The Aqua Group guide to procurement, tendering, and contract administration

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The period from starting a college course to successful completion of professional examinations represents a long and steep learning curve. The range of skills and the knowledge required to perform work efficiently and effectively might, at first, seem rather daunting. This guide will provide you with sufficient understanding and hold you in good stead for your early years in professional practice.

The Aqua Group Guide to Procurement, Tendering and Contract Administration is the merging of three established textbooks written by the Aqua Group - a highly respected group of architects and quantity surveyors. It has been edited, enlarged and updated into a single volume by Davis Langdon and now covers the entire building process from inception through to final account.

With clear and thorough explanations by practising professionals from this distinguished practice, you are taken through self-contained chapters covering the detail of:

* the briefing stage;
* procurement methods;
* tendering procedures; and
* contract administration.

Throughout, the emphasis is on current best practice and the book draws from the widely used Joint Contracts Tribunal (JCT) series of contracts, notably the 2005 edition of the Standard Building Contract.

This authoritative guide provides a detailed account of the building team's roles and responsibilities, and industry practice required to ensure that projects meet clients' expectations in respect of time, cost and quality.

Author Notes

Mark Hackett, Ian Robinson and Gary Statham are Senior Quantity Surveyors at Davis Langdon, UK.

Rob Smith and Davis Langdon LLP

Foreword	p. xvi
Introduction	p. xviii
Part I Briefing the Building Team	p. 1
1 The Building Team	p. 3
Introduction	p. 3
Parties to a building contract and their supporting teams	p. 3
Rights, duties and responsibilities	p. 4
The employer	p. 4
The architect/contract administrator	p. 5
The quantity surveyor	p. 5
The status of named consultants	p. 5
Unnamed consultants with delegated powers	p. 5
The project manager	p. 6
The planning supervisor	p. 6
The principal contractor	p. 7
Sub-contractors	p. 8
The clerk of works	p. 8
Statutory requirements	p. 8
The CDM Regulations	p. 9
Avoiding disputes	p. 10
Communications	p. 11
2 Assessing the Needs	p. 12
The structure	p. 12
The brief	p. 12
The initial programme	p. 14
The appointment	p. 16
Appointment documents	p. 17
Collateral warranties	p. 17
Part II Available Procurement Methods	p. 19
3 Principles of Procurement	p. 21
Simple theory - complex practice	p. 21
The eternal triangle	p. 21
Other considerations	p. 25
The Construction (Design and Management) Regulations 1994	p. 25
Risk	p. 26
Accountability	p. 26
Making the contract	p. 26
Type of contract	p. 26
Selection of the contractor - the tendering procedure	p. 27
Establishing price and time	p. 28
The dynamics of tendering	p. 28
4 Basic Concepts	p. 30
Economic use of resources	p. 31
Labour	p. 31
Materials	p. 32
Plant	p. 32
Capital	p. 32
Contractor's contribution to design and contract programme	p. 32
Production cost savings	p. 33
Continuity	p. 34
Risk and accountability	p. 35
Accountability	p. 36
Summary	p. 36
5 Accountability	p. 38
Background	p. 38
The modern concept of public accountability	p. 39
Contract documentation	p. 40
Proper price	p. 40
Dispensing with competition	p. 40
Inflation	p. 41
Value for money	p. 41
Summary	p. 42
6 Value and Risk Management	p. 43
Value management	p. 43
Value articulation and project definition	p. 44
Optimisation of benefits and costs	p. 45
Learning lessons and performance optimisation	p. 45
Risk management	p. 46
Risk must be managed	p. 47
Nothing ventured nothing gained	p. 48
Understanding the project	p. 48
Risk management strategies	p. 50
Allocating management actions	p. 51
Value and risk are complementary	p. 52
Similarities in the processes	p. 52
The integrated process	p. 53
7 Fixed Price and Cost Reimbursement	p. 57
Fixed price	p. 58
Cost reimbursement	p. 58
Application to contract elements	p. 59
Fluctuations	p. 59
Target cost contracts	p. 60
Use	p. 60
The employer's position	p. 60
The contractor's position	p. 61
Programme	p. 62
Summary	p. 62
8 Fixed Price Contracts	p. 64
JCT fixed price contracts	p. 64
The Standard Building Contract	p. 66
Design and Build Contract	p. 66
Major Project Construction Contract	p. 67
Intermediate Building Contract	p. 68
Minor Works Building Contract	p. 69
Advantages and disadvantages of fixed price contracts	p. 70
Advantages	p. 70
Disadvantages	p. 70
9 Cost Reimbursement Contracts	p. 71
The fee	p. 71
The Prime Cost building contract	p. 72
Characteristics of the form	p. 72
Advantages and disadvantages	p. 72
Advantages	p. 73
Disadvantages	p. 73
Budget and cost control	p. 73
Administering the contract	p. 74
Procedure for keeping prime costs	p. 75
Labour resources	p. 76
Materials	p. 76
Plant	p. 77
Credits	p. 77
Sub-letting	p. 77
Defective work	p. 78
Cost control	p. 78
Final account	p. 78
10 Target Cost Contracts	p. 79
Guaranteed maximum price contracts	p. 82
Competition	p. 82
Contract	p. 82
Advantages and disadvantages	p. 83
Use	p. 83
11 Management and Construction Management Contracts	p. 84
Payment and cost control	p. 84
Selection and appointment of the contractor	p. 86
Contract conditions	p. 87
Contract administration	p. 88
Professional advisers	p. 89
Advantages and disadvantages	p. 89
Advantages	p. 89
Disadvantages	p. 90
Construction Management	p. 91
Use	p. 92
Programme	p. 92
12 Design and Build Contracts	p. 94
The Contract	p. 95
Where to use design and build (and when not to do so)	p. 97
Managing the design process	p. 98
Novation	p. 99
Evaluation of submissions	p. 99
Post-contract administration	p. 100
Financial administration	p. 100
Programme	p. 101
Advantages and disadvantages	p. 102
Advantages	p. 102
Disadvantages	p. 102
13 Continuity Contracts	p. 104
Serial contracting	p. 104
Purpose and use	p. 105
Operation	p. 106
Continuation contracts	p. 107
Purpose and use	p. 108
Operation	p. 108
Term contracts	p. 110
Purpose and use	p. 110
JCT Measured Term Contract	p. 110
Operation	p. 111
14 Partnering	p. 113
A definition	p. 114
When to adopt a partnering approach	p. 115
The agreement	p. 116
JCT Framework Agreement	p. 116
The partnering workshop	p. 117
The benefits	p. 117
The risks	p. 118
Future of partnering	p. 119
Part III Preparing for and Inviting Tenders	p. 121
15 Procedure from Brief to Tender	p. 123
Initial brief	p. 123
Developing the brief	p. 123
Feasibility stage	p. 124
Sketch scheme	p. 124
Costs	p. 125
Procurement	p. 126
Detail design	p. 127
Programming	p. 128
Design team meetings	p. 129
Drawings	p. 129
Specifications	p. 130
Bills of quantities	p. 130
Specialist sub-contractors and suppliers	p. 131
Quality assurance	p. 132
Obtaining tenders	p. 133
16 Pre-Contract Cost Control	p. 134
Cost control	p. 134
Reporting	p. 134
Establishing a budget	p. 136
Approximate estimates	p. 136
Preliminary estimate	p. 137
Element unit quantities estimate	p. 137
Approximate quantities estimate	p. 138
Accurate quantities estimate	p. 139
Cost plan	p. 139
Substructure	p. 140
Superstructure	p. 140
Internal finishes	p. 142
Fittings and furnishings	p. 143
Services	p. 143
External works	p. 149
Development of the cost plan	p. 150
Life cycle costing	p. 151
Cash flow	p. 152
17 Drawings and Schedules	p. 154
The role of drawings and documents	p. 154
Quality	p. 155
Quality manuals	p. 156
Quality procedure codes	p. 156
Quality review	p. 157
Types, sizes and layout of drawings	p. 158
Size	p. 158
Layout and revision	p. 159
Scale	p. 159
Nature and sequence of drawing production	p. 161
Drawings for SBC contracts	p. 161
Drawings for design and build or management contracts	p. 162
Design intent information	p. 163
Computer aided design	p. 164
Drawing file formats and translation	p. 165
Project extranets	p. 165
Contents of drawings	p. 168
Survey plan	p. 168
Site plan, layout and drainage	p. 169
General arrangement	p. 169
Elevations of all parts of the building	p. 171
Descriptive sections	p. 171
Ceiling plans at all floor levels	p. 171
Construction details (scale 1:20 and 1:10)	p. 172
Large-scale details (scale 1:10 and 1:15)	p. 172
Schedules	p. 173
Drawings and schedules for records	p. 174
18 Specifications	p. 179
The use of specifications	p. 179
Prescriptive specifications	p. 180
Performance specifications	p. 180
Descriptive specifications	p. 181
Specification writing	p. 181
Decide on format	p. 181
Collect information	p. 182
Input information	p. 183
Check and test	p. 183
Deliver	p. 184
The specification as a contract document	p. 185
19 Bills of Quantities	p. 191
Tender and contract document	p. 191
The wider role	p. 192
Basic information	p. 192
Preliminaries	p. 192
Preambles	p. 194
Measured works	p. 194
Formats	p. 194
20 Sub-contractors	p. 201
Sub-contractors	p. 201
Specialist sub-contractors	p. 201
Design by the sub-contractor	p. 202
The SBC and sub-contract agreements	p. 203
SBC provisions under the main contract	p. 204
21 Obtaining Tenders	p. 205
Introduction	p. 205
Tender list	p. 206
Preliminary enquiry	p. 207
Tender documents and invitation	p. 208
Tender period	p. 209
Tender compliance	p. 209
Late tenders	p. 209
Opening tenders	p. 210
Examination and adjustment of the priced document	p. 210
Negotiated reduction of a tender	p. 211
Notification of results	p. 211
Tender analysis	p. 212
Part IV Contract Administration	p. 213
22 Placing the Contract	p. 215
Preparing and signing the contract documents	p. 215
Sectional completion	p. 216
Contractor's designed portion	p. 217
Executing the contract	p. 219
Performance bonds and parent company guarantees	p. 219
Collateral warranties	p. 220
Third party rights	p. 220
Issue of documents	p. 220
Insurances	p. 222
23 Rights, Duties and Liabilities under the SBC	p. 227
Introduction	p. 227
The employer	p. 227
The architect/contract administrator	p. 240
The quantity surveyor	p. 243
The planning supervisor	p. 244
The clerk of works	p. 244
The person-in-charge	p. 245
Conclusion	p. 245
24 Meetings	p. 246
Initial meeting	p. 246
Introductions	p. 247
Factors affecting the carrying out of the works	p. 247
Programme	p. 248
Sub-contractors and suppliers	p. 249
Lines of communication	p. 249
Financial matters	p. 249
Procedure to be followed at subsequent meetings	p. 251
Contractor's meetings	p. 253
Employer's meetings	p. 253
25 Site Duties	p. 257
The architect on site	p. 257
Supervision and inspection	p. 258
Routine site visits	p. 259
Consultants' site visits	p. 260
Inspections by statutory officials	p. 260
Records and reports	p. 261
Samples and testing	p. 263
Considerate Constructors Scheme	p. 264
Site safety	p. 265
Health and Safety Policy	p. 265
Fire precautions on site	p. 269
Regulatory control	p. 269
The Joint Fire Code	p. 269
Means of escape	p. 270
Fire-fighting equipment	p. 271
Emergency plans	p. 272
Providing information	p. 272
26 Instructions	p. 279
Architect/contract administrator's instructions	p. 279
27 Variations and Post-Contract Cost Control	p. 284
Variations	p. 284
Valuing variations	p. 285
Dayworks	p. 285
Cost control	p. 288
28 Interim Payments	p. 291
Introduction	p. 291
Payments of pre-determined amounts at regular intervals	p. 292
Pre-determined payments at pre-determined stages	p. 293
Regular payments by detailed valuation	p. 293
Certificates and payments under the SBC	p. 293
The architect/contract administrator	p. 294
The quantity surveyor	p. 294
The employer	p. 294
The contractor	p. 296
Interim certificates under the SBC	p. 297
Unfixed materials and goods on site	p. 298
Unfixed materials and goods off site	p. 298
Retention under the SBC	p. 299
Payments to sub-contractors under the SBC	p. 300
Value added tax	p. 300
Valuation and certificate forms	p. 300
29 Completion, Defects and the Final Account	p. 305
Practical completion	p. 305
Partial possession	p. 308
Possession of the building	p. 309
Defects and making good	p. 309
Final account	p. 310
Adjustment of the contract sum	p. 311
Practical considerations	p. 313
Final certificate	p. 314
30 Delays and Disputes	p. 318
Introduction	p. 318
Delays caused by the contractor	p. 319
Delays caused by employers or their representatives	p. 319
Delays caused by events outside the control of either party	p. 320
Force majeure	p. 321
Exceptionally adverse weather conditions	p. 322
SBC procedure in the event of delay	p. 322
Best endeavours	p. 322
Notification of delay	p. 323
New completion dates	p. 323
Final adjustment	p. 324
Duties and decisions	p. 325
Reimbursement of loss and / or expense under the SBC	p. 326
Liquidated damages	p. 327
Disputes and dispute resolution	p. 328
Mediation	p. 329
Adjudication	p. 329
Arbitration	p. 334
Litigation	p. 336
31 Insolvency	p. 339
Introduction	p. 339
Insolvency practitioners	p. 339
Liquidation	p. 340
Receivership	p. 341
Administration	p. 341
After the Enterprise Act 2002	p. 342
Voluntary arrangements and compositions	p. 343
Debentures	p. 344
Procedure upon the insolvency of the contractor	p. 344
The SBC provisions	p. 345
Early warning signs and precautionary measures	p. 346
Completion of the works	p. 348
Completion documentation	p. 350
Sub-contractors	p. 351
Bonds	p. 352
Final accounts	p. 352
The procedure upon the insolvency of the contractor	p. 354
32 Capital Allowances	p. 357
Introduction	p. 357
Eligibility for capital allowances	p. 358
The worth of capital allowances	p. 358
Tax deductions for property refurbishment schemes	p. 359
Capital or revenue?	p. 359
Incidental capital expenditure	p. 360
Deferred revenue expenditure	p. 360
Action summary	p. 361
Energy saving plant and machinery	p. 362
Key features	p. 362
Key exclusions	p. 363
How to claim ECAs	p. 364
Qualifying products and items	p. 364
Pre-contract planning to optimise capital allowances	p. 365
Some questions and answers	p. 365
Index	p. 367

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Table of Contents