Contract Practice Flashcards

Question

RELEVENT EVENT (time)

Answer 1

- Change (scope, quality etc), - Instruction (early use), UPS - Deferment of Possession (start 2 weeks later) fairview - Antiquities (archaeology discovered), - Suspension (Coronavirus), UPS - Act or Omission (UPS HV power), - Statutory undertakers (services), - Weather (slows/stops work), - Loss/damage by a specified peril (civil commotion, riot, fire, lighting, explosion), - terrorism, - strike, - statutory powers, - approval delay (e.g. noted in change request response to client), - force majeure (Coronavirus) (14)

Answer 2

- FAIRVIEW EXAMPLE - Change (to existing completed work), - Instruction (early use – disruption), - Deferment of possession, - act or omission.

Answer 3

- Prolongation, FAIRVIEW - ONLY ASSESSED THIS TYPE - Site overheads increase, disruption, - 3rd party claim, - loss of profit (Global - collection of all)

Answer 4

- Client - QS (estimate) or Direct Instruction - Contractor Quote - Negotiate - EA instruction

Answer 5

- If paragraph 2 of the Supplemental Provisions is selected, a contractor’s estimate of the works can be provided - D&B - Contractor must provide a quotation within 14 days of the instruction - Employer then has 10 days to accept the quotation or withdraw instruction - Contractor can object on reasonable grounds (H&S) within 10 days of instruction - Employer will pay for specific design work required to produce the estimate if rejected SBC - 21 days to provide quotation - 7 days to instruct

Answer 6

- Contractor must notify Employer as soon as likely effect of Relevant Matter becomes reasonably apparent - Notification should be accompanied by initial assessment of L&E incurred and what else is likely to be incurred - Contractor must update the employer at monthly intervals until everything is supplied - Employer has 28 days from initial assessment (and 14 days from subsequent updates) to notify the contractor of the amount of L&E incurred in suitable detail

Answer 7

- Brings together all financial aspects of the contract - An agreed, fair valuation of works undertaken by the contractor - Concludes the extent of standard of workmanship - Concludes claim for EoT - Concludes claim for L&E - Full and final settlement for the Works

Answer 8

- Final account summary - Final account statement - To confirm both parties will not claim following agreement - Right to claim for LDs and L&E are removed - Provisional sums adjustments - Variations to the contract - Claims from either party

Answer 9

- JCT D&B - JCT Contract - Schedule of Contract Amendments - Employer’s Requirements - Prelims/contractual matter/general conditions - Appendices - CSA - Design info - General site information - Draft warranties - Draft bonds and PCG - Pre-Construction Information - Tender queries - Clarifications - Contractor’s Proposals

Answer 10

JCT SBC/XQ - JCT Contract - Schedule of Contract - Amendments - Appendices - Pricing document – work schedule/specification – changes to CSA - Drawings - Spec - Surveys

Answer 11

- Under JCT contracts, the following process must take place: - The Employer must request for an ‘Acceleration Quotation’ from the Contractor. - The Contractor shall either: - Provide a quotation identifying the time that can be saved, the amount of the adjustment to the Contract Sum and any other conditions; or - Explain why it would be impracticable for the acceleration - The Contract Sum will be adjusted and shall include the amount to be paid in respect of Loss and Expense including the cost to compile the quotation. - The Employer may on or before receipt of the quotation seek revised proposals. - The Contractor cannot progress to accelerate the works until a quotation has been agreed. - The Contractor has up to 21 days to compile the quotation from: - The date of receipt of the invitation - The date the Contractor has sufficient information to produce the quotation - The quotation remains open for 7 days from its receipt for the Employer to make a decision - If the Employer wishes to progress the quotation then, the Employer needs to instruct the Contractor via a “Confirmed Acceptance” stating: - Adjustment of the Contract Sum - Adjustment of the Completion Date of the Works / Section - NOTE: If the quotation is not accepted by the Employer, then the Contractor is entitled a fair and reasonable amount for compiling the quotation, which will be added to the Contract Sum.

Answer 12

Negotiation (informal). Mediation (formal - not binding). Adjudication (STAT REQ) (formal – binding). Arbitration (MUST BE OPTION) (legally binding). Litigation (legal judge binding)

Answer 13

- Arbitration is binding and it can be a much longer and more formal process. - Must be stated in contract to apply - Adjudication involves the quick resolution of disputes between parties where an adjudicator hears the outline of both sides of the argument and makes a fast decision within 28 days. - Statutory requirement

Answer 14

Mediation – Does not give opinion/ recommendation. Independent perspective to facilitate settlement. Directs parties to agree on the issue on the basis of what a likely award might be. Conciliation – Makes a RECOMMENDATION. NOT usually binding.

Answer 15

- Adjudication – Stat requirement under HGCRA or Scheme for Construction Contracts. - Invoked at any time; 5 days notice, appoint Adjudicator. - 2 days to confirm availability. - 7 days to submit evidence. - Adjudicator decision in 28 days (can be extended with party permission). - Binding until further escalated to Arbitration or Litigation.

Answer 16

- Arbitration - Must be option in contract. - Private hearing (not in public eye). - 28 days to appoint single (14 for 2+). - Short hearing; Inspecting work, materials etc. Written statements. 1-day hearing. Can agree to extend. - Award in 1 month. - Documents only; No need for hearing. Submit statement and submit formal reply to each other. Further questioning or hearing may be requested. - 1-month decision

Answer 17

- Comprehensive process used only when ADR deemed not sufficient to investigate issue. - Cost; Losing party bares costs and court can apportion settlement at their own discretion.

Answer 18

- If the Contractor becomes insolvent the Employer is required to terminate the Contract. - The Contractor to notify the Employer of any insolvency matters arising. - When the Contractor becomes insolvent (regardless of any notices): o No further sum shall become due to the Contractor (except final date for payment subject to any Pay Less Notices). - Contractor’s obligations to complete the works shall be suspended. - The Employer to protect and secure the site and the site materials.

Answer 19

- PCC - For: Projects requiring early start on site - Designed by: Employer - Contract docs: Spec and drawings - Administration: CA and QS - Note: Brief spec, drawings and estimate of cost; - Used for urgent repair work like fire damage; scope of works isn’t certain until work starts; cost risk to employer; contractor paid Prime Cost of works plus contract fee

Answer 20

- For: Employers who have regular flow of maintenance and minor works for single contractor over specified time under one contract. Instructed from time to time – valued based on agreed schedule of rates - Designed by: Employer - Contract docs: Schedule of Rates, written description of works/drawings - Administration: CA - Note: Employer lists properties covered by contract; state period (12-36 months); type of works required; total annual value; appoint CA to issue Orders; Schedule of Rates adjusted based on %age addition/deduction

Answer 21

- For: Large scale projects needing early start on site but full design information not yet available - Designed by: Employer - Contract docs: Drawings and spec - Administration: Architect/CA and QS - Notes: Price is prime cost plus management fee for MC; MC should be brought on early

Answer 22

- Rights of third parties Act 1999 – - Can only apply if written into contract prior to execution - e.g. SC’s are identified – SC’s must be known early on (typically they are not appointed until post MC appointment) – Less favourable than CW’s as not tested in court

Answer 23

Pros & Cons of : - Intermediate; Work can be carried out in sections - Minor Works; Cannot name SC's

Answer 24

- Benefits of Traditional Contract and ability to pass selective elements of design to SC - e.g. Foundation, M&E - typically functional areas

Answer 25

- Arcadis HASP completed - Site induction - PPE - Take photos & do mark up (accurately assess progress) - E.g. Identify extend of ground floor slab that had been completed say 75% by using photo's then measuring site layout on cost x

Answer 26

- If the Client disagrees with the valuation the figure can be adjusted via a Pay Less Notice - In accordance with the Contract the works should be valued in line with site progress. If the Client is holding back payment when it is due then this is likely to result in dispute and may impact on progress so full consideration should be undertaken before issuing a PLN

Answer 27

⦁ Ground sloping away so retaining wall was required to enable a level access around the building. ⦁ Drawings showed level access and as D&B contract MC was required to deliver as per contract. - MC should have included within their price

Answer 28

⦁ Kitchen & wardrobe package £1.5m (184 kitchens) ⦁ Off-Site Material Payment 33% £500k ⦁ Conditional Bond (terminated/insolvent) - £50k 10% - Listed (in contract) - Vesting certificate (in the employer) - Insurance (against specified perils until delivery to site then covered under all risk insurance) - Set apart, clearly marked, identified and properly protected

Answer 29

⦁ A “Coronavirus Event” is a defined term under the contract. ⦁ The Contractor can be awarded an Extension of Time where a “Coronavirus Event” occurs but cannot claim for any loss and/or expense in such circumstance. - Suspension; MC could terminate contract if works suspended for 2 months. Amendment could make specific exclusion or extension of this

Answer 30

⦁ The contractor is entitled to recover loss and expense in order to put them back in the financial position that they would otherwise have been in. ⦁ Entitled to recover direct loss and expense for events which cause delay or disruption to the regular progress of the works. ⦁ This is provided that the event is or can be proved to be caused or having been derived from the actions for which the client is responsible. ⦁ Typical causes might include; failure to provide possession FAIRVIEW MC 3 weeks but only 2 week access issue. MC claim approved in relation to prolongation of site welfare, security

Answer 31

MC Claimed for 3 week delay - Deferment of possession - Prolongation of works Only 2 week delay so time related preliminaries awarded for 2 weeks only - Site security - Temp services - Site compound - Skips

Answer 32

- Site Deferment - Change (to existing completed work - Instruction (early use – disruption

Answer 33

- Weather (slows/stops work), - Antiquities (archaeology discovered), - Suspension (government intervention), - Change (scope, quality etc), ⦁ Instruction (early use), ⦁ Deferment of Possession (start 2 weeks later), ⦁ Act or Omission (UPS HV power instructed late), (Relevant Matter - Client fault indirectly) ⦁ Statutory undertakers (As above but third party delay), ⦁ Loss/damage by a specified peril (civil commotion, riot, fire, lighting, explosion), ⦁ Terrorism ⦁ Strike ⦁ Statutory powers, ⦁ Approval delay (e.g. noted in change request response to client) ⦁ Force majeure (Coronavirus - although typically amended to include time (RE) not cost (L&E) ⦁ (14 total)

Answer 34

⦁ Contract ⦁ Amends ⦁ ER’s ⦁ Appendix (CSA, Design, Site Info, Prelims, Warranty, Bond, PCI, TQ, Clarifications) – Contractor’s Proposals

Answer 35

⦁ Contract - LD's, Dates, Parties ⦁ Amends - e.g. Final Date for Payment increased from 14 to 21 days ⦁ Employer's Requirements - Prelims, Developers spec, Area schedules, Planning consent, Drawings & specifications. ⦁ Contract Sum Analysis - Compare it to other tenders, and may then be used as a basis for calculating payments due to the contractor as the works progress. ⦁ Design Summary - 12 social rent units spread over 3 floors (1and 2 bedroom flats, ASHP, 250m3 attenuation, traditional build ⦁ Prelims - These set out the way in which the work is to be undertaken. For example; working hours, planning conditions (noise), site records, BIM and other digital requirements e.g. site info storage, site waste management plan. Contractor site preliminaries; staff, welfare/offices, plant, utilities, consumables, PPE, site transport. ⦁ Programme - Anticipated 15 month programme ⦁ Surveys - Phase 1 GI (Desktop), Noise, ⦁ TQ ⦁ CP's

Answer 36

- Surety to Employer of Contractor non-performance -10% of Contract value (delay & re-tendering) - Cost varies 2-10% - Expires at PC/EoD - On Demand or (Conditional -prove non-performance and loss

Answer 37

- % deduction for making good - 50% released on completion, - 3% SBC & D&B, 5% IC & MW, NEC TBC. - Making good defects certificate issued after rectification period confirming defects have been rectified.

Answer 38

- Must be confirmed in contract; - H&S file, - Testing & Commissioning, - Work Practically Complete, - O&M, - CW’s, - Building Certificate, - Planning Compliance, - Structural Warranty, - As Built DWGs, - Keys.

Answer 39

- Implications; - Rectification period begins - Half retention released - Client insures - LDs are not applicable - Employer must accept building early if it is actually complete

Answer 40

- example of levels difference (contractual process) - MC makes CA aware - QS (EM) reviews validity - Civil engineer instructed to identify possible change - QS (EM) reviews cost; Client approves - MC Change Proposal - QS (EM) reviews - Accepted / Instruction by CA - Contractor confirms within 7 days - Takes effect from 7 days of confirmation

Answer 41

⦁ Client focus was on site acquisition as opposed to construction (i.e. not a housebuilder regularly undertaking work) so wished to pass as much risk on as possible ⦁ Cost - Certainty ⦁ Time - Establish clear date to enable Pre-Lets (Pass risk to MC) ⦁ Quality - MC responsible for quality (base build design so ok to relinquish control)

Answer 42

⦁ Cost - Potential to achieve lowest cost. ⦁ Time - Potential to deliver early as works can commence early whilst design is undertaken ⦁ Quality - Good control and flexibility ⦁ Risk - Overall highest risk with ability to have control

Answer 43

- Genuine Pre Estimate of Loss - Loss must flow from breach (i.e. delayed completion) - Loss of rent - Prolongation fees e.g. EA, DM, PMS - Finance costs - Can't be construed as a penalty

Answer 44

⦁ If construed as penalties LD's may be unenforceable if taken to court ⦁ Conversely the MC would be considered sophisticated i.e. undertaken similar works regularly and benefiting from legal advice e.g. They willingly agreed to contract terms ⦁ Reality is that excessive LD's are likely to put off tenderers and therefore inflate tender price

Answer 45

- "-"No "Liquidated Damages" to apply but reserve right to claim "UN-Liquidated Damages" outside of the contract e.g. in court - "0" Recommend against doing this as confirms no LD's can apply to works

Answer 46

- Works uncomplicated in nature e.g. MC would be comfortable in pricing works with Drawings & Spec (without BoQ)

Answer 47

- Car park extension - Additional guardhouse - £15k - Provisional Sum £40k 4x Kitchens - PC Sum for tiling

Answer 48

- Early Use; - Employer may use part of the site early for storage or otherwise with contractors consent - contractor responsible - notify insurers as likely to attract premium (third party use) - Risk of L&E disruption claim - Partial Possession - Post contract variation - Contractor cannot unreasonably withhold - Detail to clarify extent of area, implications as SC - Area deemed complete so removes liability for L&E

Answer 49

- Pros: - Early use would allow the conveyor contractor to setup their compound and store materials which potentially could save 4 weeks. - The contractor would remain responsible for complying with insurance and risk of loss / damage. - The contractor would still be liable for liquidated damages to the entire site. Cons: - Potential insurance implications. - The Client would be liable for loss & expense claims from the main contractor. - Defects arising from the main contractor due to reduced access to part of the site.

Answer 50

- The chosen option was to instigate partial possession of the site which would allow the conveyor contractor to take exclusive occupation of a designated area of the site whilst allowing the main contractor to continue with outstanding works to the remaining part of the site. Pros: - Overlapping the programme could achieve the most significant reduction in time as the other two options were primarily reliant on works following on from one another. - The Client would not be liable for loss and expense claims in relation to the partial possession area after “PC”. - Minimal contractor conflict as the Client is only required to “PC” the area when satisfied the works by the main contractor were substantially complete. Cons: - Programme gains would be reliant on the speed the works to the partial possession area could be certified as substantially complete. - A shared site would result in responsibility issues arising from the crossover of contractors. - The main contractor relinquishes their liability for liquidated damages for the portion of the site that is taken up by the partial possession area.

Answer 51

- New Engineering Contract 4 (NEC4) - Option A – Priced Contract with Activity Schedule - Option B – Priced Contract with BoQs - Option C – Target Cost with Activity Schedule - Option D – Target Cost with BoQs - Option E – Cost Reimbursable - Option F – Management Contract

Answer 52

- Employer can give notice of termination due insolvency - Contractors obligations to deliver works are suspended - Employer can do the following regardless of notices as insolvency is automatically deemed a reason for the contractors employment to be ended - Employer should secure the site, secure materials - Contractor is not to hinder this process and - Contractor should remove and plant & equipment - Contractor should provide developed design - No further sum shall become due to the Contractor (except final date for payment subject to any Pay Less Notices (Employer likely to incur costs associated with site security & removal)

Contract Practice Flashcards

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