Contract Administration

Question 1

What happens at Practical Completion?

Answer 1

• CA/EA certifies PC when all works have been completed (can issue with list of outstanding / snagging works)
• Various documents released to client such as O&M manual, H&S file.
• Client takes possession
• Client responsible for insuring / maintaining the site
• Half retention is released
• End of Contractor’s liability for LDs
• Defect Liability Period begins

Question 2

What’s the difference between a change and an instruction? (two separate items in relevant events in the JCT contract)

Answer 2

Change/variation = difference to works either from additional/unforeseen works or employer changing mind.

Instruction = doesn’t necessarily change works, e.g. expenditure of provisional sums, for emergency action to be taken by contractor, for opening up of completed works for inspection.

Question 3

What is the HGRCA 1996 (Construction Act) and what did it do for construction projects?

Answer 3

Housing Grants, Regeneration and Construction Act 1996

• Right to be paid in interim, periodic or stage payments
• Right to be informed of the amount due, or any amounts to be withheld
• Right to suspend performance for non-payment
• The right to adjudication

Question 4

What is the role of a Contract Administrator?

Answer 4

1) Duties (such as providing necessary information to the contractor), which are carried out as agent of the employer.
2) Certain decision-making functions (such as the certification of work properly carried out) in which the contract administrator is required to act fairly between the parties and exercise independent judgement
- Issues instructions, including variations or change orders
- Settles the adjusted contract sum (final account)
- Determines any applications of extensions of time by the contractor
- Certified the date of completion
- Authorises interim payments to the contractor
- Periodic inspection of works

Question 5

What does the JCT Contract Administration Guidance Note cover?

Answer 5

The roles and responsibilities of the Contract Administrator, specifically in relation to:

• Building Contract
• Employer
• Other considerations such as H&S, CDM, Statutory obligations

Question 6

Can you outline your key responsibilities as Contract Administrator for the Australian Embassy project?

Answer 6

• JCT Intermediate contract
• Undertook CA role towards the end of the defect period
• Key responsibilities were:
• Ensure the defects had been closed out
• Issue the CMGD
• Issue final certificate signifying the end of the works.

Question 7

What are the implications of issuing P.C.?

Answer 7

• Client’s right to liquidated damages ceases
• 50% of retention is released
• Defect rectification period starts
• Client must insure and secure the building

Question 8

What are the implications of issuing CMGD?

Answer 8

• Signifies all notified defects have been rectified
• After which time contractor no longer liable for ‘patent defects’
• Contractor remains liable for ‘latent defects’ for 15 years
• Enables the Final Certificate to be issued

Question 9

What are the key differences between the change control processes on NEC and JCT contracts?

Answer 9

• JCT splits time claims (Relevant Events) from cost claims (Relevant Matters)
• JCT doesn’t have any set periods of reply; claims can be settled retrospectively or post-completion
• NEC managed time and cost claims together as a Compensation Event
• NEC programme is a contract document and must be amended by a CE impacting time
• NEC forces the PM to reach decision on the CE at the time of notification
• NEC has set periods of reply

Question 10

What would you do if the contractor has not completed by the PC date?

Answer 10

Issue a certificate of non completion

Question 11

What is a payless certificate?

Answer 11

The client must issue a pay less notice if they intend to pay less than the amount set out in the payment notice, setting out the basis for its calculation. This has to be issued >5 days prior to payment date.

Question 12

What must a contractor do if a CA issues an instruction?

Answer 12

Comply within 7 days

Failure to comply, the employer is entitled to have it carried out by someone else at the contractor’s expense (contract sum)

If the instruction causes the contractor delay, it is possible for an Extension of Time to be claimed

Question 13

What are the consequences of a certificate of non completion?

Answer 13

• Employer has right to withhold LDs
• Employer has to write to the contractor informing of the intention to withhold LDs
• Employer to issue a pay less notice

Question 14

What can a CA do to open up and test works under JCT?

Answer 14

Issue an instruction for the opening up, inspection and testing of covered work, materials or goods.

The cost is added to the contract sum unless the work is not in accordance.

Question 15

What must a CA provide to the contractor immediately after contract execution?

Answer 15

• Contract documents
• Contract drawings
• Unpriced BoQs

Question 16

What is the Information Release Schedule?

Answer 16

States what information the CA will produce and when it will be provided - failure to provide on time is a Relevant Event / Matter for EoT / Loss and Expense

Question 17

Can the CA suspend the contractor’s work?

Answer 17

Legally neither the employer nor CA has a legal right to order the contractor to suspend work, but in JCT the CA can issue an instruction to postpone the work - contractor is entitled to EoT and loss/expense.

Question 18

Why might a variation be required?

Answer 18

1) Change in employer requirements
2) Client design development
3) Changes in legislation
4) Late information to contractor
5) Change in access
6) Change to materials or spec
7) Discrepancies between contract documents
8) Instructions to spend prime cost allowances or provisional sums

Question 19

What is the definition of a variation?

Answer 19

Changes to;

• design
• material specification
• removal of work properly executed
• access to the site and working conditions

Question 20

What variations are not permissible?

Answer 20

Variations that go to the root of the contract

Question 21

Can a contractor object to a variation?

Answer 21

Yes, the contractor has right to object on reasonable grounds to a variation which alters the working method

Question 22

How are provisional sums expended?

Answer 22

The CA must issue an instruction for the expenditure of provisional sums

Question 23

When does the Contract Administrator role commence?

Answer 23

Not until a building contract is in place between the employer and contractor.

In practice the Contract Administrator may be required to perform pre-contract services.

Question 24

What is a major advantage of the impartiality of a Contract Administrator?

Answer 24

Their decision can be challenged by either the employer or the contractor.

An employer normally cannot challenge an Employer’s Agent decision.

Question 25

Does the Contract Administrator have the right to issue contract instructions?

Answer 25

If the instruction is likely to affect the time or cost of the project, express permission must be achieved from the employer before the instruction is made.

Question 26

What are the Contract Administrator's responsibilities regarding inspections?

Answer 26

- Periodic - Check quality, progress and conformity with the contract documents - Does not extend to all Statutory compliance which remains with the Employer - Inspections can be delegated but it is CA's responsibility to ensure actions are identified and followed through

Question 27

Should there be a named individual as Contract Administrator in the contract?

Answer 27

Usually not, so it is a corporate entity and not an individual liable for errors; should check PII policy to ensure the appointment meets the policy terms

Question 28

What should a Contract Administrator familiarise themselves with before a project?

Answer 28

- Contract conditions - Specialist sub-contractor's documents - Specifications of works / BoQs - Drawings - Appointment of other consultants

Question 29

Can all notices and certificates be issued by the Contract Administrator?

Answer 29

- Refer to contract - Some should be issued by the Employer - CA should advise on the form and timing of a notice

Question 30

What are the two most common scenarios under which an instruction to change the works are required?

Answer 30

- Additional or unforeseen works | - Employer changes their mind

Question 31

What is the Contract Administrator's role in the valuation process?

Answer 31

- CA required to ensure that the preparation of all valuations are carried out impartially and fairly and to follow the arrangements stated in the building contract used - Building contract may state the basis on which interim valuations are carried out - needs to be adhered to

Question 32

What are the two forms of Provisional Sum?

Answer 32

- Defined: defined work that the contractor will be deemed to have made allowance in programming, planning, and pricing preliminaries - Undefined: undefined work that the contractor will not have made any allowance for

Question 33

What might be required in order to preserve the Employer's right to LADs?

Answer 33

CA to issue a certificate of non-completion

Question 34

What procedures are common for the CA to implement at Practical Completion?

Answer 34

- Obtaining necessary consents - Obtaining commissioning and certification of M&E - Provision of information for the H&S file - Issue PC certificate

Question 35

What can the CA do if there is a suspicion of defective workmanship?

Answer 35

- Request information to confirm that materials are in accordance with the specification - Issue instructions for opening up - Issue instructions to remove work, materials or operatives from site - Follow through with arrangements provided for in the contract - If found to be non-defective, contractor may have claim for delay or costs; CA should make employer aware for instruction is made

Question 36

Name some Statutory obligations on a building project?

Answer 36

- Town and Country Planning Act 1990 - Tree preservation orders - Building Regulations 2000 - The Party Wall Act 1996 - Access to Neighbouring Land Act 1992

Question 37

How did you go about issuing PC on Phase 2?

Answer 37

- I assessed that the works were substantially complete - I confirmed that the M&E commissioning had been undertaken - I reviewed the documentation issued by the contractor: H&S file, commissioning certificates, building control certificates and discharge of planning conditions - I completed a room-by-room review with the client and generated a list of 'snags' - I issued the certificate referencing the list of snags - I managed a programme of snagging works to complete post-completion

Question 38

In a JCT D&B how is completion defined? What kind of boxes does a contractor have to tick?

Answer 38

- Works substantially complete, so that the employer can use the works Contractor required to provide: - as-built drawings - H&S file - Building Control certificates - M&E commissioning certificates

Question 39

On Phase 1, we had a defect that was not noticed, a survey was missed, you were the EA how did you miss it and what could you have done better?

Answer 39

- I wasn't EA for this phase of works, however; - EA has a responsibility to monitor the works, the lack or survey should have been apparent during the works - A handover process including a handover checklist including all items for handover in the O&M such as surveys, may have identified the lack of survey - A survey could have then have been completed after Phase 1 completion

Question 40

What are the key differences between a Contract Administrator in JCT and Project Manager in NEC?

Answer 40

JCT - CA must assess time/cost changes separately - CA must instruct the expenditure of provisional sums (no PS in NEC) NEC: - PM obligated to notify the contractor of Early Warnings of anything that might affect time/cost/quality - PM must deal with time/cost changes at the time they are notified (compensation events) - PM must review the contractor's programme as a contractual document - PM has responsibilities of QS (not a defined role) - PM must operate within strict periods for reply - PM manages all notifications / communications under the contract

Question 41

What could you do if the client is pressuring you to certify Practical Completion before you feel the works are complete?

Answer 41

- Informing the client in writing of the potential problems of doing so - Obtaining written consent from the client to certify practical completion and obtaining agreement from the contractor that they will complete the works and rectify any defects

Question 42

When must patent defects be notified to the contractor and when should the CMGD be issued?

Answer 42

- Patent defects to be issued within 14 days of the end of the defects liability period - CMGD to be issued once the defects have been completed/signed-off

Question 43

What is the Final Certificate and when must it be issued?

Answer 43

- Certifies that a construction contract has fully completed - Issued after the CMGD and has effect of releasing all money due to the contractor, including remaining retention - If the client wishes to pay a lesser amount it must issue a payless notice

Question 44

Give some examples of changes in a D&B contract?

Answer 44

Changes in ERs: - addition of scope - alteration of materials - removal of site works (other than defects) Changes to working conditions: - access - limitations on working space - limitations on working hours - resequencing

Question 45

What are the differences between: - Contract administrator - Project manager - Employer's agent

Answer 45

- Contract Administrator: identified in the contract and solely responsible for administering the contract - Project Manager: identified in the contract, manages a team to develop and deliver a project for an employer - making decisions and giving instructions to the contractor. The PM provides information, controls and manages communications from the team to the employer. PM is impartial in respect of the contract. - Employer's Agent: identified in the contract, who acts on behalf of the employer in all matters. Impartial in carrying out certification and decision-making functions in respect of the contract.