NZIA Lectures - E

Question 1

Administration and Observation Outcomes

Answer 1

• To provide contract administration for the construction and completion of a project
• To provide and compile documentation for effective occupation of the project and a future reference source

Question 2

Admin and Obs Performance Indicators:

Answer 2

• Administrative processes are established and maintained for a stanadard construction contract
• Construction progress is systematically monitored and compliance with teh contract provisions and budget ensured
• Progress claims, variations and extensions of time are evaluated and certified
• Problems and uncertainties and resolved and advice provided
• A mechanism is established for regular progress reporting to the client on variations to the program, budget and quality.
• Defects are identified and rectification by the contractor is monitored
• Compliance with contract documents and requirements of regulatory authorities is verified at the completion of the contract
• Handover advice and as-built records are provided
• Project maintenance and operation manuals as required by the contract are assembled
• Ethical practices are followed

Question 3

Administration - Site Establishment

Answer 3

• What does the contract say in terms of
  
  • Possession date, insurances, bonds and programme
• Health and Safety In Design
  
  • Workshop - doing a H&S workshop may be good
• Resource Consent and Building Consent Conditions

Question 4

Admin - Contract

Answer 4

• Whatever the contract, the contractor and principal has number of conditions
• Contract describes what you are to do and when to do it by
• Contractor prior to possession date must confirm the insuaces are in place before starting
• Similar if principal is taking out insurance.
• Bonds - if the conditions say that a bond has to be paid to the principal by the contractors. If bond isnt provided by due date the principal isnt required to pay until bond delivered
• A number of things have to be met, as per what the contract states, before starting on iste
• Therefore it is important that you know what these conditions are and who is to discharge them

Question 5

Procedures and Records

Answer 5

• It is important to keep minutes from all site meetings
• Typically done by contractor
• It is important you record your observations whilst on site - from health and safety violations to defective work
• Good practice to talk to the contractors prior to leaving site what the defective work was
• Track what drawings have been issued and when, particularly when you go on site.
• Good practice is to always bring latest drawing set to site.
• Avoid issuing drawings while the works are underway, but sometimes impossible to avoid
• Sketching is often seen as clarifying existing drawings whereas revit drawings are seen as changes - this may allow the contractor to extension of time claims
• Important that you can retrieve drawings and emails quickly. - Save all the sent and received documents! (as you did at SGA!)

Question 6

Shop Drawing

Answer 6

• Some contractors issue shop drawings
• Because they require additional dimension and details to procure and manufacture details, than what is shown in the architectural package
• On some larger jobs it’s not uncommon to check 500-1000 shop drawings
• On these larger jobs you can ask the contractor to issue shop drawing programmes to avoid number of packages with similar return dates
• Try to have consistent supply of shop drawings rather than being issued multiple packages on same day
• Shop drawing response time is typically 10 days - but can be quicker by negotiation with contractor
• The architect does not approve shop drawings but only reviews shop drawings
• The stamp clarifies does in the review (see below)

Question 7

Substitutions

Answer 7

• Contractor or subby might try to substitute a product
• Typically to save money
• Be careful of substituting as architects have selected a certain product for a reason - is the substitution inferior product?
• Depending of the substitution an BC amended may be required - who will pay for this? And also who will reimburse the architect for the time taken to assess this and prep of amended BC?
• In talking into consolidation of these costs is the substitution worth it?

Question 8

Request for Information (RFI)

Answer 8

• Respond within the required time frame (typically 5 or 10 working days)
  
  • Shorter the better!
• Sometimes a contractor require response less than this
• Each practice has a different form and system to respond to RFIs
• Sequesqual numbers
• Clear response
• Variation
  
  • A, B, C , D - cataloguing
  • Change order process - if the change attracts cost then the change might need to be approved before the RFI can be responded to. If this is the case then it may take longer that 5-10 days
• Copy to interested parties (CC in everyone. Madumal show in the Architects direction)

Question 9

Contract Instructions

Answer 9

• Only the engineer (engineer to the contract?) the engineer’s representative can instruct the contractor
• Some contractors are happy to act on an RFI from an architect, others will not
• If the contractor will not, then contract instruction will a need to accompany the RFI
• Some contractors wont act on an RFI response, even if the response is confirming the contents of the drawing, without a contract instruction.
• It is important to discuss at the beginning to how the project is to be structure - that everyone is in agreement and everyone follows this agreeance.

Question 10

Variations

Answer 10

• Under NZS3910, a variation is:
  
  • Increases or decrease the quality of work
  • Omit any work
  • Change the character or quality of any of any Material or work
  • Require additional work to be done
  • Change the level, linen position or dimensions of any part of the Contract Works
• Can attract both additional cost and time
• Engineer is entitled to issue a variation and contractor have to comply
• Once Practical Completion has been award the Engineer cannot issue variation without consent of contractor
• At times site instructions can be followed up with an AD when you get back into the office
• If AD is not issued, or if the contractor deems this a variation, the contractor has one month to give written notice to the engineer.
• Depending on the varation, it can be priced bt the QS and instructed by the Architect or engineer beforehand
• Alternatively issued to directly to contractor to price, and then submit to the principal for approval prior to going ahead

Question 11

Admin - Resource vs Building Consent

Answer 11

• In theory the building should match the RC and BC drawings
• Some subtle changes be made however rare that the changes are profound
• If changes are due to the Principal the revised scheme must be submitted for another RC, and an amended BC.
• Once the building has been completed someone from the council checks for compliance with BC and RC drawings and conditions.

Question 12

Extensions of Time

Answer 12

• Extension of time is determined by what is written in the contract
• Although witten contractor not automatically entitled to extension of time if events described in contract occurs
• The contract lists the process that has to occur to get extension of time. For example contractor must notify the engineer and state the grounds for the extension
• The notice must be within 20 working days or as far as practicable
• The notice must state the number of days the contractor is applying for
• The engineer then has 20 working days to notify contractor of their decision
• Check the wording in the contract as this may vary!

Question 13

Role of the Engineer

Answer 13

• Expert advisor too and representative of the Principal, giving directions to the contractor on behalf of the principal, acting as agent of the Principal (payment)
• Independently of either contracting party, to fairly and impartially make the decisions entrusted under the contract, to value the work, and to issue certificates
• In NZS3910 and SSC an Engineer is someone as the architects representative
• Must be a natural person, not a company or other entity
• Must act in the best interest of the principal
• Authorized to legally bind the principal
• Engineer acts as expert advisor and representative of the principal
• E.g When engineer receives Payment claims and issues progress schedules - this is done as their capacity as the principles agent
• Payment claims and schedules may be received and issued by engineer as the principal agent but this is a distinctive function from those claims and schedules being assessed by the engineer
• Engineer must be an impartial administrator
• Same standard applies when making decisions - variation, extensions of time etc.
• However it is not hard to imagine scenarios when this can be difficult for the engineer “Dual Role” - being fair to both the Principal and contractor

Question 14

Liquidated Damages (LD’s)

Answer 14

• If liquidated damages are to be applied, a monetary figure will be inserted to the Contract Particulars. This figure must be a genuine pre-estimate of the actual losses incurred and not a figure that acts as a form of punishment for late completion.
• In the event that the contractor breaches the contract, a value can be payable to the Principal
• Usually when builder fails achieve practical completion by the date stated in the contract
• Oten calculated on a daily and weekly rate
• Not a penalty but an agreed figure set at the time of the entering contract, based on the actual loss the client is likely to suffer if failure to meet completion date. Ie rent, removal ost, running cost
• Important that the method of calculation is precisely and formally documented
• Can range from serval 100 dollar to 100000 oer week

Question 15

Wellbeing

Answer 15

• Important to make sure less workplace accidents and safe envionemnt
• In 2018 8 people lost lives and 37000 injuries
• More suffer from cancer and other condiitonsn because of checmicals etc
• Or heart conditions due to stress
• High demands and business istanbility can lead to poor mental health and suicide
• In NZ 6.9% of men who commit suicide and from the constrcution industry. This is the highest of any industry
• Industry is creating tools - Worksafe has created resources that can help
• THese tools are not just for people on site but includes consultants
• Respect each other and trust!

Question 16

Payment

Answer 16

• Key cause of disputes
• 80% of projects have some form of dispute about payment
• Prior to the Construction Contracts Act, payment was typically made on a ‘pay-when-paid’ basis. Meaning customers could without pay until they themselves had been paid. If the contractor was not paid then all the subbies would not be paid either. This lead to high profile consultancies - with the recognition that this approach was flawed
• Construction contract Act - says provided right documents have been issued, payment must be made within 20 working days, regardless of whether the customer/contractor has been payed. Subbies therefore can be assured of regular payment.
• Likely that the contract will state that the contractor will issue a payment claim each month
• Section 20 of the Construction Contracts Act (CCA?), sets out specific requirement as to what the payment claim must contain. Standard contracts like SSC and 3910 have incorporated these reuuqirmetns into the contract
• If these requirements are met automatically due 17 days later. Only exception is where the customer responds with a payment schedule setting out any objections
• All of this is assuming that the payment claims are issued correctly
• The courts have made it clear that regard payment claim requirement as essential and will not overlook any deficiencies unless very minor
• On day 0 contractor submits a payment claim
• On day 5 under SCC the architect must issue a provisional payment schedule - but depends on the contract. For example in 3910 its day 7
• If the principal wants to make an amendment or deduction, they must notify the engineer to the contract by day 10
• If this does happen then Replacement payment schedule must be issued by day 12
• If no deduction or changes, then provision payment shceeudle on day 2/7 becomes by amount
• Amount must be paid by day 17
• Default day under the CCAct is day 20
  
  • If the principal and contractor cannot agree the payment terms, then the provisions on the CCAct will apply

Question 17

A valid payment claim must:

Answer 17

• As per CCA 2002 (20(2), (3) and (1):
  
  • Be in Writing
  • Identify the construction contract
  • Identify the work and
  • the period
  • State the claimed amount
  • the due date
  • Indicate how it was calculated
  • State it is made under the Act
  • Accompanied by form 1

Question 18

A valid payment schedule must:

Answer 18

• As per CCA 2002 (21 (2))
  
  • Be in writing
  • Identify the claim to which it relates
  • State a scheduled amount
• If less that scheduled amount, indicate the calculations and the reason for the difference

Question 19

Disputes:

Answer 19

• The construction contract will set out the dispute resolution process that eiter the contractor or principal must follow
• Depending on the contract it may start with the engineer/architect carrying out review
• If cannot be resolved then may go to mediation

Question 20

Mediation

Answer 20

• Consensual, confidential and information negotiation process using a mediator to negotiate a mutually acceptable settlement
• Using independent mediator to define issues and settlement options, assess the implications, and to help negotiate a mutually acceptable settlement
• Purpose is to enable and empower the parties to negotiate and respovle cost effectively, and confidentially - rather than have decision imposed on them by judge, arbitrator or judicator
• Enables to not be formal or have to follow legal standards - creative and flexible

Question 21

Adjudication

Answer 21

• If dispute involves payment the dispute can circumvent the contract and the dispute ca be referred straight to adjudication.
• It is the most commonly used dispute resolution process. Binding until the dispute is finally determined by an arbitrator or court porceedings
• Unique and fast and straightforward statutory process
• Quick and cost effective
• Most reslived in 6 weeks or less

Question 22

Arbitration

Answer 22

• Depending on the contract the dispute can be referred to as Arbitration
• Process of settlement of dispute where independent and impartial arbitrator makes a decision
• Their Decision is called an ‘award’
• Formal discrete resolution process governed by the Arbitration Act 1996. An arbitrator’s decision is binding and enforceable in the courts

Question 23

Practical Completion (PC)

Answer 23

• Finished in a state where it can be use as intended apart from minor defects
• Under 3910:

Question 24

Post Practical Completion

Answer 24

• The DLP is 3 months unless some other period is stated
• The Final Payment Claim is submitted by the contractor
• The final Payment schedule is isssued
• Defects are remidied
• Final Complete Certificate is issued
• Final tranche of retentions are reduced