6-12 months where the contractor must return to rectify any defects as a result of their work.

Question 7

What are my responsibilities as a QS at practical completion?

Answer 7

Agree final account, Apply for final interim payment cert, Apply for first release of retention.

Question 8

What is the JCT payment cycle?

Answer 8

The due day is 7 days from the valuation date in the contract; Payment notice must be issued 5 days after the due date; 14 days from the due date the contractor is paid; No less than 5 days before the final date for payment a pay less notice is issued.

Question 9

What does a QS do at each key date?

Answer 9

Valuation date – submit application for payment; Due date – nothing; Payment notice date – issue payment notice.

Question 10

What is a non-completion certificate?

Answer 10

Cert which states that a completion date has been missed. Gives rights for the client to levy liquidated damages.

Question 11

What are liquidated damages?

Answer 11

Pre-determined estimate of loss.

Question 12

What are the difference between liquidated and unliquidated damages?

Answer 12

Liquidated is pre-determined; Unliquidated is actual loss.

Question 13

What are listed items?

Answer 13

Items agreed to be paid upfront/offsite.

Question 14

What was included in my vesting cert?

Answer 14

Unique reference, Description, Cost, Location, Picture and reference.

Question 15

How do you submit an extension of time?

Answer 15

Issue a notice of delay; Issue an application for extension of time which includes: Details around the delay, Estimated duration, Relevant event clause.

Question 16

How do you submit a loss and expense?

Answer 16

Give notice in writing that I intend to submit a loss and expense claim; State description; Relevant matter clause; Any substantiation required.

Question 17

Key differences between JCT and NEC?

Answer 17

Programme is a key element of an NEC contract whereas it is hardly mentioned under JCT; Variations / CEs; PM / CA.

Question 18

What advice do you provide internally in respect of delays due to weather?

Answer 18

Weather is a relevant event however not a relevant matter, meaning the Contractor will only receive time and no money. Although the extension of time covers the period in which the contractor will be exposed to LADs, the additional prelims will be at the contractors cost. I’d advise to explore other avenues of applying for extensions of time where loss and expense is also due.

Question 19

What advice do you provide regarding the changes introduced in JCT 2024?

Answer 19

The contract now includes asbestos, contaminated materials and UXOs when discovered on site: I’d advise that employers should ensure investigations are carried out before tendering; Contractors should assess their entitlement to time and money. There is a mandatory good-faith collaboration clause now included: Requires parties to act in good faith.

Question 20

What advice do you provide for S/C LAD rates?

Answer 20

LADs should be a pre-estimate of loss and not a penalty; The rates should be tailored to the subcontractor’s scope; Avoid using massive rates for small scale subcontracted works as they will become unenforceable; I advise to proportion the rates based on the scale and how critical the work is.

Question 21

How did I prepare the loss and expense claim for prolongation at 75 London Wall?

Answer 21

Issue a delay notice: Quote the relevant matter, Detail the delay, Give notice that I am planning on submitting a loss and expense claim; Prepared the claim: Used invoices, Time sheets, Site diaries, Based on actual cost.

Question 22

What is included in LAD calculations?

Answer 22

Loss of revenue, Offsite storage, Legal fees, Consultant fees.

Question 23

How do JCT subcontracts provide for LADs?

Answer 23

There is no clause for LADs in a subcontract; They are structured to be back to back with main contract; If they are to be adjusted, I would need to arrange for the subcontract to be amended.

Question 24

Under which circumstances would you recommend using JCT D&B?

Answer 24

When the Employer wants to maximise buildability; When the employer doesn’t want design responsibility; When the employer wants a quick start on site.

Question 25

What are the benefits to a contractor of a D&B contract?

Answer 25

Factor in a risk premium into their price; Opportunities when building the project by utilising different materials or methods of construction that still meet the Employers requirements; For example, as the Contractor holds design responsibility, they can carry out value engineering exercises within the design.

Question 26

Which entity would usually complete RIBA Stage 4 on a DB contract?

Answer 26

The Contractor would usually hold the design responsibility at stage 4 on a D&B contract.

Question 27

Is DB appropriate if the design was completed to RIBA Stage 4?

Answer 27

No, a traditional approach would be more suitable as the design is already at the responsibility of the Employer; Another benefit of D&B is a quick start on site, however that will not matter if the design is already complete.

Question 28

Would you recommend the use of letters of intent?

Answer 28

No I would not advise the use of letters of intents; They would be a last resort; They are generally used for enabling early works packages, however they carry significant risk; They must be completed with caution ensuring that they contain a defined scope, costs, time limits etc; By the time you have drafted a secure letter of intent, you may as well have drafted a contract.

Question 29

What are the risks when using a LOI?

Answer 29

Legal uncertainty; Disputes over scope; Financial exposure.

Question 30

Do you produce LOI's?

Answer 30

No this should be carried out by a legal professional.

Question 31

What is a Collateral Warranty and when is it appropriate to use?

Answer 31

A collateral warranty provides a contractual link between two parties involved in the same project, however would not usually have a contractual link; For example, I used a collateral warranty at 63 new bond street for the piling as it was designed by our subcontractor. This provided security and insurance for the Employer.

Question 32

What is a key consideration when including payment schedules in Subcontracts?

Answer 32

Ensure the payment schedule is aligned with the main contract; Ensure there are enough periods listed to cover the duration of the subcontractor’s scope.

Question 33

What happens if the dates expire in the payment schedule?

Answer 33

There should be a note that they continue in the same cycle; Contractually, it would signify the final valuation.

Question 34

What do you need to form a contract?

Answer 34

Offer, Acceptance, Intent, consideration.

Question 35

What are some differences between JCT and NEC contracts?

Answer 35

PM / CA; Compensation events must be implemented; Variations are not agreed until final account.

Question 36

How are JCT contract structured?

Answer 36

Agreement: Project name, Employer, Contractor; Recitals: Introduction, Description fo work, Pricing schedule; Articles: ADR, Obligations; Contract particulars: Retention, Liquidated damages, Insurances.

Question 37

What are JCT approximate quants?

Answer 37

Remeasured.

Question 38

What is the HGCRA?

Answer 38

Construction act; Forms part of every construction contract; Provides rights around payment and disputes.

Question 39

What is LDEDCA?

Answer 39

Amended the HGCRA; Added payless notices; Removed pay when paid; Added oral contracts.

Question 40

What is an advance payment bond?

Answer 40

Upfront payment with a guarantee that works will be complete; Protects the client if the contractor breaches contract.

Question 41

Name some examples of relevant events?

Answer 41

Exceptionally adverse weather; Variations; Force majeure; Third party disruptions.

Question 42

Name some examples of relevant matters?

Answer 42

Possession failure; Variations; Disruption.

Question 43

Why would you advise to use a JCT minor works contract?

Answer 43

Small scale; Low risk; Low value.

Question 44

What are the insurance options under a JCT?

Answer 44

Option A (Contractor Insures) – The Contractor takes out a joint names policy; Option B (Employer Insures) – The Employer takes out a joint names policy; Option C (Existing Structures / Refurb) – The Employer insures the existing structures and contents and the new works.

Question 45

What is a joint names policy?

Answer 45

Construction insurances that cover both Employer and Contractor under a single policy; It ensures they are treated as one entity regarding claims; Covers both the existing structure and the contract works.

Question 46

What is public liability?

Answer 46

Covers injury or damage to third parties; Example – falling debris on the public footpath.

Question 47

What is Employers liability?

Answer 47

Covers injury or damage to contractors’ own staff; Example – health and safety incident.

Question 48

What is Professional Indemnity Insurance?

Answer 48

Protection for professional negligence; Example – design errors.

Question 49

What are the required PI levels?

Answer 49

£100k or less turn over - £250k; £100k to £200k - £500k; Above £200k - £1m.

Question 50

What is subrogation in insurance?

Answer 50

Insurance principle allowing insurers to step into the shoes of a policy holder to sue a third party; Example – the insurer steps into the main contractors shoes to sue a subcontractor.

Question 51

What are third party rights?

Answer 51

Allows a person not directly party to a contract to enforce its terms.

Question 52

What is the difference between third party rights and collateral warranty?

Answer 52

Collateral warranty has a separate document; Third party rights are more loose.

Question 53

What happens at PC?

Answer 53

The Contractor finishes their scope; The CA issues a certificate of practical completion; The first half of retention is released; The defect liability period starts.

Question 54

What is the payment cycle under JCT?

Answer 54

The valuation date is stipulated in the contract; The due date is 7 days after the valuation date; The payment notice is then issued 5 days after the due date; The final date for payment is 14 days after the due date; And a pay less notice must be served 5 days prior to the final date for payment.

Question 55

What did HGCRA introduce?

Answer 55

Rights to adjudicate; Interim payments; Right to suspend performance for non-payment.

Question 56

What did LDEDCA introduce?

Answer 56

Payless notices; Disallowed pay when paid; Oral contracts.

Question 57

What steps must be taken before deducting liquidated damages?

Answer 57

The CA must serve a notice for non-completion; LADS will then be deducted through a payless notice.

Question 58

Do materials to be paid off site need to be agreed pre-contract?

Answer 58

No it is discretionary from the Employer and should be recorded in a vesting certificate.