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Introduction

Contract Administration: Control

School of the rchitecture, Design and the BuiltEnvironment

Contract Administration

Part A: Control




Contract Administration: (Part A, Control)

Introductory Notes, Aims and Objectives

The aims for the first part of the Contract Administration module are:

• to build upon the general legal issues that were identified in year one of the course anddemonstrate their relevance to the construction industry.

• to identify the contractual arrangements and various contract documentation commonly

used in the construction industry.

• to use a standard form of contract to resolve problems and issues relating to the

monitoring and controlling of construction work.

The objective is that students will become familiar with complex contact documents and be able

to utilise them in the control and administration of construction work or be able to provide

appropriate advice to third parties.

The first half of the module will be delivered over a 12-week period. Assessment for the whole

module comprises one element of coursework and a formal exam. The weightings give to the

assessments are 50% and 50% respectively.

Lecture and Seminar material will be posted n NOW. The lectures will be used to introduce the

material only and you will be expected to work through the lecture notes and recommended text

as part of your directed and independent learning time. Each lecture topic will be followed up by

a set of practical exercises, where you will have the opportunity of putting theory into practice.

The contractual problems that you will have to resolve can be very complex, therefore it is

essential that you fully prepare yourself prior to the surgery sessions.

There will be a one-hour surgery session each week where you may review your answers to the

practical tasks set and/or resolve any difficulties or problems you have with the tasks to allow

you to complete your worksheet. You should be allowing up to two hours preparation time for

the tasks each week. In the surgery your tutor will discuss your answers and deal with any

queries.

Through experience it has been shown that students who fail to carry out the necessary

preparatory work tend to struggle with the subject, and any such weaknesses are soon exposed

under examination conditions.

The module is based upon the 'JCT Standard Building Contract with Quantities, 2005 Edition

(incorporating any current amendments)'. You are required to purchase this contract, and you

are also allowed to take this document into the exam. The contract may be marked by

underlining or highlighting in a single colour only, normally no other marks will be allowed for

examination purposes.

Reading list is detailed on the NOW system. This contains the most up to date list of books for

your studies and includes direct links to the library system.




Seminar One - Introduction

Objectives and Programme

For lecturers to identify students in their particular seminar groups, and to clarify the

administration and requirements of the module.

The importance of the surgery workshops should be emphasised. Contract administration is a

practical subject, the workshops are designed to put theory into practice to ensure that students

are able to use the contract documentation to resolve problems and provide the appropriate

advice.

Prior to each surgery meeting it is necessary to read through the relevant lecture material and

prepare comprehensive notes on the seminar topic/problem.

Surgery Workshop

The following session is designed to reinforce some of the technical terminology from last yearand introduce some new terms and definitions.

Provide brief answers to the following:

1. What is a Provisional Sum and what is it likely to be used for?

2. What are Statutory Undertakers, and how are they incorporated into the bill of

quantities?

3. What is the role of the building control officer?

4. What is selective tendering?

5. How does a cost reimbursement contract operate?

6. Name five standard forms of contract commonly used in the construction industry.

7. Provide brief definitions for the following:

• Contractor’s Design Portion

• Sectional completion

• Practical completion

• Partial possession

• Rectification period

• Retention

• Liquidated damages

• Collateral warranty




Seminar Two - Procurement and Choice of Contract

Objectives

To be able to identify the different procurement routes available to a client, the different ways in

which the contract sum may be determined and the variety of standard forms of contract

available for construction works

Before the seminar

• List the different procurement routes available for construction work and very briefly

outline the way in which they operate.

• How are the contract sums calculated in the following contract arrangements, and what

contract documents are typically associated with each arrangement?

1. lump sum contract

2. remeasurement contract3. cost plus contract




Seminar Three - Contractual Relationships

Objectives

To review contractual agreements and their associated relationships.

Before the seminar meeting

Write brief answers to the following:

• In a building contract who are normally the parties to the contract?

• What criteria are normally applied to determine whether an agreement is legally binding

or not?

• What is meant by privity of contract and how may it affect organisations which are

involved in a construction project?

You are to act as a representative for Thompson & Howell Partners and prepare notes in

readiness for your meeting with the client (A Jones). You are required to explain to the client

his legal position and relationships with regards the dispute and recommend a suitable course of

action to resolve the dispute.




112 Oxford RoadSunburyMiddlesexML3 7RY3 October 2004

Thompson & HowellConstruction Dispute Consultants48 Chaucer BuildingsNottinghamNG1 4BU

Dear Sirs

Windy Ridge BungalowWindy Ridge BungalowWindy Ridge BungalowWindy Ridge Bungalow – –– – BuxtonBuxtonBuxtonBuxton

I am seeking advice on a problem concerning the roof tiles on a bungalow that iscurrently under construction.

Within a few weeks of the roof being completed a small area of tiling was found tobe suffering from surface delamination. The roofing sub-contractor remedied thisdefault by replacing the affected tiles. However, during the last few weeks largerareas of tiling have shown signs of delamination and no one seems prepared toaccept responsibility for this problem (I am enclosing all the associatedcorrespondence).

I shall be coming to Nottingham on 15 October and I would request that you are ina position to detail my legal rights and outline a recommended course of actionwhich I may discuss with you at your office at 10.00am.

Yours faithfully

A Jones

A Jones

Enc.

GKR DeQuee

Th

29 September 2005

Mr A Jones12 Oxford RoadSunbury

Dear Mr Jones

Windy Ridge Bungalow – Buxton

I am in receipt of your correspondence cprepared design. I am at a loss to underthese tiles. Wee have used them extenscompleted in the Cotswolds and their peremember you submitted the drawings tno comment was made about the choicthere is anything more that we can do inpursue this problem with the builder and

Yours sincerely

B Kershaw

B KershawSenior Partner




PEAKBUILDERS

10 Peveril RoadBakewellDerbyshireDE33 5KH22 September 2004

Dear Mr Jones

Windy Ridge – Bungalow

I am sorry to hear you are still having problems with the roof tiles on the bungalow that

we are currently constructing. I have spoken to our roofing sub-contractor concerningthe situation but he states the work was completed to your architect’s satisfaction andthere is little more he can do in the circumstances (please find attached a copy of therelevant correspondence).

The best solution we can offer is to strip the roof and use an alternative tile. If you wouldcare to instruct the architect to issue the appropriate variation order then we would carryout the work as soon as possible, and at a very competitive price.

Yours sincerely

G Hammond

G HammondManaging Director

18 September 2004

Peak Builders

10 Peveril Road

Bakewell

Derbys

Dear Sirs

Windy Ridge Bungalow – Buxton

We note the roof coverings of the above pro

and discolouration. Although we replaced thpurely a goodwill gesture and should not be

You should appreciate that we submitted a v

therefore unable to consider carrying out an

We can confirm that the tiles used were Ma

architect, although they are not a tile we nor

roofing work we take this as an acceptance

As we have used the correct tiles I cannot se

suggest the client sorts this out with the arch

Yours faithfully

R O Jones




Seminar Four – Conditions and Standard Forms

• What standard forms of contract would you recommend for the following projects?

a) Works to be carried out on the site of an existing engineering workshop.

Excavate, culvert and fill over an existing stream and subsequently construct a

track for a light gauge railway.

b) Installation of new security equipment to a university campus to incorporate all

necessary computer hardware and software.

c) To carry out items of general maintenance work to an old hostel in preparation

for student accommodation.

d) Construction of a new leisure and conference complex. Approximately £3m in

value, the work is to be designed and controlled by the architect and will requirethe appointment of specialist sub-contractors.

e) Construction of engineering workshops and office accommodation for the Royal

Navy.

f) An ongoing property maintenance programme for the M25 Housing Association.

Property portfolio comprises approximately 200 mid-war properties and 60 new-

build houses.

• A client wants to extend the office accommodation contained within his existing factory

unit. His proposal is to have a single storey flat-roofed extension constructed. The work is of traditional construction and will provide approximately 140 m

2gross floor area,

comprising general office accommodation with basic services.

If you were requested to draw up a contract for the construction works; what are the

major clauses that you would incorporate into the document. More importantly explain

why you consider these clauses are required.

Secondly is there a standard form of contract that is suitable for the client's project? Be

prepared to explain what criteria you have used when selecting an appropriate form of

contract.




Seminar Five - Architect's Instructions

Objectives

To understand the contractual procedures relating to the issue of architect's instructions.

Before the seminar

Briefly explain:

Why it is necessary to have provision for architect's instructions within the contract?

Must the contractor comply with all architect's instructions?

Is there any limit to the architect's power to issue instructions?

Is the employer able to issue instructions to the contractor?

Consider the following events and prepare brief notes on the advice you feel appropriate and

make reference to the appropriate contract clauses:

1. The foundation pits for the structural steelwork had been excavated to a depth of 1.0m

as in accordance with the design specification. During his inspection of the site the clerk

of works directed the supervising foreman (designated as the 'person in charge') to

increase the excavation depth to 1.2m. The contracts manager sent written confirmation,

of the clerk of works direction, to the architect by first class post the next day. The

excavation work was carried out and 14 days after sending the confirmation the concrete

was poured, including extra concrete and shuttering to maintain the levels required forthe steelwork.

Advise the contracts manager whether he is entitled to recover the additional costs

incurred.

2. Whilst the steelwork is being erected the architect decides that for structural reasons

certain cleats should be welded as well as being bolted (the original specification was for

bolting only). The architect informed the steelwork foreman of his requirements and

provided a written schedule identifying the relevant cleats. Unfortunately the steelwork

foreman was transferred to another site the following day and forgot about the architect's

instruction; subsequently the work was not carried out. When the architect inspected the

steelwork some weeks later he was extremely annoyed to discover that his instruction

had been ignored. In a subsequent meeting with the contracts manager the architect

demanded that the additional welding work be executed forthwith, and also informed the

contracts manager that any extra costs now incurred by the contractor as a result of

carrying out the welding at such a late stage in the steelwork programme will be at his

own (the contractor's) expense.

What advice would you give the contractor?




3. During a site inspection the architect discovers that the internal glazed screens to the

entrance foyer have been glazed in 4mm float glass and not tempered glass as required

in the specification. The architect issued a written instruction for the incorrect glass to be

removed forthwith and for it to be replaced with the appropriate tempered glass. The

architect returned to site 7 days later to discover that the glass had still not beenremoved; this caused him some concern because he viewed the existing glass to be a

potential, safety hazard.

Advise the architect as to what contractual procedures he may adopt to ensure the

satisfactory removal of the 4mm glass (for the purposes of this exercise ignore the

implications of the Health and Safety at Work Act and CONDAM regulations).




Seminar Six - Control of the Works; Statutory Undertakers

Objectives

To reinforce the procedures relating to the control of the works and to understand the role of

statutory undertakers within the contractual process.

Before the seminar meeting:

Provide answers and comments for discussion on the following problems:

1. A contract has been agreed for the construction of a new office block on a demolition

site, and it has been agreed that the contractor shall be given possession of the site on

10 December. Unfortunately the client is having difficulty in evicting squatters who

have moved into the recently vacated premises. As a result on 3 December the architect

issued an instruction to the contractor to defer his possession of the site for 5 weeks, and

so enable the client to take the necessary legal action to evict the squatters. The

contractor is ready and prepared to make a start on site and has mobilised his sub-

contractors and placed orders for plant and materials. The contractor has claimed that if the client does not ensure he can have access to site on 10 December then he will

consider the contract to have been frustrated and will have no alternative but to sue for

loss and damages.

Please comment on the situation and the action taken by all parties.

2. On a housing project it was discovered that a number of houses had been

constructed using incorrect blocks on the inner skin of the cavity wall, ie.

internal partition blocks in lieu of thermal blocks. This meant that the dwellings

did not comply with the building regulations re thermal insulation. The houses

have now been second-fixed and decorated, and tenants are waiting to move in.

What advice would you give?

3. The architect has decided that the local electricity board should be employed as

the sub-contractor to carry out the internal re wiring on a housing refurbishment

scheme.

How would this be allowed for in the bill of quantities?

4. During the early progress on a housing site a gas board engineer made a site

inspection prior to their workforce commencing work the following day.

However, during the visit he was very disturbed to find that the gas main service

trench was also to be used for the underground electric main. He immediately

instructed the site agent to commence digging a separate trench for the gas main,

which was to be at least 1m distance from the electric main. If this was not

carried out ready for tomorrow morning the laying of the gas main would have

to be delayed, the gas board could not then guarantee another date for the work.

Delays in the gas main would then delay the road construction that was

programmed to follow, delay here would obviously disrupt site access and

deliveries.

What advice would you give?




Seminar Seven - Defective Work

Objectives

To clarify the powers available to the architect to oversee and monitor the quality of the works.

Materials, Goods and Workmanship 1. A project comprises 100 dwellings, ie. houses, maisonettes and flats. Part way through

the project an in-situ concrete balcony falls from one of the completed buildings. Upon

inspection it becomes apparent that the balcony did not comply with the contract

documents, there was insufficient reinforcement and it had not been tied back to the

structure as required. The contractor maintains that this 'accident' was an unfortunate

one-off error, but the architect is still obviously concerned about the concrete balconies

that have already been installed on 59 of the completed buildings.

Advise the architect as to what action he should take, and what the implications may be

for both the contractor and employer.

2. An extensive external pipe duct has been completed and covered over with pre-cast

concrete cover slabs slightly ahead of programme. When the architect receives notice of

the completion of this work he issues a written instruction that it is his intention to

inspect the pipework, valves and insulation that have just been covered up. In the

instruction the architect states that the cost of removing the pre-cast cover slabs, making

good any breakages and relaying will all be at the contractor's expense as the pipework,

etc. should not have been covered up until he had been given the opportunity of

inspecting the work.

The managing director has asked for your comments prior to his meeting the architect

on site to discuss the above problem. Please provide the necessary advice.

3. During a site inspection of a new hotel complex the architect expressed dissatisfaction at

the standard of workmanship on the feature brickwork boundary walls fronting onto the

main road. He issued the contractor with a written instruction to demolish the

unsatisfactory work and re-execute it. The contractor refuses to carry out the work

unless he receives payment for what he considers to be additional work. He states that

the boundary walls had been completed six months ago, the architect had driven by them

numerous times without any comment and the work had been included in previous

interim valuations and certificates which confirmed that both the quantity surveyor and

architect must have been satisfied with the work. Also the clerk of works had never

expressed any dissatisfaction with the quality of the work.

Please comment.

4. During a site visit the architect expressed his concern at the standard of the scaffolding

currently being used by the contractor. In the opinion of the architect there was a lack of

base plates and toe boards, insufficient bracing and the whole structure was inadequately

tied in to the building. The architect instructed the contractor to remedy these

deficiencies straight away as it created a bad impression of the site. The contractor

responded that items of plant and temporary works were entirely the responsibility of the

contractor as it had nothing to do with the works. If the architect wished the contractor

to adopt a specific scaffolding design then the architect would have to pay for theadditional work.

Please comment.




Seminar Eight - Certificates 1

Objectives

To reinforce the role played by certificates in a construction project and to understand their use

and implications.


Prepare answers to the following:

1. Just prior to issuing an interim certificate the architect notices that the cement and sand

floor screeds are in a poor condition and not of the required standard. He informs the

contractor that he intends to deduct the value of that work from future interim

certificates until the works are remedied.

The contractor claims that the architect has no authority to do this because the quantity

surveyor has already included the work in the previous interim valuations and the

employer had paid for the work, therefore it had been accepted.

Please comment

2. The contractor fails to replace large areas of defective turfing, although he acknowledges

that he is at fault. Eventually the employer (after the correct contractual procedure has

been followed) engages another firm to replace the damaged turf. The cost to the

employer of having this work carried out was £2.000. The quantity surveyor has just

prepared the interim valuation and an interim certificate is to be issued in 3 days time for

the sum of £220,000.How may the money paid out by the employer be recovered?

3. On January 14 the architect issues a practical completion certificate at a time when the

site had been subjected to sub-zero temperatures. The employer takes possession of the

building on January 15 and starts up the heating system. Later that day extensive water

damage is discovered caused by a leaking pipe in the roof space whose joint had been

pulled due to frost action.

The contractor denies all responsibility because the damage occurred after practical

completion.

Please comment.

4. Two weeks after the issue of the practical completion certificate it was discovered that

the stormwater drainage pipes on an hotel complex were unable to cope with the

rainfall. The architect had miscalculated the amount of run-off from the roofs and

hardstandings and had under designed the system. The architect issued the contractor

with a variation order to replace the drainage system with one of a new design.

The contractor has virtually wound down the site and redeployed his workforce

elsewhere, and is reluctant to undertake such work at this stage. What are his

obligations?




5. The contractor has completed one section of the project and the employer has decided

that he would like to move in to that portion of the works. The employer has informed

the contractor of his intentions and asked him to remove his materials that are being

stored in that area. The contractor is not very keen on allowing the employer to move

into this area as he was using it as a secure storage area for expensive and vulnerable

items of plant and materials.

Please comment.




Seminar Nine - Certificates 2


Prepare answers to the following problems:

1. A contractor has completed the works by month eighteen of a twenty-four month

contract. However, the employer is in no position to move into the new premises as he

still has another six months to run on his existing lease and is unable to move his staff

and equipment until month twenty-four. As a result the architect has informed the

contractor that he will issue the practical completion certificate at the date of completion

specified in the contract, ie. month twenty-four. In the meantime the contractor is to

maintain lighting, heating and security as allowed for in his preliminaries.

Please comment.

2. The main building works and majority of external works have been satisfactorily

completed by 15 December which is the contract completion date. However, thelandscaping and grass seeding have not yet been started, and the architect will not issue

a practical completion certificate until all the works are complete. No landscaping can

be carried out at present because the site is snow-covered and the ground is frozen, also

the grass seeding can only take place (in accordance with the specification) during

September/October or March/April. Liquidated damages are being deducted from the

contractor.

Please comment.

3. The employer has approached the contractor and informed him that he intends to use a

vacant part of the site for storing propane gas and oxygen cylinders. The contractor

considers that the cylinders might possibly cause a slight obstruction, but moreimportantly may prove a temptation to the local villains who may damage the site

fencing in their attempts to remove the cylinders.

What advice would you provide?

4. When should the architect issue the schedule of defects?

5. During the rectification period it becomes apparent that the air-handling unit for the

ventilation system is not working properly because of defective sensors. However, the

schedule of defects is not due to be completed for another four months.

What can the architect do?

6. On a contract for 100 houses the liquidated damages have been written into the contract

at £60 per dwelling per week. The employer has taken partial possession of 80

dwellings, but the remaining 20 have not yet been completed 5 weeks after the contract

completion date.

What liquidated damages is the employer entitled to deduct?

7. Six months after the issue of the final certificate the plasterboard ceilings start to show

extensive cracking because the contractor failed to put in all the required wind bracing

and plasterboard noggings. The contractor's response is that he is no longer liable

because the architect has accepted the work through the issue of the final certificate.What advice would you now give to the employer?

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