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Joes APC > Contract Administration > Flashcards

Contract Administration Flashcards

Contract Admin

1
Q

1. How does the role of a CA differ to that of an EA?

A

a. The role of a CA differs to that of an EA as the CA simply administers the contract. The EA is responsible for all duties that the employer would usually perform.
b. The CA is impartial.

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2
Q
  1. Can you advise of a CA’s role at practical completion?
A

a. 50% retention is released (subject to the contract)
b. The 12 months defects period starts.
c. The ability to impose Liquidated Damages is ceased.

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3
Q
  1. Can you advise of a successful negotiation that you have undertaken and what you deem necessary for it to be successful?
A

a. On the Data centre procurement project, I negotiated the inclusion of items and the rates with the vendor, basing their costs on framework rates, and previous recent project submissions. I undertook critical analysis of the inclusion of items, ensuring substantiation and backup was received, as well as engineer approval where required.
b. I deem a negotiation successful when I can prove and substantiate to my client that there is value for money being achieved in the costs, and that they are in lie with current market rates. I also deem I t a success when successful clarification has been achieved between parties.

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4
Q
  1. What are the key differences between NEC and JCT?
A

a. PM in NEC
b. QS isn’t in NEC.
c. NEC collaborative
d. JCT has legal jargon, NEC is easier wording.
e. NEC more expensive to administer, more paperwork.

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5
Q
  1. What is a performance bond?
A

a. A performance bond is issued to one party of a contract as a guarantee against the failure of the other party to meet obligations in the contract.

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6
Q
  1. When may one be required?
A

a. Where the client needs to reduce the risk of non-performance of the contractor
b. Where the contractor doesn’t have a parent company.
c. If the contractor is new to working with this client.
d. If there is an ongoing economic crisis

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7
Q
  1. What types of performance bond are there?
A

a. On demand – payable immediately on beneficiary’s demand
b. Conditional – requires certain conditions to be met.

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8
Q
  1. If the client requested that you calculate and advise of the LD’s to be deducted, what would you suggest?
A

a. I would advise that this falls outside my area of expertise and knowledge, and I am not able to advise on this. I would suggest the client seek internal advice and legal help on this, to calculate what they would be owed. I would assist the client in noting any considerations that need to be made in relation to what costs may need to be sought after.

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9
Q
  1. How do partial possession and sectional completion differ?
A

a. Sectional completion is PC of a section of works, each section will have completion dates and rates of LAD’s, sectional completion is also in the contract, whereas partial possession is not pre agreed or stipulated in the contract.

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10
Q
  1. What would you do if a contractor could not provide a performance bond?
A

a. At the minute this is more common in the present market
b. I would firstly be concerned the contractor cannot provide this, as it could be proof that their financial situation is not good, I would therefore advise the client that entering into a contract with this contractor could be a large risk, which could be mitigated by diligent financial checks, such as Dunn and Bradstreet.

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11
Q
  1. What are the disadvantages of a performance bond?
A
  • Insurers may attempt to deny payment.
  • If they underestimate the cost of no performance, they will have to absorb any extra costs.
  • Adds additional cost to contractor/client.
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12
Q
  1. What is the cost of a performance bond?
A

a. Usually, the value is 10% of the contract sum, and cost is 1%.

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13
Q
  1. What is time at large?
A

a. There is no current fixed date for completing works.
b. Usually this is down to the CA not doing his job properly.

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14
Q
  1. What is loss and expense?
A

a. Contractor can claim loss and expense due to Employers’ error.

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15
Q
  1. What are relevant matters?
A

a. They entitle the contractor to claim loss and expense.

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16
Q
  1. Give some Relevant Matters.
A

a. Variations
b. Instructions
c. Impediment by the Employer

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17
Q
  1. What is a Relevant Event?
A

a. Entitles the Contractor to an EoT

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18
Q
  1. What are some examples of Relevant Events?
A

a. Deferment of Possession
b. Variations
c. Impediment by the Employer
d. Exceptionally adverse weather conditions
e. In the new JCT suite – Covid-19/global pandemics
f. Force majeure

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19
Q
  1. What is force majeure?
A

a. Act of God.

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20
Q
  1. If there are concurrent delays, one fault of contractor and one the Employer, is there an entitlement?
A

a. There are no clear rules on this, each case has to be judged separately, and identify all causes and effects.

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21
Q
  1. How is the construction Act relevant?
A

a. Contains statutory provisions relating to all projects over 45 days

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22
Q
  1. What is the purpose of retention and what is it?
A

a. It is an amount deducted from payment to the contractor and retained until PC and EoMGD, it provides an incentive for the contractor to come and complete the works

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23
Q
  1. What is an alternative to retention
A

a. Retention bond, this is provided by the contractor for the same value, and is used to aid the contractors cashflow.

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24
Q
  1. What if the contract sum increases for a performance bond?
A

a. Then additional retention is deducted on that amount.

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25
Q
  1. What happens when PC is granted?
A

a. Half of retention is released
b. Rectification period beings
c. Employer now has to insure building
d. Liability for LAD’s ends

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26
Q
  1. What happens at end of rectification period?
A

a. Within 14 days a statement is issued for any defects that need rectifying, contractor has to make these within reasonable time.
b. Certificate of Making Good is issued, which triggers final valuation and release of retention.

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27
Q
  1. What doe the final certificate represent?
A

a. Agreement that all contractor works are complete, contract sum is agreed, any EOTs and L&E has been closed out.

28
Q
  1. What’s the difference between termination and suspension?
A

a. Termination is where contract works are lawfully stopped, suspension is where the contractor stops works (although in common law it is not allowed to)

29
Q
  1. You mention the ERs on the medical physics bunker, what is the purpose of ER’s and what is typically included?
A

a. To ensure the contractor understands and builds to the employers’ constraints, and prior to contract execution, ensuring that the Contractors Proposals match the ER’s (the contractor builds the right thing when doing his design).
b. The JCT is set up so that the contractor must meet the ER’s.
c. Third recital – Employer accepts the CP’s match the ER’s.
d. ERs include, project overview and location, elements requiring contractor design, format of the CSA, any procedures that are to be adopted post contract execution, existing drawings, delivery programme and phasing of works.

30
Q
  1. If the contractor doesn’t issue back-to-back statement with ER’s what does this mean?
A

a. The client has to review the CP’s and ensure he is happy with them before entering into contract. If there are amendments, then these need to be rectified and the ER’s updated.

31
Q
  1. What are the advantages and disadvantages of using a JCT D&B?
A

a. Advantages
i. Contractor is responsible for design and construction.
ii. It is considered quicker than say a traditional contract, as you don’t need stage 4 design to enter into
iii. There is provision for quotations to be requested.
b. Disadvantages
i. Client loses control of design to some extent.
ii. Due to the procurement of D&B contract, there will be risk priced into costs as the contractor is responsible.

32
Q
  1. Can you elaborate on the vesting process undertaken and what was required?
A

a. Pre contract, a vesting certificate was drawn up by the client and me, this included project information and parameters, and the materials being vested (itemised schedule). This was signed by both parties and affixed to the contract.
b. When vesting post contract signing and the contractor applied for payment, the materials being vested were put into detailed schedule. Photographs and videos were taken of the materials where they were being stored, the item in the factory has labels affixed to them showing they now belonged to my client, with dates and item codification. I also visited the factory down in Oxford to value and see these materials. This was all recorded in writing and saved to files.

33
Q
  1. You mention milestone payments under the rugby utilities work, but how else can payment be made?
A

a. Alternative A – Stage payments
b. Alternative B – Periodic Payments

34
Q
  1. So how did this work?
A

a. The stages were set in the particulars, and when completed the values applied in the valuation.

35
Q
  1. What was the form of contract used on the rugby utilities work and what did the payment timeline look like?
A

a. JCT MW 2016. The payment terms were set as the same as JCT, with client amendments, however works were valued based on milestones completed.

36
Q
  1. How would you review an Extension of Time?
A

a. Firstly, I would assess the cause of the claim, whether it was due to the client and is therefore a relevant event, or whether it is due to the contractor being in delay.
b. I would assess the claim based on progress of works on site first of all.
c. I would assess how the critical path has been affected, by requesting the contractor to provide this detail on a revised and impacted programme.

37
Q
  1. What do you need to do for Practical Completion?
A

a. Architect must confirm works are completed, a snagging list would have been completed usually, and the PC can occur even if there are substantially complete works.
b. Issue a practical completion certificate.
c. JCT is vague about PC.

38
Q
  1. How are LADs deducted under JCT D&B?
A

a. Issue a non-completion certificate.
b. A notice that monies are going to be withheld and deducted.

39
Q
  1. What are the benefits of LAD’s?
A

a. For the Employer, to protect against loss due to not meeting the PC date.
b. For a contractor, so he is aware from the outset.

40
Q
  1. What if the Employer suffered no loss?
A

a. Doesn’t matter, can still deduct.

41
Q
  1. On windows replacement Alexandra Hospital, if something went wrong with vesting and the contractor went insolvent, what would you do?
A

a. I would have first previously made sure materials were appropriately vested to the client, the materials would belong to the client (the ones paid for and vested), therefore appropriate freight would need organising to transport the materials to a location of the clients choosing, or another manufacturer. There was also insurance in place in this event.

42
Q
  1. What would you do if the contractor claims for paint in his first valuation?
A

a. I would assess this claim on site to see if any painting had been done or are going to soon.

43
Q

What could show that the contractor is behind on programme?

A

Excessive application of materials on site, or not on site, overvaluation. Critical path items not seen to be completed on site. Excess of materials on site far before they are needed.

44
Q

What is the risk of an undefined PSUM?

A

It is not included in the contractors programme, and has not allowed for OH&P and prelims. therefore there is no cost AND Time certainty. He can claim an EOT.

45
Q

What is unliquidated damages?

A

Where the amount is not known or pre agreed in the contract, and is later decided by the courts.

46
Q

What happens if the date for issuing the interim payment certificate is missed?

A

The contractor’s application for payment becomes final and the figure to be paid.

47
Q

Why would you use a pay less notice?

A

If LAD’s were to be deducted, or if there were works signed off by the architect that were later discovered to be incorrect.

48
Q

Who issues a pay less notice?

A

The client

49
Q

What’s the difference between QS’s certificate and CA’s certificate?

A

QS’s certificate is a recommendation for payment which can be modified by client or CA. Also it is not sign off that the works have actually been complete in accordance with the contract.

50
Q

What is subrogation?

A

A right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

51
Q

What is a change order called under JCT SBC?

A

Variation (‘change’ in D&B)

52
Q

As a QS are you allowed to negotiate costs? What needs to be in place for you to perform negotiation as to cost?

A

Yes. Scope of services, PII.

53
Q

Have you ever been appointed as the contract administrator?

A

I have acted as CA on Rugby Utilities MW contract, and joint CA on Havant

54
Q

As a QS are you authorised under the contract to issue payment certificates and completion certificates?

A

No this is to be undertaken by the Architect/CA

55
Q

What is a risk of LAD’s?

A

If they are calculated as a penalty, which they must not be, it could be too much for the contractor to bear, and could cause him issues, risk of insolvency.

56
Q

What is a benefit of LAD’s for the contractor?

A

He knows the impact early on in the contract.

57
Q

Under the JCT D&B what is the defined term used to identify the payment due to the contractor after a valuation to maintain compliance with the Construction Act?

A

Payment notice

58
Q

What was you role on the Medical Physics Bunker?

A

Employers Agent

59
Q

On Medical physics, What were the benefits and disadvantages of using retention on the project?

What percentage did you use?

How long was retention held?

A

Benefits were there was protection against defective work post completion for the client. Disadvantage are that it affects the contractors cashflow.
3% retention, unamended
held for 12 months (rectification period)

60
Q

How does Final Account work in JCT?

A

Contractor has 6 months to provide all substantiation, no later than 3 months after the QS certifies this amount, and the CA in the same time period send that statement to the QS

61
Q

How does the final certificate work in JCT?

A

CA issues certificate 28 days after the latest event, either rectification period ending, date of CoMG cert. The due date is the date the cert is issued, then final date for payment stands the same after this.

62
Q

How do you value and assess materials on site in a valuation?

A

Ensure they are protected and not damaged, and ensure they are timely to be used soon.

63
Q

With valuation dates, is it always one month or X days, or on working days?

A

It is to the nearest business day in that month.

64
Q

What different considerations do you need to make when issuing Partial Possession compared to Sectional Completion?

A

Partial possession is not pre agreed, therefore the values need to be agreed upon by the client. Client must insure that section. There must be H&S considerations as it is a last minute change.

65
Q

Disadvantages of retention bond?

A
  • Harms employers cashflow (no retention), reduces contractors incentive to complete.

Joes APC (22 decks)

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