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Posted by Dean Suttling

Endeavour Clauses vs Absolute Obligation Clauses

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Contractual agreements often contain wording that imparts an express obligation on the parties such as "the Contractor shall" or the "the Project Manager shall" if one party is to do something specific or a broader obligation to deliver services and for the other party to receive payment. There are ...
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Posted by Dean Suttling

Negligence Claims in Construction

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There are many forms of claims in the construction contract. While most are driven by a perceived breach of contract, with the claimant seeking to recover the costs incurred due to the violation, there are also claims due to professional negligence. Such claims are made in tort, i.e., a claim for...
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Posted by Dean Suttling

Parent Company Guarantees

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Suppose you have concerns about a company you may be entering into a contract with; perhaps it's their ability to fund the project or the size of their workforce in a new region. How can you manage this risk if they are part of a larger group of companies? You could explore a Parent Company Guara...
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Posted by Dean Suttling

Exemption and Exclusions Clauses

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If things go wrong on construction projects, the financial consequences can be significant. In some cases, the value sought to be recovered by the claimant is disproportionate to the value of the contract in place. All parties will carry insurance against certain liabilities, but with any insurance,...
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Posted by Dean Suttling

Engineering, Procurement & Construction Contracts

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The term 'traditional contract' in the construction industry refers to the well-worn groove of employer-led design before employing a contractor to build that design, with the employer retaining design responsibility. Of course, there is the design and build route whereby the contractor is employed,...
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Posted by Dean Suttling

Consequences of Pausing Contracts

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Pausing Construction Contracts Many issues can arise that could cause significant delay to a project, be it disputed land or perhaps the collapse of funding for a development in the private sector. Both examples are solvable but could take time. Is it possible to suspend the works whilst working on...
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Posted by Dean Suttling

Time Risk Allowance and Terminal Float

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In-direct cost typically ranges between 25% to 60% as a percentage of the direct costs, averaged as a weekly run rate and then multiplied by the length of the programme, so assessing the programme in terms of durations becomes essential to calculate an accurate estimate or price. However, if you ...
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Posted by Dean Suttling

Defects and Abortive Work

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The identification of defects in construction work often needs to be a considered view. Pointing out non-compliance of construction activities versus the design requirements is easy when identifying defects, but what has caused the issue in the first place and what is the root cause requiring remedi...
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Posted by Dean Suttling

Conflicts of Interest

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The term "conflict of interest" is widely used to describe situations where a person or organisation is involved in multiple interests, financial or otherwise, which could corrupt the motivation or decision making of that individual or organisation. A conflict of interest exists if the circumstan...
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Posted by Dean Suttling

Acceleration Claims

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Acceleration Quotations In most construction contracts, pressure on achieving a completion date is difficult. It's harder still when impacted by project delays, which can be of either party’s making. The options available to the contractor are: Overrun past completion, which would cause repu...
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Posted by Dean Suttling

Non-Completion Notices and Extensions of Time

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Construction contracts contain start dates and end dates. With many projects, the end date is critical to meet follow-on works, trigger a funding release, or avoid penalties for overrunning and not operating on time in the case of infrastructure projects. For this reason, many clients seek to invoke...
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Posted by Dean Suttling

Set-Off Rights

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It is not uncommon for developers or clients to generally work with the same supply chain project to project or even, in certain circumstances, have more than one contract with a supplier but on the same project. As a client, you would need to recover sums due from the contractor or subcontractor, a...
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Posted by Dean Suttling

COVID-19 Construction Claims

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While the UK Government has published guidance on how the construction industry should continue during the pandemic, there was a period between the country going into lockdown, the confusion about how to implement social distancing guidelines, and other new working methods before the guidance was pu...
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Posted by Dean Suttling

Step in Rights

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A funder of a development will usually have a right to achieve a benefit in return. This could be that a particular type of product, material or layout is installed, therefore in typical circumstances collateral warranties would be requested by the funder which effectively act as a duty of care to t...
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Posted by Dean Suttling

Contract Settlements

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If you have completed a project or you’re seeking to reach an interim agreement, then you’ll be looking to agree a final account. However, there may be some contentious claims that you’re working through, add to that you have an eye on the next development and you don’t want to fall out with...
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Posted by Dean Suttling

Disputed Contract Terms

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Time and cost are significant driving forces in construction. Situations often arise whereby these pressures dictate that clients or contractors issue contracts and start works before they are formally executed. Alternatively, they issue letters of intent, but due to ongoing issues or changing timel...
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Posted by Dean Suttling

Novation Agreements

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In terms of when is novation applicable, there are various scenarios where it could be an option, such as a change in the developer who is keen to progress the works at pace and keep the project on programme and budget. Therefore, the new developer could novate the existing designer and carry on und...
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Posted by Chris Williams

Lump sum contracts

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Have you ever wondered how a cost is agreed between a client and contractor before a construction project begins? Or how the basis of this cost is put together and what any changes to the scope would mean to this agreed cost? Despite being a relatively straightforward concept to understand, parties ...
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Posted by Dean Suttling

Signing under hand or under deed (seal)

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When drawing up contract conditions, you should consider if the contract needs to be executed as a deed or if a simple underhand contract will suffice, but what is the difference? Why does it matter which route you go down. Essentially they differ, as the limitation period for bringing a claim, o...
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Posted by Chris Williams

Disruption claims in the construction industry

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Disruption can mean various things to different people, so defining it is quite tricky. However, it’s important in a construction industry context, particularly from a Contractor’s perspective, and can have substantial implications to all stakeholders party to a construction contract. What is d...
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Posted by Chris Williams

Best Endeavours vs Reasonable Endeavours

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Why do so many construction disputes occur? This is a curious question and one that has been subject to scrutiny and debate over the years. There are several factors that contribute to the issue, however gaining a complete understanding of this matter is often challenging. The factors can be wide-ra...
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Posted by Dean Suttling

Valuing variations with a Schedule of Rates

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Consider that a bill of quantities reflects the project requirements through identification of the works, as described in the specification or illustrated on the contract drawings, and complies them into a list of measurable items. By contrast, a schedule of rates is used to value the scope of works...
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Posted by Chris Williams

Practical Completion vs Partial Possession

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Have you ever come across a situation in which the penthouse balcony of a new residential block seems to be occupied with a family going about their daily lives even though the lower floors of the development are still swarmed with site operatives completing the final fit out? Or why the ground floo...
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Posted by Dean Suttling

Nominated vs Named Subcontractors

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If you are a developer operating as a management contractor whereby you procure packages with works contractors (i.e. groundworks, civils, roofing, cladding, M&E), you will likely be using the skills of an architect and structural engineer to develop your design brief and provide detailed design...
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Posted by Callum Brown

Handing over finished works

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Handing over finished works is part and parcel of any project. Whether it is a sectional handover; per area, per floor, per block, per development or a handover for the entirety of a contract – it happens all over the world every day throughout the construction industry. Regardless of the size or ...
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Posted by Dean Suttling

Building Information Modelling (BIM) and JCT

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BIM can trace its roots back to the 60’s in terms of a concept, the idea then developed in the 70s. However, this was in an era whereby drafting of construction drawings was almost entirely done by hand. It wasn’t until the computer boom of the 1980’s that allowed the development of BIM to tak...
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Posted by Dean Suttling

Final Accounts

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Final accounts are an important commercial milestone in any construction project. They signify the agreement of the final amount to be paid between the client and the contractor or contractor and subcontractor and so on. In construction contracts there are clauses and processes on how to vary the...
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Posted by Dean Suttling

What is Culpable Delay?

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If a project falls behind programme, proving or disproving liability for delay can be a complex and contentious subject for the contracting parties to resolve. Most construction contracts contain provisions for how completion dates can be extended if entitlement can be proven by the contractor. Subs...
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Posted by Dean Suttling

NEC3 vs NEC4

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Whilst NEC has been in operation since 1993, it was in 1995 after the publication of Sir Michael Latham’s report, which describes the use of NEC as “extremely attractive”, that it became what is now the go to contract for major infrastructure contracts in the UK. NEC 3 was published in 2005...
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Posted by Dean Suttling

Adjudication vs Arbitration

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The resolution of disputes in the construction industry is usually achieved through a tiered system of escalation, starting with mediation followed by adjudication, arbitration, and litigation. However, this is mostly driven by behaviours and established working relationships as, according to the Co...
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Posted by Dean Suttling

The Housing, Grants, Construction and Regeneration Act (HGCRA) and the Scheme for Construction Contracts

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In the 1980s, construction was considered to offer low value for money due to the adversarial nature of contract terms leading to high volume of disputes, coupled with a drive to award contracts on the lowest possible tender price. This created a race to the bottom whereby unsustainable contract pri...
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Posted by Dean Suttling

Latent vs Patent Defects and How to Manage them

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The occurrence of defects is an unfortunate part of construction activities, but with nearly all standard forms of contract containing clauses to deal with them, managing one should it arise can not be too difficult, can it? Administering contractual provisions works best when all parties accept ...
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Posted by Dean Suttling

Payment Mechanisms – What are your legal requirements as a client or developer?

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Payment in the construction industry is always a hot topic. The government’s recent drive to restrict bidders for government contracts based on their payment practices is very telling. This, coupled with the fact that some major contractors been recently been placed into administration by their fi...
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Posted by Paul Heming

RFIs and Design Management

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We put forward the following scenario to Jason Farnell, Adjudicator and CEDR Accredited Mediator: "I'm a Property Developer who typically acts as a Main Contractor on projects. I’m interested in understanding more about how the Design Management process is best managed – with a particular emph...
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Posted by Dean Suttling

Prime Cost Sums

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During preparation of the design, the developer, usually via a directly commissioned Architect, will seek specialist advice about certain types of finish to a building, for example a certain type of cladding. The design and specification for the project may then be predicated on the use of this type...
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Posted by Manny Singh

Letter of Intent – What’s it for and should I start works upon receipt?

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As a Quantity Surveyor working for a small main contractor, you’ve been issued a Letter of Intent (LOI) by your client whilst the contract is finalised. Although having not commercially managed a project pre-contract before, you have some queries as to what a Letter of Intent is and its parameters...
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Posted by Dean Suttling

LADs in Construction

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Construction contracts place emphasis on the insertion of clear dates for starting works, when the works must be completed by, and the provision for inserting dates that sections of the works must be completed by. Commercial factors drive this necessity for clarity on the timing of the works. The Co...
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Posted by Jon Williams

Practical Completion – When is it achieved and how is it managed?

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Practical Completion, often referred to as “PC”, is considered to mean the building is finished to a state where it can be put to its intended use, but small or minor defects may still be present. Practical Completion is not expressly defined within the JCT suite of Contracts, but it may be d...
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Posted by Dean Suttling

Dispute Resolution in Construction – An Overview

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Disputes are unfortunately common in the construction industry due to several factors, most of which can be traced back to issues concerning payment or workmanship. One example area would be a difference in assessment of a change in scope or, before even getting to the assessment, disputes can ar...
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Posted by Dean Suttling

Performance Bonds in Construction

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You’re about to enter into a contract as a developer placing a contract. You have concerns about the credit of the organisation you are about to enter into contract with or simply want surety concerning the contractor’s performance to protect your investment. Rather than seek alternative supplie...
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Posted by Dean Suttling

Provisional Sum

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Provisional Sum - When and how should you use it? Provisional sums are perceived as difficult to manage, to understand and to execute. Should you only include them in the overall price as a last resort? Whilst they are appealing as lump sum items, Provisional Sums are in effect risk items where ...
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Posted by Jon Williams

Bill of Quantities

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Your essential guide to producing a Bill of Quantities A Bill of Quantities (BoQ / BQ) is a document prepared to allow the quantification and costing of construction works and may be prepared during several stages on a project for all of the works or a sample of the works. Typically, BoQs are pr...
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Posted by Jon Williams

JCT Insurance: A Breakdown

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Construction can be a highly complex and dangerous activity. Each construction project will have its own complex risks inherited from its design and surroundings. These risks may be to persons, being site operatives, visitors to site or members of the public, or risks to the actual construction work...
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Posted by Jon Williams

JCT Payment Terms

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In the latest iteration of the JCT suite of contracts (JCT16), there were three key changes from (JCT11). These changes were: The introduction of a Common Valuation Date or “IVD” Interim Valuation Date, which intends to align the cashflow throughout a project. The frequency of applicatio...
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Posted by Yashwant Tohooloo

JCT vs NEC: Which is best for your project?

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JCT and NEC contracts are standard form of contracts. Both contracts provide a variety of options that suit the needs and requirements of clients (employers). However, you do need to understand project requirements and the level of control required by the client when selecting a contract form and a ...
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Posted by Paul Heming

Contract Acceptance by Commencement

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The Scenario We put forward the following scenario to Jason Farnell, Adjudicator and CEDR Accredited Mediator. I'm a Main Contractor working on a JCT Standard Building Contract (2016). I've agreed a price and programme with a Subcontractor following receipt of their quotation and having held a...
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Posted by Paul Heming

Management Contracting Procurement

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Management Contracting is a form of construction procurement where the Client for a project employs different Subcontractors directly. The Client has a Main Contractor in place that is responsible for managing the Subcontractors, but is not in contract with them in the same way as with traditional p...
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Posted by Paul Heming

The JCT and Pay Less Notice

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Payment in the construction industry has been a hot-topic for many years. Whether it’s payment between Employer and Main Contractor, or among Main Contractors and Subcontractors, the chance of a dispute remains higher in construction than it does in most industries. In response to this, the UK ...
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Posted by Paul Heming

Two Stage Tendering

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Two stage tendering, sometimes referred to as “negotiated tendering” or “two stage selective tendering”, is a unique construction procurement method because it takes place in two separate and clearly defined stages. In two stage tendering, the Contractor is involved to enhance buildabilit...
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Posted by Paul Heming

Loss and Expense and LADs in JCT Contracts

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The Scenario We put forward the following scenario to Jason Farnell, Adjudicator and CEDR Accredited Mediator. "I'm a Main Contractor working on an unamended JCT Design and Build Contract (2016). The project has achieved Practical Completion 8-weeks late owing to a variety of delays by various Su...
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Posted by Paul Heming

The JCT and Extensions of Time

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Most construction contracts will suffer some form of delay during its lifecycle. In all Joint Contracts Tribunal (JCT) form of contracts, a delay event is called a “Relevant Event” and the extension of time is defined as an “Adjustment of the Completion Date”. Whether during the design, t...
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Posted by Paul Heming

The JCT and Relevant Events

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The construction industry is full of jargon and it can be difficult to understand all the acronyms and terms used. It’s even more difficult when it comes to construction contracts. We’ve written this article to provide clarity on the term “Relevant Events” and what it means in Joint Contract...
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Posted by Paul Heming

Dealing with Errors, Divergencies and Discrepancies in Variations

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The scenario We put forward the following scenario to Jason Farnell, Adjudicator and CEDR Accredited Mediator. "I'm working on an amended JCT D & B Subcontract where we're contracted to clad the entire building envelope from Ground to Roof. An area of our scope had an inconsistency - part ...
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Posted by Paul Heming

NEC Contracts and Cash Flow Management

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"I'm a Main Contractor Tendering for a project where the Contract will be an NEC Option A Contract. We want to understand what the potential impacts of this Contract Type are in terms of Cash Flow and, the best management practices generally." That’s the scenario that we put forward to Jason ...
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Posted by Paul Heming

Design and Build Contracts – Increase your profit

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A Design and Build Contract is a contract where the Main Contractor offers to design and build a project for a price that includes both the design and construction. What I found striking throughout my career is the lack of contractual knowledge of even some of the most highly-skilled construction...
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Posted by Paul Heming

Can I claim for loss of profit in variations?

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The scenario: I’m working on an unamended JCT 2016 Building Contract with a £3m lump sum Contract Sum. The Employer is looking to amend an element of the works and has issued an instruction to omit a relatively large portion (approximately 10% in financial terms) of our scope of works. These ...
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Posted by Paul Heming

The client is late issuing their Notice to Commence works on site – what should I do?

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Ever wondered the best way to respond when your client is late issuing their Notice to Commence works on site? We’ve put together a real-life scenario where this happened and asked Jason Farnell, Adjudicator and CEDR Accredited Mediator, to provide actionable guidance on how you can best manage...
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Posted by Paul Heming

What happens when you are late issuing a Payment Notice?

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We've all felt that pang of dread when you realise you're late to issue a payment notice on time, and it's on a questionable subcontractor valuation that you need to issue a Pay Less notice. What are your options when that happens? Well, we put the following scenario to the experts at Commercial ...
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Posted by Paul Heming

Notices to Commence – Project Lifecycle 12

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A Notice to Commence (NTC) is a formal communication from the Client to the Contractor stating the date the Contractor can begin work. The reason NTC’s are so important is they confirm the date when the contract performance starts and therefore, they're used to calculate the completion date and...
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Posted by Paul Heming

PCSA Agreements – Project Lifecycle 11

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Pre-Construction Services Agreements (PCSAs) are used to appoint design and build Subcontractors to carry out services before entering into contract and tend to be used as part of a strategy to remove risk. PCSAs are generally advantageous as the early involvement of ‘Specialists’ can lead to...
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Posted by Christopher Barber

Stealth CDP

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The design element of a contract represents one of the best opportunities for a contractor to increase margins on a project. It also represents one of the riskiest areas where you can lose margin. Ever been hit by a Stealth CDP (Contractor’s Design Portion)? If you have, there’s a good chance yo...
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Posted by Paul Heming

Design Delay Claims – Project Lifecycle 6

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Last week we discussed the various tools to use to make sure you can claim for time lost during the design period. I’m a firm believer that when you suffer delays in construction, the priority is to get an Extension of Time and following that, to recover the money associated. The question is - ...
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Posted by Paul Heming

Understanding the contract – Project lifecycle 4

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Understanding the contract is of absolute importance to the success of your project. Do you know how many days you have to give notice of a variation? What do you do when there is a delay event – are there particular rules on this? Projects are not simple. Knowing how to act in difficult situat...
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Posted by Paul Heming

Programme Negotiations – Project Lifecycle 2

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Contract negotiation almost always involves compromise to achieve a document that is acceptable to all parties. Projects may succeed or fail as a direct result of the terms and conditions in the contract and the quality of the programme is no different. Successfully negotiating a favourable progr...
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Posted by Paul Heming

Order of Precedence – Project Lifecycle 1

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What is Order of Precedence in Contracts? Construction Contracts are often very large and include lots of different Numbered Documents like the drawings, scope of works etc. To give these documents meaning and to rank their importance, many contracts include an ‘Order of Precedence’ Clause whic...
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Posted by Paul Heming

Payment Provisions: JCT Design & Build

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As is usual in JCT contracts there are two methods for determining payments, termed ‘stage’ and ‘periodic’ payments; both of which provide for monthly payments, the difference being in the method of determining what is to be paid.  The Contract Particulars giving the option for which paymen...
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Posted by Paul Heming

Payment Provisions – JCT Subcontracts

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The sub-contract is drafted with the intention that valuations regime under the sub-contract should be linked to the Main Contract application dates, commencing with the Interim Valuation Date immediately following the commencement of a sub-contractor’s work on site. The due date for payment is 12...
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Posted by Paul Heming

Sectional Contracts – Reading between the lines!

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CREDIT: Jason Farnell, Commercial Risk Management In the recent judgement in Vinci Construction UK Limited and Beumer Group UK Limited it was argued, under a contract which had been divided into sections, that the delay damages were ‘uncertain, inoperable and unenforceable’ and that therefore t...
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Posted by Paul Heming

Design and Build – ‘He who decides, designs!’

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CREDIT: Jason Farnell, Commercial Risk Management In an un-amended JCT design and build contract, the Contractor’s obligation in respect of design is to ‘complete the design’, meaning that the Client will have prepared initial designs for the project which need to be finalised by the Contract...
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Posted by Paul Heming

Design and Build – You’re the specialist!

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CREDIT: Jason Farnell, Commercial Risk Management In an un-amended JCT design and build sub-contract, the specialist Contractor’s obligation in respect of design is to ‘complete the design’ for the sub-contract works, including the selection of the specification of materials if not described ...
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Posted by Paul Heming

Demolition Health And Safety Requirements

When working with demolition contractors, health and safety always takes paramount importance. Of course, this is the case when it comes to all types of construction, but there are specific requirements for demolition. The law states that structural alteration, dismantling, and demolition must be ca...
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Posted by Paul Heming

Deeds of Variation (DoV)

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CREDIT: Jason Farnell, Commercial Risk Management Those who can do, and those who can’t … compromise? Perhaps it is a feature of the London developer-led construction & property market, but it does seem to me to be prevalent - I am of course referring to the practice of entering into Deeds...
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Posted by Paul Heming

Redefining jurisdiction – don’t procrastinate

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CREDIT: Jason Farnell, Commercial Risk Management The recent High Court appeal judgement handed down by the Hon. Mr Justice Coulson in Mailbox (Birmingham) Ltd and Galliford Try Building Limited ([2017] EWHC1405) serves as a reminder about the structure and purpose of certain contract clauses; a wa...
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Posted by Paul Heming

Principal Designer Roles with respect to Temporary Works

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The Construction Design and Management Regulations (CDM) are the primary regulations for managing the health, safety and welfare of construction projects. CDM applies to all building and construction work and includes new build, demolition, refurbishment, extensions, conversions, repair, decorati...
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Posted by Paul Heming

Extensions of Time – Nobody told me!

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At the beginning of a contract, when relationships are being formed and the excitement of a brand new project is enthusiastically being embraced by everyone involved, human nature will usually preclude any action that might otherwise disturb the bonhomie.  This might be understandable, but it is ce...
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Posted by Paul Heming

Retention… your money!

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It is quite extraordinary to think that despite the apparently universal disdain for it, the antiquated and out-moded practice of deduction of retention is still prevalent and endorsed by industry standard forms of contract.  In other words part of the value of the output of almost every company in...
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Posted by Paul Heming

Changes to JCT Design and Build

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JCT Design and Build Contract 2016 – What is new and how does it affect you? Plus ca change, plus ca la meme chose!  What has changed, nothing much!  The apportionment of risk between the Employer and the Contractor remains unchanged in the unamended, standard document and as always the imposi...
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Posted by Paul Heming

Manual Handling Update

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The HSE has revised guidance and produced a new toolkit to help organisations manage and mitigate against the risks associated with manual handling activities. Manual handling injuries are part of a wider group of musculoskeletal disorders (MSD’s) which covers injury, damage or disorder of the ...
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Posted by Paul Heming

Record Keeping – Who needs to? You do!

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In the competitive construction and property market only the best managed and administered companies will perform at the top end of the range of achievable margins: record keeping is a huge part of this. An industry-wide shortcoming is the maintenance of adequate records, despite the widespread a...
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Posted by Paul Heming

Payment terms – A Call to Action

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Good cash flow management is critical to the success of companies in every industry. In construction, where payment is typically received long after costs are incurred however, it is vital. Poor payment practices by larger construction firms can cause real damage to those further down the supply ...
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