Valuations

Question 1

What is the procedure for carrying out a valuation under the JCT Design and Build Contract 2016?

Answer 1

The contractor submits an application on the specified date within the Contract Particulars, which triggers the payment process.
The due date is 7 days from that date, and the Employer then has 5 days to submit a payment notice.
The final date for payment is 14 days from the due date, unless it has been amended

Question 2

What is the significance of a due date?

Answer 2

Due date triggers the payment cycle for all interim payments. Construction act states a payment notice is required 5 days after Due Date.
This is also the date that the last date for payment is calculated from

Question 3

What is the procedure for carrying out a valuation under the JCT Standard Building Contract?

Answer 3

The contractor submits an application on the date stated in the Contract Particulars, which is 7 days prior to the due date.
The quantity surveyor values the works as of the due date, and issues a recommendation for payment to the contract administrator within 5 days of the due date.
Pay less notice due 5 days before final date of payment.
The final date for payment is 14 days from the due date, unless it has been amended.

Question 4

What happens if the contractor does not submit application on the specified date under the D&B?

Answer 4

The payment process is not triggered.
Should a notice be issued after the 5 day period for interim certificate, the final date for payment is delayed by the same amount
A payment notice is still required

Question 5

What happens if the contractor does not submit application on the specified date under the SBC?

Answer 5

Regardless of whether the contractor submits an application the quantity surveyor should still carry out a valuation and the contract administrator should issue a payment certificate within 5 days of the due date, otherwise the contractor can issue a default payment notice.

Question 6

What is the procedure for carrying out a valuation under the NEC 3 Contract?

Answer 6

Assessment date is 7 days before Due Date
Interim Certificate due 5 days after Due Date
Pay Less Notice 7 days before Final Date For Payment

Question 7

What happens if the contractor does not submit application on the specified date under the NEC?

Answer 7

Provision under the NEC 4 is that the PM is obliged to assess the amount due to the contractor as the lesser of
- the amount assessed by PM
- amount due at previous assessment date

Meaning best case is Contractor receives zero but they may be liable for money due to the client in the event where contractors have caused delay

Question 8

What happens where Employer party fails to issue payment notice?

Answer 8

Contractor is entitled to submit a default payment notice under the Construction Act
This would then be obliged to be paid by the Employer, subject to any deductions in a Pay Less Notice

Question 9

What are the payment provisions under the JCT Design and Build Contract 2016?

Answer 9

• Alternative A - Stage Payments
• Alternative B - Periodic Payments (the default)
• Contractor can suspend the works for non-payment 7 days after notifying the Employer

Question 10

You’ve mentioned your experience has provided an understanding of payment provisions, what are the two methods of payment under the JCT?

Answer 10

Alternative A – Stage Payments, Alternative B – Periodic (interim)
Specified in Contract Particulars.

Question 11

What assurances could you give a contractor that the Client pays?

Answer 11

I would remind them of the Employers implied terms under the housing grants act. With the clients approval we could also suggest using bonds such as advance payment and retention bonds.

Question 12

What is a variation quotation under Schedule 2 of the JCT Standard Building Contract?

Answer 12

• The Contract Administrator instructs the contractor to submit a variation quotation, and provides information to the contractor in order for them to provide that quotation to the quantity surveyor.
• If the contractor feels the information is insufficient to provide a quotation he must notify the Contract Administrator within 7 days of the instruction.
• The variation quotation should include the cost of the variation, any adjustment to the time required for completion of the works, any loss and / or expense due as a result of the variation, the cost of preparing the quotation and any additional resources required to carry out the variation.
• The variation quotation should be submitted to the Contract Administrator within 21 days of being instructed to do so or receiving the additional information requested.
• Remains open for acceptance for 7 days from the date of submission.
• If the Contract Administrator does not accept the variation quotation, the contractor is still entitled to be paid the cost of its preparation provided it has been prepared on a fair and reasonable basis.

Question 13

How does the valuation process for Alternative A and B vary?

Answer 13

A - cumulative value of stages completed + value of changes
B - works done to date

Question 14

What are the advantages of LD’s?

Answer 14

• They do not require proof of loss after the event
• Can be deducted simply by employer under the mechanism in the contract
• Agreed in advance so contractor knows extent of their liability
• No need to prove actual damage and does not matter if loss is greater or less than anticipated

Question 15

What is a liquidated damage?

Answer 15

A sum stated in the contract as damages payable in the event of a specified breach / failure to complete in time
Actual losses only, predetermined, not a penalty
QS don’t advise on calculation but can advise it would include elements such as loss of rent, loss of income, storage costs, rental costs, financing costs, fines from third parties

Question 16

What are unliquidated damages?

Answer 16

Claims made through the courts where a contract prevents a client from claiming or if actual losses are significanctly different to those occurred

Question 17

When are titles of goods passed?

Answer 17

Generally on delivery (sale of goods act 1979) regardless of whether they have been paid for
Some amendments may mean that this is not the case until payment Is received
Must ensure the the contractor has the title of goods to pass, i.e. they are not owned further down the supply chain / by the suppliers
Title should be traced down and up the supply chain to ensure this can be passed
Vesting certificate or off site materials and goods bond

Question 18

What is an advanced payment bond?

Answer 18

This is an insurance / bond that may be requested by the client in the event where advanced payments are required and agreed to, to support contractor with significant up front costs such as start up or material / plant costs

Question 19

What does a vesting certificate do?

Answer 19

Transfers the title of good
Confirms the goods will be insured to their full value to the benefit of the purchaser
That they are stored separately and marked to identify ownership

Question 20

How would you value preliminaries where there is a contract delay?

Answer 20

Can add the proposed delay time to the total contract time or take away the proposed delay time from the time completed in the contract

E.g. 50/ (100+10) or (50-10)/100 x time related prelims

Question 21

How do you value works that are not properly executed?

Answer 21

Monies associated with defective and outstanding works must be excluded from the valuation (i.e. cost of rectifying or completing works as listed in the snagging list)
Adjustments for defective / outstanding works are to be calculate at the prices used to calculate the contract sum