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
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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
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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’.
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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.
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