contract management & administration

The industry standard forms of building contract are published by the JCT, and these have over many years been and continue to be developed to include standard covenants (such as the parties, the scope of works, the cost, relevant dates, etc), the rights and duties of both parties, insurance provisions, health and safety requirements, and the procedures to be followed should anything go wrong and/or if there is a dispute.

The JCT Minor Works Agreement is essentially designed for works of 'simple' content (general building operations), and most often with contract values up to £250,000 although it can be employed on even larger projects provided the works content is reasonably straightforward.

The JCT Intermediate Contract is designed to contain more detailed provisions for usually larger and more complex projects, but generally not those involving highly specialised operations such as would require the appointment of a mechanical and/or electrical services engineer.

The JCT Standard Building Contract (with or without quantities) is for large or complex construction projects where very detailed contract provisions are required.

The JCT also produces other forms of specialised contracts such as Design and Build, Construction Management, Measured Term, Prime Cost, etc, but these do not fall within BBS remit

The vast majority of bona fide builders and contractors working in the UK are well used to working with JCT contracts and, indeed, often prefer to be engaged on these bases rather than other forms with which they will be less familiar. Both the Employer and the Contractor can have full confidence in the depth and thoroughness of these contract provisions and the measure of protection that they provide to all parties, particularly when the contract is professionally administered.

The contract administrator (CA) effectively acts as an intermediary between the Employer and the Contractor, and he is more often than not engaged from the very start of a project. He is charged with ensuring that everything runs as smoothly as possible, that the Employer's reasonable objectives can be and are met insofar as possible, and that all the appropriate documentation is in place and/or produced at the right times. His role can also be extended, dependent the complexities of the project, to include acting as Quantity Surveyor and/or as Principal Designer under the Construction (Design and Management) Regulations.

Monitoring the performance of the works is a key role of the CA. Whilst the Contractor is responsible for the day to day supervision of his operatives, etc, the CA will ensure that he is keeping to the contract in terms of works and materials quality and good building practices, and maintaining progress in line with the contract programme. The CA is also present on a regular basis to deal with comments and queries arising, the instruction of any variations to the works, etc, and to relay communications between the parties in an effective and well ordered manner.

If the CA also acts as the Quantity Surveyor (often the case particularly on smaller projects), he will be responsible for ensuring that valuations of the works in progress are an accurate reflection of achievement, and for issuing payment certificates, etc on time and upon which basis the Contractor will produce his invoices for payment by the Employer. He will also oversee the accurate presentation of eventual final accounts, and certify accordingly.

The statutory duty for compliance with health and safety, generally embodied in the Construction (Design and Management) Regulations, falls on all those involved in the works, both at pre- and post-contract stages. If the CA also acts as the Principal Designer under those regulations, his main duties tend to be pre-contract, but they can also be post-contact in the event of variations, etc being instructed. Following contract procurement, the large part of compliance with these regulations falls to the Contractor acting as Principal Contractor.

The CA is empowered to step in should things go wrong, and/or if the parties are in dispute during the currency of the works, although the JCT contracts do provide for arbitration or adjudication in the event of an irreconcilable dispute - these contract processes are designed to avoid recourse to the courts if at all possible. The works may be running late, in which event the CA will judge where responsibility lies and can either issue an extension of time, or advise the Employer to withhold liquidated damages if so provided in the contract. One or other party may be in breach of the contract, for example the Employer does not make payment in accordance the CA certificates, or the Contractor fails to expedite the works or withdraws labour, in which events the CA is empowered to serve notice on either party that the breach be remedied, failing which the party in breach would face sanctions, possibly even termination and the consequent remedies.

The CA will see the project through from start to finish, and beyond – a JCT contract will usually contain a defects liability period following the certified practical completion of a project, and during which period the Employer is entitled to withhold a monetary retention on the Contractor as 'insurance' against any faults arising with the Contractor's work during that period. The CA will make an inspection of the property at the expiry of that period, and require the Contractor to attend any found faults with his work at no added cost, following satisfactory completion of which the CA will certify making good of defects and final payment, and whereupon the contract is concluded.

There is no set scale for the charging of professional fees for contract administration. It is, however, common for fees (which are agreed at the outset) which are linked (often by a percentage) to the cost of the works. BBS will generally seek to charge fees varying from a maximum 15% of the project cost for smaller works, and reducing on a sliding scale depending size, value, complexity and scope of brief for a particular project.

This method of charges relating directly to the value of the works is useful for both the client and the consultant, as it will generally accommodate the value of any variations which may need to be instructed during the performance of a contract (up or down), without the need to be constantly revising and agreeing new fee charges. It is common that BBS will charge CA fees on this basis in tranches on the completion of certain elements of the project, such as at design stage, then at pending contract procurement, and finally at the achievement of practical completion.

All fees charged by BBS are subject to the addition of VAT at the prevailing rate.