APC extras: T017 – Contract practice

The Contract Practice competency (T017) is a core competency (to level 3) for the Project Management, Quantity Surveying and Construction and Taxation Allowances pathways. It is an optional competency for the Building Surveying (to level 2) and Facilities Management (to level 2/3) pathways.

It is closely related to the Contract Administration competency (T016) and a great deal of the knowledge required for one will overlap with the other.

Knowledge required

Level 1 requires candidates to demonstrate knowledge and understanding of the various forms of contract used within their area of business. At level 2 candidates will be expected to demonstrate an application and understanding of this knowledge at project level, including the duties and responsibilities of both parties. Candidates at level 3 will be expected to provide evidence of having given reasoned advice in relation to the selection of an appropriate form of contract, warranty and/or procurement route.

The knowledge required for the contract practice competency is fundamental to a large part of the work undertaken by a chartered surveyor and APC assessors will expect candidates to have a firm grasp of the concepts involved. Candidates who are directly involved with contracts on a regular basis will have a distinct, but not insurmountable, advantage over other candidates.

Most candidates should be able to satisfy the level 1 requirement from the knowledge gained during their undergraduate degree, relevant experience or training period. There are a large number of textbooks available to assist candidates in studying or revising for this competency if they feel the need to add to their level of knowledge.

The same essential knowledge, applied in a different manner, is required to demonstrate understanding at level 2 and level 3. At level 2 a candidate will need to demonstrate an application of their knowledge while a candidate at level 3 will be expected to have provided reasoned advice on the subject matter in question.

While it may be a generalisation to say that all construction contracts are the same, in essence they all perform the same function (i.e. to allow the construction of a building/project). Although most construction contracts are generally very similar to one another, they differ in a number of key aspects.

Candidates will not be expected to have a detailed knowledge of the specific provisions of every different type of contract but they will be expected to know how the various contracts differ from one another in relation to the more important aspects.

Aspects of a contract

Candidates should focus their attention on the following aspects of a construction contract:-

• Insurances – What insurances are specifically required by the contract and who is responsible for providing them
• Payments – What payment provisions are set out in the contract (e.g. monthly valuation procedure, certification and payment periods, retention)
• Variations – What are the provisions within the contract for issuing variations and how are variations to be valued
• Practical/Sectional Completion – Does the contract allow for sectional completion and what is required to achieve practical completion. Candidates should also be aware of the obligations that practical/sectional completion places on both parties (N.B. pay particular attention to insurance obligations post practical/sectional completion)
• Extension of Time (EOT) – What provisions are contained within the contract for issuing an EOT and what are the consequence of an EOT award (N.B. pay particular attention to the different formulas used to calculate head office overhead contribution during prolongation periods)
• Liquidated Damages – To what extent and in what situations will liquidated damages be deducted
• Sub-Contracts – How does the contract deal with the selection, appointment and payment of sub-contractors
• Reporting – What are the reporting requirements set out in the contract and what information is to be provided within these reports
• Notice Periods – Are there any clauses within the contract that require notice to be given by the contractor and what are the consequences of not giving this notice within the period stated

Candidates will be expected to have a detailed knowledge of the contract in use on the project chosen as the subject of their critical analysis. They will be expected to know its particularities or anything that makes it unique or different, particularly in relation to the key aspects identified above.

Candidates who focus on the above aspects and who ensure that they have a strong understanding of these should be able to answer all questions to the required level. However assessors will look for a good all round understanding and candidates should not neglect any other aspects of a contract they feel may be important when preparing for the final interview.