Contract Administration

Question 1

What is the difference between an Employer’s Agent and a Contract Adminstrator?

Answer 1

• Contract Administrator = responsible for administering the contract on behalf of both parties, impartially. CA usually introduces after contract is signed
• Employers Agent = Same as CA, but Employer’s Agent acts as if they were the Employer, albeit, they should remain impartial.

Question 1

What are the key responsibilities of the contract administrator under a JCT contract?

Answer 1

• Responsible for administering the construction contract
• Acts honestly and reasonable, and understands their actions are open to challenge via ADR / DR
• Must be fair and reasonable in assessments, where the contract states
• Issues timely information, instructions and variations
• Assesses delay and grants time and cost relief
• Certifies sums due
• Issues EOT

Question 2

What status does the programme have under a JCT and NEC contract?

Answer 2

• Contractor provides master programme at Tender, but programme has no contractual status under JCT
• NEC includes a programme as a contractual document, and this should be updated in accordance with intervals stated in the contract data (usually 4 weeks unamended)

Question 3

What is Practical Completion?

Answer 3

• Used under JCT form of contract
• Used to describe the building it fit for purpose, and meets all requirements for safety and convenience

Question 4

Do the works have to be totally completed before practical / sectional completion is achieved?

Answer 4

• It is common for PC to be granted when the works are substantially completed; there may be minor defects but nothing that could prevent the employer taking occupation

Question 5

Can you rescind a PC certificate once its been issued?

Answer 5

No

Question 6

What is a non-completion certificate?

Answer 6

Issued by the CA to certify that works / section of works have not been completed by contractual completion date

Question 7

What are the consequences of a non-completion certificate?

Answer 7

• Employer can withhold LD’s

Process would be:
- Certificate of non-completion to be issued
- Employer must write to contractor to notify them they will be levying LD’s
- Employer would issue pay less notice to levy damages

Question 8

What happens after PC is issued?

Answer 8

• 50% of retention is usually released (usually, or follow contract provisions if states otherwise)
• The defects period starts
• The employer required to start insuring and securing the building
• The ability to impose LD’s is ceased

Question 9

Under JCT, if the contract administrator believes completed works are not in accordance with the contract, what can they do to check / clarify?

Answer 9

• They can issue an instruction for opening-up and inspection to test the works, materials and goods to determine they are in accordance with the contract specifications / design

Question 10

Who bears the cost of opening up under JCT?

Answer 10

• The cost is added to the contract sum, unless the works are not in accordance with the contract specifications / design

Question 11

What is opening up called under NEC?

Answer 11

• Tests and inspections

Question 12

What is the definition of Extension of Time under JCT?

Answer 12

• Extending the programme to fix a new completion date
• Used to prevent time becoming at large
• Only used to relieve the contractor of paying LD’s

Question 13

What is “time at large” under JCT?

Answer 13

• Time at large is when the completion date is passed and no non-completion certificate has been issued
• Postpones the employers right to recover LD’s for late completion
• Contractors must finish the works in a fair and adequate timeframe should time become at large

Question 14

What is the process for claiming an EOT?

Answer 14

• Contractor should notify CA as soon as it becomes apparent that an EOT is required
• Contractor shall make efforts to mitigate the effects of the delay
• CA would assess the EOT #(within a 12 week period), and could request further information from the Contractor to do this
  -CA would notify the contractor, in writing, of their decision

Question 15

Does an EOT give the contractor the right to additional preliminaries, under JCT?

Answer 15

No - this would be covered under Relevant Matters

Question 16

What are payment provisions?

Answer 16

• Payment provisions outline the details as to how monies are paid to the contractor, the frequency of payments, and ways in which due monies are assessed

Question 17

What are payment applications?

Answer 17

Received from the contractor, payment applications are an assessment of the amount the contractor believes is due for the works completed on site

Question 18

What would you expect to be in a payment application?

Answer 18

Taking NEC4 Option A as an example:
- Activity Schedule
- Preliminaries and OH&P
- Advanced Payments (if applicable)
- Provisional Sums (if applicable)
- Schedule of Compensation Events
- Offsite materials / vesting (if applicable)
- Less retention (if applicable)
- Less previous assessments
- Net amount

Question 19

What is the difference between payment notices and payment certificates?

Answer 19

• Payment Certificate: NEC term
• Payment Notice: JCT term

Both are used to assess the amounts due to the contractor for the works completed to date

Question 20

What is a payment notice / certificate?

Answer 20

A document issued to the contractor from the CA / PM to demonstrate the sum they consider due to the contractor at the DUE DATE, including all calculations for the amount

Question 21

What is the due date?

Answer 21

The due date is 7 days after the valuation assessment date, in which is used to calculate all other dates associated with the payment cycle

Question 22

Does the due date move?

Answer 22

• Under NEC, due date is fixed, so NEC3 ensured clients were required to assess works completed by due date (if application not received), or NEC4 allows PM to assess the lesser of works#: due at due date, or previous application, so also fixed
• Under JCT D&B, due date is 7 days from receipt of the contractors application, or interim valuation date
• Under JCT SBC, due date is fixed

Question 23

What is a pay less notice?

Answer 23

• Allows the PM / CA to correct the assessment of the amount due to the contractor
• Must be issued no later than 7 days before the final date for payment (NEC)
• Must be issued no later than 5 days before final date for payment (JCT)

Question 24

What else can a pay less notice be used for?

Answer 24

• Deducting LD’s

Question 25

What problems are you aware of when creating contracts?

Answer 25

• May not be able to agree terminology
• Contractor or Client may not be happy with risk apportionment under contract
• May not be able to agree payment terms
• Incorrectly drafted z clauses can conflict with core clauses
• Conflicting clauses can lead to conflict and dispute resolution

Question 26

For the Kingsway, what were the payment provisions for the scheme?

Answer 26

• Assessment date 25th each month
• Due date - + 7 days
• Final date for payment - + 21 days (aware that this is usually + 14 days in unamended NEC)

Question 27

Do the payment provisions work differently under NEC3?

Answer 27

No - payment provisions are the same, ie Assessment Date followed by Assessment Period (+7 days) which comes to Due Date

Due date + 14 days gets to final date for payment

Question 29

When can a contract administrator issue practical completion?

Answer 29

• when works are practically completed and nothing is stopping the client from taking over the works, ie health and safety issues
• when all contract conditions have been met, ie collateral warranties
• when all as-built drawings have been issued

Question 30

What is the ‘base date’ used for under JCT?

Answer 30

• to determine whether changes in legislation would be changes to the contract, or whether they should have been included within contractors price (if it could be foreseen)