Construction contract certificates, notices and instructions
Many standard forms of construction contract require that certificates are issued by the contract administrator. Certificates generally result in payment being made by the client to the contractor. These certificates can either be issued regularly during the course of the works, such as interim certificates (normally issued monthly), or may signify that a particular stage has been achieved, such as practical completion. This can trigger other transitions, such as the commencement of a lease or access for a tenant to commence tenant works.
Typically, the certificates issued under a construction contract will include:
- Interim certificates.
- Certificate of practical completion (or section completion certificates where the works are to be completed in sections).
- Certificate of making good defects.
- Certificate of non-completion.
- Final certificate.
- There may also testing certificates for works and activities such as commissioning, electrical work, sprinkler systems, building regulations, concrete cube crushing, cladding mock ups and so on.
The Housing Grants, Construction and Regeneration Act 1996 (also known as the Construction Act) provides for the right to be paid in interim, periodic or stage payments, as well as the right to suspend (or part suspend) performance for non-payment and to claim costs and expenses incurred and extension of time resulting from the suspension. In addition, the Act requires that if the client intends to pay less than the amount certified they must issue a pay less notice setting out the basis for their calculation. Care must be taken to certify the correct amount, as over-certification followed by insolvency of the contractor may result in the client making a claim for negligent certification against the contract administrator.
Other specific certificates may be required (some from third parties) on completion of different aspects of the works:
- Fire regulation compliance.
- Electrical completion certificates.
- Test certificates both for manufacturing and installation.
- Lifting beams tests and marking.
- Building regulation compliance.
- Pressure vessel and boiler certificates.
Particular licenses and certificates may also be required for specialist projects, such as nuclear, pharmaceutical, oil, gas, and rail projects.
Construction contracts also often include requirements for the parties to issue notices to each other under certain circumstances. This is often intended to provide a warning mechanism, enabling the parties to prepare for, or react to, particular situations. The contract should make clear the circumstances under which a notice is required, the form of the notice, the information it should contain, who it should be sent to, at what address and the notice period. Failure to follow the correct procedure can result in a subsequent claim being defeated.
Notices (or in some cases statements) might include:
- Default payment notice.
- Notification of failure to proceed regularly and diligently.
- Notice that there is a delay, or that there is likely to be a delay that could merit an extension of time.
- Notice of intention to refer a dispute to an adjudicator.
- Notice to proceed.
- Notification of an extension of time.
- Pay less notice.
- Payment notice.
- Statement of partial possession.
- Statement of retention.
- Suspension notice.
- Termination notice.
- To vary the works.
- To postpone the works.
- To remedy workmanship, goods or materials which are not in accordance with the contract.
- To sanction a variation made by the contractor.
- In relation to the expenditure of provisional sums.
- To open up work for inspection.
- To carry out tests.
- To exclude persons from the site.
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