Post on 12-Mar-2021
transcript
Unit 4: Principle of Contract Administration under JCT 05 SBC/Q
Lecture by:
Mr. Tee
The “Traditional Contract” separates construction from design.
A construction contract will be
defined as a contract for carrying out of construction operations
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Parties in a building contract
Numbers & identity of persons varies depending on nature & complexity of project
Employer (The term used in JCT)
Architect (Agent of Employer)
Quantity Surveyor
Engineer (Civil & Structural)
Specialist consultant (M&E)
Project Manager
Clerks of Works
Contractor / Subcontractors (DSC, NSC)
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Types of construction contracts :-
Lump sum contract (pre-agreed price, adjustment by variation of works & cost fluctuations)
Measurement contract (measurement of work done upon completion using Schedule of Rates)
Cost reimbursed contract – cost plus fixed fee, cost plus variable fee, cost plus percentage) – fee cover profit & management fee
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Types of construction contracts :-
Design and build contract (Contractor involve in both design & build)
Package deals (design, build functions, may take on also architect, engineer, surveyor’s roles)
Turnkey contracts –similar to design & build, may even include procurement of site, interior furnishing, fittings, furniture & equipment
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Types of construction contracts :-
Management contract – a project manager coordinate and organise the works (commonly for large projects) – there are 2 different approaches :
1. Management contracting – Employer engage a Management Contractor to co-ordinate the completion of a series of work packages
2. Construction management – Employer engage a series of Works Contractors (Employer’s Direct Contractors) who are responsible for coordinating and managing the completion of a series of work packages
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Types of construction contracts :-
Joint venture or partnering – can be a landowner & a developer; two or more parties
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JCT 05 standard form of building contract (JCT : Joint Contracts Tribunal)
Current edition of the standard conditions of contract is JCT05
SBCC (Scottish Building Contract Committee) updates after each JCT editions
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Contract Structure – JCT (Please refer to Appendix 3.1)
Articles of agreement
Recitals
Articles
Contract Particulars
Attestation
Conditions
Schedules
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Principle of Contract Administration
Letters of intent – document expresses an intention to enter a legal relationship subject to the subsequent resolution of a condition.
Such letters are intended to fall short of establishing a legal relationship and at the same time provide comfort to the recipient
Under Scots law – is a legally enforceable
promise; but not under English law
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Principle of Contract Administration
Employers’ obligations
Implied Obligations to Contractor Not to hinder/prevent the
Contractor’s progress of work To cooperate with the Contractor
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Employers’ obligations
Expressed Obligations to Contractor 1. Duties require the client to perform certain actions: To describe the work scope in the contract (Sixth
Recital) To pay the contract sum (Article 2) To give site possession to Contractor (Clause 2.4) To provide contract documents for reference by the
Contractor (Clause 2.8.1) Not to divulge any rates or prices in the Bills, except
for contract purposes (Clause 2.8.4)
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Employers’ obligations
2. Rights endow the client with the
expectation that other parties will perform tasks for them:
To receive design proposals from the Contractor (for Contractor’s Design Portion) (Ninth Recital)
To refer dispute to adjudication (Article 7) To own materials sorted on & off site
before installation to the building structure (Clause 2.24 & 2.25)
To retain a portion of the contract sum until Defects Liability Period is ended (Clause 4.18)
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Employers’ obligations
Expressed Obligations to Contractor 3. Liabilities are placed on the client by the
contract and expose them to risks like: Liability arising from the omission of
relevant information from the contract documents (Clause 2.29.6)
Liability arising from inadequate descriptions of their requirements (Clause 2.13.2)
Liability arising from failure to pay the Contractor following earlier withholding on money from interim valuations (Clause 4.14)
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Employers’ obligations Possession of the site Date of possession (in contract particulars) Otherwise possession must be given within a
reasonable time Delay in giving possession, employer must grant EOT,
otherwise unable to apply LD Full possession, unless stated otherwise Employer has no right to access to site after site
possession by Contractor
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Employers’ obligations Possession of the site
Other employer’s direct contractors’ access to site is subject to consent of the contractor
At practical completion, the employer regains possession, contractor ceases to have possession
Sectional completion
Contract termination
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Contract administration Employer to administer the site to ensure that the contractor
can meet their obligations under the contract
SBCC requires the appointment of an architect or contract administrator, together with a quantity surveyor
Architect is an agent of the Employer Employer owes a duty to ensure that the architect executes his
obligations properly
Employer is under an implied obligation not to interfere with the architect’s certification process; otherwise may be open to a claim for damages
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Agents under the contract In JCT 2005, Architect, Clerk of Works & Quantity
Surveyors are Agents of the Employer
An agent is a person exercising contractual powers
on behalf of someone else Employer is bound by the act of his Agents whom
he employed
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The Architect as an agent The architect as the Employer’s agent, has 4 duties and
responsibilities :- 1. He may not profit from his appointment other than by
his fee 2. He may not delegate except as defined by the contract 3. He must act in his principal’s interest, and does not
enjoy the protection given by an arbitrator 4. He owes a duty of care, i.e. To use the reasonable care
& skill of such persons of ordinary competence measured by the professional standard of the time.
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Architect also owes a duty of care to the contractor (Headley Byrne & Co Ltd v Heller & Partners Ltd, 1964 – If an architect gives information which proves false and negligent and the contractor suffers loss, then the contractor can sue the architect for that loss
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Architect or Contract Administrator? The Architect has 2 responsibilities on construction projects, namely: 1) To fully develop the design and provide solution to meet the
Employer’s needs
2) After the Contractor has been appointed, the Architect has to administer the contract to ensure that the design is successfully constructed
This administration role was traditionally allocated to the Architect
in previous versions of the JCT standard forms of contract. However, more recent editions have introduced the possibility of a non-architect to assume the “contract administrator” role. For examples: the QS, PM, CM or any suitable experience organisation.
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Architect’s instructions
- Power of the architect to issue instructions
May not vary the contract conditions, or the appendix
May not vary the scope of the works (from constructing 1000m2 to 2000m2 of office block)
May not instruct beyond the scope of the works – refer to the site boundary and the nature of the works defined
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Can the architect issue instructions for variations after the issue of the certificate of practical completion?
Clause 2.38 of JCT05 gives the right to issue for rectification of material and workmanship defects
Unclear on design defects
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Clause 3.13 gives the right to issue instructions within the meaning of the clauses of the contract; contractor may request the architect to specify in writing, which provision of the contract conditions
The architect shall comply immediately
Contractor may make a reasonable objection against
an architect’s instruction if it is outside the conditions of contract
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All instructions issued by the architect shall be in writing – Clause 3.12.1
Oral instruction will be of no immediate effect; must
be confirmed by architect in writing within 7 days, or confirmed by contractor within 7 days. If not disputed by architect within 7 days, contractor’s confirmation will become an architect’s instruction
If Contractor complies with an oral instruction, architect may confirm in writing at any time prior to the issue of the final certificate
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Clerk-of-Works as an agent
Functions defined by the contract
(Clause 3.4)
Appointment of a Clerk-of-Works by the Employer to inspect the works
Has no power to issue instructions to the contractor
May issue “directions” to the contractor
The directions has no effect to the contract, unless it is followed up and confirmed by an architect’s instruction within 2 days
Under Clause 5.7, the Clerk-of-Works may be appointed as the architect’s authorised representative to sign daywork sheets
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Information and instructions
JCT 05 Clause 2.8 provides that the Architect has to issue further drawings, information, details to enable the contractor to carry out and complete the Works
Otherwise entitles contractor to Extension of Time (Clause 2.26 to 2.29)
May be construed affecting progress of work, contractor is entitled to claim for loss and expense (Clause 4.23 to 4.26)
If employer fails to provide information and drawings to proceed, may entitle the contractor to rescind the contract
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Variations
Employer’s right to instruct variations – contractor is obliged to carry out
- employer is obligated to pay
- variations can be given any time up to completion of the works, subject to appropriate adjustments to the Completion Date and the Contract Sum (Clause 2.28 and 4.3 respectively)
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In JCT 05, the meanings of variation are :-
1. alteration or modification of design, quality or quantity of the works
2. employer imposing obligation or restriction as the four (4) defined matters :
Access to the site or use of specific parts of the site
Limitation of working space
Limitation of working hours
Execution/completion of the works in any specific order
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Other meanings of variation :-
1. to expand provisional sums in the contract
2. to expand provisional sums in any nominated sub-contract
Contractor is entitled to EOT if work is delayed by such instructions
Contractor is entitled to payment for the work carried out
Employer cannot vary a contract to the extent it alters the fundamental nature of the contract work
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Employer’s other obligations
To make payment for the works executed by the contractor under the contract
Payment is made upon the issue of certificates by the architect
Obligation to insure in respect of health and safety
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The Contractor’s obligations
Completing the Works
completing the works, in a good and workmanlike manner using skill and care to be expected of a builder of ordinary competence, in accordance with the contract documents (Clauses 2.1, 2.3 & 3.6)
Hand over to the Employer (Clause 2.38)
Remedy any defects, shrinkage or other faults during Defects Liability Period (Clause 2.39)
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The Contractor’s obligations
Quality of the Works
An implied term that completing the works to be fit for purpose
For remedying any defects, shrinkage or other faults during DLP
Obliged to use materials and workmanship of the quality and standard specified in the contract documents (Clauses 2.1 and 2.3)
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The Contractor’s obligations
Defective Works
Liable for latent defects for the duration of the specified period
During construction, have to complied with instruction to remove from the site any work, materials or goods not complying with the contract (Clause 3.18)
After practical completion, to make good the defects during Defects Liability Period (Clauses 2.38 & 2.39)
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The Contractor’s obligations
Progress of the Works
Must complete the works by a specified time, on or before completion date
Must use their best to endeavour and prevent delay in the progress
To prevent completion of the works being delayed
To do all may reasonably be required to the satisfaction of the architect to proceed and complete the works before the completion date
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The Contractor’s obligations
Insurance and indemnity – the contractor is obliged to take out and maintain insurance against personal injury or death in respect of damage to property
Health and safety – obligation to provide competent staff, adequate material, proper system of effective supervision, a safe place of work
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