Appropriate Contract Selection flashcards

Question 1

What is the main purpose of the RICS ‘Appropriate Contract Selection’ guidance?

Answer 1

To assist clients and professional advisers in selecting the most suitable construction contract for a project.

Question 2

What are the three levels of guidance provided in the document?

Answer 2

Level 1 – Knowing; Level 2 – Doing; Level 3 – Advising.

Question 3

What is the key factor in determining which construction contract should be chosen?

Answer 3

The procurement route.

Question 4

Name the main procurement routes discussed in the document.

Answer 4

Traditional, Design and Build, Construction Management, Management Contracting, Partnering, Public Private Partnerships (PPP), and others.

Question 5

In traditional procurement, who is responsible for design?

Answer 5

The employer, via their appointed professional team.

Question 6

What distinguishes a ‘Design and Build’ contract from a traditional one?

Answer 6

The contractor is responsible for both design and construction.

Question 7

What is a Contractor’s Designed Portion (CDP)?

Answer 7

An element of a traditionally procured project where the contractor takes on specific design responsibilities.

Question 8

What is the key characteristic of a construction management (CM) contract?

Answer 8

The employer holds all trade contracts and appoints a construction manager to oversee them.

Question 9

What is the difference between construction management and management contracting?

Answer 9

In CM, the employer holds the trade contracts; in MC, the management contractor holds the contracts.

Question 10

What is a ‘cost reimbursable’ or ‘prime cost’ contract?

Answer 10

The contractor is paid for actual costs incurred plus a fixed fee or percentage for profit.

Question 11

What is a ‘target cost’ contract?

Answer 11

A contract where the cost risk is shared between employer and contractor through a painshare/gainshare mechanism.

Question 12

What are the key standard form contract publishers mentioned?

Answer 12

JCT and NEC.

Question 13

What is the philosophy behind NEC contracts?

Answer 13

They promote good project management, mutual trust, and cooperation.

Question 14

What are the core characteristics of NEC contracts?

Answer 14

Simple language, modular structure, focus on project management, and early warning mechanisms.

Question 15

What is the purpose of JCT’s Design and Build Contract (DB)?

Answer 15

Used where the contractor is responsible for both design and construction.

Question 16

What contract should be used under JCT for major projects using design and build?

Answer 16

Major Project Construction Contract (MP).

Question 17

What is the JCT Minor Works Building Contract (MW) used for?

Answer 17

Smaller, simple projects using traditional procurement.

Question 18

What distinguishes the JCT Intermediate Building Contract (IC)?

Answer 18

A middle ground between the detailed SBC and simple MW, suitable for moderately complex projects.

Question 19

What is the role of standard form contracts in construction?

Answer 19

To save time, reduce legal costs, and provide a familiar risk allocation framework.

Question 20

Why might a standard form contract be amended?

Answer 20

To tailor it to project-specific requirements or shift risk allocation.

Question 21

Front

Answer 21

Back

Question 22

Which JCT contract is best for large, complex traditional projects?

Answer 22

Standard Building Contract (SBC)

Question 23

What are the three versions of the JCT Standard Building Contract?

Answer 23

SBC/Q (with quantities), SBC/XQ (without quantities), SBC/AQ (with approximate quantities)

Question 24

Which JCT contract fills the gap between SBC and MW for medium complexity projects?

Answer 24

Intermediate Building Contract (IC)

Question 25

Which JCT contract should be used for small, simple traditional projects?

Answer 25

Minor Works Building Contract (MW)

Question 26

Which JCT contract is suitable when the contractor is responsible for both design and construction?

Answer 26

Design and Build Contract (DB)

Question 27

Which JCT contract is designed for major projects with experienced parties using D&B?

Answer 27

Major Project Construction Contract (MP)

Question 28

Which JCT contract is used for the management contracting procurement route?

Answer 28

Management Building Contract (MC)

Question 29

What JCT contract allows the employer to directly appoint trade contractors while a construction manager oversees them?

Answer 29

Construction Management Contract (CM)

Question 30

Which JCT contract promotes partnering and collaborative working?

Answer 30

Constructing Excellence Contract (CE)

Question 31

What JCT contract is used for ongoing maintenance over a period?

Answer 31

Measured Term Contract (MTC)

Question 32

Which JCT contract is suitable for urgent works where scope isn't fully defined at the start?

Answer 32

Prime Cost Building Contract (PCC)

Question 33

Which JCT document is used for multiple call-off contracts over time?

Answer 33

Framework Agreement (FA)

Question 34

Which JCT contract is used for defined one-off repair/maintenance jobs?

Answer 34

Repair and Maintenance Contract (RM)

Question 35

Which JCT contracts are designed for domestic homeowner use?

Answer 35

Home Owner Contracts (HO/C, HO/B, HO/CA, HO/RM)

Question 36

What is the flagship contract in the NEC suite for engineering and construction work?

Answer 36

NEC Engineering and Construction Contract (ECC)

Question 37

Name the six main pricing options in the NEC ECC.

Answer 37

Option A – Activity schedule, Option B – Bills of quantities, Option C – Target with activity schedule, Option D – Target with bills of quantities, Option E – Cost reimbursable, Option F – Management contract

Question 38

Which NEC ECC option involves a lump sum with an activity schedule?

Answer 38

Option A

Question 39

Which NEC ECC option uses cost reimbursable pricing?

Answer 39

Option E

Question 40

Which NEC ECC options include a painshare/gainshare mechanism?

Answer 40

Options C and D

Question 41

What NEC contract is used for shorter, simpler works projects?

Answer 41

Engineering and Construction Short Contract (ECSC)

Question 42

Which NEC contract is used to appoint a consultant for services like design or project management?

Answer 42

Professional Services Contract (PSC)

Question 43

What NEC contract is used to procure ongoing services over a term?

Answer 43

Term Service Contract (TSC)

Question 44

Which NEC contract is suitable for appointing subcontractors under the ECC?

Answer 44

Engineering and Construction Subcontract (ECS)

Question 45

What NEC documents provide simplified terms for subcontracting under ECC?

Answer 45

Engineering and Construction Short Subcontract (ECSS)

Question 46

What Procurement route is this?

Answer 46

Traditional (‘design-bid-build’) This procurement route is typically characterised by a separation of responsibility for the design and the production/construction of the project. The employer appoints the contractor via the construction contract and also separately appoints the team of professional consultants (e.g. the architect, structural engineer, building services engineer and quantity surveyor). The contractor assumes the responsibility and financial risk for constructing the project in accordance with the design produced by the employer’s team of professional consultants, for the agreed contract sum and within the agreed contract period.

Question 47

Answer 47

Design and build While a traditionally procured construction contract is characterised by the separation of responsibility for the design and the production/construction of a project, a construction contract that is procured on a design and build (D&B) basis is characterised by the contractor taking responsibility for both the design and the production/construction of a project. One of the main reasons employers often choose this form of procurement route is the desire to have one party (the contractor) as the single point of responsibility for the design and production/construction of a project. However, the extent of the creation of a true single point of responsibility will depend on the terms and conditions of the construction contract with the contractor.

Question 48

Answer 48

Construction management Under a construction management (CM) route, the employer does not allocate risk and responsibility to a single main contractor. Instead, the employer employs the design team (e.g. the architect, structural engineer and building services engineer) and a separate construction manager is engaged as a fee-earning professional to manage, programme and co-ordinate the design and construction activities and to facilitate collaboration.

Question 49

Answer 49

Management contracting Under a management contract, the employer engages a management contractor to participate in the project at an early stage, contribute construction expertise to the design, and manage the construction of the project. The management contractor does not carry out any construction work, but manages the project for a fee, which is paid on top of the construction costs incurred by the management contractor. The management contractor then employs and pays works contractors to carry out the actual construction works. In effect, management contracting consists of 100% subcontracting. Every item of the construction works is subcontracted to the works contractors. It is this subcontracting feature that distinguishes management contracting from construction management (discussed in Section 2.2.4), under which the separate trade contracts are all entered into directly between the employer and trade contractors.

Question 50

Answer 50

Public Private Partnerships (PPP) The term Public Private Partnership (PPP) is an umbrella term that covers a diverse range of business structures and partnerships involving the public and private sectors. Typically, private sector companies will form a consortium, sometimes referred to as a ‘special purpose vehicle’ (SPV), and enter into some kind of partnership with the public sector for supporting or providing a public service, sometimes described as Build-Own-Operate-Transfer (BOOT). One key aspect of PPP schemes is that the public sector seeks to transfer much of the development and financing risk to the private sector. For example, the private sector agrees to finance, design, build and operate a particular asset (e.g. a hospital, school, road or prison) that the public sector is able to use. The private sector is also obliged to provide long term lifecycle investment and routine maintenance; sometimes together with ‘soft services’ (e.g. catering, cleaning, rent collection).