What is retention?
It is a percentage of each interim certificate deducted and retained by the employer from each interim payment to the contractor
What is the purpose of retention?
- It provides an incentive for the contractor to rectify any defects within the contractor defects liability period
- it provides some financial security to the employer in the event of a contractor default
When is retention released to the contractor?
- Half of the retention is realised in the interim certificate after practical completion
- the remaining retention is released in the final certificate after the certificate of making good defects is issued
What is a typical retention percentage under JCT contracts?
Between 3 and 5% depending on the form in use
When would you use JCT and NEC contracts?
- Both suites provide a variety of options to suit client requirements.
- consider procurement route, scale & size of project, payment method, quantification, design and client approach
NEC: - collaborative approach
- limited experience; plain English
JCT: - previous experience with JCT
- prepared set of amendments for JCT
What is an NEC contract and why might you use it?
- New engineering contract
- An NEC contract can be used for civil engineering projects whilst JCT is used only for building projects
What are the different NEC options?
Option A - Priced contract with activity schedule
Option B - Priced contract with bill of quantities
Option C - Target Contract with activity schedule
Options D - Target Contract with bill of quantities
Option E - Cost reimbursable contract
Option F - Management Contract
What is a collateral warranty?
-They create contractual relationships between the main parties of a contract and an external third party (sub-contractor)
- the contractual relationship would not exist with the party due to privity of contract
What packages would you advise getting a warranty for and why?
Packages that have a high design content and pose a risk to the project
When would you use an intermediate contract?
-Used to bridge the gap between standard and minor works
- less lengthy contract terms than standard and more detailed than minor
- fixed price lump sum
- intermediate with contractors design portion available
Name some contractual mechanisms within the D&B contract
2.3 date of possession; contract particulars; clause 2.3 date when site is given to the contractor, begin construction and proceed to complete on it before completion date
When would you use JCT & NEC Contracts?
- Both suites provide a variety of options to suit client requirements
- you would consider procurement route, scale & size of project, payment method, quantification, design & client approach
- use an NEC if you require collaborative approach or have limited experience as it is written in plain English
- use jct if previous experience with JCT and have prepared set of amendments previously used
Name some difference between the two if you were advising a client on what to use as a proposed form?
- Programme - unlamented JCT the programme is not contractual whereas it is in an NEC
-Admin - JCT is administered by the CA/EA whereas NEC it’s the project manager - Language - JCT contracts use complex legal jargon whereas, NEC is plain English
- Money & Time - JCR has relevant events and relevant matters whilst NEC both are together in compensation events
What is the format of a JCT contract (standard & D&B)?
- Articles of agreement (scope of works, contract sun, adjudication)
- Contract Particulars (ERs & CPs, PC date, LDs, rectification period, retention %)
- Contract conditions
- schedules
What is contained within the contract conditions of a JCT Contract?
- Clause 1 - definitions & interpretations e.g - a business day
- clause 2 - Carrying out the works e.g possession, regularly & diligently proceed
- clause 3 - Control of the works e.g access and representatives
- clause 4 - payment e.g payments & notices 4.7 employer to make interim payment
-clause 5 - changes e.g valuation rules MSD works vs day works - clause 6 - injury, damage and insurance e.g insurance of the works & existing structures
- clause 7 - assignment, performance bonds & guarantees, third party rights & CWs
- clause 8 - termination e.g termination by contractor for lack of payment
- clause 9 - settlement of disputes e.g adjudication how process is started etc
