Contract administration

Question 1

What is nomination?

Answer 1

• Selection of a particular subcontractor to carry out works, manufacture or supply of materials.
• This provides the architect and client with greater control of material choice and thereby quality.
• It is often used when there are long lead-in times with the employer placing orders prior to the Main
  Contract award which reduces potential delays on site.
• The Main Contractor is relieved of liability of design and compliance with the performance spec in
  addition to subcontractor delays in respect of the works that have been nominated.

Question 2

Do nominated subcontractors get paid separately?

Answer 2

• Nominated Contractors are normally paid via the Main Contract with sums identified separately.

Question 3

Can the contractor object to a nominated subcontractor?

Answer 3

• Any objections must be made during the tender period.
• There are specific exclusions and grounds for an objection for example if they have found out the
  subcontractor is having financial difficulties and may be going insolvent

Question 4

If there are problems with the design, after Novation of the architect,
who would be responsible?

Answer 4

• At the point of novation, the client would agree the level of design was satisfactory & would be signed
  off by all parties.
• The contractor would then become responsible for the Architect & his design should any problems
  arise during construction.
• Disputes may arise where it becomes unclear when problems have arisen, either prior to the transfer of
  services or afterwards.

Question 5

What is the difference between Novation and Assignment?

Answer 5

• Novation is a mechanism whereby one party can transfer all its obligations under a contract and all
  benefits arising from that contract to a third party.
• Assignment is where contractual benefits are assigned however contractual burdens cannot be
  transferred under assignment.

Question 6

What is set-off?

Answer 6

• Set off are any monies owed to the employer by the contractor which are deducted against any
  payments due to the contractor.

Question 7

Describe differences between Statutory Provisions and Contract
Provisions?

Answer 7

• Statutory provisions are set out by law & must be complied with.
• Contract provisions relate to the contract in question & therefore only apply to a specific project

Question 8

What are domestic subcontractors?

Answer 8

• This is a standard appointment of a Subcontractor by the Main Contractor

Question 9

What are named subcontractors?

Answer 9

• Clients provide the Main Contractor with a choice of named Sub Contractors for a portion of the
  works.
• Once appointed they become a domestic subcontractor in terms of the conditions of contract.
• Additional names may be added if approved by all parties.
• This allows the client a level of control over the quality of the works packages and in some cases cost.

Question 10

After valuation and certificate are issued, the client advised that they
don’t have sufficient funding to make the payment. What would you
do?

Answer 10

• Once the certificate has been issued to the contractor, the client is contractually obliged to honour
  payment of the certificate and cannot withhold money without a valid reason.
• If this were the case, I would contact the client and contractor ASAP to arrange some form of
  payment. It may be the case that the client has insufficient funds available in time for the final date for
  payment and it may be possible to defer payment by 1-2 days.
• Failing this or if the contractor is unwilling to delay the payment, the client would need to find finance
  the payment through other funds to honour the certificate.

Question 11

What items do you include for on a valuation?

Answer 11

• Items would include:
• 1) Prelims.
• 2) Measured Works.
• 3) Materials on / off site.
• 4) Variations.
• 5) Claims.
• 6) Retention.
• 7) Previous payments.

Question 12

If an instruction was issued during the contract which involved the
fabrication of a substantial amount of materials off site would you pay
for them as off site materials within the valuation?

Answer 12

• There is no obligation on the client to pay for materials off site if this is not identified in the contract.
• However in the scenario where the client wishes to pay for them, I would ultimately check with the
  client before paying or rejecting them

Question 13

How would you deal with the urgent Verbal Instructions?

Answer 13

• If the instruction affects the critical path or programme in general I would review the instruction with
  the contractor administrator, client & contractor.
• If the instruction is valid under the contract I would ensure this is converted into a formal written
  instruction as soon as possible.

Question 14

What documents would be required in incorporating a Contractor
Design Portion Supplement into a project?

Answer 14

• Within a Design & Build project, the documentation to be included would be the Employers
  Requirements including the Scope, Specification, Drawings, Contractors Proposals along with any
  insurances.

Question 15

Could an e-mail constitute a contract document?

Answer 15

• Yes providing there is offer, acceptance, intention to create legal relations and the responding email
  does not vary the conditions, a contract will be created.

Question 16

What is your opinion of Oral Contracts?

Answer 16

• Whilst they are legally binding the difficulty lies in proving the specific terms and conditions of the
  agreement.
• It is for this reason why the HGCRA only applies to written contracts.

Question 17

What is the difference between NEC and JCT?

Answer 17

The main difference between the 2 forms is its usage.
* NEC can be used within the building & civil engineering projects whereas JCT is specifically for
building projects.
* NEC can be adopted to a number of bespoke contract strategies due to the various options available
whereas JCT has a standard set of clauses.

Question 18

What is the difference between an information requirement schedule
& an information release schedule?

Answer 18

• The information required schedule asks the Contractor to provide dates when design information is
  required.
• The information release schedule informs the Contractor when the design information will be available

Question 19

What is Frustration?

Answer 19

• Frustration occurs when any event or circumstances beyond control of both parties changes the
  contractual obligations or makes it impossible or illegal to fulfil their contractual obligations. The
  happening of such events automatically discharges contract.

Question 20

How is a contract under hand different from a deed?

Answer 20

• A Deed is signed by a witness & traditionally authenticated by a seal.
• The limitation period of under hand is 6 years whereas a deed is 12 years.

Question 21

What is the defects liability period?

Answer 21

• The defects liability period is the duration at the end of the contract, usually 52 weeks after the
  Substantial Completion Certificate has been issued whereby the contractor undertakes to rectify any
  defects that arise within the structure at the contractors expense, providing they were due to materials
  & workmanship not being in accordance with the contract.
• In the event that the contractor failed to rectify any defects the employer may employ another
  contractor to carry out the works & recover the cost of doing so from the Main Contractor.
• The retention money retained may be used to cover the costs of making good.

Question 22

What is your understanding of latent defects and what contractual
issues are associated with them?

Answer 22

• Latent defects are defects which are not readily identifiable upon inspection & only come to fruition
  some time after building completion and may take many years to become identifiable.
• A claim in contract can only be brought about within the limitation period of the contract, 6 or 12 years
  depending on whether the contract was executed as a deed or underhand.

Question 23

What should the architect do if they are discovered?

Answer 23

• The Architect should issue an instruction as necessary to instruct the contractor what to do if they are
  identified.
• This can include telling them to comply with a third party who is examining or opening up the works to
  identify the defect.

Question 24

If the works or materials are not in accordance with the Contract what
options does the Architect have available to them?

Answer 24

The architect may:-
o Instruct the contractor to remove all defective work, materials and goods at their own expense
and time.
o They can notify in writing that they can remain with an appropriate deduction being made
from the contract sum.
o Issue instructions for variations that are necessary as a result of the work. If they are necessary
there should be no additional costs or extension of time given.
o Instruct the contractor to open up and test further work to determine the extent of any noncompliance.

Question 25

When issuing instructions for further opening up and testing to
determine the extent of non-compliance what sort of things should the
architect consider?

Answer 25

• The significance of the non-compliance.
• Consequences of further non-compliance on building owners and users.
• Consequences of further non-compliance on adjoining properties and the public.
• Reason for the non-compliance.
• Level of supervision and control employed by the contractor.
• Currently recognised testing methods.
• Time and consequential costs of further opening up

Question 26

What is a provisional sum?

Answer 26

• A sum of money included in the contract for work that cannot be fully designed and costed at the time
  of tender or contract sum agreement.

Question 27

What types of provisional sum are there?

Answer 27

• Defined and undefined

Question 28

Where are provisional sums defined?

Answer 28

• NRM

Question 29

What is a defined provisional sum?

Answer 29

• A sum included in the contract for work that has not been completely designed at the time of contract
  sum agreement but for which certain specified information can be given about the extent of works, its
  quantity, duration of installation and how it is to be fixed to the building.

Question 30

What is the contractor deemed to have allowed on the inclusion of a
defined provisional sum?

Answer 30

• They are deemed to have made proper allowances for carrying out the work in their programme and
  preliminaries.
• This means that they are not entitled to an extension of time or extra prelims for carrying out the work,
  whatever the delay or cost of doing so to the contractor.

Question 31

What if the actual work does not closely resemble the provisional
sum?

Answer 31

• If the description is not accurate it has to be amended.
• This will be treated as a variation.
• This will entitle the contractor to an extension of time and extra preliminaries if appropriate.

Question 32

What is an undefined provisional sum?

Answer 32

• A sum included for work for which there is minimal or no information at the time of contract sum
  agreement. The location, quantity and time associated for the installation of the works is not fully
  known.

Question 33

What is the contractor deemed to have allowed?

Answer 33

• They are not deemed to have allowed for anything.
• Expenditure of the undefined provisional sum may carry additional costs for programme or
  preliminaries as a result of carrying out the works.

Question 34

How can a provisional sum be expended?

Answer 34

• The architect has to issue an instruction for its expenditure.

Question 35

How are provisional sums dealt with in the final account?

Answer 35

• The provisional sums included in the contract are deducted and the actual amount substituted

Question 36

What are the risks associated with provisional sums?

Answer 36

• The actual cost and time exceeds that allowed for in the provisional sum because the nature of
  the item changes between tender and instruction

Question 37

What are the main suites of construction contracts?

Answer 37

• JCT.
• NEC 3 & 4.
• ECC.
• ICE.
• FIDIC.

Question 38

What does ‘JCT’ stand for?

Answer 38

• Joint Contracts Tribunal

Question 39

What does NEC stand for?

Answer 39

• New Engineering Contract.

Question 40

What does ECC stand for?

Answer 40

• Engineering and Construction Contract

Question 41

What does FIDIC stand for?

Answer 41

• Federation internationale des ingenieurs civils.
• International Engineers Federation.

Question 42

What does ICE stand for?

Answer 42

• Institution of Civil Engineers

Question 43

What are the main parts of the JCT contracts?

Answer 43

• Recitals.
• Articles.
• Contract Particulars.
• Attestation.
• Conditions divided into 9 sections (7 for minor works).
• Schedules.

Question 44

Name the 9 sections of the JCT contracts?

Answer 44

• Definition and interpretation.
• Carrying out the works.
• Control of the works.
• Payment.
• Variations.
• Injury, damage and insurance.
• Assignment, Third Party Rights and collateral Warranties.
• Termination.
• Settlement of disputes.

Question 45

Name the main types of JCT contract

Answer 45

• Minor works.
• Intermediate.
• Standard building contract.
• Major Projects.
• Design and Build.
• Prime cost contract.
• Measured Term contract.
• Construction Management Agreement.
• Management Contract.
• Framework Agreement

Question 46

When would you use JCT Minor Works?

Answer 46

• Projects that are short in duration on a smallscape with a straight forward construction.
• JCT guidance is for a value up to £200,000 but it has to be simple in nature.
• It is a lump sum form where design should be completed prior to execution.
• The Employer or their team is to provide specifications, drawings and a schedule of works.

Question 47

When would you use JCT Intermediate Contract?

Answer 47

• The Intermediate form is recommended for projects that do not exceed a one year duration.
• The projectshould be simple in content and require only basic skills and trades where services are not
  complex and where the works are already designed

Question 48

When would you use a JCT Standard contract with quantities?

Answer 48

• A JCT Standard Building Contract would be used where the work has already been designed at
  execution.
• It is suitable for use with a bill of quantities and is a lump sum form.
• The contractor’s risk is limited to price only.
• The employer takes the risk of errors in the bill

Question 49

When would you use JCT Standard without quantities?

Answer 49

• This is suitable where work has been designed prior to contract however there is no bill of quantities.
• The contract documents will include drawings, specification and a schedule of rates.
• It is a lump sum form of contract.
• The contractor’s risk includes both price and quantity

Question 50

When would you use JCT Standard with approximate quantities?

Answer 50

• This is a remeasurement form of contract.
• There is no fixed contract sum.
• It is used where the design is not completed at the time of execution.
• An approximate bill of quantities will have been prepared.
• Construction is aimed to commence prior to the design being completed.

Question 51

When would you use JCT DB?

Answer 51

• When the contractor is responsible for design and construction.
• The project should be similar in complexity to that ofstandard building contracts.
• The contactor’s proposals form the basis of the contract.
• There is no mention of an architect or QS instead this role is replaced by the title of
  Employers Agent.

Question 52

What are the key differences between JCT Minor Works, Intermediate
and D&B Contracts?

Answer 52

• The minor works only has 7 sections of conditions instead of 9. Variations are included within the
  Control of the Works section and there is no ‘assignment and collateral warranties provision’.
• There is no mention of the QS in minor works and D&B however there is in the Intermediate Form.
• In Minor Works there is no provision for named sub-contractors, no provision for bonds and collateral
  warranties and no advance payment provision.
• Minor works also has no provision for sectional completion or partial possession.
• In Minor Works there are no relevant events listed for extension of time, instead it is referred to as
  ‘anything outside the contractor’s control’.
• The standard rectification period is 3 months for minor works and 6 months for D&B and
  Intermediate.
• The standard retention is 5% for Minor Works and Intermediate and 3% for D&B.
• D&B is administered by an Employer’s Agent rather than a Contract Administrator.
• In Minor Works and the Intermediate Form, the Contractor may be responsible for completing
  discrete part of the design whereas in D&B, he is responsible for completing the overall design.
• In D&B, the EA may request a quotation prior to instructing a change.
• There is no fluctuation mechanism for labour and materials costs in Minor Works and Intermediate
  Forms.
• Payments are made at regular intervals in Minor Works and Intermediate Forms whereas D&B gives
  the option of stage payments.
• In Minor Works, there is no option for the employer to take out a joint name all risk policy, only
  options A and C.
• There is no provision for third party rights in Minor Works or Intermediate Forms.

Question 53

What is a bespoke contract?

Answer 53

• Contract conditions that are drafted specifically for a particular project

Question 54

What the advantages of standard forms over bespoke contracts?

Answer 54

• They are written by legal experts.
• Rights and obligations of each party are clearly set out to the required level of detail.
• Risks should have been allocated appropriately between the parties.
• Parties should be familiar with the provisions in the form providing greater consistency in application
  and fewer unforeseen anomalies.
• The time and expense of preparing a fresh document for each occasion is avoided.
• Case law is built up over time and provides a good source of knowledge and clarity of the terms

Question 55

What are the disadvantages of standard forms of contract?

Answer 55

Apportionment of risks is rarely questioned and therefore becomes implicit meaning it is not reviewed
on whether it is appropriate.
* They may not be appropriate to the needs of a particular project or client.
* Using an inappropriate standard form for the project will cancel out any advantages.

Question 56

When would use a bespoke contract rather than a standard form?

Answer 56

• They should generally be used for major projects with novel obligations.
• When specialist advisors can undertake the amendments as this requires great skill and knowledge.
• Drafting from first principles is too daunting for most in the industry

Question 57

Can you have an Extension of time without a loss and expense claim?

Answer 57

• Yes an EOT does not automatically mean entitlement to L&E

Question 58

When pricing an EOT what would you include for and what rates?

Answer 58

When pricing an EOT I would include costs for prolongation of site cabins, site utilities, welfare
facilities, management staff, security, cleaners, inefficient use of labour & plant resources, subcontractor
mobilisation costs, head office, finance charges & loss of profit.

Question 59

If a project was due to finish before Christmas, but an extension of
time was given which meant the contractor finished after Christmas, is
the contractor entitled to costs over the Christmas break, which is
normally 2 weeks?

Answer 59

• It would depend on why the EOT had been issued.
• The contractor would be entitled to costs over the Christmas period for prelims / site cabins if the
  reason for the EOT allows the contractor to claim L&E

Question 60

Would you get involved in helping the Architect assess the Extension
of Time?

Answer 60

• Yes the QS would become involved in assessing the financial implications of the EOT, if applicable

Question 61

Explain the relative advantages & disadvantages of the NEC and
JCT?

Answer 61

• Advantages of the JCT Suite of Contracts:-
  o They are considered by many as the “industry standard,” therefore they offer familiarity.
  o They cover most forms of procurement and building types through the various impressive
  ancillary documents to support the main forms.
  o They are comprehensive in detail and considered by many to be fair and reasonable and not
  loaded in favour of either party.

Question 62

Advantages of the NEC Contract

Answer 62

• They are applicable to a variety of procurement strategies,
• They offer clarity and simplicity by using:-
  o Ordinary language (minimal legal jargon).
  o They include flow charts to support their users.
• They act as a stimulus to good management through maintaining:-
  o Up-to-date programmes which are required to be clear and precise.
  o Provision of early warning procedures and risk registers.
  o They Embody key features of project partnering.
  o Assessment of Compensation events by applying a “rolling Final Account.”

Question 63

Disadvantages of the JCT Suite of Contracts

Answer 63

• They are sometimes though to “compromise conditions,” in which they try to satisfy the interests of all
  parties.
• They can be considered as unnecessarily long and unnecessarily complex

Question 64

Disadvantages of the NEC Contract

Answer 64

• They are often only considered to be used for civil engineering projects and partnerships.
• They have limited exposure to the market so they are therefore not fully tried and tested with
  supporting case law.

Question 65

What are the key differences between NEC and JCT?

Answer 65

• The NEC is concise and written in plain English.
• There are a number of optional clauses reducing the need to amend contracts compared to the JCT.
• The Project Manager is presented with options to deal with problems as soon as they become apparent.
• Provision of early warning procedure and risk register encourage a proactive approach to the
  management of the project whereas JCT is more reactive.
• Compensation events deal with issues affecting both cost and money under NEC whereas under JCT,
  variations deals with money and loss and expenses deal with time.
• Changes are based on quotations prior to commitment whenever possible under a rolling final account
  under NEC whereas under JCT agreement of costs can be left to the very end of the project.
• Cost of compensation events are calculated using schedules of actual costs rather than bill rates under
  JCT.
• There is no QS or Employers Agent mentioned in NEC only a Project Manager who takes on both
  roles.
• The Programme is a contract document under NEC with 25% of money being deducted on interim
  payments if the contractor does not submit an accepted programme at contract stage.
• The NEC has no provision for nomination of sub-contractors but preferred sub-contractors can be
  listed within the Works Information.
• The Defects correction period has different periods specified depending on the impact of the defect
  under NEC where the contractor must “make good” in these time periods. This approach is much
  better at dealing with defects when compared to JCT.
• Short periods of reply are adopted under NEC which incentivise the parties to respond to each other
  however is reality the NEC maybe considered as very administration heavy.
• Retention and delay damages are optional clauses under NEC.

Question 66

What are the role of the parties in the NEC?

Answer 66

• The Project Manager can be from the employer’s organisation or an external consultant.
• The Project Manager represents the client and has full authority to make decisions, unless the employer
  has restricted his authority. The PM has the duty to be impartial and to apply the contract.
• Designers prepare the work information and are not named in the NEC.
• The supervisor is either from the employer’s organisation or an external consultant.
• The supervisors role is to check that the works are carried out as described in the contract.
• They have a similar role to the clerk of works with authority such as instructing searches or issuing
  defect certificates.

Question 67

What is the role of the quantity surveyor under the NEC?

Answer 67

• The role of the QS is not mentioned in the contract.
• The QS can adopt a supporting role to contractor and PM to agree cost of compensation events
  despite not being formally referenced.
• Options B and D involve quantities and measurement.
• Target costs under options C and D require an audit role in open book accounting in target contracts
  which the QS may be responsible for.

Question 68

How is risk management dealt with in the NEC?

Answer 68

• A risk register should be produced as soon as possible and regularly updated this is defined in clause
  11.2(14).
• It should include the description of the risk and the mitigation measure, not the value or the owner.
• Employer’s risks are listed in the compensation events (clause 60) and in the contract data (additional
  employer’s risks). Everything else is deemed to be a contractor’s risk.
• Caution: If ownership is stated in the risk register, it must match the contract conditions or it will create
  conflict. Compensation events can be added or deleted in Z clauses. Additional employer’s risks are
  listed in the contract data.
• In case of discrepancy between the risk register and terms of the contract, it will be read in the favour of
  the party who didn’t prepare the risk register, i.e. the contractor.
• If a sum is stated in the risk register neither party can claim for savings or compensation if the cost of
  the risk turns out to be less or more.
• Risks can only be transferred against a lump of money by modifying the contract conditions. The risk
  register is not contractual.

Question 69

What is a compensation event?

Answer 69

• Events which, if they do not arise from the fault of the Contractor’s, entitle the Contractor to be
  compensated for effect on the Prices, Key Dates and Completion Date.
• There are 19Nr compensation events listed in clause 60.1

Question 70

What are Early Warning Notices under an NEC contract and what are
their purpose?

Answer 70

• They are notices given by the PM or the contractor of any matter which could potentially have an
  impact on cost, completion date, key dates or performance of the works in use.
• Their purpose is to give the parties sufficient time to consider the options available to prevent or
  mitigate the issue and collaboratively find the best solution to meet the employer’s interests.

Question 71

How are early warnings dealt with?

Answer 71

• The PM and contractor have duties to give each other early warnings for inclusion in the risk register as
  soon as they become aware of an event that may:-
  o Increase the total of the prices.
  o Delay Completion.
  o Delay meeting a Key Date or impair the performance of the works in use.
• The PM is to record all the early warnings in the risk register, even if some may not be worth
  mentioning.
• Any party can call for a risk reduction meeting to review the early warning notices and collaboratively
  find the best solutions to meet the employer’s interests.
• As early warnings are resolved, they are removed from the risk register.

Question 72

What input have you given into EWN’s on the projects you have
worked on?

Answer 72

• I have checked the contractor’s estimated cost of EWN’s.
• I have notified Early Warning when I became aware of them.
• I have attended risk reduction meetings. Those were informal for ‘Project X’ but very formal and
  involving many parties for ‘Project Y’
• I have suggested options for dealing with early warnings, for example, in ‘Project X’, when the
  contractor notified us of a series of events that compromised the completion date, I discussed with the
  parties the practicalities of a different sequence of works and traffic management measures to permit
  partial taking-over by the employer, who already had a thousand cars booked for the planned
  completion date.
• Because this issue was dealt with early enough, we managed to work together to put in place a workable
  solution that suited the employer’s interests

Question 73

How are ambiguities and inconsistencies dealt with under the NEC?

Answer 73

• Under clause 17 they are awarded in favour of the party who did not provide the works information.
• The PM issues an instruction to vary the works information which is a compensation event

Question 74

How is the contractor’s design dealt with?

Answer 74

• Clause 21 - The contractor must obtain acceptance from the supervisor and PM but remains liable for
  any failure in the design.
• There is no provision for novation as the NEC considers it is against good management.

Question 75

How does the NEC deal with time and programme?

Answer 75

• The employer sets the access dates for areas of the works if applicable with the starting date, the key
  dates or milestones and completion date.
• The contract duration is not stated, the contractor must complete the works on or before the stated
  date.
• If the contractor fails to meet the completion date, delay damages apply if option X7 was selected.
• The PM must issue the ‘notice of completion’ within a week of completion.
• The programme is a contractual document.
• Clause 31.2 details the requirements of the programme:-
  o Dates stated in the contract data and work information.
  o Dates when the contractor intends to meet these requirements.
  o Method statements.
  o Order and timings.
  o Float, and separate time risk allowances.
  o Health and safety requirements.
  o Dates when site access, information, plant and materials are to be provided by the employer
  will be required to meet the programme.
• The programme must be regularly updated and show the effects of early warnings

Question 76

How is completion defined under the NEC?

Answer 76

• All the works have been completed as described in the works information (drawings and
  specifications).
• The contractor has done all the works required for the employer to use the works and for others to do
  their work.
• All notified defects that may prevent the employer or others to use the works have been rectified.
• The PM has one week to certify completion.
• Clause 35 specifies that the employer should take over the works within 2 weeks of completion. If he
  takes over part of the works, this is a compensation event

Question 77

What is the difference between acceleration (clause 36) and early
completion bonus (clause X6)?

Answer 77

• Acceleration is where the completion date and key dates are advanced for an agreed price. Delays and
  damages apply from the revised date.
• An early completion bonus is where the contractor receives a bonus proportional to the number of
  days they completed the works in advance of the completion date with the original completion date
  being unchanged.

Question 78

What are the payment mechanisms under the NEC?

Answer 78

• In option A, the contractor is paid when an activity is complete; there is no mechanism for part
  payment of an activity or materials on site.
• In option B, the Price for Work Done to Date (PWDD) is calculated via bill rates and lump sums.
• The assessment interval cannot be more than 5 weeks
• The final assessment is to be made within 4 weeks of the defect certificate.
• The PM has the duty to assess payments due even if the contractor does not submit an application.
• The amount due is the PWDD plus any other amounts due to the contractor + / - the amount to be
  paid or retained by the contractor.
• The PM must certify the assessment within one week of the planned assessment date.
• Payment is due within 3 weeks of the assessment date unless stated otherwise in the contract data.
• If payment is late or the certified assessment is later corrected for error or dispute resolution, interest is
  payable to the contractor at no less than 2% above the base rate of the bank specified in the contract
  data.

Question 79

What are the difficulties of assessing interim valuations with an
activity schedule? (Option A)

Answer 79

• The activity schedule does not describe the works to be done; this is included in the works information.
  Therefore there is a need to cross reference to understand what works are required for the activity to be
  fully completed.
• If the contractor re-sequences the works to meet the completion date, he needs to revise the activity
  schedule so that the works and methods of working included in each activity are compatible with the
  programme.
• He may take advantage of this to disproportionally load some activities.
• The PM can reject the revised SoA in this case.

Question 80

Under which conditions can the activity schedule be adjusted?

Answer 80

• There are only 3:-
  o Compensation events.
  o Changes in a planned method of working (re-scheduling).
  o Acceptance of a quotation for acceleration.

Question 81

How does the NEC permit payment by milestones / stages?

Answer 81

• The contractor must group in his tender his activities by groups of activities which will form the
  milestones.
• At each assessment date the PM assess the level of completion of each group. Payment is only certified
  when all activities of the group have been fully completed with no scope for partial payments.

Question 82

Name some of the compensation events.

Answer 82

• There are 19 of them in clause 60.1:-
  o Changing the works information.
  o Access to the site.
  o PM instructs to stop work.
  o PM or supervisor do not respond to a communication within the timescale stated in the
  contract.
  o Object of value or historical interest.
  o PM withholds an acceptance without valid reason.
  o Instruction to search.
  o Adverse weather (as measured in the contract data).
  o Employer’s risks listed in clause 80.1 and contract data.
  o PM changes assumptions previously made on compensation events
  o Employer’s breach of contract

Question 83

How are compensation events dealt with?

Answer 83

• The Project Manager notifies the Compensation Event at the time of giving the instruction.
• Or the contractor notifies the Project Manager of the CE but he must do so within 8 weeks of
  becoming aware otherwise they are not allowed compensation.
• The PM has one week to decide whether it is a valid CE (or longer if agreed with the contractor).
• If the PM fails to do so, the contractor notifies the PM that he needs to make a decision. If the PM still
  does not respond within 2 weeks of this notification, the CE is deemed to be accepted and the
  contractor can submit a quotation.
• The contractor has 3 weeks to provide a quotation.
• Within 2 weeks, the Project Manager can either request a revised quotation, or accept the quotation, or
  inform the contractor that the proposed change is not being pursued, or inform the contractor that he
  will make his own assessment.
• If the PM failed to respond within the timescales, the contractor notifies him. If the PM fails to respond
  within a further 2 weeks, the quotation is deemed to be accepted.
• Timescales can be extended if the parties agree.

Question 84

If there is a discrepancy between the employer’s requirements and
contractor’s proposals which prevail?

Answer 84

• The Contractor’s Proposals

Question 85

What is the contractor’s design liability under JCT contracts?

Answer 85

• The same as an independently employed architect with the duty to offer reasonable skill and care

Question 86

Under JCT design and build sub-contract how long do you have to submit a variation quotation?

Answer 86

14 days from invitation to price or 14 days from notice of variation