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ABH323 (Week 7)
Contract Administration – the End Game
| Question | Answer |
|---|---|
| Schedule Management - Progress of the works must be managed to ensure project... | progresses and practical completion is reached by the Date for Practical Completion |
| The superintendent must monitor: - progress and address delays and/or similar concerns at site meetings; - consider when information is required; | - consider how to manage interface between design team and - construction team; - consider management of statutory approvals and inspections; - interface with users etc. |
| Site management: | - Storage - Access - Crane access / vertical movement |
| Site safety | - Site inductions - People movement - Vertical and horizontal movement |
| Setting out | Principal typically responsible for survey points |
| Materials / labour / plant | - Deliveries - Site storage - Materials when you/others need them - Double handling - Plant management |
| Coordination | - Between everyone - Between design team and construction team |
| Insurances - Contractor’s Risk - Care of the Works | - Typically from possession of site until 4pm of Date of Practical Completion - Incl. unfixed items if value incl. in payment cert - Things given by Principal to Contractor - Things brought to site by subbies - Temp works, construction plant |
| Principal’s Risk - Excepted Risks | -Negligent act or omission of Princpal, Superintendent, employees/contractors/agents of Principal -Any risk specifically excluded by contract -Use or occupation of Principal of works or part of works -Defects in design other than design by Contractor |
| Insurances - Main types: | - Contract works insurance - Public liability insurance - Workers compensation insurance - Professional indemnity insurance - Existing building insurance (if renovation or other buildings on the land) |
| Insurances - One or the other party must take out and effect insurance | CHECK THE CONTRACT for what is required |
| Insurances - Contract works insurance: - Covers the works (excludes defective works but covers consequences of it) - Typically must be taken out from date of possession of the site | - Typically in place until the Date of Practical Completion (sometimes until 4pm on the Date of Practical Completion) - Principal’s risk from Date of Practical Completion |
| Insurances - Contract works insurance: - Typically enough insurance cover for all of the following: | > Contract sum (e.g. $5M) > Cost of demolition and removal of debris (e.g. $100k) > Cost of consultant’s fees ($100k) > Value of materials supplied by the principal ($50k) > Additional amount or percentage (e.g. 10%) |
| Insurances - Public Liability Insurance (1) | covers Principal, Superintendent, Contractor, all Subcontractors |
| Insurances - Public Liability Insurance - for: > rights and interests and liabilities to third parties; | > loss or damage to property (other than property required to be covered by contract works insurance); and > death of or injury to any person (other than liability under worker compensation insurance) |
| Insurances - Public Liability Insurance (2) | - amount is typically for any one occurrence - $20M is quite common |
| Insurances - Workers compensation insurance | - Required by Workers’ Compensation and Rehabilitation Act 2003 - Covers workers of head contractor and subcontractors |
| Insurances: Head contractor => Head contractor's workers | Subcontractor => Subcontractor's workers |
| Insurances - Professional Indemnity Insurance: | - Covers professional services e.g. design - Covers the entity that provides the prof services |
| Insurances - Professional Indemnity Insurance: Two types: | - ‘claims made’ policy - ‘occurrence based’ policy |
| ‘claims made’ policy | - must hold policy when the claim is made - typically required to hold PI insurance for 7 years after end of DLP - typically take out ‘run off’ insurance for balance of 7 years |
| ‘occurrence based’ policy | - must hold policy when the event occurred e.g. design was carried out - typically required to hold PI insurance for 7 years after end of DLP - typically don’t need ‘run off’ insurance |
| Notice Requirements - Contract clauses will provide time requirements and form requirements for... | notices of a claim e.g. variation claim, extension of time claim, delay costs claim, payment claim etc |
| Notice Requirements - All other claims not covered by a specific clause is typically covered by... | a general Claim clause e.g. AS2124 clause 46, AS4000 clause 41 |
| Notice Requirements - Time barred for all claims arising out of or in respect of a breach of... | the contract if don’t give claim within time |
| Notice Requirements - Time runs from when the contractor knew or ought to know when... | entitled to make the claim |
| Notice Requirements | - Doesn’t apply to payment claims, variation claims, EOT claims - Incl time to dispute Superintendent’s direction |
| Practical Completion | - Defined by the Contract - It is NOT when work is ‘practically complete’!! - It is when all work has been completed in accordance with the contract AND when all other requirements for PC have been met |
| Practical Completion - Typically includes: - Provision of certificates (form 15 if design, form 16 for construction, etc) - Provision of Information Documents (as required by Part 6AA QBCC Act for Non-conforming Building Products) | - Provision of manufacturer’s warranties - Provision of deed of release - All testing and inspections have been completed - EXCEPT for… |
| Practical Completion - EXCEPT for: | Minor defects or omissions |
| Practical Completion (1) | - Contractor must reach Practical Completion of the Works by the Date for Practical Completion - There is no ‘common’ or ‘industry standard’ definition - Entirely a contractual issue |
| Practical Completion (2) | Typically, contractor claims payment for the full contract price less retention / security permitted to be held after Practical Completion for the correction of defects identified during Defects Liability Period |
| Defects Liability Period - This is an agreed period of time set by the contract in which the parties have: (1) | - agreed how defects in the work identified by the client during the DLP will be communicated to the contractor e.g. weekly report, ad hoc notices, online register, emails - agreed when those defects will be rectified |
| Defects Liability Period - This is an agreed period of time set by the contract in which the parties have: (2) | - agreed consequences if contractor fails to rectify the defective work e.g. client can carry out rectification works itself or engage another contractor to do it then recover costs incurred from payment due to contractor |
| Defects Liability Period - This is an agreed period of time set by the contract in which the parties have: (3) | agreed whether DLP restarts for rectified work |
| Defects Liability Period | - Typically ends 12 mths after PC - If subcontract, typically ends 12 mths after PC of head contract but starts when subcontract reaches PC for subcontract works |
| Final Completion (1) | - Final Completion is the end of the Defects Liability Period - Contract is at an end so Final Payment Claim is made for full contract price including release of all security or retention |
| Final Completion (2) | - Sometimes may be required to give a Deed of Release with Final Claim - Often Final Certificate is taken to be evidence of final entitlements of the parties under the contract IF no notice of dispute is given within 7 days of issue of Final Certificate |
| Breaches of Contract - If a party does not perform their obligations in accordance with the contract, then it is a breach of the contract | - May be a technical breach i.e. it is a breach but no loss has been suffered by the other party - May be a substantial breach i.e. breach of a fundamental term of the contract (e.g. payment, giving access to the site) |
| Breaches of Contract (1) | Party not in breach must decide whether to give a notice of breach and seek remedy of breach (must give reasonable time to remedy – check contract), or take action to enforce specific performance |
| Breaches of Contract (2) | - Must always mitigate loss suffered though - Limitation of liability Act – max time to bring action for breach of contract is 6 years from breach occurring |
| Contract Termination - If one party is in substantial breach of the contract, non-defaulting party may decide... | to terminate the contract BUT must follow process set out in the contract else will be in breach of the contract |
| Contract Termination - Contract will say what happens on termination e.g.: | - Contractor can claim [blah] ……. - Contractor can / cannot submit a claim for payment on date of termination - Unfixed plant and materials - Copyright in plans if design done by or for the contractor |
Created by:
Asher - S