Contract Administration

Question 1

What is the role of contract administrator under a JCT contract?

Answer 1

• The contract administrator is the individual responsible for administering the construction contract
• When certifying or giving assessment or decision, the administrator has to act honestly and reasonably and their decisions are open to challenge via the dispute resolution procedure
• In certain instances, contractual provisions can be subject to ‘fair and reasonable’ assessment
• Issues timely information relating to set out and any other pre-agreed information
• Issues instructions / variations to overcome discrepancies and / or changes in scope of works
• Certifies sums due
• Assesses delay and grants time and cost relief according to prescribed provisions
• Issues extensions of time which it considers fair and reasonable
• Considers with the QS, if employed, all interim valuations, claims for variations and loss/expense resulting and issue payment certificates as appropriate

Question 2

What if a contractor does not comply with an instruction on a JCT contract?

Answer 2

• The contract states that ‘ The contractor shall forthwith comply…’
• CA must issue notice requesting compliance with the previously issued instruction
• Contractor is then allowed 7 days to carry out the instruction
• Failure to comply within 7 days of receipt of the written notice allows the CA to employ outside contractors to carry out the work and deduct the amount from the contract sum
• Further failure could lead to termination of the contract

Question 3

Do you know how an employer’s agent role differs from a contract administrator’s role?

Answer 3

EA is seen as a client advisor and is required to protect the client’s interest whereas the CA must act impartially when administering the contract, even if this means that the decision is not in the best interest of the employer.

Question 4

What is practical completion?

Answer 4

• PC is a term under the JCT form of contract. This is the point at which the contractor has completed the project and hands over to the client.
• It is called ‘practical completion’ because it is fit for purpose. The project is sufficiently complete for the employer to take over in that nothing remains outstanding that prevents the employer from using the building, although there may be some outstanding works or defects which remain to be completed.
• Works are so substantially complete that the building can be put to its intended use with safety and convenience

Question 5

Do the works have to be totally completed before practical / sectional completion is achieved?

Answer 5

It is common practice for PC to be granted when the works are substantially complete - i.e. there may be minor defects or omissions but nothing that would prevent the employer taking occupation.

Question 6

Can the PC certificate be rescinded once issued?

Answer 6

No

Question 7

What is a non-completion certificate?

Answer 7

Issued by the CA to certify that the works / section has not been completed by the contractual completion date.

Question 8

What are the consequences of a non-completion certificate?

Answer 8

• The employer has the right to withhold liquidated damages (a pay less notice is also required)
• Certificate of non-completion is required
• Employer must write to contractor notifying them of the intending to withhold LDs
• Employer to issue pay less notice

Question 9

When PC is issued, what are the consequences?

Answer 9

• 50% retention is released I(subject to the contract)
• The 12 month defects period starts
• The client needs to start insuring and securing the building
• The ability to impose LDs is ceased

Question 10

If the contract administrator believes completed work is not in accordance with the contract, what can they do to clarify?

Answer 10

They can issue an instruction for the opening up and inspection of covered work, materials or goods or the testing of the work, materials and goods to determine if they are in accordance.

Question 11

Who bears the costs of opening and testing?

Answer 11

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

Question 12

What is the definition of an extension of time?

Answer 12

• The ‘extension of time’ provision allows for the contract administrator to extend time/fix a new completion date, preventing time becoming at large, and thereby postponing the employer’s right to recover liquidated damages
• The benefit to the contractor of EOT is only to relieve the contractor of liability for damages for delay (adjusting completion date)
• The benefit to the employer is that it establishes a new contract completion date and prevent time for completion of the works becoming at large

Question 13

What is the procedure for claiming an extension of time?

Answer 13

• As soon as it is reasonably apparent that a delay is likely to occur, the contractor should write to the contract administrator to notify them
• This should identify the cause of the delay and if any of the causes are a relevant event and give an indication of the extent of the likely delay
• They should give any further information requested by the CA
• The CA must notify the contractor in writing of their decision
• Contractor must make all efforts to mitigate the effects of the delay

Question 14

What are the time periods related to granting extensions of time?

Answer 14

• The CA has 12 weeks from notification to decide on an extension of time
• If there is less than 12 weeks to PC, they should endeavor to decide before PC

Question 15

Why have an extension of time?

Answer 15

• The contractor must complete the works on or before the date for completion
• This is the contractual requirement which the contractor must comply with in respect of the whole of the works
• If they fail to achieve completion within this stated period, without having any grounds for an extension of time, then the employer may deduct LDs.

Question 16

Does an extension of time automatically give the contractor the right to apply for additional prelims?

Answer 16

No