Designing Buildings - User contributions [en]

Enabling works for construction

2019-01-07T20:28:27Z

MaryBerry:

Enabling works is a generic description for site preparation works that might take place prior to work under the main construction contract.

This could include:

* Demolition.
* Site clearance.
* Tree protection.
* Diversion and/or disconnection of existing site services.
* Geotechnical and exploratory ground investigation.
* Decoupling from existing buildings.
* Decontamination.
* [[Ground_improvement_techniques|Ground improvement and/or compaction.]]
* Excavation of known below-ground obstructions.
* Survey work.
* Creation of access routes.
* Perimeter fencing and security provisions.
* Work to neighbouring buildings.
* Discharging planning conditions that must be satisfied prior to construction commencing.
* Historical architectural investigation fieldwork.
* Access ramps.
* Signage provisions.
* Provision of statutory utilities to the site.

Enabling works might be preceded by 'mobilisation' activities, carried out after the client has selected the contractor, but before works commence on site. These are preparatory activities, such as; preparing method statements, arranging road closures, placing necessary sub-contracts, and so on. See Mobilisation for more information.

NB: NRM1: Order of cost estimating and cost planning for capital building work, defines enabling works as:

'...works executed ahead of the main building contract. Enabling works are employer and/or project team specified works, which might include a mixture of facilitating works and new building works (e.g. site preparatory works such as major demolition, removal of contaminated materials, reptile mitigation measures, and soil stabilisation; together with new sewers, new access road, new drainage, new retaining walls, and minor new building works).'

This is as opposed to facilitating works, which NRM1 defines as:

‘…all components measured and incorporated in group element 0 (i.e. Facilitating works). Includes specialist works which, normally, need to be completed before any building works can commence (e.g. major demolition works, soil stabilisation works and or temporary diversion of mains drainage).’

Enabling Works under contract SBC/Intermediate/Minor

Advantages of having an enabling works contract:

* On site sooner
* Saves a considerable amount of time and money (competitive tender)
* Could have a specialist contractor for carrying out that particular type of works eg. demolishment
* Must ensure that you have planning permission to carry out the demolishment works
* Enables you to carry out any surveys
* Site will be secure by the contractor as it will be their responsibility

Disadvantages:

* The cost and time to make up the two separate contracts
* Process involved in making up the two separate contracts
* If there are two different contractors:

* Liability of the other contractors work
* The hand-over between two different contractors

= Related articles on Designing Buildings Wiki =

* Construction phase plan.
* Demolition.
* Ground improvement techniques.
* Handover to the contractor.
* Mobilisation.
* Site clearance.
* Site layout plan.
* Site waste management plan.
* Temporary works.

[[Category:Construction_management]] [[Category:Construction_techniques]]

Novation

2019-01-07T18:49:42Z

MaryBerry:

[[File:Projectwork.png|link=File:Projectwork.png]]

= Introduction =

Novation is a process by which contractual rights and obligations are transferred from one party to another. Whilst the benefits of a contract can be transferred by assignment, if the parties wish to transfer both the benefits and the burdens then this must be done by a novation agreement.

A novation occurs when there is a rescission of one contract and the substitution of a fresh contract in which the original contractual obligations are carried out by different parties. In building design and construction, novation normally refers to the process by which design consultants are initially contracted to the client, but are then 'novated' to the contractor.

This is common on design and build projects where the design team are appointed by a client to carry out initial studies or prepare a concept or detailed design, but then when a contractor is appointed to carry out or complete the design and construct the works, the design team (or part of it) is novated to work for them.

This can be beneficial to clients as it maintains continuity between pre-tender and post-tender design whilst leaving sole responsibility for designing and building the project with the contractor. Novation effectively over-writes the contractual history to give the impression that the consultant has worked for the contractor throughout the project

NB. The process of novation in itself does not make a contractor responsible for any design carried out for the client prior to novating their contract. To achieve this the building contract needs to specifically state that the contractor has examined the design and adopted it.

= Documentation =

A novation agreement is not possible without consent. If novation and the form of novation agreement were not agreed when the consultant’s was initially appointed, they are under no obligation to agree to be novated. It is essential therefore that the principal contracts between client and consultants and between client and contractors contain express terms obliging the contractor and the consultant to enter into the novation agreement.

To avoid the risk of merely having an agreement to agree which is unenforceable, a specimen form of the proposed novation agreement should be appended to the original contractual documentation.

It is important that any novation documentation is properly drawn up and that it makes clear which services consultants performed for the client and which they will now perform for the contractor, otherwise initial appointment agreements may be rendered meaningless, for example a requirement for the consultant to inspect the contractor's work and report to the client (when they are in fact now appointed by the contractor).

The process of novation can leave designers feeling they have mixed loyalties and there can be difficulty determining where liability lies for design work carried out before novation. If the contractor does not take on the design team effectively as if they had been the employer from the beginning therefore, it may be wise for them to obtain warranties for pre-novation services from the designers. The client may also require collateral warranties from novated designers (see [[Blyth_%26_Blyth_Ltd_v_Carillion_Construction_Ltd|Blyth & Blyth Ltd v Carillion Construction Ltd]]).

= Consultant switch =

As an alternative to novation, there may be a 'consultant switch', which simply transfers the consultants from working for the client to working for the contractor, without altering the contractual history.

When there is a consultant switch, the original agreement between the consultant and the client terminates on appointment of the contractor, and there is then a new agreement between the contractor and the consultant.

This can be seen to provide better clarity of the contractual relationships. However, because the consultant’s liability to the client for pre-switch services remains, some argue that there is a greater risk of conflict of interest.

For more information see: Consultant switch.

-----
Novation is when one party can transfer all its obligations under a contract and all its benefits arising from that contract to a third party. It will bring an end to the original terms of engagement between the employer and the consultant (eg. the architect) and create a new form of agreement between the consultant and contractor. A new contract is created in place of the original one.

Advantage:

This can be beneficial to [https://www.designingbuildings.co.uk/wiki/Clients clients] as it maintains continuity between pre-[https://www.designingbuildings.co.uk/wiki/Tender tender] and [https://www.designingbuildings.co.uk/wiki/Post post]-[https://www.designingbuildings.co.uk/wiki/Tender tender] design whilst leaving sole responsibility for designing and [https://www.designingbuildings.co.uk/wiki/Building building] the [https://www.designingbuildings.co.uk/wiki/Project project] with the [https://www.designingbuildings.co.uk/wiki/Contractors contractor].

Disadvantage:

Once novated, contractually this means the contractor has been the architects employer from day one, as if the employer never existed. This can cause conflict of interest should the employer attempt to seek the architects advise.

-----
Assignment:

This occurs when the original party transfers only contractual right. Assignments are frequently used in relation to collateral warranties, whereby the benefit of a contract is transferred to a third party. An advantage of assignment is that only the benefit of the contract can be transferred by way of assignment, it is not possible to assign contractual burdens (obligations). A disadvantage of assignment is that the original contract is not extinguished so that the assignor remains liable under the contract.

= Related articles on Designing Buildings Wiki =

* Architect.
* Appointing consultants.
* Assignment.
* [[Blyth_%26_Blyth_Ltd_v_Carillion_Construction_Ltd|Blyth & Blyth Ltd v Carillion Construction Ltd.]]
* Collateral warranties.
* Concept design.
* Consultants.
* Consultant switch.
* Designers.
* Design and build.
* Design and build - pros and cons.
* Detailed design.
* Difference between assignment and novation.
* Joinder.
* Privity of contract.
* Procurement route.
* The Contracts (Rights of Third Parties) Act.

= External references =

* PACE [http://webarchive.nationalarchives.gov.uk/20100503135839/http://www.ogc.gov.uk/documents/PACE_-_GACC.pdf Guidance on the Appointment of Consultants and Contractors] P126 guidance on novation.
* [http://www.building.co.uk/news/finance/novation-without-tears/9246.article Building article: Novation without tears.]
* [http://www.kpkqs.com/download/2007%20Aug-KPK%20Research%20Digest%20-%20Novation%20Consultant%20Switch.pdf KPK Research, Design and build, novation or consultant switch?]

[[Category:Appointments]] [[Category:Procurement]]

Employer's requirements for building design and construction

2019-01-07T18:16:09Z

MaryBerry:

[[File:Construction-safety-consulting.jpg|link=File:Construction-safety-consulting.jpg]]

Employer's requirements are typically used on design and build projects (such as Joint Contracts Tribunal (JCT) DB16) or on a traditional contract where the contractor is to design discrete parts of the works.

They provide a description of the client's requirements, including; the specification for the building, the scope of services required from the contractor and an allocation of risk for unknown items. Contractor's proposals are then prepared in response to the employer's requirements. These present the contractor's suggested approach for designing and constructing the building, along with their price.

The employer approaches a contractor with a set of requirements defining what the employer wants. The contractor then responds with proposals. There is then negotiation with the employer and contractor and they in turn settle on an agreed set of contractor’s proposals. The contractor’s proposals includes price and how it can be calculated. The contract can then be executed. The contractor then implements the work. The contractor is totally responsible for the design outlines in the contractors proposals, fabricating the building and co-ordinating and integrating the entire process.

The level of detail in the employer's requirements and the extent of design required from the contractor is very variable. Employer's requirements can range from a very simple specification to a fully developed performance specification and concept design.

The employer's requirements is a very important document as it defines the success of the outcome. The better prepared they are, the keener the price from the contractor and the less likely there will be disputes. If the employer's requirements are not properly developed, the client can incur significant additional costs, as any requirements which are not properly specified, or are changed, will require the issue of instructions for which the client will be charged by the contractor.

Contracts may be awarded on either a single-stage or two-stage tender processes. A single-stage process is suitable where the information presented in the employer's requirements is sufficiently well developed for the contractor to be able to calculate a realistic price.

This can be the case either if a concept design has already been prepared by consultants working for the client, or if the building is very straight-forward, in which case much of the design work might be carried out by the contractor during the tender process.

A two-stage tender is suitable where the employer's requirements are not sufficiently well developed for the contractor to be able to calculate a realistic price. In this case, the contractor may tender a fee for designing the building along with a schedule of rates that can be used to establish the construction price for the second stage tender.

Employer's requirements might include:

* A project overview.
* Scope of services required, including identification of elements requiring contractor design.
* The form of contractor's proposals required.
* Format required for the contract sum analysis.
* Procedures that will be adopted upon award of the contract.
* Parts of the strategic brief (or project brief if this has been developed).
* Prescriptive or performance specifications (or a combination).
* Site information.
* Existing design drawings (if they exist), or perhaps an existing building information model.
* Programme and delivery process (including phasing).
* Proposed form of contract, perhaps including a model enabling amendment making a BIM protocol part of the contract documents.
* Procedures for inspection, testing, commissioning and handover.
* Responsibility for statutory approvals (such as planning permission and building regulations approvals) and information about any existing approvals or consultations.
* Design liability.
* Requirements for warranties.
* Professional indemnity and other insurance requirements.
* Allocation of risk.
* Requirements for samples and items for comment or approval.
* Tender pricing document (or form for contract sum analysis).
* Pre-construction Information.
* Client policies (such as environmental or health and safety policies).
* Collaborative practices.
* Employer's information requirements for building information modelling.
* Request for details of named or nominated sub-contractors.
* Any requirement for consultants to be novated or switched to the contractor once the contract has been executed.
* Targets for post-occupancy evaluation.

Once the client has received the contractor's proposals, there is likely to be period of negotiation during which any inconsistencies between the contractor's proposals and the employer's requirements are discussed and either the contractor's proposals or the employer's requirements are amended to ensure agreement between them. This is an important part of the tender process as it is not always entirely clear which document prevails after the contract has been entered into.

Dealing with a complaint:

If the client alleged that a defect was due to our negligent design. The first action would be to contact the Insurance company and warn them of a possible claim for negligence being made.

Personal Indemnity Insurance is required by Architects under the ARB and RIBA codes of conduct, and under clause 7.4 of the RIBA standard conditions of appointment for an Architect 2012. Its purpose, in part, is to protect the Architect from claims in negligence . Clause 7.3 in the RIBA standard conditions of appointment for an Architect 2012, provides a limit of the Architects Liability with a Net Contribution clause. This is an express term in the contract and only allows a claim of damages to be brought against them for their fair share of losses incurred.

For example, a judge may find that 70% of the damage is down to poor workmanship from the contractor, with 30% resulting from negligence design. The architect can only be liable for 30% of the work. If this clause was not in the contract, it would leave the architect open to very large claims from the client for the full amount.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* BIM protocol.
* Client requirements.
* Design and build.
* Consultant switch.
* Contractors proposals.
* Employer's agent.
* Employer's information requirements (BIM).
* Novation.
* Procurement route.
* Request for proposals (for the appointment of consultants).
* Two-stage tender.
* What should be included in a scope of work?

=== External references ===

* [http://www.building.co.uk/data/procurement-employer%E2%80%99s-agents/3080960.article Building .co.uk article on employer's agents.]
* Workplace concepts: [http://www.workplaceconcepts.co.uk/faq/1745-developing-your-employers-requirements-before-appointing-a-contractor.htm Developing your Employer's Requirements before appointing a contractor].

[[Category:Client_procedures]] [[Category:Procurement]]

Purpose of Tendering and Procedures

2019-01-07T13:36:50Z

MaryBerry:

This article needs more work. To help develop this article, click 'Edit this article' above.

= Introduction =

A tender is a submission made by a prospective supplier in response to an invitation to tender issued by an employer. It makes an offer for the supply of goods or services.

There are two purposes in tendering:

# To select a suitable contractor at a suitable time
# The offer of a price is required from the contractor at an appropriate time. This offer will be the basis for the ensuing contract.

Along with the conditions, the contract drawings and bills of quantities (if used) make up the contractual agreements.

There is no direct relationship between the type of tendering procedure and the form of the contractual agreement. The tendering process marks the beginning of the contractual relationship.

Main methods:

1. Open Tendering

2. Selective tendering - single or two stage

3. Nomination / negotiation

4. Serial

5. Joint ventures

= Legal obligations =

=== The parties’ obligations ===

* The employer’s request for tenders is an invitation to treat and therefore the employer is under no legal obligation to accept any tender.
* The cost of tendering is generally borne by the contractor.
* Where the preliminary work goes beyond what is normally expected, an employer may agree to make payment.
* A person who invites another to tender with no intention whatsoever of accepting that tender can be liable for any expenses that the latter incurs.
* An employer who expressly promises to accept the lowest tender will be bound by that promise, if that tender complies with any conditions.
* An employer may be under an implied obligation to give proper consideration to any tender submitted in accordance with published conditions.
* Local authorities are required by the Local Government Act 1972 to publicise formal contracting procedures, normally involving competitive tendering.
* Local authorities are required to give reasons for their procurement decisions and are generally prohibited from taking into account non-commercial considerations in reaching those decisions.

=== European Union control on procurement in the public sector ===

* European Treaty (which applies to all public sector contracts): prohibits discrimination within the European Union on grounds of nationality and restrictions on the free movement of goods or services.
* A complex array of European Union Directives lay down rules governing the procedures for the awarding of contracts by any public body where the contract value is greater than specified values. See OJEU for more information.

= Open tendering =

* Traditional method
* Advert placed and interested suppliers can apply for documentation
* Advert or documentation may state that the employer is not bound to accept the lowest tender, or indeed any tender
* It is an indiscriminate request for tenders, and there is no method of ensuring high quality building
* Preparation places unnecessary burden of time, effort and expense on the industry as a whole
* Its use has been declining in the UK, but because of the effect of certain European Union legislation, its use in the public sector is increasing

= Single stage selective tendering =

* A limited number of contractors (generally no more than six) are pre-selected to tender for the work
* An employer who builds regularly may have an approved list of contractors
* If the pre-selection process has been done properly, any of the contractors is satisfactory to the employer
* Therefore tenders may be considered on price alone

=== Selection of contractors ===

* A short list of suitable tenderers should be drawn up either from the employer’s approved list of contractors or from an adhoc list
* The number of tenderers invited should be a maximum of six
* One or two further names should be added to replace any firms that do not accept the preliminary invitation
* Points to be considered:

# The firm’s financial standing and record
# The firm’s recent experience of building at the required rate of completion
# The firm’s general experience and reputation in this area
# The firm’s competence and resources in respect of statutory health and safety requirements
# The firm’s approach to quality assurance procedures
# Whether the management structure of the firm is adequate for this type of contract
# Whether the firm will have adequate capacity at the relevant time

* This can be achieved by means of the NJCC Standards Forms of Tendering Questionnaire
* Lists should be periodically reviewed to exclude firms whose performance has been unsatisfactory and to allow the introduction of suitable additional firms

Advantages of Single Stage:

* Ensures only capable and approved firms submit tenders
* Competitive pricing - the full scope of work is priced in competition with other bidders
* Risk allocation - the client and the contractor have a clear statement of risk allocation in the contract. Avoidance of cost escalation during second-stage tendering. The contractor is not given an opportunity to revisit the pricing.
* Cost certainty - provides the client with an early contractual commitment on price for the whole works.
* Overall speed of the project - timescales are known.

Disadvantages of Single Stage:

* Design team do not have the benefit of the contractors experience at a stage in the design when it would be most useful.
* Issues such as continuity of work, production cost savings, build ability and subletting specialist items can have a significant impact on the final price of a project.
* The price is only as good as the information provided.
* Competitive pressure may encourage tenders to take risk in their pricing.
* Sequential design and construction removes opportunities for acceleration of the overall programme.

Problems with Single Stage tender:

Proceeding to tender with unresolved design issues will eventually result in:

* Communicating different levels of design completion in tender documentation.
* Incomplete or contradictory tender information
* Errors or omissions in the contractors tender
* Qualifications or discrepancies in the contractors submission that are now identified prior to the acceptance of tenders.

Successful single stage tendering include:

* Limiting the contractors risk by undertaking design reviews for completeness, build ability and co-ordination before issue of tender; preparing comprehensive tender documentation; minimising work that will be designed during construction
* Selecting the right contractor by building enough time into the programme to allow for post tender evaluation of tenders
* Managing the design process to deliver certainty by allowing time in the pre-construction programme for the completion of design work and production information
* Design responsibility - clear communication of the extent of the design responsibility allocated to the contractor and making sure designers stay strictly within their scope of work

=== Preliminary enquiry ===

* In order that the contractors may be able to decide whether they will tender and to anticipate the demands on their tendering staff, each firm should be sent and should reply to a preliminary enquiry for invitation to tender
* It should include the following information:

# Project name
# Type and function of building
# General description of the project
# Employer’s name
# Employer’s professional team
# Location of site
# Approximate cost range
# Number of tenderers it is proposed to invite
# Nominated sub-contractors for major items
# Form of contract and any proposed amendments
# Examination and correction of bill (Alternative 1 or Alternative 2)
# Anticipated date of possession
# Period for completion of works
# Approximate date for dispatch of tender documents
# Tender period
# Details of guarantee requirements
# Particular conditions applying to the contract

=== Interview ===

After the responses to the preliminary enquiry letter have been received, each contractor suitable should be interviewed in order to:

* Determine that the forms of construction to be used will in general be suitable
* Discuss and establish the organisation of the work and the time required for tendering
* Discuss and establish (if required) the nature and extent of the design indemnity insurance to be taken out by the contractor
* Provide any further information required by the contractor
* Make a final judgement on the competence of each firm’s competence

=== Sending out documents ===

Tender documents will include:

* Checklist of drawings and documents
* Specification
* Tender form and instructions for their completion
* Complete sets of drawings
* Or the bills of quantities with a selection of drawings
* Pre-tender health and safety plan
* Proposed programme dates
* Specific contract terms and conditions
* Details of and bond and/or guarantees required
* Covering letter

The covering letter should include:

* Invitation to tender (if not already sent)
* List on enclosures
* Date and place for delivery of tenders
* Whether the site is open for inspection and if so what arrangements should be made to visit
* Request for acknowledgement
* Also enclosed should be an envelop for the delivery of the tender already addressed and marked ‘tender for…’ on the face

Time for tendering

* As long as possible
* Determined in relation to the size and complexity of the job
* Four weeks should be regarded as the minimum time for tender
* Contractors tendering on a specification and drawings will need longer than when bills are supplied

The formulation of bids

* Where no bills are supplied, the tenderers must prepare their own quantities from a complete set of drawings with the guidance of the specification
* Estimating, (the contractor formulating rates for the items in the bills), does not:

# take account of the way in which the costs are incurred (brickwork on second floor is cheaper than brickwork on seventeenth floor)
# necessarily mean that the actual rates are the same as those in the in the bills

* If the contractor does not want to tender (too busy or not appropriate work), they may submit an inflated ‘cover bid’
* If the contractor is short of work they may be satisfied with a low profit or no profit at all
* If the contractor does want the job, but the contract is risky, they may add a premium to the rates
* The contractor’s cash flow has a significant effect:

# If the project is at the end of a tax year, they may reduce the rates at the beginning of a project and increase them at the end – back loading
# Or the contractor may wish to get cash quickly to meet liabilities and will therefore inflate the rates at the beginning – front loading

* Illustrates the danger of using bill rates to value variations

=== Withdrawal of tender ===

* As the contractor’s tender is merely an offer, it may be revoked at any time before it has been accepted
* This can cause problem for contractor’s relying on sub-contractor’s bids when formulating their own tenders

=== Opening of tenders ===

* When returned, the marked envelopes will be left unopened until the time stated for delivery has passed and a check has been made that all have been delivered.
* Bills may be returned in separate envelopes and only the bill accompanying the lowest tender will be opened.
* A list is prepared for the client in order of price, and the contract period may also be entered against the contractor’s name if this has been requested from the contractor
* As soon as any tender is accepted, all tendering contractors must be notified

=== Examination of a priced bill ===

* The QS will make a mathematical check and generally look through the rates for any possible serious errors or omissions in the pricing
* If there are none, the tender can be recommended for acceptance
* If mistakes are found, the contract administrator, employer and contractor must be notified
* Under Alternative 1:

# The contractor will either be invited to stand by the tender price or to withdraw
# If they withdraw, the next lowest bid may be considered
# If they stand by the tender, an endorsement should be added to the priced bills indicating that all rates and prices inserted therein by the tenderer are to be considered as reduced or increased in the same proportion as the correct total or priced items exceeds or falls short of such items

* Under Alternative 2:

# The contractor should be given the opportunity of confirming their offer or amending it to correct genuine errors
# Should they elect to amend the offer and the revised offer is no longer the lower, the offer of the firm now lowest in the competition may be examined
# If the tenderer elects not to amend the offer, an endorsement will be required as above

=== Negotiated reduction of tender ===

* Should the tender under consideration exceed the employer’s budget, the recommended procedure is for a reduced priced to be negotiated with the tenderer, based on agreed changes to the specification or the quantity of work

=== Preparing contract documents ===

* Completing the articles or agreement is left to the contract administrator or QS
* All documents should be marked for identification and signed by both parties

= Two stage selective tendering (negotiated tendering) =

* To separate the process involved with selection from the process for determining the pricing mechanisms
* Not to involve the contractor with responsibility for design, but to get the contractor involved in an advisory capacity before the scheme has been fully designed

Reasons for selecting a two-stage tender:

* Achieving early appointment of the main contractor ahead of the completion of the design, and potentially a quicker start on site
* Securing the involvement of a contractor for pre-contract services on a competitive basis, to obtain input on build ability, sequencing and subcontractor selection.
* Transferring a greater degree of design and other construction risk to the contractor
* If the client has a genuine need to follow a two-stage route, because of programme constraint

=== First stage ===

The first stage competition is typically based on deliverable including a construction programme and method statement, detailed preliminaries pricing, overheads and profit.

* The process for the selection of the contractor and for the establishment of a level of pricing for subsequent negotiation
* Competitive selection takes place based on a minimum amount of information needed to:

# Provide a competitive basis for selection
# Establish principles of layout and design
# Provide unambiguous pricing documents related to preliminary design and specification information in forms sufficiently flexible for a basis for pricing the second stage tender
# Define obligation, conditions of, and programme for second stage procedures
# State the conditions of contract

* When the first stage procedure has been completed and a contracted selected for the second stage, no contract for the execution of the work will have been entered into
* The costs incurred in preparing and submitting the first stage will be borne by the tenderers
* Tenderers should not be required to submit a response to the health and safety plan with their first stage tenders: the tenderer whose bid is most favourable should be required to submit its response as soon as possible

=== Second stage ===

The second stage is concluded with the agreement of a lump-sum contract sum, typically based upon competitive tender of between 70 and 80% of the value of work packages.

* The process of finalisation by the employer’s professional team in collaboration with the selected contractor of the design and development of production drawings and the health and safety plan for the whole project and the preparation of bills of quantities for the works proceed on the basis of the first stage tender
* The result is an acceptable sum for inclusion in a contract, and completed contract documentation is prepared in conjunction with the contractor
* If the parties fail to proceed beyond the second stage, procedures, established during the first stage, will need to include equitable arrangements for reimbursement of the contractor’s participation in the second stage
* Used for complex projects

What are the advantages of 2 stage tendering

* Early involvement of the contractor
* Encourages collaborative working
* Potential for earlier start on site
* Greater client involvement in selecting the supply chain
* Contractor can help identify and manage risk

What are the disadvantages of 2 stage tendering?

* Cost certainty may not be achieved before construction starts
* Additional pre-construction fees for the contractor
* Contractor could take advantage of second stage negotiation - increase costs
* Potential for parties to not agree contract sum - risk - cost of retendering

= Selective tendering for design and build =

* The terms of any consultant switch should be communicated to the tenderers in the preliminary enquiry
* In order to limit unnecessary work by tenderers, the employer should include in the requirements all information about the site and building in their possession

=== Selection of tenderers ===

* Preliminary list should comprise six to eight contractors
* Final list should (in additional to criteria outlined above) take into account:

# Whether the firm has had recent experience of designing and constructing to type of building envisaged by the Employer’s Requirements
# Whether the firm’s customary design capability is in-house and if not, what method will be used

* Final list should be limited to no more than three firms, due to the high costs involved in in preparing tenders for work with contractor’s design involvement
* If two stage tendering is used, the list may be increased to no more than five firms with either one or two going through to the second stage

=== Employer’s Requirements ===

The Employer’s Requirements should state the priority of the following items that will determine the successful tender:

* Appearance
* Functional requirements
* Capital cost
* Expected lifespan of the building
* Flexibility of use
* Quality
* Running and maintenance costs
* Time of construction
* Any other factors

=== Cost of tendering ===

Where substantial high quality design work is required or excessive competition is introduced, it may be in the employer’s interests to offer payment fro the preparation of unsuccessful competitive tenders

=== Single stage or two stage? ===

Most employers would benefit from a two stage procedure that would enable post-tender changes and development to the design and cost.

In exceptional circumstances where the employer’s requirements are well defined, then single stage tendering may be used

=== Extent of information ===

A full set of drawings and specification should not be expected at tender stage. Therefore the employer must indicate the minimum require to enable him to select a contractor

Tenderers should be instructed to indicate in their tender the period they require to elapse between the acceptance of their tender and the commencement of work on site to enable them to complete production drawings and obtain necessary statutory approvals

=== Tender period ===

Depends on the nature of the Employer’s requirements and whether a single stage or two stage procedure is being followed. For most projects, the period is three to four months

=== Assessment ===

The evaluation should be carried out in accordance with the criteria specified in the preliminary enquiry The best tender, which may not be the lowest, should be accepted

=== Two stage tendering ===

The process of finalisation of the contractor’s proposals resulting in an acceptable basis for the contract. Where the employer fails to reach an agreement with the selected contractor, it will be necessary to either recommence the second stage procedures with another tenderer or invite further first stage competitive tenders

= Negotiation =

* Newer forms of procurement (eg construction management and management contracting) demand a less adversarial approach
* The inherent flexibility demanded means no standard method for negotiating a contract
* Serial contracting: contractors are asked to bid for a project on the basis that if they build this one satisfactorily, others will follow and the same bill rates will be used - partnering
* Most effective way of selecting a contractor for non-traditional approaches
* Familiarity between employer and contractor is important factor

= Joint ventures =

* For projects that are so complex that the distribution of liability becomes a problem
* Involves all parties taking on joint and several liability for the design and/or execution of the project
* The agreements must be carefully examined and backed up by bonds or guarantees

= Points to consider when preparing a Tender enquiry questionnaire to be sent to various contractors =

Tender enquiry questionnaire

* Name of firm
* Size of firm
* Turnover of firm
* Evidence of financial stability
* Location of firm
* Recent experience of this type of project
* References from previous clients/architects
* Recent experience of this type of time scale
* Health and safety records
* Availability of resources for that time period
* Information on key personnel to be working on project
* Management structure of firm
* Quality assurance procedures within the firm
* Details of liability insurance

= Points to consider when preparing an agenda and objectives for a structured interview to establish a shortlist of contractors who will be invited to tender. =

Agenda for interview

* The information in the questionnaire
* Location of project
* Nature of site/ existing buildings
* Restrictions over site
* The firm’s general approach to the site conditions
* Description of the required retail development including cost
* Experience of the firm in large retail developments
* Discussion as to the type of contract and method of procurement that will be used
* Experience of the firm with this type contract and procurement method
* Whether there will be any contractor’s design
* Health and safety records and initial plan for the project
* Resource available for the project
* Initial thoughts as to programme and phasing
* Procedure to be adopted for the examination and correction of any errors in the tender
* Approximate date for despatch of tender documents and tender period
* Any additional questions that the firm may have

Objectives

* To establish whether the firm has the requisite skill and experience for this type of development
* To judge their competence
* To ascertain whether they have the adequate resources necessary to carry out the project
* To meet the firm face to face
* To give the firm an opportunity to ask any questions about the project, client and design team

List of attendees

* Client
* Architect and/or contract administrator and/or quantity surveyor
* Director of construction company
* Key personnel who would be involved with project

Bonds and/or parent company guarantees are commonly used to protect the financial interests of the employer.

What are bonds?

* Bonds are financial assurances that can be purchased from finance institutions such as banks or insurance company by contractors to back up their tenders

What are parent company guarantees?

* Parent company guarantees are financial guarantees under which the contractual performance of one company within a corporate group is underwritten by other members of the group to back up the contractor’s tender

In what ways do they provide security?

* Bonds and/or guarantees can be provided to guarantee every aspect of the contractor’s performance
* They provide security for the employer in that in the event of insolvency of the contractor
* Bonds can be provided in return for early release of retention money, so that the employer is protected against any defects that he may later discover
* Advance payment bonds protect the client in the event that the contractor fails to fulfil obligations that have already been paid for
* Bonds can also be requested by contractors from subcontractors to protect their ability to deliver the project for the tender sum in the event that their tender was based upon the subcontractor’s tender and the subcontractor has subsequently withdrawn

How are the requirements for these included in the tender documents?

* The need for a bonds and/or parent company guarantee would be stated in the preliminary enquiry for invitation to tender
* Details of the bonds and/or parent company guarantees would be outlined in the tender package

How would you deal with errors in tender returns?

Depends on which alternative chosen on instructions to tenders:

* • Alternative 1 – the QS should amend computing errors arriving at a new tender sum. They should inform the contractor who can choose to either confirm or withdraw
* Alternative 2 - QS should amend computing errors arriving at a new tender sum. They should inform the contractor who can choose to confirm, amend or withdraw.

[[Category:Articles_needing_more_work]]

Procurement route options pros and cons

2019-01-07T11:29:32Z

MaryBerry:

This article needs more work. To help develop this article, click 'Edit this article' above.

See also: procurement route.

= Traditional contract =

Good for:

* Quality – full design pre tender
* Design flexibility – variations & instructions
* Specialist subcontractors – Named specialist update to standard building contract sbc11
* Design control – through the architect / contract administrator
* Contractor's Designed Portion – such as mechanical and electrical engineering
* Cost – there may be lump sum cost benefits unless are multiple changes made

Not suited for:

* Time – require full detailed pack pre tender
* Cost – not a benefit if many changes made
* Incomplete drawings – lead to delay, costs and claims of negligence

Contracts: JCT Standard Building Contract 2016, JCT Intermediate Building Contract 2016, JCT Minor Works Building Contract 2016, NEC3 ECC Option A

JCT Standard Building Contract 2016:

* Lump sum payment
* CDM
* Contractor's Designed Portion
* Named subcontractors
* Variations / instructions
* Retention
* Collateral warranties
* Termination provisions
* Pre-agreed alternative dispute resolution procedures.

= Design and build =

Good for:

* Time – Fast track, overlap of design and construction
* Cost – lump sum / Guaranteed maximum price
* Single point of responsibility – Contractor design and build responsibility
* Has good price certainty
* Easy to arrange changes in the design
* Novation – can benefit quality.
* Low risk for the client
* Variations can be accurately valued

Not suited for:

* Quality – cheapest route to meet contract specification can lead to low quality products/ build quality.
* Design flexibility – request for changes will have cost/time implications
* Contractor carries risk for construction
* Client exposed to claims for buildability
* Design could affect the buildability of the project

Contract: JCT Design and Build 2016, JCT Major Project Construction Contract 2016, NEC ECC Options A-E

JCT Design and Build 2016:

* Contractor to complete design and carry out the works.
* Lump sum / Guaranteed maximum price
* CDM
* Collateral warranties
* Termination provisions
* Retention
* Pre-agreed dispute resolution procedures

= Management contracting =

Good for:

* Complex / specialist projects – individually appointed packages to best suited sub-contractor
* Potential cost saving – competitive tender
* Time - it is possible to overlap design and construction
* Quality – each package subcontracted to specialist
* Design flexibility – changes can be made throughout construction, although there are potential cost implications.

Not suited for:

* Inexperienced clients – risk high
* Fixed cost - Prime cost basis per package.
* Lack of available specialists – would leave gaps in work to be undertaken.

Contract: JCT Management Building Contract 2016

* Prime cost contract
* Collateral warranties
* Sustainability
* Collaborative working
* Third party rights – such as the funder / contractor

= Construction management =

Good for:

* Complex / specialist projects – individually appointed packages to best suited sub-contractor
* Time - It is possible to overlap design and construction

* Design flexibility – changes can be made throughout construction, although there are potential cost implications.

* Potential cost saving – competitive tender
* Quality – each package subcontracted to specialist
* All building types
* Efficiency – Early appointment of the construction manager to aid programme

* Inexperienced client – risk high as appointing trade contractors
* Fixed cost - Prime cost basis per package.
* Lack of available specialists

Contracts:

JCT Construction Management Appointment 2016, NEC ECC Option F, Construction Management Trade Contract 1999

JCT Construction Management Appointment 2016:

* Employer - trade contractor
* Lump sum
* Collateral warranties and third party rights
* Retention

CM/A

* Employer - construction manager
* Collateral warranties
* Sustainability

[[Category:Articles_needing_more_work]] [[Category:Procurement]]

Letter of intent

2019-01-07T10:00:01Z

MaryBerry:

See the [http://www.designingbuildings.co.uk/wiki/Talk:Letter_of_intent discussion page] for a detailed debate about the pros, cons and content of letters of intent.

[[File:Letterofintent.jpg|link=File:Letterofintent.jpg]]

= Introduction =

A letter provided by the employer to a contractor in which the employer indicates an intention to enter into a formal contract for the works described and asks the contractor to start work before formal contracts are agreed.

Usually occurs when the employer is not in a position to formally commit to carrying out a project, but wishes to start some works to enable the project to be completed within a particular timescale if it does proceed. It gives comfort that the process is moving towards formed contract, speeds things up.

A letter of intent is a document expressing an intention to enter into a contract at a future date but creating no contractual relationship until that future contract has been entered into. A letter of intent is not an 'agreement to agree'.

It is important to bear in mind that 'letter of intent' is a term of commercial convenience and not a term having a substantive legal meaning, as for example 'subject to contract’. Each letter of intent must be construed on its own particular meaning.

It is suggested that the legal effect of a letter of intent may fall into one or more of the following categories:

* The expression of an intention to enter into a contract at a future date which does not give rise to any legal obligation, whether in contract or quasi ex-contractu (as if from a contract) on a quantum meruit (a reasonable amount for labour and materials, payable even in the absence of an enforceable agreement); or
* The expression of an intention to enter into a contract at a future date which does not give rise to any liability in contract but does not exclude or negate a right to recover reasonable expenditure on a quantum meruit; or
* The creation of a conditional or ancillary contractual obligation which may, but not necessarily will, be subsumed by a wider contractual obligation upon formal contracts being exchanged; or
* A legally binding executory contract in that the letter of intent is an offer capable of being accepted or is the acceptance of an offer.

Letters of intent are most commonly sent at a time when it is anticipated that the recipient will be incurring costs and overheads. They can be used as an interim arrangement to mobilise construction prior to a formal contract being executed, but they should never be seen as an alternative to a full contract and should place a limit on expenditure and the client’s liability prior to the contract being put in place.

-----
For a letter of intent to be binding, there must be the three essential elements of a contract; agreement, intention and consideration.

Agreement: Certainty as to the key terms. Make sure it contains clear details of the scope of work to be carried out under it. It should set out the period for which it is valid and limit the amount to be spent under it.

Consideration: Ensure the letter of intent includes an obligation on the employer to make payment for the work instructed and, if possible, make it clear how that will be calculated.

Intention: An intention by both parties to enter a contractually binding agreement. The document must be signed by both parties.

Process after a letter of intent:

* Both parties should agree a formal contract as a matter of urgency
* Both parties should agree key dates and get regular, perhaps weekly cost updates to ensure limitation periods and monetary caps set out in the letter of intent are not exceeded.
* Employers should not allow work to continue when a letter of intent has expired
* Contractors should not incur any costs in excess of any financial caps stated in the letter of intent without getting the employers agreement before doing so.

= Content =

A comprehensive letter of intent should address the following:

* Client authorisation to the contract administrator to represent them.
* Acceptance of the contractor’s offer and definition of the project.
* The agreed contract sum.
* Reference to the tender documents and subsequent amendments (with dates).
* Instruction to proceed on a certain date.
* Site possession date.
* Contract completion date (including details of any phases).
* A full description of the proposed form of contract, including warranties and performance bonds.
* A fall-back date for signing the contract (this is important, as beyond a certain time in the progress of the works it may no longer be in the interests of the contractor to sign the contract).
* Direction as to whether the contract will be executed by Deed, under seal or under-hand.
* Restriction of the work authorised by the letter of intent, by proceeding with which the contractor has fully accepted the terms of the letter of intent.
* Terms and provisions for cancelling the letter and determining the works at any time prior to signing the full contract - specifically, the terms will limit the client’s liability for costs and exclude claims for loss of profit, opportunity, good will, indirect or consequential losses.
* Provision for the contractor to have access to the site under licence only, with no (tenancy) rights to possession and limited rights described in a separate licence that sets out conditions and the licence period.
* Client and agents access provisions during the licence.
* Insurance provisions and indemnification.
* Agreement that there are no rights to assign the works.
* Disputes resolution procedures.
* Liquidated and ascertained damages to be applied to late completion.

= Legal and negotiating position =

In July 2012, a legal judgement relating to letters of intent was made in the case of Ampleforth Abbey Trust v Turner & Townsend Project Management.

Turner & Townsend were appointed as project managers for a number of projects at Ampleforth College. On the advise of Turner & Townsend, the contractor, Kier Northern, was appointed on the basis of a letter of intent to allow an early start on site. In the event, 8 letters of intent were written and the contract itself, despite being substantially agreed, was never signed.

The contractor was four months late in completing the works, but as there was no contract in place, the settlement that was reached was not as favourable for Ampleforth as it might have been. Ampleforth began proceedings for professional negligence against Turner & Townsend. The judge awarded damages to Ampleforth on a ‘loss of chance’ basis because the letter of intent failed to make provision for liquidated and ascertained damages, although such a provision was set out in the proposed contract.

In essence the advice for clients is to avoid letters of intent because they do not cover all the eventualities set out in a standard contract. They also reduce the pressure for a contractor to sign a more comprehensive set of obligations and allow the contractor an opportunity for back-negotiation from a position of strength, for example, if ground works have thrown up unforeseen risks.

NB: Tender documentation should set out proposed contract documentation and terms so that there is no reason for agreement of the contract to be delayed.

= Other case law =

A letter of intent is to be distinguished from a provisional contract. This distinction was considered in the case of Hall & Tawse South Ltd v Ivory Gate Ltd. Judge Thornton QC described the comparison in the following terms:

'A letter of intent is usually an [sic] unilateral assurance intended to have contractual effect if acted upon, whereby reasonable expenditure reasonably incurred in reliance upon such a letter will be reimbursed. Such a letter places no obligation upon the recipient to act upon it and there is usually no obligation to continue with the work or to undertake any defined parcel of work, the recipient being free to stop work at any time.

'The effect of such a letter is to promise reasonable reimbursement if the recipient does act upon it. However, the letter in question (in the instant case) ... is one which imposes obligations on both parties. It requires the plaintiff to commence the works, being a defined package of work and contract administration. The plaintiff had an option of whether to start or not but, having started, the plaintiff was under an obligation to continue with the works and not to stop, unless the defendant appointed another contractor or gave notice abandoning the work or the contract was superseded by one of the two successor contracts envisaged by the letter. I propose, therefore, to refer to this contract as "the provisional contract".’

In the case of OTM Limited v Hydranautics (1981) the court found that OTM's telex stating '…it is our intention to place an order for one chain tensioner. A purchase order will be prepared in the near future but you are directed to proceed with the tensioner fabrication on the basis of this telex…’, was a letter of intent and did not constitute an acceptance of an offer.

In contrast to OTM, the court found there was a binding contract in Wilson Smithett & Cape (Sugar) Ltd v Bangladesh Sugar & Foods Industries Corporation.

The plaintiffs who were sugar merchants responded by a tender to an invitation sent by the defendants, a nationalised Bangladeshi Corporation. The tender was for the sale of 10,000 tons of sugar cane. The plaintiffs were the second lowest bidder. The Bangladeshi Government decided to import a further 10,000 tons and the defendants were instructed to place an order with the second lowest tenderer, i.e. the plaintiffs, if they were agreeable to matching the successful tenderer's bid.

Negotiations were conducted between the plaintiffs and the defendant; eventually the plaintiffs sent to the defendant a letter of offer, which was to remain open until 2 pm local Dacca time on 12 June 1991. The same day the defendants issued a letter of intent, which stated:

'We are pleased to issue this letter of intent to you for the supply of the following materials ... all other terms and conditions as per your ... offer dated June 12th .. ‘

The defendants decided not to proceed with their purchase and they contended that their letter of 12 June was nothing more than an expression of a future intent to enter into a contract. The court rejected this submission and held that the letter, although it used the phrase ‘letter of intent', was nevertheless intended to have a contractual significance and effect; accordingly there was a binding contract between the parties.

Similarly, in Turriff Construction Ltd v Regalia Knitting Mills Ltd the court held that a letter of intent had a contractual effect.

The concept of 'ancillary contract' or 'if contract' was considered in the case of British Steel Corporation v Cleveland Bridge & Engineering Company where the court held that a letter of intent had no contractual effect, as the effect of the material letter was to ask the recipient, British Steel, to proceed immediately with the work pending the preparation and issuing of a form of sub-contract, being a document which was still in the state of negotiation not least on the issues of price, delivery dates and applicable terms and conditions. Of an 'if contract' Goff J stated:

'As a matter of analysis the contract (if any) which may come into existence following a letter of intent may take one of two forms: either there may be an ordinary executory contract, under which each party assumes reciprocal obligations to the other; or there may be what is sometimes called an "if" contract, i.e. a contract under which A requests B to carry out a certain performance and promises B that, if he does so, he will receive a certain performance in return, usually remuneration for his performance. The latter transaction is really no more than a standing offer which, if acted upon before it lapses or is lawfully withdrawn, will result in a binding contract.'

The possibility of an 'if’ contract was also considered, but rejected, by the court in A. Monk Construction Limited v. Norwich Union Life Insurance Society.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* [[Ampleforth_Abbey_Trust_vs_Turner_%26_Townsend_Project_Management_Limited|Ampleforth Abbey Trust vs Turner & Townsend Project Management Limited]].
* Appointing consultants.
* Construction contract.
* Contract conditions.
* Contract engrossment.
* Contract execution.
* Essentials of a contract.
* Invoice.
* Letter of appointment.
* Liquidated and ascertained damages.
* Professional Indemnity Insurance clause in conditions of engagement.
* Purchase order.
* [[Should_You_Do_Preparatory_Works_Before_Agreeing_to_a_Final_Contract%3F|Should You Do Preparatory Works Before Agreeing to a Final Contract?]]
* Template letter responding to request for bespoke appointment contract.
* Tender documentation.

[[Category:Contracts_/_payment]] [[Category:Procurement]]

Dispute resolution

2019-01-06T15:57:53Z

MaryBerry:

Construction projects are usually long-term transactions with high uncertainty and complexity, and it is impossible to resolve every detail and foresee every contingency at the outset. As a result, situations often arise that result in disputes between the parties to the contract.

The likelihood of disputes arising can be reduced by:

* Preparing clear, unambiguous and consistent project information with defined information release schedules.
* Properly assessing risks.
* Ensuring funding is in place.
* Selecting an appropriate procurement route with suitable allocation of risk.
* Using standard, unmodified forms of contract.
* Ensuring the project team have the appropriate skills and resources.
* Minimising changes.
* Agreeing realistic time schedules with consistent workloads.
* Programming works so there are no unnecessary delays.
* Managing third party dependencies.
* Adopting collaborative working practices.
* Maintaining clear lines of communication and keeping good records.
* Issuing warnings where there may be problems.
* Tackling and settling disputes quickly.
* Taking action to mitigate problems.
* Not exaggerating claims.

Where disputes do occur, the parties to the contract should first attempt to resolve them amongst themselves, as this is likely to be the fastest and least expensive solution, allowing the project to continue without disruption and maintaining good working relationships.

Where this is not possible, it may be necessary to seek a third party to resolve the dispute.

However, taking disputes to the Courts can be expensive, complex, adversarial and time consuming. This may not be appropriate on construction projects, where a quick resolution may be needed so that the works can proceed and where it is important that the parties to the contract maintain a good working relationship.

As a result, construction contracts usually include provisions for the resolution of disputes by agreed alternative dispute resolution procedures (ADR). These are typically less formal than court proceedings and should be faster, less expensive and less times consuming, allowing the parties to maintain a good relationship.

Construction contracts are also subject to statutory schemes such as the Housing Grants, Construction and Regeneration Act, which impose ADR in the absence of appropriate contractual terms.

ADR typically involves procedures such as mediation, adjudication, arbitration, or a combination. Large or complex projects may have additional tiered dispute resolution procedures with obligations to negotiate in good faith, dispute resolution boards, steering committees and partnering meetings. For more information see: Alternative dispute resolution.

Where court action is necessary, the Technology and Construction Court (TCC) is a specialist court, which deals principally with technology and construction disputes. However, in many cases, there will be a compulsory Pre-Action Protocol to encourage the frank and early exchange of information about the prospective claim and any defence to it. This can enable the parties to avoid full court proceedings by agreeing a settlement before commencement. It also supports the efficient management of proceedings where full court proceedings cannot be avoided.

In the event of a Dispute arising, the Contract Administrator must:

* Advise on the various processes and which one to use (mediation/adjudication/arbitration/litigation)
* Provide all necessary information when required
* Tread carefully before becoming directly involved.
* Provide all necessary advise to client but do not directly negotiate on their behalf (CA no authority to do so)

The CA’s roles are:

# Notify the client of contractual obligations
# Notify contractor of contractual obligations
# Arrange an informal negotiation/discussion with both parties
# If not possible, look at dispute resolution as outlined in the contract - firstly mediation, secondly adjudication.

= Find out more =

=== Related articles on Designing Buildings Wiki ===

* Adjudication.
* Alternative dispute resolution legislation.
* Alternative dispute resolution.
* Arbitration.
* Conflict avoidance.
* Construction disputes.
* Contract claims.
* Defects.
* Delays on construction projects.
* Dispute resolution board.
* Expert evaluation.
* Expert witness.
* International research into the causes of delays on construction projects.
* Liquidated damages.
* Loss and expense.
* Mediation.
* Negotiation techniques.

[[Category:Appointments]] [[Category:Client_procedures]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Procurement]]

Certificate of non completion

2019-01-06T12:32:47Z

MaryBerry:

The date for completion of construction works (or dates for completion of sections of the works) is generally set out in the contract particulars. However, it is not uncommon for delays to cause the completion date to be missed, that is, the works are not complete, and so a certificate of practical completion cannot be issued by the date for completion.

Where the client is responsible for the delay, an extension of time may be granted, the completion date adjusted, and the contractor may be entitled to claim loss and expense.

Where the contractor is responsible for the delay, the client may be entitled to claim liquidated and ascertained damages (at a rate set out in the contract particulars).

Some contracts (such as the JCT Standard Form of Building Contract), require that the contract administrator issues the contractor with a certificate of non-completion (sometimes referred to as a ‘non-completion certificate’ or ‘non-completion notice') as a prerequisite to claiming liquidated and ascertained damages.

The certificate of non-completion gives formal written notice to the contractor that they have failed to complete the works described in the contract by the completion date that was last agreed (the original completion date may have been adjusted during the course of the works).

The contract administrator must give due consideration to any applications for extension of time before issuing a certificate of non-completion, and if there are subsequent extensions of time that result in the completion date being adjusted, and the contractor then fails to meet this adjusted date, a new certificate of non-completion must be issued.

Where the contract provides for sectional completion of the works, separate certificates of non-completion must be issued for each section that is not completed by the required date.

The client may then deduct liquidated and ascertained damages from payments otherwise due to the contractor, providing that an appropriate notice has been issued (a pay less notice) setting out the basis of the calculation. Contractors may challenge claims for liquidated and ascertained damages if the procedures and the notice periods set out in the contract have not been followed.

Some contracts (such as the JCT Minor Works Building Contract) do not require that a certificate of non-completion is issued, although it may be considered best practice to issue one anyway.

It is very important when deducting liquidated damages to ensure that the correct contractual procedures are adhered to. In the case of [[Octoesse_LLP_v_Trak_Special_Projects_Ltd|Octoesse LLP v Trak Special Projects Ltd.]] [2016], Justice Jefford held that Octoesse was not entitled to deduct liquidated damages as they had agreed to an extension of time after a certificate of non completion had been issued. The JCT Intermediate Building Contract is constructed such that:

'If the Contractor fails to complete the Works or a Section by the relevant Completion Date, the Architect/Contract administrator shall issue a certificate to that effect. If an extension of time is made after the issue of such certificate, the extension shall cancel that certificate and the Architect/Contract Administrator shall where necessary issue a further certificate.'

As Octoesse had not issued a further certificate of non completion, they were not entitled to deduct liquidated damages.

To find out more, see Octoesse LLP v Trak Special Projects Ltd.

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(Clause 2.31) If the contractor fails to complete the works by the completion date, then the architect shall issue a certificate of non-completion.

The [https://www.designingbuildings.co.uk/wiki/Certificate_of_non-completion certificate of non-completion] gives formal written [https://www.designingbuildings.co.uk/wiki/Notice notice] to the [https://www.designingbuildings.co.uk/wiki/Contractors contractor] that they have failed to complete the [https://www.designingbuildings.co.uk/wiki/Works works] described in the [https://www.designingbuildings.co.uk/wiki/Contract contract] by the [https://www.designingbuildings.co.uk/wiki/Completion_date completion date] that was last agreed.

If the architect does not do this, they are denying the client their ability to claim for LAD’s.

The [https://www.designingbuildings.co.uk/wiki/Contract_administrator contract administrator] must give due consideration to any applications for [https://www.designingbuildings.co.uk/wiki/Extension_of_time extension of time] before issuing a [https://www.designingbuildings.co.uk/wiki/Certificate_of_non-completion certificate of non-completion].

Once this is issued, the employer may claim LAD’s.

(2.31) However, if a new completion date is fixed after the issue of such a certificate, such a fixing shall cancel that certificate and the CA shall issue a further certificate.

It is very important when deducting [https://www.designingbuildings.co.uk/wiki/Liquidated_damages liquidated damages] to ensure that the correct contractual procedures are adhered to. Under all JCT forms, the employer must give the contractor written notice.

JCT SBC 16 clause 2.32 ‘Payment or allowance of liquidated damages’ states that:

# The CA must issue a non-completion certificate ([IP address hidden])
# A notice that the Employer may require payment of or withhold or deduct LADs ([IP address hidden])
# A notice demanding payment of LADs or withholding or deducting them (2.32.2)

The Employer is required to, no later than 5 days before the final date for payment of the final amount due under the contract, serve a notice stating that, for the period between the Completion Date and the date of practical completion of the Works, (i) he requires the Contractor to pay liquidated damages (clause [IP address hidden]) and/or (ii) he will withhold or deduct liquidated damages (clause [IP address hidden]).

[https://www.designingbuildings.co.uk/wiki/Contractors Contractors] may challenge [https://www.designingbuildings.co.uk/wiki/Claims claims] for [https://www.designingbuildings.co.uk/wiki/Liquidated_and_ascertained_damages liquidated and ascertained damages] if the procedures and the [https://www.designingbuildings.co.uk/wiki/Notice notice] periods set out in the [https://www.designingbuildings.co.uk/wiki/Contract contract] have not been followed.

If the employer wants to claim LAD’s due to delayed completion the employer must show that:

* The clause is not a penalty
* There is a definite completion date fixed in the contract
* Any specified contractual procedures have been complied with (CA role)
* The employer has not waved the right to deduct liquidated damages

The contractor may avoid paying Liquidated damages by

* obtaining an extension of time
* by showing that the date of completion no longer applies because the CA has not given an extension of time when one was due
* by showing that the amount stated in the appendix is legally a penalty - the amount is much greater than could possibly represent a realistic pre-estimate

Advantages of LAD’s

# The employer does not have to prove loss before deducting damages
# Liquidated damages enable the parties to know from the outset as much as possible about the risk they bare
# Liquidated damages save time and money on arbitration or litigation

= Related articles on Designing Buildings Wiki =

* Certificate of practical completion.
* Completion.
* Construction contract.
* Contract administrator.
* Extension of time.
* Liquidated and ascertained damages.
* Loss and expense.
* Pay less notice.
* Practical completion.
* Octoesse LLP v Trak Special Projects Ltd
* Topping out.

=== External references ===

* Standard forms for certificates of non completion are available – e.g. [http://www.ribabookshops.com/item/certificate-of-non-completion/2878/ RICS Certificate of Non-Completion].

[[Category:Articles_needing_more_work]] [[Category:Contracts_/_payment]]

Problems on construction sites

2019-01-06T12:03:36Z

MaryBerry: Created page with "If a problem occurs on site, the architect’s immediate actions should be: Actions: * Stop the work * Ensure that the contractor has notified the employer * Ensure that the co..."

If a problem occurs on site, the architect’s immediate actions should be:

Actions:

* Stop the work
* Ensure that the contractor has notified the employer
* Ensure that the contractor does not repair/do any work until the insurers/survey have/is carried out their investigation
* Notify the CDM co-ordinator
* Instruct the structural engineer to carry out a structural report
* Assess measures to be taken to restore the site to a safe condition
* Ask the QS to go to site and value the damages
* Ensure that the contractor has disclosed all of the facts to the insurer

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Contractual situation 1: Example - collapsed wall

A full investigation must be carried out to determine who’s fault it was:

* Design fault
* Contractors fault
* Specified peril eg. a flood

- Contact PI insurer’s case to notify them of a circumstance that may lead to a claim

- Advise other consultants to do the same

- If the damage was caused by a specified peril, it will be covered by works insurance

- If it was a design fault, will be covered by PI insurance

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Contractual situation 2: example - a fire

-The contractor will restore the damaged work, restore and repair any site materials damaged and proceed with carrying out the completion of the works

-The restoration of the loss or damage shall be treated as if it were a variation required by an architects instruction

-The contractor may be entitled to an extension of time and loss and/or expense

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Contractual situation 3: example - archaeological items found

- All items found on site are the property of the employer

- The architect should contact the archaeology department of the borough or county council to i- inform them of the discovery and ask advise.

- The architect shall issue instruction as to what is to be done, which may require that the contractor permit the examination, excavation and removal of the items by a third party

- The architect shall ascertain any entitlement the contractor has to loss and/or expense