Episode 36:

Hello and Welcome to the Part3 with me podcast, 

The show that helps part 3 students jump start into their careers as qualified architects and also to provide refresher episodes for practicing architects. I am your host Maria Skoutari and this week we will be looking more closely at the Contract Administrators role, responsibilities and duties under the different JCT Contract Forms — PC5 - Building Procurement of the Part 3 Criteria.

Let’s start by defining what and who a Contract Administrator aka CA is:

The CA’s role involves managing the contract between the employer and building contractor. This role was historically carried out by the architect but it can be undertaken by several possible professionals, such as building surveyors, quantity surveyors, management surveyors and engineers. But interestingly the JCT forms refer to the role as ‘Architect/Contract Administrator’ indicating that there is no contractural difference between the two under the JCT forms. 

The CA role is typically outlined in the JCT Minor Works Contract, Intermediate Contract and Standard Building Contract. 

So when does the CA’s role begin:

The CA’s role starts once a building contract is in place between the employer and the contractor. There may be instances though, were the CA is required to perform pre-contract services to be covered by a formal or informal agreement with the employer. These often include activities such as the selection of the method of procurement, calculation of liquidated damages and deciding on the type of building contract. Then the CA becomes responsible for a series of services following the start of the building contract. 

Before we jump into the CA’s responsibilities, lets look into their appointment process and terms of appointment first:

When acting as CA, the individual should comply with the relevant RICS rules and by-laws and confirm their terms and conditions within the appointment. The exact details will need to be agreed with the employer stating the scope of services, the level of PII cover, and exercise reasonable skill and care. 

A few key items the CA should we wary of include caution when involving the terms of appointment are:

• Seeking the employer’s authority to instruct works that will require expense not covered in the building contract. If the CA has not been given authority or permission to make decisions that could have financial implications, so its useful for the CA to agree with the client at the outset a method for dealing with unforeseen and additional works, as well as expending monies.
• Reporting in a particular format and at specified times.
• Undertaking the design responsibility for the works.
• Carry out routine site inspections to monitor and update the client on quality, progress and conformity with the contract documents. 
• Provide instructions stating what information the employer will be provided with and its frequency. One of the best times to advise the employer will be when preparing interim valuations, when the CA will have to assess the value of instructions and should be able to predict the likely ACS based on anticipated instructions and adjustments for the expenditure or non-expenditure of provisional and contingency monies.
• Check for compliance with the specification of works and quality and if defective workmanship or materials are found or suspected, the CA should seek proof the materials are in accordance with the specification, issue instructions for opening up, issue instructions to remove work, materials or operatives from the site.
• Be aware of health and safety
• Be aware of general current legislation that may affect the conduct of the building contract and the contract works
• CA has a duty to recommend to the employer that they get their own specialist advice on insurance cover, in terms of level, scope and relevance to the works and provisions of the building contract and the CA should confirm that all the appropriate insurances are in place at the time the building contract is signed
• The CA will need to be familiar with The Housing Grants, Construction and Regeneration Act 1996 procedures, including the Act’s provisions in the building contract.

So that cover the terms of the CA’s appointment. 

Now lets look into what the CA’s responsibilities are under the building contract:

In general, it is the CA’s duty to administer the project in such a way that the correct contractual procedures and good administrative practices are followed, and that the life of the building contract from inception to completion is accurately and completely recorded. Where specific procedures do not exist the CA should carefully consider what activities ought to be undertaken and how they are communicated in order to ensure that the project is fairly and effectively administered.

The CA’s duties typically consist of:

• Initial familiarisation
• General Administration
• Record keeping
• Site inspections
• Meetings
• Reporting to the employer
• Employers Instructions
• Time Management
• Interim Valuation of the works
• Contract Instructions/Variations
• Contract completions date, extensions of times, parietal possession and practical completion
• Managing Loss and Expense
• Adjusting the Contract Sum 

So lets look at the CAs responsibilities step by step, first and foremost, they should familiarise themselves with: 

• The building contract conditions
• The specialist sub-contract documents
• The specifications of works/bill of quantities or similar 
• The drawings
• And the appointment agreement for other consultants.

Then moving to the CA’s General Administration duties:

The CA should carefully consider what activities ought to be undertaken in order to ensure that the project is fairly and effectively administered. Where the JCT contract provides for a named CA that person will have a specific role, duties and rights. Using JCT ICD as an example, these may include:

1. Provision of information:
2. Financial matters (e.g. Certifying the amount of interim payments to be made by the Employer to the Contractor etc.)
3. Supervision (e.g. Approve the quality of materials or goods or of the standards of workmanship, Instruct the Contractor, Make a fair and reasonable extension of time for completion of the Works or Section in writing etc.)
4. Miscellaneous (e.g Undertake the role of CDM Coordinator, etc.)

It should be remembered that some of these activities mentioned are discretionary while others are mandatory. The CA is also expected to accept and respond to various notifications, advice, information, requests, proposals and applications as part of the day-to-day administration duties.

Another of the CA’s responsibilities is accurate Record keeping:

These records should include:

• Notes of site inspections
• Office files
• Photographs

The CA should, ensure that all records and documents in connection with the project are agreed between the parties and that there are no ambiguities or disagreements in their accuracy or authenticity of the information. All records and other documents should be identifiable in relation to the building contract with the date and name of the author clearly marked. Upon completion of the contractual procedures the CA’s records will need to be properly and safely archived.  

Now when it comes to Site Inspections, the CA’s duties involve:

The frequency of them will vary from project to project and within the life of a project. The CA’s terms of appointment may dictate the frequency of visits.

Which can be determined by:

• the complexity of the project
• the contractor and site personnel
• progress of works
• predetermined stages (if applicable).

The CA may delegate the inspections but it is their responsibility to ensure that after each visits any necessary actions are identified and followed through. Inspections can be made jointly with the contractor’s agent and the clerk of works (if appointed). 

The inspection should include:

• The recording of basic information, e.g date and time of inspection, weather conditions, number and type of operatives on site, progress of the works, etc.
• A review of the quality of workmanship
• A review of progress in relation to the contract programme.
• A check on materials being used. Instructions may be required for substitute materials.
• A check that the works conform to the specification and drawings.
• Noting general information to report to the employer on the progress and quality of the works.
• Records of any measurement of work that might be needed for certification purposes, particularly where they may be covered up before the valuation date. 
• A general awareness of health and safety arrangements on site, with any concerns being brought to the attention of the contractor. 

It can be useful for the CA to issue ‘site directions’ at the end of an inspection to confirm any instructions given. It is recommended that the CA issues copies of these to the employer and contractor’s.

Now when it comes to, Meetings, the CA is expected:

Attend informal meetings on site, may be with operatives, contracts managers, specialist suppliers, other professionals or the employer. Some projects will have formal progress meetings which the CA will attend or may even chair. Such meetings should be minuted and issued soon afterwards to clearly record the decisions taken and actions required. 

Normally it should be possible to agree a programme of meetings at the start of a building contract, and typically formal meetings will cover matters as:

• progress to date and expected completion,
• the contractor reporting delays, or problems 
• health and safety
• contract instructions, including changes requested by the employer
• information required
• sequencing of work
• input by other interested parties
• queries relating to the drawings and specification
• progress of procedures in connection with extensions of time, claims for loss and expense, instructions and their valuation, payments, dayworks
• quality of work
• review of nominated sub-contractors and suppliers 
• effectiveness of communications between parties during the project.

It can be helpful to have an initial meeting soon after the order for the works has been placed by the employer to ‘set the scene’; this meeting is typically the ‘pre-commencement’ meeting. The agenda can include:

• Contacts
• General matters (e.g site access and arrangements, enabling works, working hours, etc.)
• Statutory matters (CDM, fire strategy, required planning consents, etc.)
• Programme and timing

As part of their duties, the CA is expected to report to the client/employer:

Regardless of the employer’s knowledge about the building contract, the CA should keep the employer up to date with what is happening on the project in general. This in part can be addressed by the employer being copied in on correspondence. The CA should also identify the relevant obligations held by the employer under the building contract and provide the employer with an overview that includes advising of any risks or concerns with regard to quality, cost and time. 

The CA will also need to set out the extent of responsibility for reporting progress against estimated total cost. To achieve this the CA will need to keep and manage a running record of the estimated final adjusted contract sum (ACS) which will need to include costs for elements as:

• preliminaries
• specified works
• outstanding unspent provisional and contingency sums
• additions
• omissions
• employer variations (additions and omissions)
• anticipated variations
• loss and expense
• prolongation costs, and
• potential contractor claims.

The CA is also responsible for issuing the Clients/employers instructions:

The CA may need to issue instructions to change works in two common scenarios:

• Additional or unforeseen works.
• The employer changes their mind, which the employer should be advised of the potential adverse consequences of changing their mind from the outset.

With regard to the ACS there are two principle scenarios that will arise from employers’ instructions during the works:

• Cost Savings. Where works are omitted or varied
• Additional Costs. Similarly where there is an addition or variation 

A Key Responsibility of the CA will be Time monitoring:

The building contract will state a start and end date for the works and it is the CA’s responsibility to monitor progress and ensure the contract completion date is achieved. If there is a risk of delay to the contractual completion date the CA should advise the employer at the earliest opportunity. There are several ways in which the CA can monitor progress of the works through a combination of:

• the contractors programme
• the portion of the works valued to date as part of the whole
• experience of the CA
• checking with specialist suppliers
• use of a bespoke project planning computer software, or

It is worth the CA considering factors that may influence progress of the works, such as:

• the weather
• contract instructions
• quality of site management and organisation.

One of the most important roles of the CA is issuing of Interim valuations of the works:

The CA is required, both under the contract and case law, to prepare valuations impartially and fairly and follow the arrangements stated in the form of building contract used. The building contract may state which interim valuations are carried out, what sums should be included in the valuations, and what elements retention monies should be allocated.

Where contract instructions have been issued, it is the CA’s responsibility to consider if the contractor has incurred any loss or expense that will need to be included in the valuation. The CA may need to remind the employer of the time limits for payment when issuing the valuation certificate. On larger or more complex projects, often there will be a quantity surveyor (QS) preparing the valuation for the CA to issue. Where the valuation is prepared by somebody other than the CA, it is important that the CA is satisfied with the amount being certified.

Other considerations relating to valuation include:

• Specialist works
• Materials on or off site: the CA may have to see evidence of receipted invoices from suppliers and check the physical existence of goods and materials. 
• VAT: Value Added Tax (VAT)
• Retention monies: The contract will state the amount to be deducted for retention as a percentage of the sum valued. For valuations issued after practical completion but before the final certificate, the percentage used to calculate the retention will normally be halved.
• Delay and prolongation costs
• Liquidated damages

The CA will also have to issue Contract instructions/variations

In the majority of cases, contract instructions will be generated by either the design team or the contractor.

It is solely the CA’s responsibility to issue instructions which should be given in writing and issued promptly. Although building contracts frequently recognise verbal instructions, these are not effective unless subsequently and promptly confirmed in writing. The CA will need to be aware of the cost implications of issuing instructions. The calculation of those costs should be in accordance with the rules set out in the building contract. It is worth the CA considering the impact instructions will have on the programme and sequence of works, as well as the contract completion date. Where an instruction issues drawings, the instruction should itemise any variations that are shown on the drawings so that the cost and time implications can be considered. Before the works commence on site the CA should review the contract documentation and identify the elements of works that will need instructions Where instructions are issued for the expenditure of provisional sums, the CA should be mindful of the two types of provisional sum as defined in the Standard Method of Measurement for Building Works (RICS 1998) as they will give rise to different liabilities. The two types are:

1. ’Defined’, where the provisional sum given is for defined work the contractor will be deemed to have made due allowance in programming, planning, and pricing preliminaries; and
2. ‘undefined’, for undefined work the contractor will be deemed not to have made any allowance in programming, planning and pricing preliminaries.

It is not unusual for contractors to issue ‘confirmation of verbal instruction’ (CVIs) notes to the CA. The CA should be wary of relying on these not least because CVI’s are not recognised by most forms of building contract and, in any event, it is the CA’s responsibility to issue instructions to the contractor.

The CA’s role also consists of checking and monitoring the Contract completion date, extensions of time, partial possession and practical completion

The factors to be considered and procedures for extending the contract completion date vary between building contracts and so it is important for the CA to check the building contract wording to ensure that the correct notices and certificates are issued.

1. Starting with the Contract completion date (date for completion): This will be defined in the contract documents and in most cases will remain fixed unless altered by the CA following a request from the contractor for an extension of time. the CA should use the programme as an active document recording how each element of the project progresses. Some building contracts require the CA to issue a ‘certificate of non-completion’ in order to preserve the employer’s right to claim liquidated damages.

2. When it comes to the Extension of Time (EOT): Without the EOT and liquidated damages provisions, if the contractor is prevented from completing the works by the date for completion for reasons beyond their control, time would become ‘at large’ and liquidated and ascertained damages would be unenforceable. To overcome this, the standard forms of building contract provide for extensions of time to be given by the CA. The CA assesses whether or not the delay has had an effect on the contract completion date and what that effect is. Some building contracts list the reasons (sometimes termed ‘relevant events’) that are eligible for an EOT being granted to the contractor. In principle the reasons fall broadly into two categories:

• circumstances beyond the control of either the contractor or the employer; and
• delays caused by the employer or the CA.

It is also important to remember that the employer needs to be kept informed of any extensions of time and also of any further delays that are the contractor’s responsibility.

3. Then with Early or partial possession: Ideally, whether or not the employer may require possession of part of the works prior to completion of the project, is an issue that should have been considered and recorded at the time of selection of the building contract. If partial possession is granted the CA will be obliged to issue a certificate granting practical completion for the part of the works for which possession is obtained. If the employer decides during the course of the building contract to take possession before all or part of the contract works are complete, and the building contract does not have express provisions for early or partial possession, the CA will have to advise the employer of this. The implications are that the CA may have to grant practical completion of the entire works, whether or not the contract works are complete. In such an event consideration will have to be given to omitting the outstanding works from the contract so that the necessary financial adjustments can be made, but this will still leave the employer with works that are outstanding. These outstanding works may have an impact on the safe use and operation of the works and the CA will have to clearly advise the employer of such matters.

4. When it comes to Practical completion: 

There may also be a number of pre-requisites on granting practical completion and they can include:

- Where a health and safety file is to be produced,

- The production of all the necessary testing and commissioning certificates, particularly to verify that the premises are safe to occupy and the design objectives have been achieved.

In cases where the employer wishes to take occupation or make use of all or part of the works in advance of practical completion being granted, the wording of the building contract should be checked for any particular procedures that need to be followed. In some cases the building contract will be silent on early occupation and so the CA may be required to grant practical completion. This might have a severe impact on the employer’s rights under the contract, particularly in relation to the works that have not yet been completed by the contractor. In these circumstances it is important for the CA to advise the employer of the implications of early occupation.

Now when it comes to Loss and expense, that is also under the duties of the CA to monitor:

The loss and expense provisions provide for the contractor to be reimbursed for deferment of possession, or if the works have been affected by certain specified circumstances, where the contractor will not be reimbursed by other provisions of the building contract. The CA will need to be familiar with the relevant contract clauses concerning loss and expense and certain points are of particular importance, including:

• If the building contract lists the matters that may give rise to claim, the CA should be satisfied that the claim falls within at least one of those provisions.
• The contract conditions may require the CA to establish the direct loss and/or expense or allow the CA to instruct the quantity surveyor to do so.
• The loss and expense must be actual; meaning the CA should must find out what exact amount the contractor has expended or lost. 
• Where the contract conditions require the contractor to make a written application to the CA that direct loss and expense has occurred, then the CA must be satisfied that the contractor’s application has been made as soon as required under the conditions. Delay in doing so could result in voiding the claim.
• Whenever loss and expense has occurred it should be taken into account in the calculation of the next interim certificate and the CA should inform the employer whenever a claim for loss and expense has been received in writing and then keep the employer regularly updated on progress in dealing with it.

And finally when it comes to the Adjusted Contract Sum aka ACS:

It is the CA’s responsibility to determine the ACS. This will be based on the contract documents, records held by the CA and information and evidence provided by the contractor. Building contracts provide for the CA to request documentation to assist in the development of the ACS.

So sum up what I discussed today:

The CA’s responsibilities and role include:

• Administering the terms of the building contract between the parties
• The CA has two key functions - Acting as agent and Decision Making 
• The CA will act as the employers agent in some circumstances and make impartial decisions - the benefit of the impartial decision making is that the employer or contractor may challenge the CA’s decision under the JCT IC, MW or SBC, whereas under a DB the employer wouldn’t be able to challenge the employer’s agents decisions
• The CA must have the knowledge and skill to understand the relevant contractual provisions and know how to apply them
• Act in a manner which is independent, impartial and fair when making decisions
• Have in-depth knowledge of construction and the inter-relation between trades and construction operations so that the changes and the impact of the changes can be traced
• Be able to set up appropriate office procedures and record keeping corresponding for the scale and nature of the building contract and the works
• Be aware of the different types of critical path and project programming techniques
• In terms of design, under the JCT MW, IC and SBC forms, the CA doesn’t undertake any design duties.