Contract Administration

Question 1

Can you outline the role and responsibilities of the CA?

Answer 1

Contract Administrator – is appointed by an employer to administer the contract between the employer and the contractor; technically the role does not begin until building contract, but in practice starts before; is responsible for administering the terms of the building contract between the parties. Tasks:
• chairing meeting,
• periodically inspecting the works
• giving instructions, including variation or change orders
• determining any application for extensions of time by the contractor,
• authorising interim payments to the contractor,
• certifying the date of completion
• setting the adjusted contract sum (final account)

Question 2

What information is needed to enable a completion certificate to be issued?

Answer 2

• The contract administrator certifies practical completion when all the works described in the contract have been carried out. This is when, leaving aside minor items and/or snagging, the works are considered to be complete.
• Once the certificate of practical completion has been issued, the client takes possession of the works for occupation. At this point the contractor no longer has exclusive possession of the site, and their obligation to insure the works and their liability for liquidated damages for delay comes to an end. Depending on the type of contract, at this point the contractor usually becomes entitled to half of the retention monies.

but what information do you need?

Question 3

What is sectional completion and how does this differ from Practical completion?

Answer 3

• Sectional completion refers to a provision within construction contracts allowing different completion dates for different sections of the works.
• Sectional completion differs from partial possession in that it is pre-planned and defined in the contract documents.
• Practical completion - generally, it is the point at which a building project is complete, except for minor defects that can be put right without undue interference or disturbance to an occupier.
• Partial possession - The client may wish to take possession of part of a building or site, even if works are ongoing. This can be programmed within the original contract documents it the need can be foreseen through a requirement for sectional completion, but in the absence of such a provision many contracts offer the more open-ended option of partial possession.

Question 4

What did you learn from your training course on contract administration?

Answer 4

I gained an understanding of the role and responsibilities of a contract administrator as well as the main administrative procedures when managing a construction contract.

For example I learnt the types of certificates being issued in practice. These are:

• Interim certificate- enable contractor to be paid.
• Partial Possession by the Employer - ad hoc agreement made during contract when Employer takes over part of the site early.
• Section Completion Certificate - written into contract, project divided into section.
• Non-Completion Certificate - Issued when Contractor fails to complete on time as a result of his own fault
• Practical Completion Certificate - issued when the client is physically able to take occupation of the works and use them for their intended purpose.
• Certificate of Making Good - Issued when Certificate of Making Good The Rectification Period is completed and the Contractor has made good all defects notified to him.
• Final Certificate - issued when all defects are completed, the final account is settled.

Question 5

When working on NSN Project, what were the timescale requirements for the payment certificates this project?

Answer 5

No later that 7 days after the due date.

Question 6

If these timescales of issuing Payment Certificate were not met, what happens?

Answer 6

If the payer (i.e. the project manager (or employer, contractor or service manager)) fails to issue a certificate/ payment notice, then the provisions of section 110B of the Construction Act will apply in such circumstances. Section
110B provides that if no payment notice is issued by the contractor (the payee), then:
(a) If the payee (the contractor) has already made an application for payment specifying the sum the payee considers to be due and the basis on which that sum is calculated, the sum applied for will become due or
(b) If the payee has not already made an application for payment, the payee can issue a payee’s default notice specifying the sum the payee considers to be due and the basis on which that sum is calculated.

However, the absence of an express term confirming this position may potentially lead to uncertainty.

Question 7

What was the process you were required to follow for issuing
instructions?

Answer 7

On Project Winchester and NSN I needed to follow Change Control Proces before instructing the changes and the standard NEC procedure to raise an CE an implement the cost/time.

Question 8

What was the dispute procedure under this contract?

Answer 8

On NSN contract was amended to allow for escalation procedure that was included as an additional form of conflict resolution. The nominated programme director and nominated Consultant or Contractor Director were required to meet within 14 days of the other party’s notification to resolve the dispute. If the dispute had not been resolved, then either party could be referred to adjudication. I participated in these meetings where my input and evidence were requested by the Client. For instance, I provided calculations and supporting information to conclude the issue on application of framework rates, and
I advised the Client regarding the contract’s entitlement and specific items which the issue had an impact on as well as relevant records issued to the Consultant in order to solve the problem at the project level.

In addition option W2 was incorporated into the contract so adjudication was a form of the dispute resolution.

Question 9

What is the appropriate time, in terms of this contract to notify a delay?

Answer 9

The Contractor has 8 weeks to notify a Compensation Event but the Contractor also need to issue an Early Warning which the experience contractor would have given otherwise the Contractor may not be entitle to any payments.

Question 10

In terms of agreeing the final account on this project, what does
the contract state?

Answer 10

Under NEC there is no references to the final account as such. the final account is based on rolling final account basis and it’s effectively the last valuation.

NEC4 specify the Final Assessment (but not NEC3) and the final amount is due 4 weeks after the Supervisor issue the Defects Certificate or 13 weeks after the PM issues a termination certificate.

Question 11

When acting as Employers agent and issuing practical completion,
what happens as a result of practical completion?

Answer 11

• Employers takes possession of site
• Half retention normally released
• Employer must now insure the building
• Rectification period Begins
• Final Account Period Begins
• Liquidated Damages cannot be taken after this date

Question 12

Explain the key principles in managing JCT 2016 contract?

Answer 12

the parties stated within JCT contracts are The Employer, the Contractor, The Architect/Contract Administrator, The Employer Agent, the Quantity Surveyor, the Adjudicator,
Structure of JCT: Articles of Agreement, Recitals & Articles
Changes managed by:

Relevant event - A term contained within the Contract relating to categories for which a Contractor is entitled to an Extension of Time; example: Variations, Instruction, Lock out/strike
Relevant matter - A term contained within the Contract relating to categories for which a Contractor is entitled to an Extension of Time and Money !

Question 13

How NEC and JCT contract differ?

Answer 13

NECJCT
1. Person to act on behalf of the Employer
Project Manager (ECC), Employer’s Agent (PSC)Contract Administrator
1. Approach
Focusing on proactive and collaborative approach (e.g Early Warning) Focusing on liabilities and risks
1. Language
Plain, simple EnglishTraditional lawyer’s language
1. Time
NEC demands a more detailed set of documents that make up the programme to be submitted at regular basis

JCT requires the contractor to submit a master programme for execution of the works as soon as possible after the contract is executed

No details of what should be included in the programme

No requirements to submit revisions on regular basis

Early Warning Processes in place where both the Project Manager and Contractor are required to notify each other of any matter which could affect time, cost or quality- followed by risk reduction meeting Programme is nor a contractual document Period for reply to any communication, CE, Early Warning etc stated in the contract
1. Cost
The flexibility of the cost options (A to F) under NEC provides for a more modern set of approachesJCT maintains a relatively firm stand on pricing options.NEC provides an array of options with six pricing options.For example, JCT is mostly based on lump sum contract with or without quantities

Compensation Events deals with matters of cost and time together .

Compensation events are events which are usually not the fault of the contractor and change the cost of the work, or the time needed to complete it. As a result, the prices, key dates or the completion date may be reassessed, and in many cases the contractor will be entitled to more time or money.

Variation/Claim – JCT splits up the components of time and cost, dealing with them and their sub-parts independently at various stages after the change arises

Relevant event - is an event that causes a delay to the completion date, which is caused by the client, or a neutral event not caused by either party.

Relevant matter - is a matter for which the client is responsible that materially effects the progress of the works. This enables the contractor to claim direct loss and / or expense that has been incurred.

in relation to the NEC contract it is located in three different locations – clause 5, Y(UK)2 and Contract Data PartIn relation to payment, the JCT contract payment section is clear, is all in one section (clause 4) and easy to follow.More objective – when dealing with weather conditions “worst than 1 in 10 years”Subjective “exceptional diverse weather conditions
1. Quality
NEC includes the work information/scope(NEC4) what design the contractor is obligated to carry outJCT provides separate contracts for employer’s design and contractor’s designSupervisor and Contractor are obligated to notified each other about defects No such a statement under JCTNEC provides a process for accepting defects reflecting time and costSimilar to NEC but only addresses the cost effect of work, materials or goods.
1. Format

Core Clauses (1-9)

Main Options (A-F)

Resolving and Avoiding Dispute Options (W1-W3)

Secondary Options (X1-X22)

Z Clauses – Additional Conditions of Contract

Contract Data (part 1 and Part 2)

Articles of Agreement.

Contract Particulars: these contain project-specific information.

Conditions of Contract; and

Schedules.

1. Terminology
   Project ManagerContract Administrator Client (NEC4)EmployerCompensation EventRelevant matter, relevant event

Question 14

How did you manage the change control process on NSN project?

Answer 14

• Producing CCF
• Tracking changes against the budget
• Issuing CCF to the Client/ Producing commercial validation report
• managing NCE/ CE process in line with NEC requirements and timescale

Question 15

What did you do during the weekly Early Warnings meetings on Project Winchester?

Answer 15

• discuss the potential issues with the wider team in order to avoid the issue or minimize risks
• sometime I was asked to price the Early warning to provide a financial indication o the issues.

Question 16

How did you take a leadership role on Project Wincher in managing CE? How did you do it?

Answer 16

• I issue relevant communication to the Contractor
• I assessed the CEs and agreed the value on CE
• I chair the weekly Compensation Events meetings where I discuss key actions and track the progress
• I track the CES status in a form of CEs tracker
• I responded to any communication issued on Conject
• I implemented and instructed changes on Conject.

Question 17

What are the consequences of Practical Completion?

Answer 17

• Employers takes possession of site
• Half retention normally released
• Employer must now insure the building
• Rectification period Begins
• Final Account Period Begins
• Liquidated Damages cannot be taken after this date

Question 18

Name certificates issued under NEC form of contract

Answer 18

• Defect Certificate
• termination certificate
• payment certificate
• PM certify Completion within one week from Completion

Question 19

What is a Completion under NEC contract?

Answer 19

• Completion is when the contractor has done all work within the Works Information/Scope and corrected all notified Defects
  *

Question 20

What is defined cost?

Answer 20

Defined Cost is the cost components in the Schedule of Cost Component less Disallowed Cost.

Question 21

What is Disallowed cost?

Answer 21

Disallowed Cost is cost which the Project Manager decides:
• is not justified by the Contractor’s accounts and records;
• should not have been paid to a Subcontractor or supplier in accordance with his contract;
• was incurred only because the Contractor did not:
‒ follow an acceptance or procurement procedure;
‒ give an early warning which this contract required.

and includes the cost of:
• correcting defects after Completion;
• correcting defects caused by the Contractor not complying with a constraint on how he is to provide the works;
• Plant and Materials not used to Provide the Works (after allowing for reasonable wastage);
• resources not used to Provide the Works (after allowing for reasonable availability and wastage);
• preparation for adjudication.

Question 22

What is schedule of costs components?

Answer 22

• Provide division between reimbursable items of cost, and items deemed to be included in the Fee
• Two types of schedule:
  
  • Schedule of Cost Components (SCC); used only with Options C, D and
    E for payment of Defined Cost and assessment of compensation events
    
    • include: People, Equipment, Plant and Materials, Sub-contractor, Charges, Manufacture and fabrication, Design, Insurance
  • Shorter Schedule of Cost Components (SSCS); used always with
    Options A and B for assessment of compensation events,
    
    • include: People, Equipment, Plant and Materials, Sub-contractor, Charges, Manufacture and fabrication, Design, Insurance