Contract Administration Flashcards
1
Q
D&B vs SBC
A
- Contractor responsible for design,
- No listed subcontractors,
- No architect/CA/QS (EA only), No clerk of works,
SBC Payment Certificates - Contractor can issue Payment Notice if no Payment Certificate issued (SBC)
2
Q
Roles/Responsibilities: Client, MC, QS, CA, EA
A
- Client - Pay, Possession, Insure, Not obstruct, Pay Less if does not agree/LDs
- Contractors – Complete Work & Design, Comply, Inform EA of discrepancies
- QS – Only EA (no QS role D&B), Undertake valuations, Confidential, L&E, Final Account, Value variations
- CA – (Only EA D&B), Chair meetings, Inspect work, Instructions, EoT, Issue Certificates, Certify Completion
- EA – As CA but for D&B, typically QS but contractually is assumed as different party as no acknowledgement in contract. Issues Payment Notices
3
Q
Change to Design Process
A
- JCT SBC CDP or D&B – Contractors Proposals inc drawings & specs,
- CA respond in 14 days;
A; Accept
B; Accept & Incorporate comments
C; Re-Submit, No Response = Acceptance, Contractor must reply if disagrees in 7 days – - CA confirm or withdraw in 7 days.
4
Q
Insurances:
A
- Contractor’s all risk – Joint policy with employer, protects against loss or damage to works, machinery, materials
- Employer Liability; Required by all firms employing staff, Pays out if employee is injured or ill
- Public Liability; Covers injury or death to public, also covers loss or damage to 3rd parties
- Professional indemnity insurance; Professional services – Negligence – assurance against bankruptcy in case of claim, run off cover for retirement/ winding down
- Terrorism insurance; Damage or loss, pool re-insurance back by UK gov. should losses be too large, premium for high-risk areas e.g. London
- Non-negligent insurance – Insurer may not pay if non-negligent, contractor acquires. (Work undertaken correctly but despite this neighbouring property is damaged -non-negligent insurance covers this eventuality)
5
Q
Construction All Risk Insurance Options
A
- Option A - New Building - Contractor – Full reinstatement plus Fees, Risk of underinsurance with contractor
Typical - Option B - New Building – Employer - Full reinstatement plus Fees, Employer must cover any insurance shortfall
MWL - Option C – Existing structure – Employer – Replacement schedule required (Expert required) (Insurance covered by Landlord not party to contract if tenant is Employer). Employer must cover any insurance shortfall
Newbridge
6
Q
Performance Bond
A
- Surety to Employer of Contractor non-performance
- Worth 10% of Contract value (delay & re-tendering)
- Cost varies 2-10%
- Expires at PC or EoD
- On Demand (unconditional) or (Conditional -prove non-performance and loss)
7
Q
Parent Company Guarantee
A
- Contractor procures in Employers favour (MWL BCEGI UK - Bejing Construction PCG)
- No Cost
- PC assume responsibility for Contractor obligations should they become insolvent
- Lasts the limitation period of contract (6/12 years)
8
Q
3rd Party Right vs CWs
A
- 3rd Party Rights; Rights of third parties Act 1999
- Can only apply if written into contract prior to execution
- e.g. SC’s are identified – SC’s must be known early on (typically they are not appointed until post MC appointment) –
- Less favourable than CW’s as not tested in court
- CW’s clearly set out the parties to contract along with their obligations (transparent & clear)
9
Q
Change D&B
A
- Change from ER’s; Design, Quality or Quantity or Imposition (site access, working hours, reduced working area)
- Employer makes EA aware – Instruction/EAI (if immediate) or Estimate
Employer Proceed? – Change Proposal to Contractor – - Contractor Price – Accepted or Negotiated
- Instruction by EA – Contractor confirms within 7 days – takes effect from 7 days of confirmation (i.e. that is the point from which the scope of works is assessed from in relation to for example an EoT claim)
- If Contractor does not comply Employer/EA can give notice
7 days post notice 3rd party can be appointed
10
Q
Section/Practical Completion Requirements
A
- Requirements must be confirmed in contract;
- H&S file,
- Testing & Commissioning,
- Work Practically Complete,
- O&M,
- CW’s,
- Building Certificate,
- Planning Compliance,
- Structural Warranty,
- As Built DWGs,
- Keys.
11
Q
Implications of PC
A
- Rectification period begins
- Half retention released
- Client insures -
- LDs & LE are not applicable
- Employer must accept building early if it is actually complete
12
Q
Sectional Completion
Partial Possession
Early Use
A
- Sectional Completion – Contract provision – Pro Rata – Value of Section must be stipulated
- Partial Possession – Post contract variation – Contractor cannot unreasonably withhold – Detail to clarify extent of area, implications as SC
- Early Use – Employer may use part of the site early for storage or otherwise with contractors consent – contractor responsible – notify insurers as likely to attract premium (third party use)
13
Q
Named Subcontractors
A
Nominated no longer included in JCT
- Client can influence the selection of sub-contractors - MC responsibility for SC performance
1. Client short-list SC’s in the tender documents for the main construction contract.
2. MC has opportunity to reasonably object to any firm on the list.
3. MC leads the tender process for each named SC package.
4. After appointment, the named subcontractor becomes a domestic subcontractor. The main contractor is only paid the rates in the accepted subcontract tender.
14
Q
Materials on/off site
Off Site:
A
- Employer not obliged to pay for any materials off site unless ‘listed items’ within the contract
- Listed items e.g. bespoke cladding or steelwork, lift
- To be included in valuation:
- Listed (in contract)
- Vesting certificate (in the employer)
- Insurance (against specified perils until delivery to site then covered under all risk insurance)
- Set apart, clearly marked, identified and properly protected
15
Q
On Site
A
- Can be included in a valuation if:
- Not delivered prematurely
- Suitably protected from weather
- The materials become property of the employer once they are paid for but the contractor is still responsible for any damage and/or theft.
