After assessing four different types of procurement route and I would like to propose for this project is Design and Built procurement route.
The following reason for selection: Client to manage the Design and built processes with a single point of contact, contractor is responsible for both design and built, The client has more influence and control to shape the desired outcome in design and built, the client pays for the project and gets the key to gain access to the building, Low cost and time risk, contractors experience in the design and built is a great advantage to the inexperienced client,
Identify the key issues
Alexander contractors Preferred tender withdrawal (Award to the next contractor)
Pile cap concrete volume(Actual bill of quantity concrete) nit reasonable
Clerk of work directionis to proceed as per the drawing design (Assume that the contractor written to contract administrator) change of construction method (Pile cap) time and cost increase.
Existing building floor collapse while curing of the concrete. Contract administrator issue new instruction for new slab and wall works(variation cost new unit rate (Extension of time). Solution: May use old unit rates and claim use loss and expenses also.
Approximate quantity not accurate.
Late payment by employer several occasions.
Definition of Contract: The condition and appendix, drawings, specifications, schedule of rates, bills of quantities, the tender, letter of acceptance, agreement and such documents as the parties may expressly identify in writing and agree as forming part of the contract.
a)Discuss the liability of Alexander contractors to the employer for the additional costs that the employer had to incur as a consequence of being required to employ a more expensive tender to carry out the construction project.
General rules of contract:
Assume that the Alexander contractor has no liability for the employer additional cost incurreduntil the offer isaccepted. If the tender documentstate that, may withdraw tender anytime before acceptance by the contractor. It would appear in contract document,Alexander contractor is not liable to the employer.
Liability is depends on the terms and conditions of tendering contract.
The basic contractual position is that since a contractor’s tender is merely an offer it may be validity revoked at any time before it has accepted.If the employer likes to have a binding contractual obligation he can request the contractors to supply a ‘bid bond’ that is promise by deed not to withdraw the bid, backed by a financial guarantee.
b)Discuss the Clerk of work’s power to issue a direction as detailed in the given scenario and its implications on the loss and expenses incurred by the contractor.
The contractor informed the Contract administrator and Clerk of work about the increase in quantity of concrete refers to the pile caps. Clerk of work a direction to go-ahead with construction works according to the design drawing and ignore BOQ for the concrete.
This direction has two implications on the contractor loss and expense.
Increase in volume of concrete will require more materials and man power resources and change in method of curing.
The same also refers to increases curing time ends. This could not be accomplished as planned by the contractor in the original program, this implication result in additional expense for the contractor and loss of time.
As per JCT standard building contract clause 3.4: The clerk of work is an inspector appointed by the employer to oversee the construction project works behalf of the employer. Clerk of work is authorized to give only direction and he cannot give instruction to the contractor.
Contract administrator is empowered to issue instructions and such direction shall need to be confirmed in writing within two working days of the direction being given, any work so given and confirmed shall, as from the date of issue of the confirmation, shall be deemed the date instruction is issued by the contract administrator.
Liability: Once the contract administrator is given instruction and proceed confirmed in writing, the variation cost is claimable for the contractor.
Variations, except when loss and expense relates to a confirmed acceptance of a schedule 2 quotation.
Instructions of the contract administrator, issued in accordance with clause 3.15, postponement of any work to be carried out under this contract. The generally accepted view is that this provision does not empower the contract administrator to postpone all the work, so as to enable the employer not to give possession of the site at the agreed time. It is concerned rather with instruction which alter the order in which the works are to be carried out. Such a procedure may of course the contractor loss through the need to re-programme.
c)Detail the possible claims with respect to the given scenario, the main facts that can be included in the claims and the contractual provisions available to substantiate the claims according to the JCT standard building contract with quantities 2005 edition revision 2 2009′.
The possible claims with the respect to the given scenario: Ben Contractor can submit claim under the disruption claim, Disruption is the material change of the performance conditions that were expected resulting in an increased difficulty in performance, The impact of disruption on performance is often a loss of productivity and increased costs, Root causes for disruption include the changes in plans and specifications, and defective drawing etc
Progress Payment should be paid within time allowed by the contract. Failure to do so:
â€¢ May attract penalty interest and
â€¢ Is a breach of the contract by the employer
Before any payment is made, ensure that the builder completes the stage and that they are entitled to the payment.
The Ben Contractor will have to contribution their part to the Progress Claim:
They have to provide information required for a progress claim:
There is much basic information required before cost information is required.
Building company’s name
Project name and address
Date: the date of preparation and submission should be shown to prove compliance with the contract conditions. Should there be any delay in payment, the date of submission can be seen for the possible calculation of interest on late payments.
Progress claim number
Ben Contractor to adopt Methods of assessing the value of work completed
To determine a percentage of large areas of the works since the works commences is very quick
and should only be carried out by those with long experience of the trades involved. It is best used as a check of claims carried out by others (Example a clerk of works checking through a builder’s progress claim.
Measure the work completed since the last progress claim
Measure the total work completed since the commencement of the works
Determine a percentage of each work item completed since the commencement of the works
Determine a percentage of large areas of the works since the works commenced
The Ben Contractor should ensure that the progress claim should contain three components:
A covering letter, The progress claim summary and a complete breakdown showing detail of how the figures on the summary were achieved.
The employer will want as much information as possible before a payment is approved. By providing all relevant information you will be answering all the employer’s questions , Any questions related to the progress claim details are likely to delay the payment to the builder.
The contractor must justify and present evidence that justifies that the cost is related to discrepancy between drawings and BOQ , changes in structural spec and progress of work adversely affected
The contractor possible claim:
The contractor can only claim loss and expense based on site conditions if there is a particular provision of the contract that provides this.
The Project was awarded to the contractor estimated at 50million, Out of which 15 million is to carry extra loads upon completion of the project.
There are certain procedural aspects in relation to claims, The procedure for making the claim is set out in JCT SBC5. The application must be made to the contract Administrator who decides if the claim is founded and ascertains the amount incurred. The nature of loss or expense can cover out of pocket expenses for loss or loss of profit. There may be immediate cost and head office overheads and profits.
The JCT SBC 5 requires the contractor to prove that direct loss and expense has been incurred. The loss may be arising from one of the following:
â€¢ Discrepancy or diversions between contract drawings
â€¢ Diversions where the quantity is different to an approximate quantity.
â€¢ Suspension of works due to default in payment.
The detail possible claim from the contractor:
Direct Costs: Labour, materials supplies, equipment and professional consultants being contracted by contractor
Head office Overhead costs (or Indirect Cost ) : Business related expenses that are necessary to perform the instruction issued by the clerk of work, Overhead costs are usually a percentage of labour costs and can include office rent, insurances, office supply, communication expenses, mileage and drawing printing or reproduction.
Fee ( or Profit) The profit is usually a fix directly associated with the work.
Preliminaries and site overheads: Cost of an overhead nature actually incurred on the site but in either case only in so far they would not otherwise have been incurred and which should not have been provided for the contractor.