Focus Items

Question 1

How do you value Preliminaries?

Answer 1

Split into time related preliminaries and fixed related preliminaries.

Include any site constraints and identify the works required for them and value these.

Could consider creating a preliminaries book.

Question 2

What topics does the JCT Tendering Practice note cover?

Answer 2

Introduction - The introduction covers the a general overview of the document and the different types of tendering under a selective tendering process.

The Preliminary Enquiry - Time for responses to an enquiry letter and formation of the PQQ.

The ITT - How to formulate the tender documents, length of tendering, tender submissions and compliance.

Assessment and Award - Assessment on criteria other than costs, post tender discussions, recommendation and award.

Question 3

What is tendering?

Answer 3

Tendering is the process of inviting bids from suppliers or contractors to carry out work.

Question 4

What premiums would you expect to pay in a Two Stage tender process?

Answer 4

The PCSA itself.

Lack of competitiveness in the first stage.

Risk premiums in the second stage.

Preliminaries and overheads as there is longer engagement with the contractor.

Question 5

On Focus Apartments, you provided a recommendation to the Client following a PQQ process. Can you tell me how you advised on the scoring criteria for the PQQ returns?

Answer 5

The contractors were requested to provide relevant experience, audited financial accounts, management staff, health and safety information.

I then applied a score weighting to these elements, such as 2.5, and scored them out of 10.

I then multiplied their score by the weighting and added these together to give them a total score.

Question 6

What are Alternative 1 and Alternative 2 in the JCT?

Answer 6

Alternative 1 - The tenderer is informed of the errors and given the choice to either confirm or withdraw their tender. This method aligns with contract law principles, allowing the contractor to decide whether to proceed despite the errors.

Alternative 2 - The tenderer is informed of the errors and given the option to correct genuine errors (such as arithmetic mistakes). If the corrected tender sum exceeds the next lowest bid, the tender is set aside, and the next lowest bid is considered instead.

Question 7

How do you approach the analysis of preliminaries costs to ensure they are appropriate for the project’s scope and duration?

Answer 7

I would review the project scope and understand the specific requirements, site conditions and the complexity to determine the necessary preliminary expenses.

I would request that the contractor breakdowns their preliminary activates, identifying which items were time related or fixed.

I would also compare the preliminaries cost to benchmark data for similar projects in both scope and site similarities.

Additionally, I could breakdown these costs to a percentage and weekly rate.

Question 8

How do you manage the quality of design in a Design & Build Contract?

Answer 8

Novation.

If there are specific elements the client is worried about, these could be taken to a greater level of design to ensure the standard of desired quality is achieved.

Ensure that the ER’s are robust.

When the stage 5 drawings are produced by the contractor, the design team could grade these with A, B, C.

The stage 5 drawings could be reviewed by the novated design team consultant, but a information barrier would need to be put in place between the two teams (novated, client side).

Question 9

How do you differentiate between a provisional sum and a prime cost sum, and what are the financial control implications of each?

Answer 9

A provisional sum is a cost for an item which is either defined or undefined in the contract.

A prime cost sum is the cost for materials or subcontracted work where the supplier is nominated by the client.

Provisional sums are paid based on the actual work incurred, whereas prime cost sum is the actual cost of the materials provided by the supplier via invoices.

Question 10

How would you create a cashflow forecast?

Answer 10

I would need to have access to the construction programme and contract sum analysis and identify when packages would be bought and split out the values accordingly.

Obtaining drawdown schedules from specialist subcontractors and professional consultants can also assist when populating the cashflow.

Question 11

What are the valuation rules under JCT Forms of Contract?

Answer 11

There are three rules for measurable work:-

If it is of a similar character, quantity and in the same conditions as existing work, then the bill rates should be used.

If it is of a similar character, but different quantity or conditions, the bill rates should be used as a basis but a fair allowance should be made to take account of the difference.

If it is not of a similar character, fair rates and prices should be used.

Question 12

What are the common heads of claim in loss and expense?

Answer 12

Prolongation.

Thickening of preliminaries.

Disruption causing plant or labour to be underemployed.

Increases in labour or material costs during the period of delay.

Head office overheads.

Loss of profit.

Finance charges.

Acceleration costs.

Claim preparation costs.

Question 13

What are the fluctuation options under a JCT?

Answer 13

Option A - contributions, such as levies and taxed.

Option B - Labour and material cost fluctuations, including tax changes.

Option C - A formula based on cost indices

Question 14

What are the three methods of valuation under a JCT?

Answer 14

Agreement between the parties.

A Schedule 2 quotation.

The Quantity Surveyors valuation.

Question 15

What is a Relevant Event and Relevant Matter and how do they impact the project?

Answer 15

A Relevant Event causes a delay to the completion date and entitles the contractor to an extension of time,

Examples of a Relevant Event are,

Adverse weather
Force Majeure
Delay in giving the contractor possession
Terrorism

A Relevant Matter is when the client causes a delay which materially effects the progress of the works and entitles the contractor to cost.

Examples are,

Variations caused by the client
Delays in receiving instructions from the client
Delay in giving the contractor possession
Discrepancies in contract documents

Question 16

What are the fluctuation options under a JCT?

Answer 16

Option A - taxes, levies, statutory contributions

Option B - materials, labour

Option C - formula based adjustment

Question 17

What types of LOI are there?

Answer 17

Pure Letter of Intent - These express an intention to enter into a formal contract but do not create any legally binding obligations.

Interim Contract - These allow works to commence whilst whilst the full contract is being finalised.

Conditional Contracts - These remain in place unless replaced by a main contract.

Question 18

What is the difference between a LOI and a PCSA?

Answer 18

Letter of Intent (LOI):
- Expresses an intention to enter into a formal contract later.
- Allows a contractor to begin work before the main contract is signed.
- May or may not be legally binding, depending on its wording.

Pre-Construction Services Agreement (PCSA):
- A formal contract used in two-stage tendering to engage a contractor before the main contract.
- Covers design input, buildability advice, and cost planning.
- Provides a structured scope of services separate from the main contract.

Question 19

What are the insurance options under a JCT?

Answer 19

Option A - The Contractor takes out joint names all risk policy covering the works

Option B - The Employer takes out joint names all risk policy covering the works

Option C - The Employer takes out joint names all risk policy covering the works and the existing structure

Question 20

What takes precedent over the ER’s and CP’s in a Design and Build?

Answer 20

In a standard Design and Build the CP’s would take precedent, however this may be amended out for the ER’s to take over.

Question 21

What are some types of bonds in a JCT?

Answer 21

Performance bond - A gurantee that the contractor will perform their obligations unde the contract

Advance payment bond - Used when the employer makes an advance payment to the contractor (for mobilisation or off-site materials)

Retention bond - Replaces the need for the employer to retain part of the payment as security

Question 22

What do you do if there are discrepancies between the ER’s and CP’s?

Answer 22

Follow the contract and it’s amendments.

Ensure that the CP’s are followed forward and have an open discussion with the client and contractor to see if variations need to be raised.

Question 23

What are Collateral Warranties used for and how do they work?

Answer 23

They create a direct contractual link between a party involved in the project and a third party beneficiary.

It allows the beneficiary to bring a contractual claim directly against the warrantor.

I.e, if a sub-contractors work has defects after the defects rectification period, the client can bring a claim against the sub-contractor.

Question 24

What are the various types of notices under a JCT Design and Build?

Answer 24

Commencement Notice.

Extension of Time Notice.

Payment Notice.

Practical Completion Notice.

Defects Notice.

Loss and Expense Notice.

Question 25

How did you determine what constituted a change under the contract on the Vista Tower project, and what process did you follow when issuing Employer's Agent Instructions?

Answer 25

I reviewed the change against the contract in line with section 5.1 in the JCT. When issuing the Employer's Agent Instruction, I ensured that the costs had been reviewed and agreed with the contractor. This was then presented to the client for agreement and sign off before the works commenced.

Question 26

What are the different standards and guides associated with Whole Life Carbon Assessments?

Answer 26

- RICS Whole Life Carbon Assessment Professional Standard - NRM Suite - Environmental product declarations

Question 27

How do you include for risk when producing a cost plan?

Answer 27

I will include separate allowances for, - Design Risk - Construction Risk - Employer Change Risk - Employer Other Risk As the project progresses, I'll readdress these to determine if they need to be reduced or increased.

Question 28

If a client was to ask you about inflation over the next year what would you say?

Answer 28

I would inform them that inflation is likely to rise by 3% in 2026, however due to the turbulent situation in geopolitics it is difficult to say. The 3% is based on the major consultancy publications with Turner& Townsend stating 3.0% and Gardiner & Theobald stating 2.5% for London and 2.25% for the rest of the UK.

Question 29

What insurances need to be in place for a Construction Project to commence?

Answer 29

Public Liability Employers Liability Professional indemnity Contractors All Risk.

Question 30

What is retention? How does it work?

Answer 30

It is a percentage taken from the monthly application for payments submitted by the contractor. Half is released at practical completion, with the other half being released 12 months after the practical completion date. It is used as protection to the client should works be required in the rectification period. If the contractor refuses to carry out the rectification works then the client can use the retention to appoint another contractor to carry out the works.

Question 31

How do you monitor a contractors financial position throughout the project?

Answer 31

Ensuring their interim applications are fair and accurate. They're not front loading in the initial stages. The general progress of the project and materials are on site.

Question 32

What are Collateral Warranties used for and how do they work?

Answer 32

A legal agreement that creates a direct contractual link between the client and a third party, such as a sub-contractor. You would use a collateral warranty if a subcontractor has design obligations.

Question 33

What is an Advanced Payment Bond?

Answer 33

It is a bond which protects a client if they make an advanced payment to a contractor before work begins or materials are delivered.

Question 34

What is a fixed price allowance?

Answer 34

It is a pre-agreed lump sum for a specific item or scope of work. Unlike Provisional Sums, it is not subject to remeasurement, the price is fixed. You may use one where the scope is not defined but a fixed cost is required. The actual scope is clarified during the project.

Question 35

If you were to set up on your own today, what would you need to put in place to enable this?

Answer 35

First I would notify the RICS that I intended to set up on my own, I would gather the relevant insurances, Employers Liability Professional Indemnity Public Liability Run off cover I would then develop my firms dispute resolution and complaints log processes and comply with all relevant regulation.

Question 36

What is benchmarking and how do you use it?

Answer 36

It is information collated from completed project to help cost planning. When using benchmark data I will ensure that the projects are, - Similar in nature and specification - Apply regional price indices to the relevant location - Apply inflation up to the current date - Take account for any site abnormalities and adjust accordingly

Question 37

What would you consider is a current tendering issue that you are aware of?

Answer 37

Regulatory complexity linked with the BSR could potentially reduce the number of competent contractors. A shift towards two-stage tendering to reduce risk and early contractor involvement, however this increases costs for the client due to PCSA and longer programme.

Question 38

What happens in partial possession?

Answer 38

The client takes possession of a section of the site prior to PC. It is not stated in the contract. PC is achieved. Rectification period begins. LAD's are reduced proportionately. Half of retention is released.

Question 39

What are the time frames in the valuation?

Answer 39

The valuation date is stated in the contract, usually 1 month after the contractor takes posession. The interim application is issued by the contractor before the valuation date. The due date is 7 days from the valuation date. The payment notice must be raised within 5 days of the due date. The contractor must raise their invoice. The final date for payment is 14 days from the due date. If a pay less notice is to be raised, this must be raised 5 days before the final date for payment.

Question 40

How do you draw down from a bond?

Answer 40

It depends if it is On Demand or Conditional. On demand is when the bondsman pays out the bond when this is requested and the criteria is met. Conditional is where the works covered by the bond must be proven before the funds are released.

Question 41

What is a Relevant Event and Relevant Matter and how do they impact the project?

Answer 41

A Relevant Event causes a delay to the completion date and entitles the contractor to an extension of time, Examples of a Relevant Event are, Adverse weather Force Majeure Delay in giving the contractor possession Terrorism A Relevant Matter is when the client causes a delay which materially effects the progress of the works and entitles the contractor to cost. Examples are, Variations caused by the client Delays in receiving instructions from the client Delay in giving the contractor possession Discrepancies in contract documents

Question 42

In what scenario would you issue a Payless Notice?

Answer 42

If a mistake had been made in the valuation for the interim application, this could be readressed in the Payless Notice. If LAD's were due following a non completion notice.