Contract Practice - Interim Valuations & Payment Privisions

alison_patey0437
Mind Map by , created over 6 years ago

T017 & T016 Mind Map on Contract Practice - Interim Valuations & Payment Privisions, created by alison_patey0437 on 04/21/2013.

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Created by alison_patey0437 over 6 years ago
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Contract Practice - Interim Valuations & Payment Privisions
1 Valuations
1.1 Purpose?
1.1.1 To provide recommendation to certifier on value to them 2 issue thier interim cert.
1.2 the Construction Act Relevant?
2 Retention
2.1 JCT Rules
2.1.1 rtn = certified amount retained by client
2.1.2 % stated in approx - usually 5%
2.1.3 Held on wrk executed
2.1.3.1 material off site, measured works, listed items, materials on site etc.
2.1.3.2 NOT:
2.1.3.2.1 restoration of loss or damage
2.1.3.2.2 statutory fees/ charges
2.1.3.2.3 L&E
2.1.3.2.4 Fluctuations
2.1.3.2.5 cost of emp. MG defects
2.1.3.2.6 opening up 4 inspection
2.1.4 PC 1/2 is relased
2.1.5 Emp. gains interest from retention & can keep it
2.1.6 must be placed into a seperate bank account if specified by MC
2.1.7 statement of retention must be issued to MC with each interim cert.
2.1.8 Balance of retention release on issue of certificate of Making Good
2.2 why?
2.2.1 provide degree of security 4 client
2.2.2 intended 2 provide funds should issues become apparent e.g. insolvency of MC
2.2.3 provide incentive to ensure defects are MG
2.3 Weaknesses?
2.3.1 cost easily be greater than 2.5% or 1.5%
2.3.2 sets precedence 2 accept defects & snagging
2.3.3 retention often not treated properly by emp.
2.4 Retention Bonds
2.4.1 What
2.4.1.1 some sectors such as lifts & piling will not accept costs feat. retention but offer bonds in lieu
2.4.1.2 form of on demand bond
2.4.1.3 inc consideration - in lieu of retention
2.4.1.4 remains in force until end of defects period
2.4.1.5 provided by bank/ guarantor
2.4.2 ADVANTAGES:
2.4.2.1 assignable
2.4.2.2 latham report = retention bonds are a better option than normal retention
2.4.2.3 can provide same level of security as interim retention
2.4.2.4 does not inflict cashflow problems
2.4.2.5 ease MC could b passed onto tender prices
2.4.3 DISADVANTAGES:
2.4.3.1 only advantage over suing if MC goes bust
2.4.3.2 not ready access 2 the money as with interim retention
2.4.4 Types
2.4.4.1 its conditional and to enforce you must;
2.4.4.1.1 prove MC default of obs
2.4.4.1.2 prove beneficiary has sustained damages
2.4.4.1.3 prove that damage has been reasonably sustained
2.4.5 Terms of bond
2.4.5.1 immediate in insolvency
2.4.5.2 payable if MC not performed obligations
2.4.5.3 expires after completion of rectification of defects

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