Contract Administration

Question 1

Who is responsible for administering the building contract?

Answer 1

• JCT MW/IC/SBC - Contract Administrator
• JCT DB - Employer’s Agent
• NEC3 and NEC4 - Project Manager

Question 2

Please detail some key responsibilities of the contract administrator under a JCT contract?

Answer 2

• Administering the contract between contracting parties
• Determining EoT and L&E claims
• Issuing PC statements
• Issuing instructions
• Certifying interim payments
• Administrating change control procedures
• Collating and issuing schedules of defects
• Notifying partial possession / certifying sectional completion / non-completion

Question 3

How does the EA role differ from the CA role?

Answer 3

CA - solely responsible for administering contract for the employer. Impartial role in the contract
EA - acts on behalf of the employer in all matters. When carrying out certification and decision-making, EA should still act impartially

Question 4

What is practical completion?

Answer 4

• PC - point at which a building project is complete (except minor defects and outstanding works that can be put right without undue interference/disturbance to an occupier
• Project is “capable of beneficial occupation and use’ by Employer

Question 5

Can you rescind the PC statement once it has been issued?

Answer 5

No - once issued, it’s final and binding on the employer

Question 6

What are the consequences for the contractor and employer once the PC statement has been issued?

Answer 6

• 50% retention released (STC)
• Defect rectification period starts
• Employer usually required to start insuring and securing building
• Employer’s ability to levy liquidated damages ends
• Performance bond / PCG expires

Question 7

What is a non-completion certificate?

Answer 7

• Formal written notice that contractor has failed to complete the works described in the Contract by the completion date
• Enables liquidated damages to be levied

Question 8

What are the consequences of a non-completion certificate?

Answer 8

Triggers right for employer to levy liquidated damages if they choose to do so (employer must also write to contractor notifying them of intent and issue pay less notice to recover LDs)

Question 9

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?

Answer 9

• Depends on why EoT issued and whether L&E allowed to be claimed for
• If L&E can be claimed, contractor would be entitled to costs over Christmas period

Question 10

What is the defects liability period?

Answer 10

• Duration at end of contract (usually 1 year after PC certificate issued) where contractor undertakes to rectify any defects arising within the structure at the Contractor’s expense, providing they were due to materials and workmanship not in accordance with contract
• If the contractor failed to rectify any defects, the employer may employer someone else to undertake and recover cost from main contractor (can use retention monies)

Question 11

What’s your understanding of latent defects and what contractual issues are associated?

Answer 11

• Latent defects not readily identifiable upon inspection, only come to fruition some time after completion, potentially after years
• Claim in contract can only be brought about within limitation period (6 / 12 years depending on whether executed as a deed or underhand)

Question 12

What should the CA do if latent defects are discovered?

Answer 12

Issue instruction to contractor as necessary, may include to instruct compliance with 3rd party examining / opening up works to identify defect

Question 13

Why might the EA instruct the contractor to ‘open up’ works which have been covered up?

Answer 13

• If they suspect work isn’t completed in ‘proper and workmanlike manner’ or believes ‘materials, goods, or work not in accordance’ with the Contract
• Defined under clauses 3.12 and 3.13

Question 14

When issuing instructions for further opening up and testing to determine the extent of non-compliance what sort of things should the CA consider?

Answer 14

• Significance of non-compliance and consequences on building owners, users, adjoining properties and public
• Reason for non-compliance
• Level of supervision and control employed by contractor
• Recognised testing methods
• Time and consequential costs of opening up

Question 15

Assuming the EA has instructed the contractor to ‘open up’ the works, what are the potential outcomes? (including effect on cost and completion date)

Answer 15

• If works NOT defective, contractor paid for opening up, may be entitled to adjustment of completion date
• If works ARE defective, contractor remedies at own expense / gives Employer saving, EA can instruct Contractor to open up similar work, which if defective no payment / adjustment of completion date. If not defective, completion date may be adjusted but still no payment

Question 16

If the works or materials aren’t in accordance with the Contract, what options does the Architect have available to them?

Answer 16

Architect may:
- Instruct contractor to remove all defective work / for variations necessary, materials and goods at their own expense and time
- Notify in writing they can remain with appropriate deduction made from contract sum
- Instruct to open up and test further work to determine extent of any non-compliance

Question 17

What is an EoT?

Answer 17

Extension of time - provision allowing CA to adjust completion date, so postponing employer’s right to recover liquidated damages. Used in instances where delay is not contractor’s responsibility or fault

Question 18

What’s the procedure for claiming an EoT?

Answer 18

• As soon as reasonably apparent that delay has, or is likely to occur, contractor notifies CA in writing
• Notification identifies ‘relevant event’ and gives indication of extent of delay - usually shown on a programme
• Contractor required to submit info requested by CA to determine claim
• CA notifies contractor of their decision of the claim- completion may be adjusted, if delay in accordance with contract and adequately demonstrated

Question 19

From a CA point of view, what are the time periods related to assessing relevant events and adjusting the completion date?

Answer 19

CA must notify contractor of their decision within 12 weeks of receipt of the required particulars (sooner if completion date less than 12 weeks away) and state extension awarded

Question 20

If the contractor successfully demonstrates a relevant event and CA adjusts the completion date, is the Contractor due additional preliminaries?

Answer 20

No, Contractor is required to demonstrate a ‘relevant matter’ for L&E claim

Question 21

Would you as the QS get involved in helping the CA assess EoT?

Answer 21

Yes, involved in assessing financial implications of EoT, if applicable

Question 22

How did you assess an EoT claim on xxx project?

Answer 22

• Reviewed current programme against original, determining which items on critical path
• Assessed whether cause of delay impacted critical path
• Liaised with design team to confirm the time proposed/claimed to complete works was reasonable

Question 23

How would you deal with an urgent Verbal Instruction?

Answer 23

• If instruction affects critical path, CA, QS client and contractor to review
• If valid under the contract, formalise in writing ASAP

Question 24

How is completion defined under NEC ECC contracts?

Answer 24

Clause 11.2(2)

NEC3
- Done all work which Works Information states they are to do by Completion Date and
- Corrected notified Defects which would have prevented the Employer from using the works and Others from doing their work

NEC4
- Done all the work the Scope says to be done by Completion Date and
- Corrected notified Defects which would have prevented the Clieent using the works or Others from doing their work