Contract Practice Flashcards
(21 cards)
What is an Advance Payment Bond?
A Surety product that protects the money being Advanced to a Contractor at the start of a project. The Bond will protect the Beneficiary for the full Advanced amount should the Contractor default on the agreement.
Why did you recommend the inclusion of an APB for the Cardiff Airport project?
● Due to the large value of the equipment and high upfront costs to the contractor for manufacture, to aid the contractor’s cashflow.
● To protect the client should the contractor default on the agreement.
How much was the APB for at Cardiff Airport?
50% of the contract value (£1,143,580.50).
Who provided the ABP?
Chubb European Group
What were the section and times for completion for the Cardiff Airport security equipment?
● Delivery of all security equipment - 4th December 2023
● Operation of lanes 1, 2 and 3 - 19th February 2024
● Operation of Lane 4 - 4th march 2024
● Removal of existing security equipment - 1st April 2024
What were the LDs for delay?
£5,000 per week or part thereof for each section.
How were the LDs calculated?
Calculated based on the likely cost of building works delay (the actual loss the client will incur).
What is the difference between liquidated damages and unliquidated damages?
Liquidated Damages - pre-determined damages agreed in the contract
Unliquidated Damages - actual damages that were not pre-determined. Can be pursued in arbitration / court.
What contractual provisions were there surrounding delay in the MF/1 contract?
● Time for completion of sections
● Detailed records - at no point have Leidos been prevented from delivering equipment to the airport.
● Detailed records - we assisted Leidos in planning the delivery of some elements of the security equipment (2no ProPassage lanes) to be stored at Cardiff Airport to clear space in Leidos’ Bedford factory, however Leidos decided not to proceed with this.
● Provided table of works that could not be undertaken until the security equipment was delivered
● No contractual obligation to evidence the cost caused (not unliquidated).
For Cardiff Airport, why did the security equipment contractor claim to not be fully culpable?
Primarily as programmes submitted had not been approved - my response:
● “as per clause 14.3 of the contract “Approval by the Engineer of the Programme does not relieve the Contractor of any of his obligations under the Contract.” As such Leidos’ obligations i.e. the Time for Completion of each Section would not have changed if any of the submitted programmes had been approved. Leidos’ suggestion that the non-approval of the submitted programmes makes Cardiff Airport partly culpable for the delay to the delivery of the security equipment is therefore incorrect.”
● Provided my tracker showing the programmes that had been submitted and the reason they could not be approved in line with the contract. E.g. not in accordance with contract spec (different lanes). Porgrammes would not have been achieved by Leidos anyway.
How were you able to negotiate the LDs settlement?
● Detailed records - at no point have Leidos been prevented from delivering equipment to the airport.
● Detailed records - we assisted Leidos in planning the delivery of some elements of the security equipment (2no ProPassage lanes) to be stored at Cardiff Airport to clear space in Leidos’ Bedford factory, however Leidos decided not to proceed with this.
● Provided table of works that could not be undertaken until the security equipment was delivered
● No contractual obligation to evidence the cost caused (not unliquidated).
● Refuge Leidos’ argument that they were not fully culpable due to programmes not being accepted.
What sections were included in your Cardiff Airport procurement strategy?
● Introduction
● Progress to date (feasibility and design)
● Project Analysis (Client objectives / constraints / market analysis)
● Legislation (Public contracts regulations)
● Works Packaging
● Procurement Route
● Tendering Strategy
● Contract Strategy
● Summary of Recommendations
What options did you have in the Cardiff Airport Procurement Strategy?
● Works packaging - single or multiple
● Procurement Route - traditional, D&B
● Tendering strategy - restricted, open
● Contract strategy - fixed price / cost reimbursable / forms of contract
Why did you chose NEC for the Cardiff Airport building works?
● Proactive and collaborative mechanisms e.g. early warnings, programme submissions, agreeing CEs as they happen
● Familiarity of myself and contractors
● Option A - defined scope and cost certainty
Why did you chose IET MF/1 for the Cardiff Airport security equipment?
● Because it has mechanisms tailored towards ensuring quality of electrical installations (e.g. Factory and Site Acceptance Tests). Provisions such as this differ from more standard construction contracts (e.g. NEC/JCT) which are tailored towards construction works more generally.
● It had been used previously at Cardiff Airport for HBS.
● My MD had used it before so could offer me support.
What is included within the NEC PSC?
● Core Clauses
● Main Option Clauses (A, C, E)
● Dispute Resolution Options (W1 or W2)
● Secondary Option Clauses (X, Y (UK) 1, 2 and 3)
● Additional Conditions of Contract (Z)
● Schedule of Cost Components
● Contract Data
What is a Collateral Warranty?
A legal agreement in the construction industry where a party (often a consultant, contractor, or subcontractor) warrants to a third party (like a lender, buyer, or tenant) that they have met their obligations under the main contract. It essentially creates a direct contractual relationship between parties who wouldn’t otherwise have one, allowing the third party to make claims against the warrantor if the work is defective.
How did you prepare the CW on the Hampton Footbridge project and who was the beneficiary?
Use a previous example that had been agreed between WCC, Alun Griffiths and Burroughs. WCC were the beneficiary.
What insurances were required by the building works contractor for Cardiff Airport?
● Employer’s Liability Insurance - £10m
● Public Liability Insurance - £10m
● PI - £10m
● Airside Liability - £10m
● All risk - £10m
What insurances were required by the security equipment contractor for Cardiff Airport?
● Employer’s Liability Insurance - £10m
● Public Liability Insurance - £10m
● PI - £10m
● Airside Liability - £10m
● All risk - £10m
What should be considered when selecting a form of contract?
● Nature and scale of the works
● Client’s risk appetite
● Parties’ familiarity
● Client / project analysis
