Contract Administration

Question 1

What are interim valuations?

Answer 1

Components of a valuation:
* Works executed
o Preliminaries
o Works executed by contractor
* Variations / changes
* Expenditure of provisional sums
* Adjustment of prime cost sums
* Site materials / materials on site
* Materials and goods off-site
* Contractor’s design fees
* Loss and expense
* Costs and expenses relating to the contractor’s right of suspension
* OH&P Adjustments for:
* Advance/advanced payments
* Works not properly executed
* Fluctuations
* Errors in setting out
* Retention
* Amounts previously paid

Question 2

Give me two differences between CA and EA?

Answer 2

Contract Administrator acts as a neutral party
EA acts on behalf of the employer and has no duty to act fairly between the two

Question 3

Tell me the process of issuing a practical completion certificate?

Answer 3

A practical completion certificate is issued ones the works are practically complete, meaning the employer may take over the possession of the site and use the building for its intended purpose with safety and convenience.

Question 4

What are LDs? And how are they calculated?

Answer 4

Liquidated damages area a genuine pre estimate of loss suffered by the employer because of late completion of the works. The damages are inserted into the contract prior to signing by both parties.

Question 5

Is there a limit in the JCT of LDs?

Answer 5

No, however they cannot be seen to be a penalty, they have to be a genuine and realistic assessment of loss.

Question 6

How can you calculate LDs?

Answer 6

The employer should calculate the LDs, it is not to be done by consultants.

However I can advise that they can comprise:
Loss of rent or other income
Professional fees
Expected costs incurred by other parties
Legal costs

Question 7

What are the principles of deducting LDs?

Answer 7

A non-completion certificate has to be issued.
The contractor is notified that LDs are likely to be deducted
A pay less notice is servedby the client

Question 8

What is the implication of inserting “nil” or £0 in the section against the damage clause?

Answer 8

The consequence of this can be that the contractors liability for damages is zero.
Blank means the client would still be able to deduct damages but would need to do so through the courts.

Question 9

What is Nomination?

Answer 9

• Selection of a particular subcontractor to carry out works, manufacture or supply of materials
• This provides the architect and client with greater control of material choice and thereby quality
• It is often used when there are long lead in times with the employer placing orders prior to the Main Contract award which reduces potential delays on site
• The main contractor is relieved of liability of design and compliance with the performance spec in addition to subcontractor delays in respect of the works that have been nominated.

Question 10

Do Nominated subcontractors get paid seperately?

Answer 10

Nominated contractors are normally paid via the Mani Contractor with sums identified separately.

Question 11

Can the contractor object to a nominated subcontractor?

Answer 11

• any objections must be made during the tender period
• there are specific exclusions and grounds for an objection for example if they have found out the subcontractor is having financial difficulties or going insolvent

Question 12

If there are problem with the design, after Novation of the architect, who would be responsible?

Answer 12

• At the point of novation, the client would agree the level of design was satisfactory & would be signed off by all parties.
• The contractor would then become responsible for the Architect & his design should any problems arise during construction
• Disputes may arise where it becomes unclear when problems have arisen, either prior to the transfer of services or afterwards.

Question 13

What is the difference between Novation and Assignment?

Answer 13

• Novation is a mechanism whereby one party can transfer all its obligations under a contract and all benefits arising from the contract to a third party.
• Assignment is where contractual benefits are assigned however contractual burdens cannot be transferred under assignment

Question 14

What is set-off?

Answer 14

Set off are any monies owed to the employer by the contractor which are deducted against any payments due to the contractor.

Question 15

Describe the differences between Statutory Provisions and Contract Provisions?

Answer 15

• Statutory provisions are set out by law & must be compiled with.
• Contract provisions relate to the contract in question & therefore only apply to a specific project.

Question 16

What are domestic subcontractors?

Answer 16

This is a standard appointment of a subcontractor by the main contractor.

Question 17

What are named subcontractors?

Answer 17

Clients provide the main contractor with a choice of named sub contractors for a portion of the works.
Once appointed they become domestic subcontractors in terms of the conditions of contract.
Additional names may be added if approved by all parties
This allows the client a level of control over the quality of the works packages and in some cases the cost.

Question 18

After valuation and certificate are issued, the client advised that they dont have sufficient funding to make the payment. What would you do?

Answer 18

• once the certificate for payment has been issued to the contractor, the client is contractually obliged to honour payment of the certificate and cannot withhold money without a valid reason.
• If this were the case , I would contact the client and contractor ASAP to arrange some form of payment. It may be the case that the client has insufficient funds available in time for the final date of payment and it may be possible to defer payment by 1-2 days.
• Failing this or if the contractor is unwilling to delay the payment, the client would need to find finance for the payment through other funds to honour the certificate.

Question 19

What items do you include for on a valuation?

Answer 19

Items would include:
- Prelims
- Measured Works
- Materials on/off site
- Variations
- Claims
- Retention
- Previous payments

Question 20

If an instruction was issued during the contract which involved the fabrication of a substantial amount of materials off site would you pay for them as off site materials within the valuation?

Answer 20

• there is no obligation on the client to pay for materials off site if this is not identified in the contract.
• However, in the scenario where the client wishes to pay for them, i would ultimately check with the client before paying or rejecting them.

Question 21

How would you deal with urgent verbal instructions?

Answer 21

• If the instruction affects the program or critical path in general I would review the instruction with the contract administrator, client & contractor.
• If the instruction is valid under the contract I would ensure this is converted into a formal written instruction as soon as possible.

Question 22

What documents would be required in incorporating a Contractor Design Portion Supplement into a project?

Answer 22

Within a D&B project, the documentation to be included would be the Employers Requirements including the Scope, Specification, Drawings, Contractors Proposals along with ant insurances.

Question 23

could an email constitute a contract document?

Answer 23

Yes, providing the is offer, acceptance, intention to create legal relations and the responding email does not vary the conditions a contract will be created.

Question 24

What is your opinion of Oral contracts?

Answer 24

• Whilst they are legally binding the difficuty lies in providing the specific terms and conditions of the agreement.
• It is for theis reason why the HGCRA only applies to written contracts.

Question 25

What is the difference between NEC & JCT?

Answer 25

- the main difference between the 2 forms is its usage - NEC can be used within the building & civil engineering projects whereas JCT is specifically for building projects - NEC can be adopted to a number of bespoke contract strategies due to the various options available whereas JCT has a standard set of clauses.

Question 26

What is the difference between an information requirement schedule and an information release schedule?

Answer 26

- the information required schedule asks the contractor to provide dates when design information is required. - the information release schedule informs the contractor when the design information will be available

Question 27

What is Frustration?

Answer 27

Frustration occurs when any event or circumstances beyond control of both parties changes the contractual obligations or makes it impossible or illegal to fulfil their contractual obligations. The happening of such events automatically discharges the contract.

Question 28

how is a contract under hand different from a deed?

Answer 28

- A deed is signed by a witness & traditionally authenticated by a seal. - the limitation of under hand is 6 years whereas a deed is 12 years.

Question 29

What is the defects liability period?

Answer 29

- The defects liability period is the duration are the end of the contract, Usually 52 weeks after the Substantial Completion Certificate has been issued whereby the contractor undertakes to rectify and defects that arise within the structure at the contractors expense, providing they were due to materials & workmanship not being in accordance with the contract. - In the event that the contractor failed to rectify and defects he employer may employ another contractor to carry out the works & recover the cost of doing so from the main contractor. - The retention money retained may be used to cover the costs of making good.

Question 30

What types of provisional sum are there?

Answer 30

Defined and undefined

Question 31

Where are these defined?

Answer 31

NRM

Question 32

What is a provisional sum?

Answer 32

A sum of money included in the contract for work that cannot be fully designed and costed at the time of tender or contract sum agreement.

Question 33

What is a defined provisional sum?

Answer 33

- A sum included in the contract for work that has not been completely designed at the time of contract sum agreement but for which certain specified information can be given about the extent of the works, its quantity, duration of installation and how it is to be fixed to the building.

Question 34

What does JCT stand for?

Answer 34

Joint Contracts Tribunal

Question 35

What does NEC stand for?

Answer 35

New Engineering Contract

Question 36

What does EEC stand for?

Answer 36

Engineering and Construction Contract.

Question 37

What does FIDIC stand for?

Answer 37

International Engineers Federation

Question 38

What does ICE stand for?

Answer 38

Institution of Civil Engineers

Question 39

What are the main parts of the JCT Contracts?

Answer 39

- Recitals - Articles - Contract Particulars - Attestation - Conditions divided into 9 sections (7 for minor works) - Schedules

Question 40

Name the 9 Conditions Sections

Answer 40

- Definition and interpretation - Carrying out the works - Control of the works - Payment - Variations - Injury, damage and insurance - Assignment, Third Party Rights and Collateral Warranties - Termination - Settlement of disputes

Question 41

Name the main types of JCT contract

Answer 41

- Minor Works - Intermediate - Standard Building Contract - Major Projects - Design and Build - Prime Cost contract - Measured Term Contract - Construction management Agreement - Management Contract - Framework Agreement

Question 42

When would you use JCT Minor Works?

Answer 42

- Projects that are short duration on a small scape with a straightforward construction. - JCT guidance is for a value up to £200,000 but it has to be simple in nature - It is a lump sum form where design should be completed prior to execution - The Employer or their team is to provide specifications, drawings and a schedule of works.

Question 43

When would you use JCT intermediate Contract?

Answer 43

- The intermediate contract for is recommended for projects that DO NOT EXCEED ONE YEAR in duration - The project should be simple in content and require only basic skills and trades where services are not complex and where the works are already designed.

Question 44

When would you use JCT D&B?

Answer 44

- When the contractor is responsible for design and construction - The project should be similar in complexity to that of standard building contracts. - The contractors proposals from the basis of the contract. - There is no mention of and architect or QS instead this role is replaced by the title of Employers Agent.

Question 45

What are 3 Key differences between JCT Minor Works, Intermediate and D&B Contracts?

Answer 45

- The minor works only has 7 sections of conditions instead of 9, Variations are included within the Control of the works section and there is no "assignment and collateral warranties provision" - There is no mention of the QS in Minor Works and D&B however there is in the intermediate form - In Minor Works there is no provision for named sub-contractors, no provision for bonds and collateral warranties and no advance payment provision.

Question 46

What are 3 Key differences between JCT Minor Works, Intermediate and D&B Contracts?

Answer 46

- Minor works also has no provision for sectional completion or partial possession. - In Minor Works there are no relevant events listed for extension of time, instead it is referred to as "anything outside the contractors control" - The standard rectification period is 3 months for minor works and 6 months for D&B and Intermediate

Question 47

What are 3 Key differences between JCT Minor Works, Intermediate and D&B Contracts?

Answer 47

- The standard retention is 5% for Minor Works/Intermediate and 3% for for D&B - D&B Is administered by an Employers Agent rather than a Contract Administrator - In Minor Works and the Intermediate Form, the Contractor may be responsible for completing discrete parts of the design whereas in D&B, he is responsible for completing the overall design.

Question 48

What are 3 Key differences between JCT Minor Works, Intermediate and D&B Contracts?

Answer 48

- In D&B, the EA may request a quotation prior to instruction a change. - There is no fluctuation mechanism for labour and materials costs in Minor Works and Intermediate Forms - Payments are made at regular intervals in Minor Works and Intermediate, whereas D&B gives the option of stage payments.

Question 49

Can you have an EOT without an L&E claim?

Answer 49

- Yes an EOT does no automatically mean entitlement to L&E.

Question 50

When pricing an EOT what would you include for and what rates?

Answer 50

- When pricing an EOT I would include costs for prolongation of site cabins, site utilities, welfare facilities, management staff, security, cleaners, inefficient use of labour & plant resources, subcontractor mobilisation costs, head office, finance charges and loss of future profit.

Question 51

Explain the relative advantages and disadvantages of the NEC & JCT? Advantages of the JCT Suite of Contracts:

Answer 51

Advantages of the JCT Suite of Contracts: - THey are considered the "industry standard" therefore they offer familiarity. - They cover most forms of procurement and building types through the various impressive ancillary documents to support the main forms. - They are comprehensive in detail and considered by many to be fair and reasonable and not loaded in favour of any party.

Question 52

Explain the relative advantages and disadvantages of the NEC & JCT? Advantages of the NEC Suite of Contracts:

Answer 52

- They are applicable to a variety of Procurement strategies. - They offer clarity and simplicity by using: 1. Ordinary language - minimal legal jargon 2. They include flow charts to support their users - They act as stimulus to good management through maintaining: 1. Up-to-date programmes which are required to be clear and precise 2. Provision of early warning procedures and risk registers 3. They embody key features of project partnering 4. Assessment of Compensation events by applying a "rolling final account"

Question 53

Explain the relative advantages and disadvantages of the NEC & JCT? Disadvantages of the JCT Suite of Contracts:

Answer 53

- They are sometimes thought to "compromise conditions" in which they try to satisfy the interests of all parties - They can be considered as unnecessarily long and unnecessarily complex

Question 54

Explain the relative advantages and disadvantages of the NEC & JCT? Disadvantages of the NEC Suite of Contracts:

Answer 54

- They are often only considered to be used for civil engineering projects and partnerships - They have limited exposure to the market so they are therefore not fully tried and tested with supporting case law.

Question 55

How is Risk Management dealt with in the NEC?

Answer 55

- A risk register should be produced as soon as possible and regularly updated. It should include the description of the risk and the mitigation measure, not the value or the owner.