karen bradbury es96q contract documentation. contract documentation lecture objectives be aware of...

Karen Bradbury

ES96QContract Documentation

Contract DocumentationLecture objectives• Be aware of the essentials needed in

any package • Identify the details of what each of the

components comprise• Be aware of who produces what• Be aware of how you might put together

a package of contract documents

JCofP for Risk Management in Tunnelling Projects:

Contract Documentation

Documentation that defines • the scope of works• the nature• the Form and Conditions of Contract

(including specifications for the works), and • the apportionment of risk and payment

mechanisms.

From Page 14 of the Code

What is the minimum information needed in the contract documents?

• The work to be performed• The quality of the work required• The contractual conditions• The cost of the finished work• The construction programme

Based on Allan Ashworth “Contractual Procedures in the Construction Industry”,2006, 5th edition, Pearson, p. 127

Contract Documentation Back to Basics

Stephen Wearne “Civil Engineering Contracts”,1989

• Agreement or contract– Exchange of letters or formal

contract

• Conditions of contract• Drawings• Specification• Bill of quantities

Allan Ashworth “Contractual Procedures”, 2006

• Form of contract including– Articles of agreement– Appendix

• Contract drawings• Bill of quantities,

specifications, or measured schedules

Which document provides which function?

Generic Function Usual Contract Documentation

What? Type of projectScope, shape, sizeQuality of work

How much? Amount of work

Where? Location

When? Payment

Who? PartiesResponsibilities

How? Procedures

What if? Prior agreement on liabilities & procedures

Based on Stephen Wearne, “Civil Engineering Contracts” 1989, p. 26, Thomas Telford.

Which document provides which function?

Generic Function Usual Contract Documentation


SpecificationDrawingsSpecification

How much? Amount of work Bill of quantities

Where? Location Drawings

When? Payment Conditions of contract


Agreement or contractConditions of contract

How? Procedures Conditions of contract


Conditions of contract


Contract Documentation Back to basics

Stephen Wearne in his book “Civil Engineering Contracts” published in 1989 identified the following set of documents for Civil Engineering contracts:

• Agreement• Conditions of contract• Drawings• Specification• Bill of quantities

Conditions of Contract

• What did you learn about conditions of contract in the previous session?

Conditions of ContractFrom Warwick undergraduate module on Construction

Management, George Webb

• Set out the ‘rules’ by which Contract is run• Show rights and obligations of the parties• Set out action to be taken if issues arise• Form legal basis of the Contract• There are many standard forms, eg ICE, FIDIC, I Chem.

E. NEC. • Should not tamper with them!

Conditions of Contract• Details of the parties and description of the Works;• Employer's representative and their powers of

instruction;• Obligations (of Contractor and Employer) and sanctions

for non-fulfillment;• Time, Payment and claims for extra time and payment;• Liabilities and Insurance;• Quality of materials and workmanship (and, where

appropriate, Design);• Health and Safety;• Disputes and Termination.

From George Webb , lecturer on Warwick Undergraduate Construction Management module

Contract Documentation Back to basics

Stephen Wearne in his book “Civil Engineering Contracts” published in 1989 identified the following set of documents for Civil Engineering contracts:


What checks would you make on the drawings?

Checks on DrawingsMany risks can be reduced by studying the drawings.

Suggested checks include:• The drawings are complete and match the bill of quantities.• Assess the likely requirements for the mechanical plant and

scaffolding.• Check access and working space and storage space for

materials.• Consider security. Is there a need to secure the area and/or

hire security guards?• Check the position of boundaries, access, and services.

(Tebin, 2009)

Specification

Specifications present a complete description of the structure to be built, such as details of the construction site, the materials to be used, and the method of construction. (Tebin, 2009)

What types of different specification have you come across?

Types of specification• Product requirements• Materials and workmanship• Submittal documents• Performance or functional requirement• Minimum quality• Testing

Bill Of Quantities

In the UK, the BOQ is structured using SMM7 (Standard Method of Measurement for Building Works) and provides a common basis for comparison and production of tenders.

A BOQ can reduce costs of tendering by up to 5% by reducing variability, hence reducing later disputes and cutting of corners.

Greenhalagh, B., & Squires, G. (2011). Introduction to Building Procurement. London & New York: Spon Press., p.

84, 86

Methods of Payment

• Relative importance of the drawings, specification and bill of quantities will be linked to the method of payment

• Measurement method– payment against given criteria

• Cost reimbursement– payment for actual costs involved

Examples of Measurement Methods of Payment

• Drawings and specification• Performance specification• Schedule of rates• Schedule of prices• Bill of quantities• Bill of approximate quantitiesBased on Allan Ashworth “Contractual Procedures in the Construction Industry”,

2006, 5th edition, Pearson, p.

Advantages and Disadvantages of Bills of Quantity

Advantages of BOQs Disadvantages of BOQsSimplified tender analysis Cost and time to createCalculation of interim valuations and progress payments

Estimating practice can be poor

Valuing of variations in orders is easier

Procurement may be discouraged from alternative design solutions

Fee calculation easier Can contain errors, omissionsMaybe discrepancies between drawings spec and BOQ.

Greenhalagh, B., & Squires, G. (2011). Introduction to Building Procurement. London & New York: Spon Press., p.

85)

NEC3 EEC Six Major Pricing options

• Option A a priced contract using Activity Schedules• Option B a priced contract using Bills of Quantities• Option C a target cost contract using Activity Schedules• Option D a target cost contract using Bills of Quantities• Option E a cost-reimbursable contract• Option F a management contract

Does everyone understand these?

EEC Contract Documents

www.neccontract.com/documents/works_info.pdf accessed 23/3/2014

EEC Contract DataThe following documents are identified within Contract Data and are not Works Information• boundaries of the site• Partnering Information (if Option X12 is used)• incentive schedule (if Option X20 is used), • matters to be included in the initial Risk Register, • information describing the Working Areas and• the programme (if required at tender stage).

NEC3 EEC definition of Works Information

‘‘11.2(19) Works Information is information which either– specifies and describes the works or – states any constraint on how the Contractor Provides the

Works

and is either– in the documents which the Contract Data states it is in or – in an instruction given in accordance with this contract.’’


NEC3 EEC – who provides the works information?

Works Information provided by the Employer includes • technical information, specifications and drawings

describing the works,• constraints on how the Contractor Provides the

Works, including specific safety requirements and• Employer’s requirements for work to be designed by

the Contractor.

Works Information provided by the Contractor is particulars of the Contractor’s design for works he is required to design.


NEC3 EEC Site Information• Site Information describes the condition of the Site

before work starts. • Works Information describes what is to be done on

the Site. • Site Information is defined as follows

– ‘‘11.2(16) Site Information is information which describes the Site and its surroundings and is in the documents which the Contract Data states it is in.’’

– Site is defined as ‘‘11.2(15) The Site is the area within the boundaries of the site and the volumes above and below it which are affected by work included in this contract.’’


NEC3 EEC Site and Works Information

Works information

Drawing no.01000200

DescriptionNew factory buildingExisting factory building (proposed features)

Site information

Drawing no.02000300

DescriptionExisting factory building (existing features)Existing mains services


NEC3 EEC Hierarchy of documents

http://www.neccontract.com/news/article.asp?NEWS_ID=670&Type=News accessed 23/3/2014

http://www.neccontract.com/news/article.asp?NEWS_ID=670&Type=News



Articles of Agreement

The part of the contract which the parties sign.

Blank spaces in the articles are filled with:• Names of the parties• Date of signing of the contract• Location and nature of work• List of contract drawings• Amount of the contract sum

Allan Ashworth “Contractual Procedures”, 2006, p. 129

Appendix

The appendix to the conditions of contract:• Needs to be completed at time of signing• Includes the part of the contract peculiar to this

particular project• Information on

– Start and completion dates– Periods of interim payment– Length of defects liability period for which contractor is

responsible


Which document provides which function?Generic Function Usual Contract Documentation


SpecificationDrawingsSpecification

How much?

Amount of workAmounts of bond, retention, insurance, liquidated damages

Bill of quantitiesAppendix to tender

Where? Location Drawings

When? Period for completionPayment

Appendix to tenderConditions of contract


AgreementConditions of contract

How? Procedures Conditions of contract


Conditions of contract


What is meant by?

• Bonds• Retention,• Liquidated damages• Collateral warranty• 3rd party rights

BondBond - a Client may require a Contractor to

provide a bond for the duration of the contract, which would become available to the client to meet any additional expenses that might result from a failure on the part of the contractor to meet his responsibilities. Such bonds are normally 10% of the contract value and are obtained from banks or insurance companies.


RetentionsRetentions - an amount, usually 5-10% held

back from the sum due to a contractor, for payment at a later date. The amount will be specified in the Conditions of Contract. Retentions are usually released on the basis of half at the issue of the certificate of practical completion, the remainder at the issue of the final certificate or end of maintenance period.


Liquidated Damages

Liquidated damages - a sum detailed in the Conditions of Contract which is designed to cover the financial loss a client would face in the event of late completion. The sum usually stated as a weekly or occasionally daily rate is recovered from the Contractor. Must be a realistic figure.


Collateral Warranties

Collateral Warranties - an agreement which is added to the appointment between a consultant and his client to bind the consultant into an agreement with a third party such as a funding institution.


3rd Party Rights• A third party right is the right of a person

who is not a party to a contract (a third party) to enforce the benefit of a term of that contract.

http://uk.practicallaw.com/4-502-4310 accessed 17th March 2013

http://uk.practicallaw.com/4-502-4310

Collateral warranties and 3rd party rights• Who gets them?

– Any funder– Any buyer (often referred to as a

purchaser).– Any tenant (or a given number or class of

tenants)• But what is the difference?



Collateral warranties and 3rd party rights• In one sense, there is no difference in

practice. – Either may give effective construction security.

• However, collateral warranties remain popular, in part because:– They are familiar. – It may be easier to grant step-in rights if a

borrower (such as a developer) becomes insolvent.



Typical Contract Documents• Scope of Project – for Tenderers• Site data – includes Site Information data, working hours, etc• Works information – specifies and describes works and/or any

constraints • Drawings – showing what is to be constructed• Specification – detailed requirements• Bill Of Quantities – activities broken down for pricing• Programme – critical dates• Conditions of Contract – sets out obligations• Form of Tender – states Contract price and terms• Acceptance – Employer’s written acceptance• Bond – voided if constructed as agreed• Guarantee – third party acts if default• Formal Agreement – sets out main Contract features • (Additional information – possible variations to Contract)

Source: George Webb, ES3D4/ES4D5 Construction Management module, University of Warwick, 2012c

Contract Documents• What are the essentials needed in any

package • Some details of what each of the

components comprise• Who produces what• How do you put together a package

of contract documents

JCofP for Risk Management in Tunnelling Projects:

Who Produces These?

• Form and conditions of contract – solicitor, lawyer, commercial manager

• Contract drawings – design consultant, employer’s advisor

• Bill of quantities – consultant, quantity surveyor

• Specifications - consultant

Traditional Complaints About Contract Documentation

• Missing information• Late information• Wrong Information• Insufficient Detail• Impracticable designs• Inappropriate information• Unclear information• Not-firm/Provisional information• Poorly arranged information• Conflicting information

Brook, M. (1998). Estimating and Tendering for Construction Work, 2nd Edition. Oxford: Butterworth-Heinemann pp. 36, 40

• Poor work description• Obscurity of specification clauses• Amendments to standard forms

of contract• The attempts by consultants to

cover inadequacies through the introduction of ‘all-embracing’ risk clauses

Quah, L. K. (1992). Comparative variability in tender bids for refurbishment and new build work. Construction Management and Economics Volume 10, 263-269

How would you put together a package of contract documentation?

What documents should be on site?

• Contract drawings• Bills Of Quantities (unpriced)• Descriptive schedules• Master programme• Additional drawings and details


• Risk assessment and register• Contract • CDM co-ordinator• Permit to work

Architect’s (Engineer’s) instructions (AI's/EI’s) - instructions issued by an Architect/Engineer, first verbally and then confirmed in writing to a site agent as work progresses on site and, as questions arise over details and specifications.Certificate of Practical Completion - a stage reached in the contract where the Client can take beneficial occupation.Clerk of Works - a person, usually with wide building experience, often resident on a site and acting on behalf of a Client, in inspecting work, quality of materials etc during the course of a contract.Contingencies - a sum set aside to cover the cost of any additional or unforeseen work which may be encountered once the project is proceeding on site. Contingencies are also used to pay for changes which a client may request or meet extra payments which the contractor may be entitled to.Extension of time - an extension of time to a contract period authorised by the Architect/Engineer for reasons of adverse weather conditions, an unusual number of variations etc. The reasons for which an extension of time may be granted are usually given in the Conditions of Contract.

Contract Terms and Documents


Final Certificate - a certificate stating that the works are now complete and the client is due a full and final settlement to the contractor.Preliminaries - matters which feature at the beginning of a Bill of Quantities, which are relevant to the contractor in terms of his obligations and responsibilities and which will therefore influence his costings. These would include such items as names of Clients and Consultants, insurance requirements, length of contract, descriptions of the site in terms of its access, working areas and adjacent buildings etc, a detailed description of the work to be undertaken and the order in which it should be tackled. Prime cost sum - an amount included in a Bill of Quantities to cover a particular bit of work or supply of materials to be carried out by a nominated sub-contractor or supplier. Provisional sum - a sum included in a Bill of Quantities for work that is required but cannot be sufficiently designed or specified at the outset of the contract.eu



Schedule of rates - a list of works activities usually priced at a rate per unit for example, a price might be included for building in common brick at so much per square metre. Snagging - the term used to describe unsatisfactory work or small items of work still to be completed which are discussed/discovered during final site inspections.Sub-contractor - persons employed to undertake specialist work beyond the capacity or capabilities of the main contractor. Domestic SCs are employed directly by the main contractor. Nominated SCs are specialist firms selected by the Client or the Architect/Engineer, with whom the main Contractor must then work. Variations - changes in work authorised by the Architect/Engineer.



karen bradbury es96q contract documentation. contract documentation lecture objectives be aware of...

Documents

package of contract

conditions of contractdetails

construction management

prior agreement

type of projectscope

construction industry

risk management

whatbe aware