Contract Administration L1-3 Flashcards

Question

WHAT IS TYPICAL RETENTION PERCENTAGE UNDER JCT?

Answer 1

Bond provided by contractor in lieu of taking retention, however should be equal to retention value. Bond requirement to be stated in contract particulars. Standard form is provided in JCT contract schedules. If the Contractor does not oblige, the Employer can deduct from interim payments.

Answer 2

Completion of works in a shorter time frame than anticipated at tender, or the act of programme recovery by the Contractor if they are delayed.

Answer 3

Used in difficult market conditions to aid the Contractor's cashflow.

Answer 4

Employer pays the premium for taking out the bond. May reduce the Contractor's incentive to complete making good defects promptly. Reduces Employer's cash flow. Employer does not benefit from interest accruing on amount of the retention bond.

Answer 5

Re-sequencing works, making sequential activities parallel Increasing work time, longer days / weekends Advanced working methods, i.e. de-humidifier to dry out works faster Increased incentive for staff, i.e. bonus Most effective and cost effective - re-sequencing works Least effective - usually inc. working time and resources employed may result in reduced productivity

Answer 6

Where adjustments to the contract sum are limited to statutory contributions, taxes and levies.

Answer 7

Contract sum adjusted for changes in material and labour costs as well as statutory contributions, taxes and levies.

Answer 8

Date fixed and stated in the contract particulars. Difference - Completion date is the actual completion of works, taking into account EoT if necessary.

Answer 9

When the works are substantially complete with minor defects only, the Employer is able to take beneficial occupancy of the development. Half retention released. Employer surrenders the right to apply for LAD's. Employer takes back possession of the site and responsible for insurances.

Answer 10

Completion and handover of works to the Employer in agreed stages.

Answer 11

PC is vague and not defined in JCT, reliant on the CA/Architect that deems works complete. Should not be conditional. Common practice for PC granted when works are substantially complete, with minor defects remaining only and nothing to prevent Employer taking beneficial occupancy.

Answer 12

Sectional completion is a contractual obligation for the Contractor to hand over the section at the stated date. Partial possession relies on the Contractor's consent.

Answer 13

When the Employer requests and the Contractor consents to the Employer taking possession of the works or part of the works before practical or sectional completion.

Answer 14

Issue a written statement to Contractor stating relevant part and stating relevant date.

Answer 15

Contractor's obliged to make good any defects, shrinkages, or other faults that arise related to the contract works during this period, typically 12 months so the building has been observed in all seasons.

Answer 16

Create contractual relationships between main parties of a contract with an external third party. Contractual relationship would not otherwise exist with the third party due to privity of contract. Used due to principle of privity of contract - the rights and obligations under a contract can only be enforced by a party to the contract. Collateral warranties gives remedies to third parties.

Answer 17

Issued by Architect/CA to certify works or works section was not complete by the relevant completion date.

Answer 18

Emplover has right to withhold LAD's, as long as withholding notice (pay less notice) has been issued.

Answer 19

Interim certificates Practical completion or sectional completion certificates Non-completion certificates Certification of making good Final certificate

Answer 20

Collateral warranties - Agreement put in place with a third party outside the primary contract, binding the goods/service to the main contract. Third party rights - Assignment

Answer 21

So that third parties (funders, purchasers, tenants) can enforce the benefit of the contract they are not party to. Can be necessary because: - Privity of contract - Without agreement, third party cannot enforce a term of the contract - Construction security - A lender may not be able to claim against a party who caused something to go wrong. - Unlikely success of claim in tort - To claim for economic loss, a contractual right is more likely to be successful than a claim in tort Provides security for 3rd parties when not named in a contract, but have an interest in.

Answer 22

The rights and obligations are created by the courts applying common law, falling into 3 categories: 1. Negligence 2. Nuisance 3. Trespass On the other hand, contract law is the rights and obligations set out within the contract.

Answer 23

Any third party with a financial investment in a project, but not party to the main contract. Funding institutions, future tensnts, purchasers. Employer may also want CL with key sub-contractors in case the main contractor goes into liquidation, maintains the contractual link for redress in case of defective workmanship.

Answer 24

Collateral warranty obligations should mirror the main agreement, if a party is in breach of main agreement, they would also be in breach of the warranty. Common terms include: - Limitation of liability - Reasonable skill and care or fitness for purpose - Requirements for PI insurance - Assignment rights - Transfer rights of a contract from one party to another - Novation rights - Transfer rights of a contract from one party to another

Answer 25

CWa/F - JCT standard form for a funder CWa/P&T - JCT standard form for a future purchaser / tenant

Answer 26

Where rights and obligations of one contractual party are transferred to a third party.

Answer 27

Standard to allow assignments of rights twice without consent, however the writing should be notified in writing to the other party.

Answer 28

Novation is a new contract transfers the rights and obligations of one contractual party to a new third party. Assignment is the transfer of contractual rights and benefits only, as burdens cannot be assigned.

Answer 29

Whether the new party has the right to take action against the novated party for breaches that occured before the novation.

Answer 30

Employer loses all contractual relations with the novated party, therefore the right to take action for a breach. Therefore, collateral warranty between the Employer and novated party is common.

Answer 31

Clause limiting a party's liability for potential losses, for example: - Limitation to a fixed sumn - Limitation to the extent of PI insurance - Exclusion of consequential loss - Limitation to loss that can be covered from a third party - Limitation to responsibility or a net contribution clause

Answer 32

Collateral warranty - direct link from Employer to Sub-contractor Sub-contractor fails to carry out obligations - Employer has contractual right to sue sub-contractor for breach of contract. Could also use a Performance Bond.

Answer 33

Permit funders to step into another parties' shoes, usually the Employer, providing the Employer protection in the event the Employer defaults on their loans. Funder can take ownership of the development and sell it off if required. Key Problem is that the main cause may result in the developer not being able to sell the development, resulting in the funder being in arrears. An experienced developer has more likelihood of selling the asset than the funder.

Answer 34

The ordinary skill and care expected of a person undertaking the particular service.

Answer 35

Provision of a service that is suitable for the Employer's intended purpose, a more onerous obligation than 'reasonable skill and care'.

Answer 36

A surety bond is a guarantee from the surety in favour of the Employer that the contractual obligations will be fulfilled by the Main Contractor. If called upon, the bond will provide financial compensation if the other party does not fulfill their obligations. It does not guarantee the completion of the works.

Answer 37

In writing, commonly executed as a deed (12 years), It will contain a duration with PC date and a financial limit noted.

Answer 38

Alternative to normal contractual provision of the Employer holding a retention percentage at each interim payment. The contractor includes the premium cost within their tender, the bond is issued by a third party (bank/insurance company) guaranteeing the Contractor's commitment to rectify any defects. If not, the Employer can claim the the bond. Pros' - Reduced risk to Employer losing retained sum if Contractor becomes insolvent, improves the Contractor's cash flow, avoids Sub-contractors being penalised by retention holdings, and is seen to build trusting professional relationships. Con's - ?

Answer 39

When the client does not wish to hold retention on the Contractor, but requires assurance for defect rectification in the event the Contractor fails to do so.

Answer 40

Arrangement where the contractual performance of one company is underwritten by another corporate group. This means the parent company could complete the works themselves, or pay the financial equivalent.

Answer 41

The most common bond in the industry. Typically provided by banks or insurance companies, giving Employer guarantee of payment up to a stated amount of money should the Contractor's breach of his contractual obligations.

Answer 42

10% of contract value, the premium for taking our the bond is added to the contract sum.

Answer 43

The burden of proof lies with the Employer to prove the Contractor has defaulted their obligations under the main contract and genuine loss has been suffered.

Answer 44

Aka Bid Bonds, rare in the UK. The tender guarantee to the beneficiary shows a sincere intention to proceed if selected, protecting the beneficiary from delay or loss in the event the winning bidder cannot fulfill their commitments / sign contract.

Answer 45

Final account prepared when the Main Contractor is facing insolvency. Typically greater value than original forecast due to costs incurred by the client to appoint a new Contractor to complete the works.

Answer 46

Covers Employer against loss / damage for materials already paid for through interim valuations before the materials are on site.

Answer 47

Unnecessary if tender selection process is operated effectively, only reliable and capable contractors selected. Unnecessary premiums added to contract sum which are unlikely to be called upon. If a serial developer, this may add a lot of money to their project costs.

Answer 48

If the Contractor is new or unproven. Protect interests of a 'one off' developer. During difficult ecnomic climate, higher risk of insolvency and Parent Company Guarantee's are risky.

Answer 49

Pro's: - Do not need to be paid for - Can be unlimited - Make parent company responsible for performance as well as financial guarantee Con's: - Not as secure as bonds because of the financial link between parent company and subsidiary, whereas performance bonds provided by third-party finance institution.

Answer 50

Paid straight away upon default occuring and request for payment. No requirement to satisfy any review or condition to demonstrate the default. Whereas conditional bonds, the Employer must satisfy the Surety that the default has occured and the bond must identify the condition. May also require litigation or arbitration resulting in delays and costs.

Answer 51

Developer undertaking speculative housing developments will frequently enter agreements with LA for adoption of roads / sewers. If for any reason the Developer fails to complete adoption of roads / sewers to the required standards, the LA completes on their behalf and call on the bond to claim back costs.

Answer 52

To provide assurance the contractor performs their obligations, a Parent Company Guarantee (PCG) or Performance Bond may be required. PCG only available where the Contractor is a subsidiary to another company. PCG guarantees performance and is liable if it does not perform. Alternatively, Performance Bond to protect the client in the event the performance requirements are not met.

Answer 53

Indemnity is to protect against legal responsibility or to compensate, it is open ended. Insurance is a fund enabling the indemnifying party to make necessary payments, including time and financial limits. Insurances required to cover indemnities are set out in the contract.

Answer 54

A transfer of a defined risk to an insurance company in exchange of a premium.

Answer 55

Liability and loss insurance.

Answer 56

Financial cover for legal liabilities that the insured party owes to others.

Answer 57

Financial cover for legal liabilities that fall directly onto the insured party.

Answer 58

Legal technique, insurer steps into the shoes of the insured to benefit from legal rights or remedies they may have against a third party responsible for the loss.

Answer 59

Employer and Contractor are insured under the same policy. Stops the insurer having the right of subrogation against the other party if they have caused the loss.

Answer 60

Only useful to the Contractor if the LOI is legally binidng. To be legally binding, the LOI must have the basis of a contract - offer, acceptance, consideration and both parties intend to create legal relations. Without these 4 things, LOI is worthless.

Answer 61

When an early start is required on site, often used to instruct initial design / survey works, or procurement of long lead-in items. Issued to commence works while discussions of the main contract are ongoing.

Answer 62

No legal significance of LOI's unless a court reviews and states so, with correspondence between the parties taken into account to establish if a contract has been formed. If formed, the court will decide the contact obligations. If not, the LOI has no contractual effect and quantum merit will be applied. Quantum Merit - 'what one has earned'... Reasonable compensation for works provided when the works and/or related costs are not stated within a legally enforceable contract.

Answer 63

The process of acquiring construction work or services.

Answer 64

Specifics of project and client objectives, including: - Cost - Time - Control - Quality - Risk

Answer 65

Traditional contracting Design and build Management contracting Construction management

Answer 66

Design completed by the client design team before competitive tenders are invited, a Main Contractor is appointed to undertake what the designers have specified. The Contractor takes responsibility and financial risk for the construction of the specified works for the agreed contract sum, within the contract period. The Client takes responsiblity and risk for the design and design team performance.

Answer 67

When the client has had the design prepared. If the design is substantially completed at the time of contractor selection. If the client wishes to retain control over the design and specifaction. If cost certainty at start on site is important. If the shortest overall programme is not the client's main priority.

Answer 68

Advantages: - Higher quality finish with retained control of the design - Increased level of cost certainty before commencement - Design changes are reasonably easy to arrange and value Disadvantages: - Longer overall programme, lack of overlap between design and construction - Contractor has no input with design / planning - Based on competitive pricing, can lead to adversial relationships - Dual point of responsibiltiy, design team controlling design, contractor controlling construction

Answer 69

The Contractor is responsible for the design, planning, organisation, control and construction of the works to the Employer's Requirements. The Employer gives the tenders the Employers Requirements and the Contractor responds with the Contractor's Proposals, including the price of works.

Answer 70

Limited timeframe - start on site with design and construction overlapping. Minimise risk - reduced risk for client, design responsibility transferred to Main Contractor Expertise - technically complex projects, Contractor appointed with relevant experience Control - where the client does not want to control the design development

Answer 71

Advantages: - Single point of design responsibility - Earlier commencement on site - Early price certainty is increased - Client benefits from contractors experience harnessed during design Disadvantages: - Clients may struggle to prepare a sufficiently comprehensive brief - Client has to commit to concept design early - Variations from original brief are difficult to arrange and often expensive. - Harder to compare tenders and determine value for money

Answer 72

Dependent on amount of design completed prior to the Contractor being appointed. This can range from full design to initial information and co-ordination only.

Answer 73

May be outsourced to a seperate design company (contractor retains responsibility) In-house design capabilities, or client's team may be novated to contractor.

Answer 74

Management contractor employed to contribute their expertise and manage construction with a management fee for doing so. Unlike CM, the MC has direct contractual links with all of the works contractors and take responsibility for the works, despite not undertaking the works themselves. No direct contractual link from the Employer to the Works Contractors. The client employs a design team, therefore bears the risk of that team delaying construction, i.e. late receipt of design. First work packages can commence prior to final design being complete. MC selects work contractors via competitive open book tender, the client reimburses the costs to the MC plus the management fee.

Answer 75

Where an early start on site is priority, and the client does not want cost certainty prior to works commencement.

Answer 76

Advantages: - Shorter programme due to overlapping design & construction. - MC and Works Contractors contribute to the design and planning process. - Changes can be made easily in packages not yet let with little to no impact. - Works are let competitively at current market prices on firm price basis. Disadvantages: - Client brief must be good qualtiy by design team, as design will not be complete until significant resources are spent. - Final cost not confirmed until last works pacakge is let. - Changes to design of later packages may affect those already let. - Little incentive for MC to reduce costs. - In practice, the MC has little legal responsiblity in the event a contractor defaults and Employer has no links to Works Contractos for recourse. - MC can become a 'post box' if not committed to the project, if design isn't closely managed, programme and quality can slip.

Answer 77

Employer places a direct contact with each of the trade contractors, utilising expertise of a construction manager acting as a consultant to co-ordinate the contracts. Trade contractors undertake works, CM oversees construction process and co-ordinates design team, the CM has no contractual links to the contractors or design team. The CM role includes programme preparation, providing necessary site facilities, breaking down project into suitable work packages, obtaining and evaluating tenders, co-ordinating and supervising works.

Answer 78

On large, complex projects where CM expertise can be utilised, e.g. upfront buildability knowledge in design, programme advice. When an early start on site is key. Maintains flexibility in design and construction strategy, however, cost certainty is not considered a key factor. Where the client is experienced in construction.

Answer 79

Advantages: - Reduced programme by overlapping design and construction. - CM contributes to design and planning process, client remains involved throughout design & construction phases. - Roles, risks and relationships for all parties are clear. - Changes in design easy for work packages not yet awarded. - Prices may be lower due to direct contracts with trade contractors. - The client has a means of redress to trade contractors through direct contractual links, and pays directly. Disadvantages: - Price and programme uncertain until last works package is let. - Changes to packages may adversely affect those already let. - Client must provide a good-quality design brief to the project team, design incomplete until significant resources are spent. - Client must be proactive and hands on, must rely on selection of a skilful and commited team. - Client has lots of consultants / contractors to deal with, delivery can be delayed by design team. - CM can become a 'post box' rather than adding value if not committed.

Answer 80

Under CM, the client is in direct contractual relationships with each tradey, the CM isn't. Under MC, the Main Contractor is in direct contractual relationship with the tradeys and the client is in contract with the MC only.

Answer 81

Detailed discussion with client and design team, identifying priorities - cost, time, quality, risk, control requirements and expertise.

Answer 82

Recommend taking into account other requirements prior to final decision, i.e. cost and quality. If priority is time, Construction Management or Management Contracting offer the fastest start with overlap on design and construction, as not dependent on a tender period, however trade off is reduced cost certainty.

Answer 83

Design and Build - design and construction overlapped, rather than being sequential. Design and construction risk transferred to Main Contractor with their tender being a lump sum price to provide high level of cost certainty.

Answer 84

Private Finance Initiative. Government programme launched 1992, bringing private sector PM and expertise to public sector. Private sector granted a concession to finance, design, build and operate major public projects, i.e. schools/hospitals.

Answer 85

Guaranteed maximum price. Lump sum contract with no adjustment of tender price, unless design changes are requested by client. The contractor is to include additional risks involved during design in their tender price.

Answer 86

Project provided by the Private sector in partnership with the Public sector, including Private Finance Initiative (PFI). Long term contractual agreements of 25-30 years. Private sector finances and builds infrastructure projects (hospital, school, roads) including maintenance. In return, Private sector receives toll money (bridge) or agrees a payment scheme with the Public sector.

Answer 87

Advantages: - Infrastructure projects obtained without a large capital burden on public purse - Transfer of risk to private sector - Better value for money, benefitting from the skill and efficiency of the private sector Disadvantages: - Expensive approach when compared with other routes - Costs of preparing bids is exceptionally high - Government (taxpayer) committed to payments for lifetime of concessions (usually 25-30 yrs) unless income is dependent on cash flow

Answer 88

Financially Free Standing - Project costs recovered by charging users, i.e. toll roads, bridges. Joint Venture - Investment from Public and Private sector, however Private has overall control. Contribution and risk allocation clearly defined. Services Sold - CAPEX financied by private sector then sold back to public. Must be proven as better value for money for the Public sector than Financially Free Standing or Joint Venture to go ahead.

Answer 89

When Private sector involvement provides clear value for money compared to traditional Public sector procurement. Generally considered for projects over £20m with significant ongoing maintenance.

Answer 90

High bidding costs associated with PFI projects can take longer to procure than traditional projects. Value for money hard to achieve as the cost of private borrowing is more expensive than public sector borrowing. Long term and inflexible contracts formed which cannot respond to demographic changes, e.g. reduced students in classrooms meaning the LA is paying for empty classrooms.

Answer 91

Private Sector design, finance and construct a facility, then lease back to government for an agreed timeframe and rental cost. At lease end, the government can renew the lease, buy out the private sector ownership or walk away. Operation and maintenance is usually on the Tenant during the lease (government). Provides public sector with financing for large-scale projects based on ongoing revenue, rather than CAPEX. Primary disadvantage - ownership remains with the private sector.

Answer 92

Facility designed, financed, operated and maintained by a Private company. Ownership of the building sits with the requestor (government) from construction completion. At the end of the agreed concession period, the concessionaire's involvement (Private) ends and all operating and maintenance revert to the host government. The concessionaire retains all toll income during the agreed period.

Answer 93

BOOT Variation on Build Operate Transfer, where ownership stays with concessionaires until the end of the concession period, and transferred to host government free of charge at the concession period end.

Answer 94

Long term approach of structuring business relationships, involving two or more parties aiming to achieve specific mutual objectives. Either dealt with as Project Partnering or Long-term Partnering. Normally operated in one of the following ways: 1) Traditional construction contract with a seperate partnering charter 2) Two-party contract aligned to partnering, contract establishes collaborative relationship, different to the first option as parties are contractually bound to work co-operatively 3) Multi-party partnering contract. Difficulty is the complex legal situation in regard to responsibilities and liabilities of each party. Negotiation is chosen over competitive tendering.

Answer 95

Long term relationship over numerous projects over a long period. Framework Agreements used to set overriding contractual terms relating to future purchases. Project and services are then draw down on a project-by-project basis.

Answer 96

All members become involved in partnering during the design stage, including contractors. Ownership of risk is spread between parties, encouraging collaborative approach to deliver the solution and overcome problems.

Answer 97

More trust achieved between parties, reduced adversial relationships as contract conditions are agreed by all parties in advance. Increased cost certainty and speed of calling off contracts gained.

Answer 98

Overall construction and design programme is shortened due to prior understanding of client requirements from previous projects, as well as: - Reduced conflict - Early supplt chain involvement - Improved communication - Pooling of resources results in innovation - Improved client satisfaction - Recognition of profit margin for contractor and suppliers - Team environment - Improved buildability with early involvement of contractors - Predictability of time and cost Main benefits generated from strategic partnering (multiple projects) rather than a single project.

Answer 99

Structured procedure for gaining quotations from contractors for a portion of works under competitive or negotiated tender with a single contractor.

Answer 100

Open tendering Selective tendering (single or two stage) Negotiated tendering Serial tendering

Answer 101

Indiscriminate request for tenders from open market, achieved by advert placement in paper or technical press inviting contractors to tender documentation. Little to no barriers to entry. Advantages: - Opportunity for capable firms which have not been used previously. - Secure maximum competition from the market. Disadvantages: - Increased errors due to inexperienced contractors with no understanding of client requirements. - No assurance the lowest tenderer is capable or financially stable. - Total cost and time to review the tenders increased.

Answer 102

Restricted number of tenderers, pre-selected and can be single or two stage.

Answer 103

Structured process of receiving competitive tenders from numerous pre-selected capable contractors, aka Traditional tendering. Contractors pre-selected based on: - Financial standing - Qualifications / certifications - Previous track record - References - Organisational structure - Capacity and resources - Size of work previously undertaken

Answer 104

Advantages: - Only capable and approved firms submit tenders - Reduces the aggregate cost of tendering - Reduced risk of receiving tenders from unsuitable contractors Disadvantages: - Missing specification elements lead to amendments later in contract, may lead to corners cut and lesser quality - Clients unable to benefit from early contractor engagement - Can take a long time and contractors reluctant to engage due to uncertainty of appointment

Answer 105

Where the client seeks to appoint a Contractor based on an outline scope of works, not fully defined. Client team and Contractor then work together to develop a final scope and pricing, utilising the Contractors buildability knowledge with earlier involvement. First stage purpose: - Outline project design to each of the tenderers - Contractors submit prices for assisting to finalise design with their expertise. - Submission consists of: - Schedule of rates used for pricing Stage 2 - Price for assisting with design development during Stage 2 - Confirmed Contractor overheads and profits - Preferred Contractor is appointed to assist. Second stage purpose: - Following design development to a defined stage, formal negotiation to agree: - Final price - Contract conditions - Programme

Answer 106

For a complex building / site Where magnitude of work is unknown at the time of contractor selection If early completion is required Where the design would benefit from contractors expertise on buildability

Answer 107

Detailed build up of preliminaries costs Percentage additions for overheads and profits Construction programme Proposed sub-letting of works

Answer 108

Advantages: - Early contractor involvement - Encouraged collaboration - Potential for earlier start on site - Client involvement in selecting supply chain - Contractor helps identify and manage risk Disadvantages: - Cost certainty may not be achieved before construction commences - Additional pre-construction fees incurred for main contractor - Contractor could take advantage of second stage negotiation and raise costs - Potential for parties to disagree on contract sum with a risk of retendering

Answer 109

The client has a preference for appointing a particular firm, only negotiate with the one contractor. Used when the contractor has successfully carried out previous works for the client, existing relationship. No competition, one contractor invited only. Contract sum agreed by negotiation. Schedule of rates from previous projects used as a basis of agreeing prices.

Answer 110

Contractors bid for a project on the basis if they complete the initial project satisfactorily, other similar projects will follow with same bill rates applied.

Answer 111

In accordane with JCT practice note 2017, I would include: ITT (Invitation to Tender letter) with following instruction to tenderers... - Date and time for return, to whom, site visits, programme, errors procedures, scoring matrix. - Conditions of proposed contract - Pricing documentation - Specification - Drawings - Employer's requirements - Pre-construction H&S info - Form of tender

Answer 112

Poor client & contractor relationship Dissatisfied client Insolvent contractor

Answer 113

Formal statement in which the tenderer fills in the blank spaces, providing their name, address and sum of money for carrying out the works.

Answer 114

Set out client requirements including function, size, accommodation and quality requirements for the project. Level of detail inlcuded dependent on level of design undertaken prior to tender. Normally includes current state of planning permission. Details the level of design, structure and specificatio information to be provided by tenderers.

Answer 115

Contractor's response to the Employer Requirements. Key documentation for the client to review, including plans, elevations, sections and typical details. Layout drawings and specification for materials and workmanship are also provided.

Answer 116

At novation, the client would agree the level of design is satisfactory and would be signed off by all parties, the contractor then becomes responsible only for the design should problems arise during construction. Dispute may arise if unclear when the problem was caused, either prior to transfer of services or afterwards.

Answer 117

Details of contract particulars Company turnover Previous relevant experience and references Company accounts Management and organisational structure H&S records Quality systems and environmental policy Provision of bonds, warranties, PCGs.

Answer 118

Dependent on procurement process and size of project. Traditional procurement route with a BoQ - around a month to allow the MC to obtain pricing information from their subbies. Large, complex projects - Judgement call, but longer than 4 weeks. If a two stage tender, the first stage may be shorter i.e. 2-3 weeks. Better to ensure sufficient time so contractors can price the project correctly rather than rush, encouraging the contractor to price risk into their tender price.

Answer 119

Selection of a specific subbie to carry out works, manufacture or supply materials. Provides the client with control of material choice and thereby quality, used for long lead-in items with client placing orders prior to MC being appointed, reducing potential delays on site. This does relieve the MC of liability of design and compliance and direct management of the subcontractor for the works where they have been nominated. Nominated contractors normally paid via main contract with sums identified seperately. The MC can object to a nominated subcontractor, but this must be stated during the tender period. May be due to working relationships, quality, known financial difficulties, insolvency.

Answer 120

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

Answer 121

Novation is a mechanism where a party can transfer all 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.

Answer 122

Monies owed to the Employer by the Contractor which are deducted against any payments due to the Contractor.

Answer 123

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

Answer 124

Standard appointment of a subcontractor by a Main Contractor.

Answer 125

Clients name subcontractors to be appointed by the Main Contractor for a portion of the works. Once appointed, they become a domestic subbie in terms of the conditions of the contract. Allows a level of control of work packages quality and in some cases, cost.

Answer 126

Once the certificate is issued to the contractor, the client is contractually obliged to honour the certificate and make payment, they cannot withhold money without a valid reason. I would contact the client and contractor ASAP to arrange payment, this could be agreed as a delayed payment of 1-2 days, or failing that, if the contractor is not willing to delay payment, the cliet would need to fi

Answer 127

1) Prelims 2) Measured works 3) Materials on/off site 4) Variations 5) Claims 6) Retention 7) Previous payments

Answer 128

If the instruction affects the programme, review with the CA, client and contractor. If the instruction is valid under the contract, I would issue a formal written instruction ASAP.

Answer 129

No obligation for client to pay for materials off site if this is not identified in the contract. However, worth checking with the client before paying or rejecting them.

Answer 130

Within a D&B project, the documentation to be included within the ER's include the Scope, Specification, Drawings, Contractors Proposals along with any insurances.

Answer 131

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

Answer 132

Whilst legally binding, difficulty lies in proving the specific terms and conditions of the agreement. For this reason, HGCRA only applies to written contracts (Housing Grants, Construction and Regeneration Act 1996).

Answer 133

Housing Grants, Construction and Regeneration Act 1996 is intended to ensure prompt payment throughout the supply chain and that disputes are resolved swiftly. Provisions of the act include: - Right to be paid in interim payments - Right to be informed of the amount due, or any amounts withheld - Right to suspend performance for non-payment - Right to adjudication - Disallowing pay when paid clauses Act applies to all contracts for construction operations. 2011 amendments included: - Dates for payments must be set out in contract - Client must issue a payment notice within fve days of the date for payment - Client must issue a pay less notice if they intend to pay less than amount noted on payment notice - Notified sum is payable by the payment date

Answer 134

Main difference between the 2 forms is its usage. NEC can be used for building & civil engineering projects, whereas JCT is specific to building projects. NEC can be a bespoke contract due to various options available, whereas JCT has standard set of clauses.

Answer 135

Occurs when circumstances beyond control of either party changes contractual obligations, makes it impossible or illegal to fulfill their contractual obligaitons. This automatically discharges the contract.

Answer 136

A Deed is signed by a witness & traditionally authenticated by a seal. Limitation period of under hand is 6 years, as a deed is 12 years.

Answer 137

12 month duration from Practical Completion whereby the Contractor undertakes any remedial works within the structure at their expense, providing the defect is due to materials & workmanship not being in accordance with the contract. If they fail to do so, the Employer may rectify by other means and expense the Main Contractor. Retention money may be used to cover the costs of making good.

Answer 138

Not readily identifiable defects upon inspection, only come to fruition some time after works completion, may take many years to become identifiable. A claim in contract can be brought within the limitation period of the contract, 6 or 12 years.

Answer 139

- Significance of the non-compliance - Consequences of further non-compliance on the building owners and users - Consequences to adjoining properties - Reason for non-compliance - Level of supervision employed by contractor - Currently recognised testing methods - Time and consequential costs of further opening up

Answer 140

Issue an instruction to instruct the Contractor what to do when identified. Can include telling them to comply with a third party who is opening up the works to identify the defect. If the work/materials found are not in accordance with the Contract, the CA may: - Instruct contractor to remove ALL defective work, materials and goods at their own expense and time. - Notify in writing that an appropriate deduction is to be made from the contract sum. - Issue variations necessary as a result of the work, there should be no additional costs / time given if in accordance with contract. - Instruct the contractor to openup and test further work to determine extent of non-compliance.

Answer 141

Sum of money included in the contract sum that cannot be fully designed and costed at the time of tender / contract agreement. Defined provisional sum - Sum included for work not designed at time of contract, but specified info can be given of works extent, its quantity, duration of installation, fixings to building, etc. Undefined provisional sum - Sum included for work for which there is minimal/no info at time of contract agreement. The location, quantity and time associated for the installation of works unknown. These are defined in the NRM (New Rules of Measurement, RICS).

Answer 142

Make proper allowances for carrying out works in their programme & prelims. Therefore, not entitled to an EoT or extra prelims for carrying out the work, wheatever the delay or cost of doing so to the Contractor. If the actual work does not resemble the provisional sum... - If the description is not accurate, it is to be amended - This will be treated as a variation - Entitles the Contractor to an EoT and extra prelims if appropriate

Answer 143

The Contractor cannot be expected to allow programming, planning or pricing of undefined , the expenditure of the undefined provisional sum may carry additional costs for programme or prelims as a result of undertaking the works.

Answer 144

Architect / CA issues an instruction for its expenditure.

Answer 145

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

Answer 146

The cost and time allowed for in the contract is exceeded as the item changes between tender and instruction.

Answer 147

JCT - Building projects only NEC 3 & 4 and ECC - Building and civil engineering projects ICE - Institute of civil engineers FIDIC - Civil engineering projects

Answer 148

Joint Contracts Tribunal

Answer 149

New Engineering Contract

Answer 150

Recitals - Project overview and description, design portion if applicable Articles - Primary obligations of parties under the contract Contract Particulars - Project specific information referred to in the Recitals, Articles & Conditions Attestation - Execution of the contract Conditions divided into 9 section (7 for MW) - Standard conditions of JCT forms Schedules - Details on design portion, variations, insurance, code of practice, third party rights, forms of bonds

Answer 151

The 9 Sections: 1) Definition and Interpretation 2) Carrying out the works 3) Control of the works 4) Payment 5) Variations 6) Injury, damage and insurance 7) Assignment, third party rights and collateral warranties 8) Termination 9) Settlement of disputes

Answer 152

Minor works (with CDP) Intermediate (with CDP) Design and Build Standard building contract (with quantities) Major projects Prime cost contract Measured term contract Construction management agreement Management contract Framework agreement

Answer 153

JCT guidance states up to £200k value, simple in nature, short in duration with a straight forward construction. Lump sum with design completed prior to execution. Employer provides specifications, drawing & schedule of works.

Answer 154

Do not exceed 1 year duration, simple in content requiring basic skills and trades where services are not complex and works are already designed.

Answer 155

Work already designed at execution, suitable for use with a BoQ and is a lump sum form. Contractor's risk is limited to price only, Employer takes the risk of errors in the bill.

Answer 156

Works designed prior to execution, however no BoQ and is a lump sum form. Contract documents include drawings, spec and schedule of rates. Contractor's risk includes both price and quantity.

Answer 157

Remeasurement form of contract with no fixed contract sum, used when design is not completed at time of execution. Approximate BoQ not prepared. Construction aimed to commence prior to design being completed.

Answer 158

Contractor is responsible for design and construction, Contractor Proposal's form the basis of the contract. Similar complexity to standard building contracts. No mention of Architect / CA / QS, instead replaced by Employer's Agent.

Answer 159

7 Sections, where there is no assignment or collateral warranties provision. D&B and Intermediate have 9 section with this included No mention of QS in MW or D&B, but QS is mentioned in Intermediate No provision for named sub-contractors No provision for bonds, collateral warranties or advance payment MW has no option of sectional or partial completion No relevent events listed for EoT, instead referred to as 'anything outside the contractors control' Rectification period for MW is 3 months, 6 months for D&B and Intermediate Retention standard @ 3%, 5% for D&B and Intermediate MW and Intermediate, the Contractor is responsible for part design only, D&B design is Contractor responsibility In D&B, the EA can request a quotation prior to instructing a change No fluctuation for labour and material costs in MW and Intermediate MW and Intermediate payments are at intervals, D&B has option for stage payments MW has no option for Employer to take out a joint name policy No provision for third party rights in MW or Intermediate

Answer 160

Contract conditions drafted specifically for a particular project.

Answer 161

Written by legal experts, with rights and obligations clearly set out and risks allocated appropriately. Familiarity with provisions means consistency in application and fewer unforeseens causing issues. Time and cost of preparing a new contract is avoided. Case law has built up over time, providing clarity on terms.

Answer 162

Usual provisions rarely questioned, therefore risk items for either party may not have been reviewed thoroughly. May not be appropriate to the needs of a client. Using an inappropriate standard form will cancel out any advantages of using it.

Answer 163

Major project with novel (new) obligations When specialist advisers can amend as necessary, requires great skill and knowledge

Answer 164

Yes, an EoT does not mean automatic entitlement to loss and expense.

Answer 165

I would include cost for prolongation of: - Site cabins, utilities, welfare, facilities - Management staff, security, cleaners - Inefficient use of labour and plant resources - Subcontractor mobilisation costs - Head office - Finance charges & loss of profit

Answer 166

Only if the EoT allows the Contractor to claim for loss and expense, otherwise no.

Answer 167

Advantages: - Familiarity - 'Industry standard' - Cover most procurement and building types via ancillary documents to support the main forms - Comprehensive in detail and considered fair and reasonable, not biased Disadvantages: - Thought to compromise conditions to satisfy interests of all parties involved - Can be considered unnecessarily long and complex

Answer 168

Advantages: - Applicable to a varirty of procurement strategies - Use simple, ordinary language (minimal legal jargon) - Include flow charts to help users - Act as a good stimulus for good management, maintaining good programmes, early warning/risk procedures and project partnering and 'rolling final account' (up-to-date compensation events) Disadvantages: - Often considered for civil engineering project only - Limited market exposure, therefore limited case law

Answer 169

NEC is concise and plain English, with limited optional clauses to amend unlike JCT. The PM has options to deal with problems when they become apparent, with early warning procedure & risk register, this encourages a proactive approach instead of reactive (JCT). Compensation events deal with cost & time issues, whereas JCT variations are cost, loss and expense for time. Changes based on quotes prior to commitment, JCT costs may be confirmed at completion. No QS or EA mentioned in NEC, only a PM who takes on both roles. Programme is a contract document - 25% of interim payments deducted if a programme is not submitted at contract stage. NEC has provision for preferred subcontractors, rather than nominated subcontractors. Defects correction period depends on the impact of the defect, contractor must make good within these time periods. More successful than JCT approach of within 12 months only. Short reply periods adopted under NEC, improving communication however is known to by very admin heavy. Retention and delay damages are optional under NEC.

Answer 170

PM can be from Employer's organisation or an external consultant, representing the client and has authority to make decisions unless said so. PM has duty to be impartial in line with the contract Designers prepare work info and are not named in the NEC Supervisor is either from employer's organisation or external consultant, their role is to check works are undertaken as stated within the contract, similar to Clerk of Works with more authority - instructing searches or issuing defect certs. QS is not named in the contract, supporting the PM with compensation events only.

Answer 171

Events which entitle the Contractor to be compensated for Prices, Key Dates and Completion, unless they arise from a fault by the Contractor. 19 compensation events are noted in the contract - Change of works information, access to site, delayed communcation by PM.

Answer 172

PM and Contractor are obliged to insert early warnings into the risk register if it may increase costs or affect a key date within the programme, i.e. completion. The PM records all warnings, risk reduction meetings can take palce to review and find solutions to then be removed from the register.

Answer 173

The contractor must gain acceptance from the PM and Supervisor, however, remains liable for failure in the design. No provision for novation as it's deemed bad management under NEC.

Answer 174

If I am unaware of an answer relating to NEC contracts, I state: Unfortunately, I have not had practical experience with using NEC contracts, however would look to the NEC Guideline and Flow Chart documents to advise.

Answer 175

Client Principal Designer Principal Contractor Designer Contractor

Answer 176

The client has overall responsibility, supported by the PD and PC. Good relationships are essential between the main 3 duty holders. A commercial client must: - Other duty holders are appointed (principal designer & contractor) - Sufficient time and resources are allocated - Relevant info is prepated and provided to other duty holders - Principal designer and Principal contractor carry out their duties - Welfare facilities are provided A domestic client (not a business entity), the duties are transferred to the contractor on a single contractor project, or the Principal Contractor on a project involving more than one contractor.

Answer 177

Appointed by the client of project with more than one contractor, a person or organisation with sufficient knowledge/experience for the role. PD is responsible for planning, managing, monitoring and co-ordinating pre-construction H&S, including: - Identifying, eliminating and controlling foreseeable risks - Ensuring designers carry out their duties - Preparing and providing relevant info to other duty holders PD liases with PC to help in planning, management and monitoring construction phase. The designer, below the PD, prepares designs for the works and must eliminate foreseeable construction or maintenance risks for construction, maintenance and use.

Answer 178

Appointed by the client, duties include: - Plan, manage, monitor and co-ordinate H&S during construction when there's more than 1 contractor - Liaise with client and PD - Prepare construction phase plan - Organise co-operation between contractors and co-ordinate their work PC must ensure: - Suitable site inductions are provided - Reasonable steps taken to prevent unauthorised access - Workers are engaged in H&S matters - Welfare facilities are provided

Answer 179

The main set of regulations for managing health, safety and welfare of construction projects, applying to all building anf construction work, including new build, demolition, refurb, extensions, conversations, repair and maintenance.

Answer 180

The individual responsible for administering the construction contract, appointed by the client. CA must act honestly without bias, their decisions are open to challenge via dispute resolution procedures. CA role includes: - Managing tender process - Preparing and executing contracts - Reviewing and administering contract documents, i.e. payment, completion, variation certs, EoT, CI. - Chairing progress meetings - Agreeing defects, commissioning, testing procedures - Updating the client with project documentation

Answer 181

Used within Design and Build contracts only (NEC4 notes this role as Project Manager). EA is likely the lead consultant or architect, Differ from CA as the EA acts on behalf of the client while the contractor takes the risk and responsibility for design and construction.

Answer 182

The CA - 'The Referee': Manage the contract between the Employer and Contractor, selected dependent upon the nature, scale and scope of works. The CA acts impartially whilst managing information between Employer and Contractor, including keeping records, site inspections, meetings, reporting, issuing instructions on behalf of the client, monitoring programme, certifying payments and completion. CA role officially commences at contract execution, though in practice CA advises client on amendments, insurance provisions, consents, licences, stat obligations. CA's decision can be challenged by both Employer and Contractor, so good management is key. The EA - 'The Coach': EA acts on behalf of the client on all matters, exclusively under D&B contracts where the Contractor takes on all design and construction risk. EA role commences at tender stage with a concept design / pre-planning, much earlier than CA, advising client from inception, assisting the project team & contractors. EA must still act impartially, pulling together the Employer's Requirements, reviewing and advising on the Contractor's Proposals then ensuring all parties are happy to execute contract. The EA performs contract administration within D&B contracts, whereas CA performs the same contract administration role in traditional forms of contract - Minor Works, Intermediate and Standard.

Answer 183

The partnering process can be abused by one of the parties Requires more client resource to compensate for less competitive environment Process can collapse if one party becomes disadvantaged To be effective, multiple projects required to learn and become familar with working processes Direct costs of workshops, training and management involvement in early stages of establishing the partnering approach