Termination by the Employer Insolvency of the Contractor (Cont’d): � The Contractor is automatically terminated if it applies for bankruptcy, liquidation or receivership. � The Contractor must notify the Employer if this occurs (cl. 8.5.2). � The Employer must still notify the Contractor that the Contract has been determined (cl. 8.5.1). � The Contractor can be reinstated if terms can be agreed with the liquidator (cl. 8.3.2). � The Employer may employ another Contractor to complete the Works (cl. 8.7.1). � The new Contractor can use all tools and plant left on site (if the Employer did not request their removal under cl. 8.7.2.1). � Any unwanted equipment left on site by the insolvent Contractor can be 31 sold by the Employer Termination by the Employer Insolvency of the Contractor (Cont’d): � The Employer must give any profit to the insolvent Contractor. � The original Contractor’s subcontracts may be assigned to the Employer. � An insolvent Contractor is not entitled to further payment until the Works are completed. � The Employer’s direct loss and expense incurred as a consequence of appointing a replacement Contractor will be deducted from any payment due (cl. 8.7.4.1). � If these costs exceed the payment due, the insolvent Contractor will owe the difference to the Employer (cl. 8.7.5). � Cl. 8.8 governs the payment of any outstanding sums if the Employer does not continue with the Works after terminating the insolvent Contractor. 32
Termination by the Contractor � The Contractor can terminate the Contract if: � the Employer defaults (cl. 8.9); or � the Employer becomes insolvent (cl. 8.10). � The Contractor can determine its own employment under the Contract if: � the Employer causes certain “specified defaults” (cl. 8.9.1); or � certain “specified suspension events” arise (cl. 8.9.2). � The Contractor � s notification procedure mirrors the Employer's (cls. 8.9.1; 8.9.2; 8.9.3). 33 Termination by the Contractor Insolvency of the Employer � The Contractor can determine the Contract if the Employer become insolvent. � Cl. 8.10 defines the Contractor’s procedure, and mirrors cl. 8.5, which the Employer must follow to determine the Contractor. � The definition of “insolvency” provided by cl. 8.1 dictates when the Employer or the Contractor can determine the Contract. 34
Termination by Employer or Contractor � Cl. 8.11 governs determination of the Contract by either party. � Cl. 8.11.1 defines the events that can cause either party to determine the Contract. � These are events that frustrate the Contract. � Neither party is liable for causing them � e.g. supervening illegality or supervening impossibility make it impossible to complete the Works. 35 Remedies for Breach of Contract Required when a party fails to perform its obligations arising from the Contract � Material breach � The contract will be brought to an end “determination of the contract”. � Non-material Breach � Damages will be paid by the party in breach to return the affected party to their original position � These damages are unliquidated (Their amount must be determined by the Court because it was not agreed beforehand) 36
Specific implement or damages? � A remedy is the device provided by the Contract to compensate an innocent party for the loss or expense it incurs as a consequence of the other party’s breach. � Specific implement: � It requires the court to grant an order requiring a party to perform a specific act. (In England, specific performance is an equitable remedy available for breach of contract and may be granted in addition to or instead of damages.) � Allows the innocent party to compel the party in breach to fulfil its obligations. � Only possible when the innocent party must be able to insist on the Works being completed. � It is seldom possible to prove this requirement, causing most remedies to be in the form of damages. 37 Withholding payment under the Construction Act � The Housing Grants, Construction and Regeneration Act 1996 clearly defines the circumstances in which payment due under a construction contract can be withheld. � Before withholding payment, a party intending to do so must give notice of this intention to withhold payment, sating: � the amounts that will be withheld; and � the grounds justifying each withholding. � Cl. 4.13 defines the process the Employer must follow if intending to deduct from the amount due under an Interim Certificate. � In Singapore context, refer to Security of Payment Act (SOPA) 38
Suspending performance � The Housing Grants, Construction and Regeneration Act 1996 clearly gives a party the right to suspend work if: � payment has not been made by the due date; and � notice explaining why payment is being withheld has not been received. � The Contractor’s statutory right of suspension is accommodated by cl. 4.14 in SBC/Q. 39 Recourse under Tort � A party can owe a duty to another in the absence of a contract (Each party has a Duty of Care towards the other) � Organisations still have obligations to each other irrespective of contract � In construction, liability under delict (Tort) is most likely to arise due to negligence. � All other possibilities are governed by standard contracts. � A claim for recompense under delict requires: � a duty of care to not be fulfilled; and � the innocent party to suffer loss. 40
PRINCIPLE OF CONTRACT LAW (PART 3 OF 3) 41 Learning Outcome � Understand Privity of Contract � Assignment and novation � Third party rights and collateral warranties � Sub-letting � Insurance, guarantees and bonds 42
Privity of contract � A contract between two parties can only create rights and liabilities between those two parties. � Historically, third parties cannot be affected, and cannot affect, a contract to which they are not a party. � The “privity principle” = the rights and obligations created by a contract are only enforceable by the parties to it � In construction, third parties often require rights as a consequence of the Contract between two parties as they are affected by the parties � work (i.e. owners of adjoining buildings, underwriters, etc.) � The construction industry has historically used collateral warranties to create a duty of care between a party to a Contract and a third party that is not part of the Contract. 43 Privity of contract (Cont’d) The strict application of the doctrine of Privity of Contract can now be moderated in one of the following ways: 1) Assignment. 2) Novation. 3) Contracts (Rights of Third Parties) Act 1999 4) Collateral Warranties. 44
Assignment � Under common law, a party can assign its rights to another party, but not its obligations. � Assignment takes place when the original party transfers some or all of the contractual rights to someone who is otherwise outside the contract. Eg:- a contractor obtain finance by assigning the rights of payment under a contract as collateral (security) for a loan � Cl. 7.1 requires a party wishing to assign rights arising from SBC/Q to obtain the written consent of the other party. � Cl. 7.2 allows the Employer to assign its rights with regard to the Contractor's obligations to the purchaser or tenant of the Works. This gives the purchaser the Employer’s rights to the correction of defects, for example. 45 Novation � It is not possible for one party to a contract to assign the whole contract (i.e. rights and obligations), to a third party and simply disappear � Novation is the creation of a completely new contract to replace the original one. � Instead of assigning rights created under the Contract, the Contract is terminated and a new one created with the new party. � In design and build procurement, novation allows the Employer’s design team to be transferred to the winning Contractor. � Novation creates problems of liability 46
The Contracts (Rights of Third Parties) Act 1999 � Empowers third parties by expressly given rights by a contract between two other parties (e.g. SBC/Q between Employer and Contractor) to enforce those rights. � Construction examples: � The Contractor may be obliged to not disrupt an adjoining business. The adjoining business is the third party. The Contractor would be liable to it if disruption did occur. � A third party may be given the right to damages if the actions (or inactions) of the Employer or Contractor cause it to incur loss and/or expense. � SBC/Q applies the Construction Act through cls. 7A and 7B; plus Schedule 5. 47 Collateral warranties � A collateral warranty is another contract formed between one of the parties to the main contract and a third party. � For example, the Contractor takes out a collateral warranty with a third party to satisfy a condition of the main Contract with the Employer . � “Collateral” = related to and dependent on another contract � “Warranty” = captures a promise made from one party to another � A collateral warranty overcomes the problems caused by the privity principle. � SBC/Q accommodates the use of collateral warranties as an alternative to third party rights in: � Part 2 of the Contract Particulars � Defines the warranties the Contractor must provide � C.l.s. 7C to 7E 48
49 Sub-contracting under SBC/Q � Two methods (i.e. appointing subcontractors / “sub-letting”). � The Contractor can select and appoint subcontractors to complete all or part of the Works (cl. 3.7). � The Contractor must obtain the CA � s written consent before appointing (cl. 3.7.1). � The CA will not withhold the provision of consent (cl. 3.7.1). � The Contractor is vicariously liable for the performance of all subcontractors. � “Listed” subcontractors are chosen by the Contractor to complete a designated part of the Works from a list of at least three subcontractors provided by the Employer (cl. 3.8).The Contractor is free to choose any subcontractor from the list provided. The Contractor or Employer can add to the list (cl. 3.8.2). 50
Sub-contracting under SBC/Q (Cont’d) � From a contractual viewpoint: � “Domestic” subcontractor = listed subcontractor. � “Domestic subcontractor” is not defined by SBC/Q. � “Listed subcontractor” is not defined by SBC/Q. � All subcontractors have the same contractual standing � Both domestic and listed subcontractors are “sub-contractors” under SBC/Q (cl. 3.8.4). � The Contractor is vicariously liable for their performance, irrespective of how they were introduced to the project. sub-contractors � � Cl. 3.9 defines mandatory terms of 51 appointment. Note cl. 3.9.2.5 (re collateral warranties). Nominated subcontractors � Why does JCT SBC/Q not allow “ nominated subcontractors ?” � Nominated subcontractors and nominated suppliers were widely used under JCT98. “There appears to have been little use of the provisions for Nominated Sub-contractors and little appropriate use of the Nominated Supplier Provisions. The provisions of JCT98 for listing of sub-contractors have been retained and, in the JCT's view, the specifying of a supplier is a matter generally better dealt with in the Contract Bills or other Contract Documents.” JCT (2005). Standard Building Contract: Guide (SBC/G) . London: Maxwell & Sweet. � JCT2011 share the same stand as JCT2005. 52
Indemnity � “Indemnity” = a legal exemption from incurred liabilities or penalties. � When a risk is transferred to another party, it indemnifies (pays compensation) that party against that risk. � If an event against which a party has sought an indemnity occurs, it will not bear the cost of resolving it. � Insurance policies provide an indemnity. � The insurance company indemnifies the policy holder against specified risks in return for payment of a premium. � The indemnity should return the policy holder to their original position. 53 Insurance “An insurance contract is an agreement whereby one party, the insurer, in return for a consideration, the premium, undertakes to pay the other party, the insured, a sum of money or its equivalent upon the happening of a specified event which is against the insured’s financial interest.” Eaglestone, F. Insurance under the JCT Forms . 54
Two types of insurance must be considered: 1) Liability insurance � The insurance company undertakes to indemnify the insured against the damages and legal costs which would occur if the insured became liable for those damages or costs. � This causes the risk borne by the insured to be passed to the insurer. � Examples: Car insurance, Public liability insurance, Professional Indemnity insurance (“PI” insurance) 2) Loss insurance � The insurance company undertakes to compensate the insured for loss or damage that the insured suffers itself rather than loss or damage that a third party suffers (which would be covered under liability insurance). � The insurance company is not required to provide an indemnity against the actions of third parties as loss insurance does not consider third parties; only the insured. � Loss insurance remains valid even if the insured incurs loss or damage due to its own mistakes (and negligence in some policies). 55 Guarantees and bonds � The Contractor may be required to provide a guarantee or a bond to prevent it non-performance. � Although often required, guarantees and bonds are not accommodated in a non-amended SBC/Q. � Bonds and/or guarantees are usually requested by the Employer. � A bond is provided by a third party which underwrites the Contractor’s fulfillment of its Contractual obligations. � A guarantee is provided by the Contractor's parent company for the same purpose. � Performance Bonds are common. � Retention bonds are becoming common. 56
TYPES OF CONTRACTS 57 Learning Outcomes � Understand types of Contracts � Identify various types of construction contract 58
Types of Contract Contracts have different types based on their payment systems. Two main payment systems are: � Price based: � These involve lump sum and measure (re-measurement) contracts. Prices are submitted by the contractor in his tender. � Cost based: � These involve cost-reimbursable and target cost contracts. The actual costs incurred by the contractor are reimbursed, together with a fee for overheads and profit. 59 Three types of contract available: 1)Lump Sum Contracts: � Where the Contract Sum is determined before construction starts. � A “lump sum” contract fully completes the design so that the Contract Sum can be accurately determined before construction works is started. The Contractor undertakes a defined amount of work in return for an agreed sum (Relevant standard form is The JTC2011 SBC/Q) � Pros: high degree of certainty about the final price, easier contract administration in the event of no or minimal change � Cons: not suitable when substantial change is expected 60
Three types of contract available (Cont’d): 2)Measured Contracts: � Contract Sum is not finalised until after completion, however the method of determining the Contract Sum (i.e. measuring the Works) is agreed between the Employer and the Contractor before the Works start (Relevant standard form is The JTC2011 SBC/Q) � Pros: some flexible for design change, time is saved in not preparing full BQs at initial stage (but re-measurement of the Works are required once complete), allow work to commence on site when the design is only in outline form � Cons: contract is quantity based and adversarial (only the rates form part of the contract not the quantities, more risk than lump sum contracts (but probably with programme advantage), final price may not be determined until long after the Works are complete, less initiative for designer to complete designs at 61 earlier stage Three types of contract available (Cont’d): 3)Cost Reimbursement Contracts: � Contract Sum is determined by calculation of the Contractor’s actual labour, plant and materials cost, to which a previous agreed percentage addition is made to cover the Contractor’s overheads and profit (cost plus). � Cost plus a percentage fee � Cost plus fixed fee � Cost plus fluctuating fee � Cost reimbursement based on a target cost � Pros: provide extreme flexibility, allow and require high level of client involvement � Cons: little incentive for the contractor to perform efficiently, no estimate of final price at tender 62
Using NEC Contract as example: 63 Principles of Standard Forms of Contract The construction industry uses Standard Forms of Contract to: � Save time in writing new contracts � Provide a check list of issues to agree � Incorporate previous judicial decision � Promote familiarity 64
65 The Contract Documents � Contract incorporate several documents � Under traditional procurement, these are: � Articles ofAgreement � Conditions of Contract � Contract Drawings � Contract Bills of Quantities � Specification 66
Families of Standard Forms of Contract � JCT (and SBCC) - Scottish Building Contract Committee � NEC � FIDIC � ICE � GC/General Works � ACA 67 Families of Standard Forms of Contract (Cont’d) � JCT (Joint Contracts Tribunal) – comprehensive, cover every procurement route relationship, most widely used. � NEC (New Engineering Contract) 68
Families of Standard Forms of Contract (Cont’d) 69 Families of Standard Forms of Contract (Cont’d) 70
Families of Standard Forms of Contract (Cont’d) 71 Families of Standard Forms of Contract (Cont’d) 72
Families of Standard Forms of Contract (Cont’d) 73 Families of Standard Forms of Contract (Cont’d) 74
Families of Standard Forms of Contract (Cont’d) 75 Families of Standard Forms of Contract (Cont’d) � FIDIC (Fédération Internationale Des Ingénieurs-Conseils) – international standard, used predominantly for infrastructure projects � ICE (Institution of Civil Engineers) – for civil engineering projects 76
Families of Standard Forms of Contract (Cont’d) � GC/Works – used by central Government, becoming less common 77 Families of Standard Forms of Contract (Cont’d) � IChemE (Institution of Chemicals Engineer) � Partnering Contracts (i.e. ACA PPC 2000 (2004 revision) - ACA (Association of Consultants Architect), NEC3 X 12 Option, JCT/Be Constructing Excellence contract) 78
TENDERING & PROCUREMENT (PART 1 OF 2) 79 Learning Outcomes � Understand and difference between tendering strategies tendering and procurement � Discuss practical application of Tender Strategies � Understand Project Constraints and Procurement Assessment Criteria (PAC) � Study main features, pros and cons of Traditional Procurement routes � Appreciate importance of procurement strategy to influence project success 80
Difference between tendering and procurement:- 1)Procurement is the overall act of obtaining goods and services from external sources (i.e. building contractor) and includes deciding the strategy on how those goods are to be acquired by reviewing the client’s requirements (i.e. time, quality and cost) and their attitude to ask. 2)Tendering is an important phase in the procurement strategy but procurement involves much more than simply obtaining a price. Tendering is the bidding process, to obtain a price and how a contractor is actually appointed. 81 Three main types of tendering strategy: 1) Single-stage tendering – most common strategy by obtaining a price for the whole of the construction Works through issuance of Invitation to tender documents to a number of competing contractors who are all given the chance to bid for the project based on identical tender documents. 82
Three main types of tendering strategy(Cont’d): 2)Two-stage tendering – become more common in recent years and is often used where time is constrained (enable overlap of design and tendering process). � Used when the design process would benefit from the technical input of a contractor in the later design stage (to obtain the early appointment of contractor. � Preferred contractor is chosen on the basis of the quality of their bid, the quality of their team and their prelim price, overhead and profit allowance rather than via bid for constructing the entire project. � Pre-construction services agreement will be put in place for work with the professional to the preferred contractor to complete the design. 83 Three main types of tendering strategy(Cont’d): 3)Negotiated T ender - effectively a single-stage tender with a single contractor who returns with an initial price. � This is then negotiated with the client’s professional team (usually quantity surveyor (PQS)). Competitive advantage of a formal bidding process is compromised. � Not viable for quasi-government projects. 84
85 86
Practical Application of Tender Strategies – Part 1 of 4 � Producing the pre-tender estimate (PTE) � Choosing the most suitable tender Strategy � RIBA Plan of Works/APM work plan � Setting up the tender including selection of tendering contractors � Assessing a suitable tender period 87 Practical Application of Tender Strategies – Part 2 of 4 � Producing/compiling the tender documents � Invitation to tender letter � Form of tender � Contract conditions � Instructions to tenderers documents � Project information (preliminaries/works/information/employer’s requirements) � Design information � Pricing document 88 � Typical appendices
Practical Application of Tender Strategies – Part 3 of 4 � Considering how project-specific factors/abnormal influence a tender � Issuing the tenders � During the tender process � Tender queries � Tender adduenda � Mind-tender interviews � Tender withdrawals 89 Practical Application of Tender Strategies – Part 4 of 4 � Receiving tenders � Opening tenders � Reviewing the tenders � Checking for errors and conflicts � Equalisation / Normalise process � Post-tender interviews � Checklist of further items to review � Post Tender (draft scoring and evaluation of findings) 90 � Tender report and notifying tenderers
Project Constraints � Time Requirements � Cost Requirements � Quality Requirements 91 Procurement Assessment Criteria (PAC) 9 criteria 1) Timing 2) Controllable variation 3) Complexity 4) Quality level 5) Price certainty 6) Competition 7) Management 8) Accountability 9) Risk avoidance 92
Procurement Options - Procurement Arrangement Options(PAO) 1) Traditional 2) Design and Build 3) Construction Management 4) Management Contracting 5) Prime contracting 6) Private Finance Initiative (PFI) 93 Traditional Procurement Route Main Features: � Design is fully developed before commencement of construction � Follow RIBA Plan of Work � T ender documentation based on drawings, specifications and Bills of Quantities, Approximate Quantities or Without Quantities � Tenderers are invited to tender a price to complete thedescribed Works � Cost relatively certain upfront � Split of responsibility for (and management of) design & production 94
95 Traditional Advantages: � Fair competition, satisfactory public accountability � Relatively low tender preparation/tendering costs � Procedures are well known � Changes to design are reasonably easy to implement and value � Full control over design quality 96
Traditional Disadvantages: � No concurrent working (slow to start on site and long duration) � Vulnerable to claims (additional time and money) in the event that design is incomplete � Non-involvement of Contractor in planning or design (poor buildability) � Design risk rests with the client � Fragmented nature leads to adversarial relationships, poor participants, possible conflict and communication between confrontation 97 Traditional 98
Traditional Traditional Procurement Variant Route: 1) Traditional sequential Contractors bid on completed design and cost documents 2) Traditional accelerated basis of partial A Contractor is appointed earlier on the information, by negotiation or in competition 3) Traditional with re-measurement A re-measurement contract uses bills of approximate quantities. The accepted tender sum is a lump sum based on a fixed period, but the quantities used to prepare the tender will be re- measured on completion 99 TENDERING & PROCUREMENT (PART 2 OF 2) 100
Learning Outcomes � Study main features, pros and cons of Non-traditional Procurement routes � Appreciate importance of procurement strategy to influence project success � Understand Partnering Concepts � Procurement Report 101 Design & Build Main Features: � Tender doc usually comprise brief to outline scheme stag e : � Building function � Space requirements � Building services performance criteria � Outline specification of key elements (i.e. finishes, key features, etc.) � Single point of contact (Contractor is appointed to complete the design and construct project � Suitability (suited to all clients, including inexperienced clients, suited to project requires cost and time certainty), not suitable for complex or high quality buildings � Minimisation of variations (design responsibility lies with the Contractor, leading to cost and time savings (compared with traditional procurement 102
Design & Build Advantages: � Client interacts with a single point of responsibility � Inherent buildability � A firm price can be agreed prior to construction � Shorter overall duration (compared to traditional) � Contractor’s design liability can be extended to include fitness for purpose 103 Design & Build Disadvantages: � Client needs to appoint Contractor before design is complete � No design overview unless Consultants are appointed by Client � Difficult for clients to prepare an adequate brief � Contractors’ bids are difficult to compare � Design liability limited by use of standard contracts � Client changes can be expensive 104
Design & Build Risks: � Low cost risk as most design and build contracts let on lump sum basis � Low time risk as the Contractor will use set time goals and be held to them � High design / quality risk as Contractor develops the design. Develop and construct procurement route can be used to overcome this 105 Design & Build 106
Design & Build Variant The Design & Build Variant 107 Design & Build The Design & Build Variant Novated Design & Build / Two-Stage Design: � Competitive Design and Build � Client prepares “client’s requirements” documents � Several Contractors tender design proposals brought to (typically) scheme design stage � Winning contractor appointed on basis of design content (including predicted cost) � The appointed Contractor then completes and constructs the design � Novation of the initial design team is required 108
Design & Build The Design & Build Variant Develop & Construct Contractor develops the concept design, contractor only responsible for the design development 109 Design & Build The Design & Build Variant Package Deal � “Off the shelf” product � Employer able to view similar completed buildings Turnkey � Complete package handled by Contractor from commencement to completion � Contractor does everything including fit-out � Idea : Take possession = turn the key 110
Construction Management Main Features: � A Construction Manager advises the client � The Employer contracts directly with the numerous Works Contractors � Shorter communication lines give quicker responses 111 Construction Management Advantages: � Potential to reduce project duration � Individual packages let competitively � Opportunities to improve buildability � Breaks down traditional adversarial barriers � Concurrent working is inherent � Clarity of roles, risks and relationships for all organisations � Late changes easily accommodated 112
Construction Management Disadvantages: � No cost certainty at outset � Needs informed client, able to take an active role in the project � Clients may not appreciate their risk exposure � Risks adopted by clients in return for control � Needs a good quality brief � Requires a competent project team � Needs effective control of time and information 113 Construction Management Risks: � Medium cost risk as total cost is not known until last package let � Medium time risk as no single organisation is solely response for timed completion � Low quality/design risk due to close working of client, designers and Works Contractors � Clients have historically had problems with Construction Management as they have not appreciated the risks associated with control 114
Construction Management 115 Management Contracting Main Features: � Management Contractor advises Client on programming, division ofthe project into work packages and buildability and obtain tenders � Work divided into series of packages � Each package is awarded on a lump sum, fixed price basis to separate Works Contractors � Construction of each package can start as soon as the Client approves its design � Design and construction overlap considerably � Relies on clear communication and co-operation, and mutual trust between Employer and Contractors 116
Management Contracting Advantages: � Concurrent working is inherent � Potential to reduce project duration � Opportunities to improve buildability � Breaks down traditional adversarial barriers � Late changes easily accommodated � Work packages tendered competitively 117 Management Contracting Disadvantages: � Needs a good quality brief � Poor price certainty � Requires a good quality project team � Difficult to resist Works Contractors’ claims 118
Management Contracting Risks: � Medium cost risk as total cost is not known until last package let � Medium time risk as total duration is determined by package selection � Low quality/design risk due to close working of client, designers and Works Contractors � Client relies on estimated costs until the last package has been tendered and let � A Guaranteed Maximum Price (GMP) may be negotiated with the Management Contractor to move cost risk from the client 119 Management Contract 120
121 Prime Contracting � A form of procurement in which the client enters into a relationship with a contractor who provides a single point of contact (prime contract) for a supply chain to deliver one or more projects (long term relationship). � The contractor is reimbursed subcontractor costs (prime costs) and a fee for overheads and profit (i.e. a prime cost contract, cost plus contract or cost reimbursement contract). 122
The Private Finance Initiative (PFI) Main Features: � A public sector client procures a service from the private sector � Several private sector organisations collaborate to provide the service � New buildings or infrastructure is usually required � The quality of service is specified; the quality of capital assets is not (other than functionality) � Capital assets are financed, designed, constructed, and operated by the private sector � Capital assets may be retained by the private sector at the end of the agreement 123 The Private Finance Initiative (PFI) Main Features (Cont’d): � PFI schemes run for long time periods � The private sector is exposed to many risks � Financing risks � Demand risk (continuity and certainty) � Technology risk � PFI schemes convert public sector capital expenditure into revenue expenditure � PFI schemes are complex collaborations and generally involves 3 types of organization:- � The public sector client � The private sector provider of the required service 124 � Funders and investors
The Private Finance Initiative (PFI) PFI Scheme Participants: The public sector client: � instigates the project to advance its primary strategy � is usually inexperienced in PFI procurement � is advised by central government bodies � procures the service from the private sector via a single contractual link � procures the service from a Special Purpose Vehicle (SPV) created by the private sector 125 The Private Finance Initiative (PFI) PFI Scheme Participants (Cont’d): The private sector service provider: � The private sector service provider comprises several private sector organisations that collaborate to provide the service via the Special Purpose Vehicle (SPV) � The SPV is an legal entity created by the collaborating private sector organisations that: � Procures design, construction and operating expertise from the construction industry � Secures finance from funders and investors � Distributes risks inherited from the client 126
The Private Finance Initiative (PFI) PFI Scheme Participants (Cont’d): The funders and investors: � The funders and investors provide the capital required to construct new infrastructure � Funders provide the majority of finance as loans that are repaid during scheme operation � Investors provide further finance through part ownership of the scheme. They are paid dividends in addition to repayment of stock investments � Funders and investors influence the private sector service provider to ensure they will earn the required return on their 127 investments The Private Finance Initiative (PFI) PFI Scheme Participants (Cont’d): � “The consortium” comprises all the collaborating private sector organisations � Construction designers, constructors, operators � Funders and investors � The SPV 128
129 The Unitary Charge: � In return for access to the service the client makes regular payments to the SPV � This is the “unitary charge” � The private sector uses the unitary charge to: � Finance the construction of new infrastructure � Finance the operation of that infrastructure to a performance level agreed with the client � Earn a profit 130
PFI (NON-TOLL BASED) 131 PFI (TOLL BASED) 132
Partnering concepts Collaborative approaches: � Recognise that success is more likely if organisations work together for the good of the project, rather than themselves � Are implemented as: � Short term project partnerships; or � Long term strategic partnerships � Reply on a neutral third party to help organisations partner by facilitating the process of establishing common ground and shared attitudes 133 Partnering defined “Partnering is a set of strategic actions, which embody the mutual objectives of a number of firms achieved by co-operative decision making aimed at using feedback to continuously improve their joint performance. ” JCT Constructing Excellence contract 134
Partnering defined � All partnerships must: � Develop mutual objectives � Solving problems collaboratively and simply before they escalate into disputes � Measure performance to characterise continuous improvement (Measuring continuous improvement) � In addition, they should: � Share common values and cultural norms among partners � Incentivise partners to continually improve � Provide value for money to the client 135 Forming Partnerships � Forming a partnership requires a step-change from traditional practice � An independent facilitator will guide the process � Usually through a series of workshops � Linked to commercial development if strategic partnering � Linked to project process if project partnering � Facilitator aims to build common understanding, practices and goals among partners 136
Value for money and partnering � A criticism of partnering is the difficulty of ensuring value for money � Achieving VFM from partnering requires: � Comparison of partnership performance against other procurement routes (using additional metrics than costalone) � Demonstrating continual improvements in performance throughout partnership life � Reforming the partnership after periods of operation � Removing underperforming organisations 137 Target Costing � If actual cost < target cost � Contractor and client share the saving � Target cost must be realistic and not inflated � If actual cost > target cost � Contractor and client share the additional cost � If actual cost > GMP � Contractor and client share the additional cost below GMP � Contractor bears all additional cost above GMP 138
Procurement Report 1.Executive Summary 2.Introduction / purpose of the report 3.The project scope 4.Client’s objectives 5.Summary of procurement options 6.Review of options (advantages / disadvantages) 7.Recommended strategy 139 140
141 142
*Providing all issues resolved during 2 nd stage, if not the 2 stage would score lower ** Client at risk during the 2 nd stage negotiations 143 *Providing all issues resolved during 2 nd stage, if not the 2 stage would score lower 144 ** Client at risk during the 2 nd stage negotiations
STAKEHOLDER MANAGEMENT 145 Learning Outcome � Understand Stakeholder � Stakeholder Management & Engagement � Stakeholder Analysis and Register 146
What should you do with stakeholder throughout the project? 1)Identify all of them 2) Determine their requirements 3) Determine their expectations 4) Determine their interest 5) Determine their level of influence 6) Plan how you will manage them 7)Plan how you will communicate with them 8) Manage their expectations, influence and engagement 9) Communicate with them and stakeholder 10) Control communications engagement 147 1) Identify all of them � As early as possible � Stakeholders discovered late in the project will likely request changes, which can lead to delays � Internal/External, Primary/Secondary, Direct/Indirect, Overt / Covert � People, could groups or organisations that positively or negatively impact or be impacted by the project 148
2) Determine their requirements � Conduct requirements reviews � Inform consequences if people the negative requirements are found later 149 3) Determine their expectations � More ambiguous than stated expectation, may be unidentified requirements � Intentionally or unintentionally hidden � Unidentified expectations will have major impacts across all constraints � Once captured, expectations are analysed and may be converted to requirements and become part of the project 150
4) Determine their interest � Determine level of interest to plan strategy to increase stakeholder’s interest and level of engagement � Determine stakeholder’s interests related to the project and, where appropriate, attempt to either build these interests into the project or implement them as reward � Engagement levels: unaware, resistant, neutral, supportive, leading 151 5) Determine their level of influence � To some degree, each stakeholder will be able to negatively or positively effect a project � Should be identified upfront and managed accordingly � Power / Interest, Power / Influence, Influence / Impact, Power / Urgency / Legitimacy � Analyse potential impact or support (i.e. keep satisfied, manage closely, monitor (minimum effort), keep informed. 152
Multiple classification models used for stakeholders’ analysis such as: � Power / Interest � Grouping the stakeholders based on their level of authority (power) and their level of concern (interest) � Power / Influence � Grouping the stakeholders based on their level of authority (power) and their active involvement (influence) 153 Multiple classification models used for stakeholders’ analysis such as (Cont’d): � Influence / Impact � Grouping the stakeholders based on their active involvement (influence) in the project and their ability to effect changes to the project’s planning or execution (impact) � Salience model (Power / Urgency / Legitimacy) � Describing classes of stakeholders based on their power (ability to impose their urgency (need for immediate attention), and legitimacy (their involvement is appropriate). 154
High KeepSatisfied Manage Closely Power Monitor Keepinformed (MinimumEffort) High Low Interest 155 6) Plan how you will manage them � Plan before taking action � Plan how to keep them involved in the project and how to manage their interests, influence and expectations 156
7) Plan how you will communicate with them � T o keep stakeholders involved and get them to relate their thoughts and concerns to plan how information will be shared � Remember communication as the most frequent causes of problems on projects so careful communication planning can help prevent problems 157 expectations, influence and 8) Manage their engagement � Managing stakeholders doesn’t end during project initial stage the life of the � On-going process throughout project 158
9) Communicate with them � Stakeholders are included in project presentations and receive project information, including progress reports, updates, changes, etc. � Regular engagement with stakeholders 159 10) Control communications and stakeholder engagement � Good communication and relationships with stakeholders are critical to success � Essential to monitor both areas and to determine if and where communication and/or relationships are breaking down and then adjust approach as necessary � Manage closely, keep satisfied, keep informed, monitor 160
Stakeholder Analysis � Classification tools such as power/interest grids can be used to group stakeholders � Group by qualifications lie authority level, impact or influence, or requirements � Help better manage stakeholders on the project 161 Stakeholder Register � Compilation of stakeholders’ information � May include stakeholders’ name, title, supervisor, project role, contact information, major requirements and expectations, impact and influence, attitude about the project, the classification the individual falls into, and other relevant information STAKEHOLDER REGISTER ProjectTitle ProjectNo. ID Name Title Department ContactInfo Impact Major Major Influence Role(s) in Responsibilities Classification Requirements Expectations (1 to 5) Project inProject 1 2 3 162
Stakeholder Analysis Matrix (SAM) and � Stakeholder analysis information management strategies � Sensitive information not to be published No. Stakeholder Impact Potential Influence/Interest Assessment Stakeholder Management Strategies 1 2 163 CONTRACT ADMINISTRATION (PART 1 OF 3) (Refer to JCT2011/ SBC/Q for this Module) 164
Learning Outcome � Structure of Contract Documents � Purpose of clauses and parts of JCT2011 SBC/Q 165 Contract Documents comprise: (Refer to JCT2011 Notes 6.1) � The Agreement and its Conditions (should be from a standard form) � The Contract Drawings � The Contract Bills (the Bills of Quantities, including their ‘preambles’ & specifications) 166
The Contract Sum � When the Contract is executed, the selected tenderer’s tender price becomes the Contract Sum � The Contract Sum is the amount the Employer will pay to the Contractor in the event that there is no design changes required during construction and no damage arise. � The Contract Sum is defined in JCT2011/ SBC/Q Article 2: 167 Employer’s Obligations: � Payment of the Contract Sum (Article 2) � Possession of the site (cl. 2.4) � Administration of the Contract - Appoint: � The Architect / Contract Administrator (Article3) � The Quantity Surveyor (Article 4) � The CDM Coordinator (i.e. planning supervisor”) if none then the Architect (Article 5) � The Principal Contractor (Article 6) � An arbitrator, if agreed to have one (Article 8; cl. 9.3) If QS or CA quits, Employer must appoint a replacement within 21 days (cl. 3.5) 168
Employer’s Obligations (Cont’d): � Insurance and Indemnity (Cl. 6.7 to 6.11), in the event that the Employer will insure the Woks against “all risks” during construction, Joint name policy , risks to be covered (cl. 6.8), Option B to the construction of new buildings (Schedule 3, cl. B.1 to B.3), Option C applies to construction in or alteration of existing buildings (Schedule 3, cls. C.1 to C.4), Employer’s negligence is not offset by Contractor’s public liability insurance, which is also required (cl. 6.1) � Confidentiality – prevents the Employer from sharing any commercial information relation to the Contractor with third parties � Health & Safety – must ensure that Works do not commence until HSE plan is in place, The Construction (Design and Management) Regulations (CDM) (Cls. 3.23, 3.24) 169 The Construction (Design and Management) Regulations (CDM) are the main set of regulations for managing the health, safety and welfare of construction projects. Contractor’s Obligations: � T o construct the Works as described in the Contract. Obligation created by Article 2 � C.l. 2.1 requires the Contractor to complete the Works in a “proper and workmanlike manner” in compliance with the Contract Documents. � Quality of workmanship � Materials (cl. 2.3.1), workmanship (cl. 2.3.2) “as described”. � If the BQ do not define the required quality of materials or workmanship, the work must be “of a standard appropriate to the Works” (cl. 2.3.3) � If the CA is not satisfied with the quality of materials or workmanship, he can instruct the Contractor to remedy this (cl. 170 3.19) and cost to be borne by Contractor
Contractor’s Obligations (Cont’d): � Insurance and Indemnity (Cl. 6.7), in the event that the Contractor will insure the Woks against “all risks” during construction, Joint name policy to also indemnify the Employer (cl. 6.2), risks to be covered (cl. 6.8), Option A applies to the construction of new buildings (Schedule 3, cl. A.1 to A.4), Public liability insurance is also required (cl. 6.1). Insurance against Personal Injury and Property Damage & Insurance against Damage to the Works � Access and supervision – Contractor is obliged to grant access to the site to the CA (cl. 3.1), Employer’s representative (cl. 3.3) and keep a competent person-in-charge on the site at all times (cl. 3.2) 171 Contractor’s Obligations (Cont’d): � Health & Safety – to comply with all relevant Statute (i.e. the law), even though they have to anyway (c.l. 2.1) – Contractor liable to the Employer for any breach caused by non-compliance with Statute – CDM Regulations, Health and Safety at Work Act 1974. Health and Safety at Work Act 1974. Often referred to as HASAW or HSW, this Act of Parliament is the main piece of UK health and safety legislation. It places a duty on all employers "to ensure, so far as is reasonably practicable, the health, safety and welfare at work" of all their employees. 172
The Employer’s Agents � An Agent is a person exercising contractual powers on behalf of someone else. � The organisation employing the Agent is called the Principal. � Once the Principal has employed an Agent, it will be bound by the acts of that Agent. � Under JCT2011, the Architect, Engineers, Clerk of Works, and Quantity Surveyor are the Employer’s agents. 173 The Architect (CA) � The rights and responsibilities of the Architect are definedby: the law; � the terms of appointment (e.g. the RIBA StandardAgreement for the Appointment of an Architect);and � the JCT2011 SBC/Q Contract Conditions. 174
The Architect (CA) (Cont’d) � May not profit from his appointment other than his fee. � May not delegate his responsibilities except as defined by the Contract. � Under JCT2011 SBC/Q the Architect’s rights to delegate are narrow and accurately defined. � Must act in his Principal’s interest. � Owes a duty of care to his Principal (i.e. the Employer). � Owes a duty of care to the Contractor. If the Contractor suffers loss due to false or negligent information from the Architect, then damages due. 175 The Clerk of Works � The Employer is entitled to appoint a Clerk of Works to act as an inspector on site on his behalf (cl. 3.4) � The Clerk of Works inspects the quality of materials and workmanship and may issue directions to the Contractor. � The Clerk of Works can only direct the Contractor on matters that the CA can (later) instruct (cl. 3.4) � A Clerk of Works direction has no effect until confirmed by the CA within 2 days of the direction being given (cl. 3.4) � The CA’s confirmation is considered to be an Instruction 176
The Quantity Surveyor � Prepares interim valuations (cl. 4.11) and evaluates the Contractor’s applications for payment, if submitted - they usually are (cl. 4.12) � Calculates the amount of Retention on each interim valuation (cl. 4.18.2) � Ascertains the amount of the Contractor’s Loss and Expense, if instructed to by the CA following the Contractor’s submission of a claim (cl. 4.23.3) � Values Variations and provisional sum work (cl. 5.2) and re-measure work for interim valuations, if required (cl. 5.4) � Agrees payment for Fluctuations with the Contractor (Schedule 7 para. A.5, B.6, or C.4) � Prepares each interim’s Gross Valuation in accordance with The Valuation Rules (cl. 5.6) – QS ascertain then CA issue an Interim Certificate. 177 The QS will always prefer to value using cl. 5.6 rather than cl. 5.7(Daywork Rates). Requirements of a certificate � Certificates document achievement or occurrence of key events in a project � Certificates must: � leave no doubt as to their content and consequences � be issued when required by the Contract � be issued in accordance with the procedure defined by the Contract � be issued by the correct party � be issued to the correct party � The CA must give the Contractor a copy of all Certificates sent 178 to the Employer ( cl. 1.8 ).
CONTRACT ADMINISTRATION (PART 2 OF 3) (Refer to JCT2011/ SBC/Q for this Module) 179 Learning Outcome � Purpose of clauses and parts of JCT2011 SBC/Q 180
Payment under SBC � Corporates several obligations from the Construction Act regarding payment practice, including: � The Employer has 14 days from the issue of an Interim Certificate to pay the certified amount to the Contractor (cl. 4.13.1) � If it does not,then: � The Contractor can charge interest on the outstanding amount at 5% above the base rate (cl. 4.13.6; cl. 1.1); � The Contractor can suspend the Works (cl. 4.14); and � The Contractor can terminate its own employment if payment still outstanding a further 14 days past the due date (i.e. 28 days after certificate issue (cl. 8.9.1.1) 181 Interim payments � Interim valuations are performed at agreed regular intervals by the QS to ascertain the current value of the Works � This is the Gross Valuation � In principle, the difference between one Gross Valuation and the immediately preceding Gross Valuation is the amount to be paid by the Employer for that period’s work � This amount is subject to Retention (and other Employer “set- offs” as permitted by SBC/Q) 182
Retention � Retention is governed by cls. 4.10, 4.18 and 4.20. � An agreed Retention Percentage is withheld by the Employer from each payment due following a Gross Valuation. � Retention is deducted at the full Retention Percentage stated in the Contract Particulars from Works not yet covered by a Practical Completion Certificate (cl. 4.20.2.1) � Retention is also deducted at the full Retention Percentage from materials on site and Listed Items (cl. 4.20.2.2) � Retention is deducted at half the Retention Percentage stated in the Contract Particulars from Works that are covered by a Practical Completion Certificate but are not yet covered by a Certificate of Making Good - i.e. during the Rectification Period (cl. 4.20.3) 183 Terminology � Interim - Something that happens several times at regular intervals - SBC/Q defaults to valuations at monthly intervals. � Gross Valuations (cl. 4.16) The QS’s ascertainment of the total value of the partially completed Works on the date of each interim valuation. � Interim valuations (cl. 4.11) The QS’s monthly activity of ascertaining the amount due in an Interim Certificate. This requires a Gross Valuation. � Interim Certificates (cls. 4.9, 4.10, 4.13) The regular certificates denoting the interim payments that must be paid by the Employer to the Contractor. � Retention (cls. 4.10, 4.18, 4.20) A proportion of the sums otherwise due to Contractor withheld by the Employer until the end of the project to ensure the Contractor to complete the Works. � Retention Bond (cl. 4.19) As alternative of the Employer deducting Retention, the Contractor can obtain a Retention Bond which will pay out to the Employer if the 184 Contractor defaults on its obligations.
Payment generally Contract parties are free to agree: � The sum to be paid for the Works. � Whether payment is to be in instalments. � When instalments are due and how they are to be paid. 185 Paid when paid” clauses � Payment Grants, Construction and under The Housing Regeneration 1996 Act: � Sections 109 and 110 establish the Contractor’s statutory right to periodic payment. � Section 110(1) requires that a mechanism for ascertaining payments is provided by construction contracts. � Section 113 prohibits “paid when paid” clauses These were typically used by the Contractor with its subcontractors and were considered unfair. 186
Content of a Gross Valuation When ascertaining each Gross Valuation, the QS will include: � those parts of the Works “properly executed” on the date of valuation (cl. 4.16.1.1) � materials or goods stored on site and clearly identifiable as being destined for inclusion in the Works (cl. 4.16.1.2) � materials or goods stored off site but identified in the Contract Documents as “Listed Items” and therefore clearly identified as being destined for inclusion in the Works, (cl. 4.16.1.2) 187 Interim Certificates: procedure � The Contractor can (and usually does) make an application for payment under cl. 4.12 in advance of the interim valuation. � The Contractor’s application will typically include: � Works completed to date, charged at “bill rates.” � Works completed in response to CA Instructions requiring variations, charged in accordance with the Valuation Rules (cls. 5.6 to 5.10). � Wherever possible, variations should be measured and suitable bill rates applied (cl. 5.6 - “Measurable Work”). � If a variation “cannot properly be valued by measurement,” Daywork may be used (cl. 5.7 - “Daywork”). � All Dayworks sheets must be signed by the Clerk of Works. 188
Interim Certificates: procedure (Cont’d) � The QS conducts an interim valuation as required by the CA to ascertain the “Gross Valuation” so that an amount payable by the Employer can be stated as due in an Interim Certificate (cl. 4.10). � The QS will attend the site to: � Confirm and value the work completed (cl. 4.16.1.1) � Confirm and value any materials or goods stored on site and due to be incorporated in the Works (cl. 4.16.1.2) � Confirm presence of any Listed Items (this may require a visit to the Contractor’s or supplier’s storage facility) (cl. 4.16.1.3) 189 Interim Certificates Each Gross Valuation must “adjust” the Contract Sum to incorporate additions or deductions caused by Variations, additions and deductions (cl. 4.16): here are some deductions… � Liquidated Damages (if Non-Completion Certificate issued) (cl. 2.32.2.2) � Errors in setting out that do not have to be amended (cl. 2.10) � Cost of employing an alternative contractor to rectify defects the Contractor is refusing to fix (cl. 2.38) � Cost of employing an alternative contractor to implement instructions the Contractor is refusing to do (cl. 3.11) � Value of Works not in accordance with the Contract which does not require to be replaced (cl. 3.18.2) � The updated Contract Sum is the Gross Valuation (cl. 4.16). 190
Instructions vs. Variations Instructions � Instructions address how the Works are being completed (Instructions are issued to change the way in which Contractor are working or correct parts of the Works that have been assembled incorrectly) � Instructions are usually issued when the CA or Clerk of Works observes the Contractor to be acting contrary to the Contract Documents (e.g. work “not in accordance”) The Contractor will not be paid to comply with an instruction � The instruction was required because the Contractor was not doing what it should have been doing. � The Contractor would be paid for complying with an instruction if the instruction was issued in error 191 Variations � Variations change the definition of the Works themselves. CA can only issue instructions in accordance with their right to do so under SBC/Q cls. 3.14 to 3.22. � Two types of Variations: � Variations that change the content of the Contract Documents (cl. 5.1.1) � Variations that oblige the Contractor to use certain working methods (e.g. working at night) (cl. 5.1.2) 192
CA’s instructions � Traditionally called “Architect’s instructions” (or “A.I.s”) � Now that any suitable organisation can adopt the Contract Administrator role, instructions are also called “Contract Administrator’s instructions” � The purpose of an instruction is to direct the Contractor’s work. An instruction may: � require site practice to be changed � require the Contractor to correct its mistakes � vary the definition of the Works - i.e. issue a “Variation” (‘Variation’ is an alteration of the Contract Document) 193 CA’s powers to instruct � The CA can only issue instructions where allowed by SBC/Q � All instructions must be in writing (cl. 3.12.1) � Verbal instructions must be confirmed in writing within 7 days, or � Contractor’s written acceptance of a verbal instruction becomes a CA’s instruction if a CA’s instruction is not issued within 7 days of the Contractor’s acceptance 194
CA’s powers to instruct (Cont’d) � A Variation is required cl. 3.14 � The Works are to be postponed cl. 3.15 � A Provisional Sum is to be spent cl. 3.16 � Inspection of the Works is required cl. 3.17 � Work not in accordance must be corrected cl. 3.18 � Workmanship not in accordance must be corrected cl. 3.19 � The work is otherwise not satisfactory cl. 3.20 � A person is to be excluded from the site cl. 3.21 � Antiquities have been discovered cl. 3.22 195 Contractor’s right to query instructions � The Contractor has the right to “reasonably object” to an instruction if: � the Contractor believes the CA cannot issue it, or has done so in error � it would change the working conditions as given in clause cl. 5.1.2 under which the Works are to be completed (cl. 3.10.1) � The Contractor can ask the CA to prove that it has the right to issue the instruction (cl. 3.13) � The CA must notify Contractor of the SBC/Q provision that empowers the instruction “forthwith” 196
Adjusting the Contract Sum The Contract Sum can be increased or decreased if: � a Variation has been issued (cl. 4.3.1.1) � an Acceleration Quotation or a Variation Quotation has been submitted by the Contractor and accepted by the Employer (cl. 4.3.1.2) � a change in premiums the Contractor must pay for any “all risk” insurance of the Works they were obliged to take out (cl. 4.3.1.3). 197 Valuing variations (Measurable Work) 5.6.1 To the extent that a Valuation relates to the execution of additional or substituted work which can properly be valued by measurement or to the execution of work for which an Approximate Quantity is included in the Contract Bills and subject to clause 5.8 in the case of CDP Works, such work shall be measured and shall be valued in accordance with the following rules : 1.where the additional or substituted work is of similar character to, is executed under similar conditions as, and does not significantly change the quantity of, work set out in the Contract Bills, the rates and prices for the work so set out shall determine the valuation; 5.6.1 2.where the additional or substituted work is of similar character to work set out in the Contract Bills but is not executed under similar conditions thereto and/or significantly changes its quantity, the rates and prices for the work so set out shall be the basis for determining the valuation and the Valuation shall include a fair allowance for such difference in conditions and/or quantity; 3.where the additional or substituted work is not of similar character to work set out in the Contract Bills, the work shall be valued at fair rates and prices; 4.where the Approximate Quantity is a reasonably accurate forecast of the quantity of work required the rate or price for the Approximate Quantity shall determine the valuation; and 198
Valuing variations (Measurable Work) (Cont’d) 5.6.1 .5 where the Approximate Quantity is not a reasonably accurate forecast of the quantity of work required, the rate or price for that Approximate Quantity shall be the basis for determining the valuation and the Valuation shall include a fair allowance for such difference in quantity. Provided that clauses 5.6.1.4 and 5.6.1.5 shall apply only to the extent that the work has not been altered or modified other than in quantity. 2.To the extent that a Valuation relates to the omission of work set out in the Contract Bills and subject to clause 5.8 in the case of CDP Works, the rates and prices for such work therein set out shall determine the valuation of the work omitted. 3. In any valuation of work under clauses 5.6.1 and 5.6.2: 1.measurement shall be in accordance with the same principles as those governing the preparation of the Contract Bills, as referred to in clause 2.13; 2.allowance shall be made for any percentage or lump sum adjustments in the Contract Bills; and 3.allowance, where appropriate, shall be made for any addition to or reduction of preliminary items of the type referred to in the Standard Method of Measurement, provided that no such allowance shall be made in respect of compliance with an 199 Architect/Contract Administrator’s instruction for the expenditure of a Provisional Sum for defined work. Key events in project progression � Date for Possession contract period starts � Date for Completion [of the Works] / Completion Date contract period ends - these dates may, or may not, be the same Note: If the CA judges the Works to be incomplete on the Completion Date (which may, or may not, be the Date for Completion in the Contract Particulars), it issues a Non-completion Certificate (Clause 2.31). Issue of a Non-completion Certificate obliges the Contractor to pay Liquidated Damages to the Employer at the rate in the Contract Particulars � Practical Completion the Works are practically completed - half the Retention is released (Practical Completion Cert, c.l. 2.30) � Making Good Defects the Works and all snagging are fully completed - the remaining Retention is released (Certificate of Making Good, c.l. 2.39) � Final Certificate the final account is settled (c.l. 4.15) 200
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