Contract Administration and Law (UK)

Scenario For The Halls of Residence Building Background Newtown University are extending their student accomodation facilities with the construction of a new separate halls of residence building. The University has a constrained budget and timescale, and as a result, the project is currently proceeding along the traditional procurement system. Project Particulars Title: Newtown University Halls of Residence Address: Sterling Street, Major City, UK Contract JCT Standard Form of Building Contract, 2016 Edition, With Quantities. (JCT SBC/Q 2016) Parties Employer: Newtown University Quantity Surveyor: The Measurement Partnership Contract Administrator/Architect: Alpha Design and Project Management Partnership Engineer: Engineering Services Contractor: Dollar Construction Ltd Key features of the formal contract are to include:- Date of possession 22nd September 2018 The required Date of completion 2nd September 2019 Liquidated and ascertained damages £___ /week (still to be agreed) JCT Fluctuations Option C Formula Rules Module BCPM0077.doc 2018/2019 Page 3 Assignment Case Study Scenario You have recently joined an established small practice as a Consultant Project Manager which offers project management and legal/contractual advice together with an expert witness/mediation services. On the 30th October 2018, you receive a telephone call from the Estates Officer of Newtown University. Clearly concerned, the Estates Officer relates a number of problems, some contractual, some legal and some relating to the design and construction progress of their Halls of Residence project. Newtown University explain the following problems with their project:- x Regarding progress, the project is, according to the words expressed by the Estates Officer in his telephone call, already late in accordance with Dollars draft master programme. The substructure is now under construction and nearly complete. Newtown University are having difficulty in getting a clear indication from their Architect/Contract Administrator, or from the Main Contractor as to when the project is scheduled to be completed. This is made more complicated by the fact that although the invitation to tender said that the client required a 49 week consruction period, that Dollar qualified their tender stating that a 52 week construction period would be more realistic for the project. Dollar Construction Ltd also appear to have used up all the float time in the draft master programme and moved away from the master programme sequence in order to accommodate weather related issues and an Antiquities find during the sub-structure excavation and construction. The Estates Officer has pointed out that although liquidated damages might be claimable, the Architect/Contract Administrator has vaguely indicated that there are likely circumstances for a possible extensions of time because of:- - Weather related issues. - Recent discovery of Antiquities. - A major Newtown University proposed change to the scheme amending the external cladding and installing a dry sprinkler system throughout the Halls of Residence Building in order to provide a more secure fire resistance environment for the students. - Late issue of some of the drawings for the superstructure construction. x The Estates Officer has also raised a number of concerns about the contract documentation, namely that:- - The Alpha Design and Project Management Partnership have been engaged on the RIBA standard conditions of engagement and contracts have also been formally signed with them and all the other consultants. There has been however, merely a letter of intent Module BCPM0077.doc 2018/2019 Page 4 Assignment between Newtown University and Dollar Construction Ltd in which Newtown University asked Dollar Construction Ltd to start work pending the final agreement and signing of the contract. Dollar Construction Ltd agreed to commence the enabling works and substructure construction on the 22nd September 2018 which were detailed and formed the basis for the scope of work to be undertaken under this letter of intent. The letter stated that all the JCT 2016 contractual terms would apply to the enabling works and the substructure construction, although no mention was made in the letter of the valuation and payment mechanisms to be applied, and no financial cap was stated. - The letter of intent mentioned that many of the articles of agreement comprising the recitals, articles and contract particulars had been agreed, but that matters relating the formal contract completion date, the execution of the deed and particulars like liquidated damages, the retention percentage and the name of the Adjudicator still remain to be agreed at the time that the letter of intent was issued. The contract documentation which had been prepared by Newtown University’s solicitor was tabled on 26th October 2018, but Dollar Construction Ltd refused to sign it because they refused to accept decisions made by Newtown University’s solicitor in the contract document on the matters that Dollar Construction Ltd stated that were still under negotiation, and which they attest were still to be formally agreed. - It appears also that there is now a disagreement about the basis of payment on the first valuation for the interim certificate. Alpha want this work valued as Dollar’s tender prices/rates etc, whereas Dollar say that valuation and payment should be based on restitution. - The tender documentation made it clear that Newtown University require a default performance bond to the value of 10% of the contract sum from Dollar Construction Ltd which Alpha Design and Project Management Partnership were required to arrange. Newtown University allege that Alpha Design and Project Management Partnership have failed to arrange for the Main Contractor to provide such a performance bond, despite the fact that they had a duty in their terms of engagement to arrange to do so. - The proper forms for appointment for the sub-structure sub-contractor have not been completed, in that, the collateral warranty from the subcontractor to Newtown University has not been completed and signed. - Dollar Construction Ltd have informed Alpha Design and Project Management Partnership that there appear to be a number of errors between the construction drawings, the specification and the bills of quantities. - Also, there are concerns that the contractor’s design portion specification based on the architects performance requirements for the lift installations seems to be inadequate, because the Engineer has marked the sub-contractor’s design as ‘C’. Module BCPM0077.doc 2018/2019 Page 5 Assignment x The Estates Officer explains that as a result of resent visits to the construction site, he has become concerned about a number of quality and workmanship issues, because Dollar Construction Ltd does not appear now to have a Site Manager in-charge on the site at all times. He has the impression that Dollar Construction Ltd has recently started another new project nearby, and that the Site Agent/Manager is now managing both projects, proportioning his time between them. Your task, is to prepare a report (approximately 2500/3000 words) to the Estates Officer of Newtown University offering JCT 2016 contractual, legal, and appropriate case law advice as to problems identified in the assignment brief as a whole, and advise as to how the University should proceed in relation to the all problems outlined above.