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RICS APC Core - Contract Practice > Interim Valuations and Payment Provisions > Flashcards

Interim Valuations and Payment Provisions Flashcards

1
Q

What is the purpose of a valuation?

A

To provide advice to the certifier on value to allow them to issue their interim certificate

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2
Q

Regarding valuations how is ’The Housing Grants, Construction and Regeneration Act 1996’ relevant?

A

It contains statutory requirements relating to interval and procedure for contracts that have a duration of over 45 days

Specifically stating that a party to a construction contract is entitled to interim or stage payments coming from interim valuations or pre-determined amounts at project milestones or specified dates.

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3
Q

Relevant to valuation what happens if a contract does not contain the provisions required by the Construction Act?

A

The Scheme for Construction Contracts will apply to fill the gaps

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4
Q

What are the main elements of a valuation?

(7 main elements)

A

a) Preliminaries
b) Measured work
c) Variations
d) Materials on site
e) Materials off site
f) Loss and expense
g) Retention

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5
Q

What are the six steps to a valuation set out within Interim Valuations and Payment, 1st edition (August 2015) ?

A
  1. Planning
  2. Pre-Valuation
  3. Valuation
  4. Valuation Document
  5. Issue Valuation
  6. Post Valuation
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6
Q

Why is it important to visit site as part of a valuation?

A

In order to conduct a fair assessment to ascertain a valuation - going to site allows you to objectively and accurately determine what has been done and what has not. It also allows you question the contractor face to face about any disparities you may imminently see.

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7
Q

Which two pieces of legislation impact valuations?

A
  1. ’The Housing Grants, Construction and Regeneration Act 1996’
  2. ‘The Local Democracy, Economic Development and Construction (LDEDC) Act 2009’
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8
Q

What year did ’The Housing Grants, Construction and Regeneration Act’ take effect?

A

1996

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9
Q

What year did ‘The Local Democracy, Economic Development and Construction (LDEDC) Act’ take effect?

A

2009

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10
Q

Regarding valuations, written in legislation how many days after a due date must an employer issue a notified sum (payment notice)?

A

5 Days

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11
Q

Regarding valuations, if an employer fails to issue a payment notice will the contractor be entitled to payment?

A

Yes, legislation states that if the employer hasn’t issued a payment notice within 5 days of the due date the payee can issue their own notice providing that there is a basis to which the sum is calculated.

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12
Q

Regarding valuations, when must an employer pay the amount on the payment certificate?

A

The employer must pay the contractor on or before the final date for payment unless a pay less notice has been issued - in which case they would pay the amount on that.

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13
Q

What must a pay less notice have?

A

A basis of calculation.

e.g. a breakdown of costs, this could be by using a CSA

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14
Q

If an employer fails to submit a payment notice and the payee gives their own notice, can the employer still submit a pay less notice?

A

Yes

So long as they base the pay less notice on the payee’s notice.

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15
Q

Regarding interim valuations, how many days before a final payment can a pay less notice be issued?

A

It depends on the contract. in JCT it is typically 5 but this can be changed on agreement. If there is no agreement on this within the contract then the Scheme for Construction Contracts will take president and it would be fixed at 7 days.

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16
Q

Within a valuation period, if a pay less notice is issued - to what date would work be valued?

A

To the date of the pay less notice

17
Q

As part of a valuation is it possible for a notified sum or pay less notice to be £0

A

Yes, but only if there is a basis to which the sum is calculated.

18
Q

An interim valuation represents value of the “work properly executed by the contractor” - who is responsible for determining weather a job has been completed properly and to the standard specified in the contract?

A

The Contract Administrator

19
Q

Regarding valuations, what are the sub steps of the Planning stage?

Interim Valuations and Payment, 1st edition (August 2015)

A

a. Understanding the requirements
b. Employers’ specific requirements
c. Review pricing document
d. Liaise with contractor
e. Liaise with consultants
f. Liaise with clerk of works

The planning stage of valuation will be done before the contract begins. It is only done once. It is about being prepared and communicating with relevant people about their different roles within the valuation process.

20
Q

Regarding valuations, what are the sub steps of the 2. Pre-Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

A

a. Receive contractors’ interim application for payment

The pre-valuation is somewhat of a formality. This is the stage where you simply receive the contractor’s interim application for payment check all is in accordance with the contract administrator and do basic initial checks that all is in order.

21
Q

Regarding valuations, what are the sub steps of the Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

A

a. Fair assessment
b. Ascertain valuation
c. Collect information

This is when you gather information to inform your valuation by inspecting the works etc and calculate the valuation.

22
Q

Regarding valuations, what are the sub steps of the Valuation Document stage?

Interim Valuations and Payment, 1st edition (August 2015)

A

a. Check valuation
b. Complete valuation documentation
c. Record valuation

Valuation documents is about checking your valuation and collating it into documents and the proper forms.

23
Q

Regarding valuations, what are the sub steps of the Issue Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

A

a. Assemble valuation documentation
b. Review valuation
c. Sign valuation
d. Issue valuation

Issuing the valuation is about collecting up the document, checking everything is there, signing it and issuing it to the appropriate people.

24
Q

Regarding valuations, what are the sub steps of the Post Valuation stage?

Interim Valuations and Payment, 1st edition (August 2015)

A

a. Maintain records
b. Manage discrepancies
c. Record payment

Post-valuation is simply about maintaining records of the valuation and managing any discrepancies

25
Q

Does an interim valuation measure the value of total works or the value of works completed within the valuation period?

A

An interim valuation measures the total value of works complete

This will be compared to the previous period to get the notified sum

RICS APC Core - Contract Practice (19 decks)

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