Contracts Flashcards
Advising on contract modifications
SOAF: Advised on using X20 (KPI) in place of X7 (Delay Damages). Two reasons:
- X20 creates a collaborative atmosphere as everyone is more invested in finishing early
- Difficult to give a genuine pre-estimation of damages, so anything could look like a punishment.
Provided reasoned advice on a contract
I advised my client that the Contractors Activity Schedule under an NEC Option A contract needed to be adjusted.
The set up resulted in only 3 payments being made, but each were high volumes and could cause issues with cash flow. I advised for the Contractor to break down their activities into smaller milestones to make a smoother process.
Selecting form of contract
I have not, but main things I would consider are:
- Clients experience
- project sector - NEC is UK governments recommended form of Contract
- Client’s attitude towards change control
- Type of project - not a guarantee, but often times NEC = engineering projects.
Contract amendments - what would I do?
Medina ECC Contract. Contractor wanted to include existing assets to be client risk. I discussed with legal team & client team. my recommendation was that this would still be covered in the case of accidental damage, it would not create any additional risk for the client.
- Discuss with legal team as I am not a solicitor.
- Assess the impact of this amendment to the client. Does it open additional risk, or does it mitigate risk?
- Discuss rationale for inclusion
Systems for managing risk
I created a tool using Smartsheet for the contractor to upload early warnings and notifications of compensation events. This allowed the client to retain control of the early warning register and be notified of any compensation events as soon as.
I would recommend that having an early warning/risk register is key, and to have weekly sessions to review potential risks, mititgate them, and discuss any identified compensation events.
Ambiguity in a contract
I have not dealt with this personally. However, what I would look to do is:
- Discuss with client legal team to understand the impacts
- Conduct a workshop to understand the impacts of amending the Contract
- Propose an amendment to the Contract to provide clarity
Client only works with bespoke contracts
I would advise the client against this, but ultimately if they insisted they would only work with them I would oblige.
Reasons why I would advise against it:
- More people are familiar with standard forms
- More case law on standard forms
- Faster to use standard forms
- More comprehensive risk management associated with standard forms
Have I advised client on Liquidated Damages?
I advised that on the Brede project that liquidated damages should be used.
Rationale: myself and many others worked for consultants, and thus in the case of any delay, our rates would need to paid for in order to continue working.
Method: i used a standard tool to collate the expected number of people (and their rates) and created a daily rate.
Have I advised client on warranties
I have not advised a client on warranties before. However, in that situation, I would do the following:
- Gain an understanding of the parties in the project - is a parent company guarantee applicable
- Identify any parties that would need collateral warranties. For example, my Brede project had collateral warranties established with the Contractor’s designer.
When would I advise a client to enter into a PCSA
I would advise the client to enter into a PCSA if they are going with a two-stage tendering approach, or they require bringing in a contractor/other party to provide buildability advice/design input.
When would I advise a client to issue a letter of intent
I have advised a client very recently to enter into a letter of intent as there was a risk of delayed completion date should we not begin promptly. I advised the client that issuing a letter of intent while final negotiations were ongoing would allow the Contractor to mobilise and keep on their prorgramme.
When Contractor breached programme, what do?
On my large scale mains replacement project, the Contractor was not producing a programme when required. This was a breach of contract under an NEC ECC Option C contract.
My response: I reminded the Contractor of their requirements under the NEC Clause 31.3. I highlighted that any compensations events they submitted would be subject to my own assessment, and payment could be withheld as without an updated programme I could not guarantee milestones had been completed.
How have I produced contract documentation
Drafted an NEC4 ECC Option A contract (with previously agreed amendments) for my Medina Eel Screen project. I collaborated with the Contractor to get the relevant information for the Contract Data, and I populated the Works Information.
Have I carried out contractual mechanisms/procedures such as variations (CEs)
Medina Eel Screens: The Contractor identified that additional surveys were required to ensure their design process was as robust as possible. I instructed them to carry out these surveys, which was a compensation event under the contract (60.1) - they provided a cost, I reviewed alongside the commercial team, and accepted this cost.
How have I selected a suitable contract based on procurement
I have not - however I have typically worked with NEC contracts which were designed to be flexible enough to work across different procurement routes.
If the client preferred to go down a design and build procurement route, I would ensure that the Contract’s works information included this.
