Commercial Management of construction

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Related to sections in the JCT - SBC 2011

Payment sections 4.9, 4.11 and 4.12 - key points

Final date for payment of each interim valuation is 14 days from the date of issue

The employer must give the contractor notice within 5 days of issue if they intend to pay less, known as a 'pay less notice'

If the employer does intend to withhold any amount, then it must give written notice no later than 5 days before final date of payment, clearly stating grounds for the deduction.

Final Account section 4.15- Key Points

Final Certificate must be issued within the specific time period set out in the contract

The onus is on the contractor to send all necessary information to the contract administrator or QS not later than six months of PC

No later than 3 months after receiving the information, the CA or QS if asked will make a final assessment of the amount of loss and expense due, and the QS will prepare a statement of final adjustment to the contract sum.

3 months can restart if disputed or changed.

Final Certificate issued within two months after this statement

Both parties have the right to challenge final certificate within 28 days of its issue.

Issue of Certification section 4.9- Key points

Failure to certify could result in negligence (Sutcliff vs Thackrah)

Contract Particulars now establish due dates for payment

Interim certificates are issued within 5 days of the due dates

Payment is made within 14 days of the due date

Valuation section 4.10 - Timescales

Valuation and issue of certification will normally be on a monthly basis

Interim application should be made no less than seven days before the due date,and sent to the QS - note SBC does not require QS to identify in detail where differences arise and inform the contractor.

Two methods in which it can be assessed, though acceptance of the contractors application for payment or through valuations from the QS.

Valuation should cover the amounts due at the date, not more than 7 days of the certificate.

Certificate can then be issued no later than 5 days after the due date.

Termination by the contractor section 8.9 - defaults from the employer can include

Failure to pay the amount 'properly due' on the certificate by the final date of payment.

Obstruction of the issue of the certificate

Fails to comply with clause 7.1 - assignment without consent of the other party

Fails to comply with clause 3.23 - comply with the CDM regulations

Termination is optional in the case of the employers bankruptcy

Must have resulted in the suspension of the whole of the uncompleted works for the continuous period stated in the contract particulars

The contractor may give the employer notice specifying the default

Termination by the employer section 8.4 - defaults from the contractor can include

Failure to proceed regularly and diligently

Without reasonable cause- suspend the works or the design of the contractors design portion

Refuses or neglects to comply with a notice or instruction from the Architect or CA

Fails to comply with clause 3.7 or 7.1 -

Fails to comply with 3.32

If the default occurs the CA should issue a warning notice - 8.4.1

If the default continues for 14 days from receipt of notice, then the employer may terminate employment of the contractor by issue of a further notice within 21days

Insolvency by the contractor - must notify the employer in writing. Three options, arrangements can be made for the contractor to continue, alternative contractor is novated to complete the works, 'conditional novation' whereby they contract completion date would be subject to re negotiation, new contractor would disclaim liability for that part of the work undertaken by the contractor.