Contract Administration

Question 1

At Nursteed Rd, Devizes, was the CCTV survey included in the tendered works? Would this have changed your assessment of loss and expense?

Answer 1

• CCTV survey was included but repairs to the collapsed drain were not as this was unforeseen.
• Prelims would need to be pro-rata’ed based on additional time, or assessed for which prelim costs were time based vs fixed cost.
• If repairs were in tender doc this would have changed assessment - contractor would have allowed for this.

Question 2

Nursteed Rd - how did you asertain the delay and calculate the cost? How did you present this to the client?

Answer 2

• C serves notice that a delay to completion is expected (MW)
• CA makes ‘fair and reasonable’ assessment of delay - requesting info if possible. In this instance, based on time to get specialist subbie to site. CA can issue further EoT if necessary.’
• Cost of variation reviewed with C - based on subbie cost plus OH&P.
• Associated L and E Claim from C based on ACTUAL loss, not based on an estimate - therefore enquiries made to contractor and evidence needed.
• L and E claim based on pro-rata prelims of time-based costs, and contractor OH&P.
• Presented to client as a breadown, including impact on professional percentage based fee, VAT etc.

Question 3

At Atlantic Works, Southampton, How often did you issue financial reports to the client?

Answer 3

• In accordance with the Term’s of Appointment which set out that reporting to client would happen after each site inspection.

Question 4

At Southampton, What process did you follow to agree the final account with the contractor?

Answer 4

• Records held by the CA e.g. prov sums, contingency sums, additions, omissions, variations, loss and expense.
• Evidence provided by the Contractor that was requested by the CA - these are time limited. e.g. quotations.

Question 5

At Southampton, what is required as CA to release retention at expiry of rectification period?

Answer 5

• Contractor has made good ‘defects, shrinkages andother faults’ that have been notified to it in time.
• Certificate of Making Good Defects.

Question 6

What happens at Practical Completion?

Answer 6

• Concept Not Defined
• Interpretation of CA
• Only ‘De Minimus’ works outstanding - nothing to prevent beneficial occupation
• Emplyer Takes Possession
• Employer Obliged to Insure
• 50% Retention released
• Right to Claim LADs ends
• Rectification Period begins

Question 7

What is the purpose of the Non-Completion Certificate?

Answer 7

• Preserves Employer’s Ability to Claim LADs

Question 8

How should an Interim Valuation be evaluated?

Answer 8

• The value of works properly executed.
• Value of materials on or off site - check for receipts/physical existence of materials if necessary. (MW does not include provision for materials off-site).
• % of any agreed variations or instructions.
• Adjustments due to instruction of PC Sums.
• % of time related and fixed prelim costs - including delay and prolongation costs appropriately.
• Retention deducted. For valuations after PC this figure is normally halved.
• Presented Gross, Less previous payments, Less Retention.
• It is possible to accept defective work - adjustments to contract sum should be agreed in writing by both parties.

Question 9

What is a Relevant Event and can you give some examples?

Answer 9

• Event entitling contractor to an E.O.T. and potentially Loss and Expense Claim as well.
• Examples:
• Variations
• Exceptionally Adverse Weather
• Terrorism or Civil Commotion
• Delay in giving possession of site.
• Delay by nominated sub-contractor.

Question 10

What is a typical length of a Rectification Period?

Answer 10

• Between 6 and 12 month with JCT contracts.
• 12 months is typical as it allows the building to be assessed through a full 4 season cycle.

Question 11

Explain a NEC, ICC and IChem E Contract.

Answer 11

• NEC - New Engineering Contract. Created to foster more collaboration in the industry. Latham report recommended more widespread use.
• ICC FIDIC - International Federation of Consulting Engineers, ICC is typically used for infrastructure projects.
• IChemE - performance based contracts for construction of process plants

Question 12

Why was the RICS CA Guidance Note Withdrawn?

Answer 12

It was ‘out of date’

Question 13

Talk me through the process of instructing a variation.

Answer 13

• Is it a ‘material change’ from the specification - something new or different?
• Has the contractor missed something in the spec?
• CA reviews cost of variation (with C and E). If cannot agree on price of variation with contractor, then CA values it (MW).
• If it gives rise to additional costs, the CA will need to seek permission from Employer.
• CA to consider impact on programme and sequence.
• Issued in writing by the design team to the contractor.
• EOT and Loss and Expense Claim from contractor assessed alongside.
• CA should instruct expediently
• CA should update projected final account.

Question 14

At Nursteed Rd, Devizes, How could the variations / delays been avoided?

Answer 14

• It would have been possible to carry out the cctv survey prior to works starting and to include necessary works within the contracted works. However, this would have led to 2 periods of disruption for the trading store.
• The protective barrier in the car-park was added by the client. This didnt add much time, but perhaps could have been avoided with more knowledge of client’s intentions for the site.

Question 15

Apart from RICS Guidance note, what governs payment in construction?

Answer 15

• The Housing Grants, Construction and Regeneration Act (The Construction Act) 1996, establishes contractors right to be paid in interim payments
• The provisions of the Contract itself:
• Contractor makes application for payment anytime before Interim Valuation Date
• The Due date is 7 days after the IVD, and the Final Date for Payment is 14 days from this e.g. 21 day cycle.

Question 16

Why was the Rectification Period 12 months? Explain your decision making.

Answer 16

• This allows the work to be subject to a full 4 seasons of weather, so any expansion/contraction will become apparent.
• Protects the employer and contractor.

Question 17

What is the difference between named and nominated sub-contractors? What/where is the risk?

Answer 17

• Nominated sub-contractor: Pre-selected by the client and imposed on the contractor. Risk for delay or insolvency on the part of the sub-contractor rests with the client.
• Named subcontractor: Client influences the choice of subbie by providing a list within the tender documents. The main contractor (once appointed) seeks tenders from the subbies and appoints. The contractor takes on responsibility for the performance of the subbie.

Question 18

How are LADs calculated under JCT? What processes and notices must be administered and why are these important?

Answer 18

• Certificate of Non-Completion - if subsequent EOT is granted then another Cert of Non-Completion must be issued by employer.
• Notice that Employer may require deduction of LADs.
• A Notice demanding payment of LADs or withholding or deducting them.

Question 19

When would you choose a JCT MW Contract?

Answer 19

• Traditional procurement - all design completed before tendering to contractors.
• Simple in nature.
• Where there is no requirement to use a specific sub-contractor. Can name in tender documents but must be made clear who accepts responsibility for performance etc.
• Where any Contractor Designed Portion is simple in nature and not critical to the project (as not provision for requiring PI insurance from the Contractor).
• Where there is no need for Sectional Completion or Partial Possession.
• When a Clerk of Works is not required.
• When PI insurance is not required for a Contractor Designed Portion.

Question 20

What requirements does the Construction Act 1996 make of contruction contracts?

Answer 20

• Right to stage payments
• Right to notice of the amount to be paid.
• Right to suspend work for non-payment
• Right to take any dispute arising out of the contract to adjudication.

Question 21

What is Retention?

Answer 21

• A percentage reduction on interim payments, of which half is released after Practical Completion.
• JCT MW: 95% certified on interim payments (and then 97.5% at PC). JCT IC and S: 97% on interim payments (and then 98.5%).

Question 22

What is the payment procedure under JCT contracts?

Answer 22

• Interim Valuation Date - recorded in contract particulars and one month after commencement (Construction Act 1996), and monthly thereafter.
• Due date - 7 days after Interim Valuation Date.
• Employer’s Payment Notice - 5 days after due date at the latest (good practise to get this issued as soon after due date as possible).
• Employer’s Payless Notice - No later than 5 days before the Final Date for Payment.
• Final Date for Payment - 14 days after the Due Date.

Question 23

What certificates must have been issued before the Final Certificate?

Answer 23

• Interim payment certificates at monthly intervals.
• Practical Completion certificate.
• Interim payment certs following PC, inc release of 50% of retention.
• Certificate of Making Good.

Question 24

What can a contractor do if an emplyer fails to pay amounts due by the date?

Answer 24

• They can charge interest on late payment of interim and final certificates at 5% above the Bank of England rate.
• Contractor also has a right to stop work, or suspend performance of its obligations under the contract.

Question 25

How are defects managed during the Rectification period?

Answer 25

* CA must notify the contractor within 14 days of the expiry of the Rectification Period of any defects, shrinkages, other faults. * The Contractor should put these right at his own expense. * The CA could otherwise instruct an appropriate deduction from the Contract Sum. * Once Contractor fullfilled duties above, CA should issue Certificate of Making Good.

Question 26

What is the Final Payment Procedure under JCT MW?

Answer 26

* Contractor supplies to the CA all documentation required for calculation of the final payment. * Due date for the final paymet will be 28 days after receipt of this, or from the date stipulated in the cert. of making good, whichever is the later. * CA to issue final cert for payment no later than 5 days from this due date. This states the Contract Sum, adjusted for any defects not rectified or any instructions not complied with. * Final date for payment will be 14 days after the due date.

Question 27

How would you choose insurance provisions for works using JCT MW?

Answer 27

* 5.4A used where no existing structures and Contractor covers works in joint names all-risk policy - either as a specific policy or under the Contractor's annual All Risk Insurance. * 5.4B used where there are exisitng structures - Emplyer covers works in joint-names all risk basis and extends risk to existing structures to cover the contractor on 'specified perils'. * 5.4C used where insurance by other means needed. e.g. where emplyer is a tenant or a home-owner and existing structures insurance not readily available. * I would use NBS Prelims software to create prelims which has useful prompts for insurance. I would also defer to a senior colleague if any unusual conditions apply.

Question 28

What is the Base Date in JCT contracts?

Answer 28

A date 7 days before submission of the tenders. Serves to determine what fluctuations are payable (is this provision is used) (MW only)

Question 29

How should LADs be calculated?

Answer 29

* A genuine pre-estimate of the loss that the emplyer is likely to suffer. * A reasonable and proportionate protection of their commercial interests.

Question 30

What management contracting?

Answer 30

A procurement route where the various contractors are contracted to a single 'management contractor' who is appointed by the client. Can speed up large projects, as the various stages can be commenced before the complete design is finished e.g. piling started.

Question 31

What is construction management?

Answer 31

Similar to management contracting. Except the individual contractors/trades are contracted direct by the client and a 'contruction manager' coordinates them on the client's behalf.

Question 32

What is a 'Prime Cost Sum'?

Answer 32

* Different to a Prov Sum. Normally a price ascertained in advance of tender process from a specialist supplier or subbie - not relevant to MW. * Is still adjustable as there may be uncertainty on what the cost is

Question 33

How does a CA allow for occupation by the employer during works?

Answer 33

* Should be made clear in the tender documents * Agreement reached with C over necessary arrangements. * Phased if possible, so dates when C has access are made clear from start.

Question 34

What is the procedure for deducting LADs?

Answer 34

* Can be recovered as a debt, or from monies due (more likely) * If LADS to be deducted from an amount on a payment cert, must issue a pay-less, with reason for deduction and how calculated clearly described. * If EoT granted following date for completion, LADs deducted to that point must be re-paid. * E can claim LADs as reduction in moies due from any cert, or as a debt any time up until Final Cert.

Question 35

If the Contractor and the Employer were of the opinion that an Extension of Time is owed, would you give one?

Answer 35

As Contract Administrator, and under the terms of the contract, it is for me to determine if an EoT is due. JCT MW - due for occurences that are outside of the C's control. JCT IC - only possible to give in relation to delay caused by events in Clause 2.20 (Relevant Events): *Where C has suspended works due to non-payment by E. *Failure to release info by E, CA or any Emplyer's Person. *Weather - exceptional and adverse. *Strikes *Force Majeure - events outside of the control of humans.

Question 36

When can the Final Certificate be issued?

Answer 36

* At end of rectification period * Only once the Final Account has been agreed. The final account may have been agreed at PC, in which case any defects arising during rectification period are either made good by C, or E and then deducted from Retention.

Question 37

What is the difference between patent and latent defects?

Answer 37

Patent = discoverable by reasonable inspection. Latent = not discoverable by reasonable inspection.

Question 38

How can defects be addressed through Final Account?

Answer 38

* Final Account can be agreed at any point - PC or later at end of rectification - it is distinct from the Final Cert. *If defects rectified by C before Final Account there is no affect on final sum. * If C does not rectify within time, E can engage another contractor and deduct the amount from the final account. * If final account agreed at PC - then defects are addressed by C during rectification period. If they don't, E can do them and use retention monies.

Question 39

What is the RICS doc on final account?

Answer 39

Final Account Procedures Guidance Note - 2015.

Question 40

Give some examples of Relevant Events under the JCT IC

Answer 40

*Variations *Opening Up works that do not show a fault of the contractor *Deferment of being given possession of the site *Approximate quantities that are not accurate of work involved. *Suspension of works by the contractor for non payment by Employer.

Question 41

Give example of Relevatn Matters under JCT IC entitling the Contractor to a Loss and Expense...

Answer 41

*Variations *Approx Quantities *Omissions, Impediments etc on part of CA or Employer