APC Trainer: A grilling on Contract Practice... (T017)

This week’s question focuses on Contract Practice (T017).

If you recall from previous articles, assessors are trained to ask questions that ascertain candidate’s progress against the three APC competency levels:

Level 1 knowledge and understanding (‘knowing’)
Level 2 application of knowledge and understanding (‘doing’)
Level 3 reasoned advice and depth of technical knowledge (‘advising’)

The following questions are typical of those that could be reasonably expected at Final Assessment.

Level 1

Q A client is looking to undertake construction works. This is the first project they have ever undertaken. They ask you what advantages the use of a standard form of building contract would have over a bespoke contract. How would you guide them?

The candidate should clearly explain the advantages of having, where possible, standard forms of contract:

• Terms and conditions in standard forms of contract are agreed by representatives from across the various stakeholder groups in the construction industry. This means that they are more likely to be balanced and fair to all parties.

• The contract clauses are likely to have evolved over a period of time and take into consideration case law developments.

• Standard forms of contract, through regular usage, are familiar to those who work in the industry. This means that contract administration processes should, in theory, be better understood by the contract participants.

• Client’s legal fees should be reduced.

To really impress the assessors the candidate could explain their understanding of the rule of ‘Contra Proferentem’ (this legal principle provides that an ambiguous term will be construed against the party that imposed its inclusion in the contract – or, more accurately, against the interests of the party who imposed it.

Level 2

Q I note from your APC diary you have recorded time for making a client’s amendments to a standard form of contract. Can you explain exactly how you did this?

The candidate should know that this can be done by appending a Schedule of Amendments and inserting a note in the Articles of Agreement. Alternatively, each alteration can be physically made to contract clauses by inserting the revised wording as appropriate. In both cases the employer and contractor should countersign each alteration.

Some standard forms of contract are available online and allow for amendments to be made by simply overwriting the standard clauses.

Level 3

Q I see that you attended a seminar on PPC2000 and partnering. What are the main features of PPC2000 that distinguish it from the more traditional standard forms?

The candidate should be able to talk through some of the following:

• Single multi party contract PPC2000 allows the client, the constructor and all consultants and key specialists (i.e sub-consultants, sub-contractors and suppliers) to sign a single Partnering Contract. This avoids the need for several two-party professional appointments and a separate building contract and/or partnering agreement, and substantially reduces project paperwork.

• Team-based approach This single, integrated contract encourages a team-based commitment to the project, and should reduce the temptation to hide behind unconnected two-party agreements.

• Integrated design/supply/construction process PPC2000 provides for the early selection of a project partnering team and the collaborative finalisation of designs, prices and members of the supply chain. It covers the full duration of the partnering relationships, and encourages the contributions of the constructor and specialists during the key period prior to start on site, as well as during supply and construction.

• KPIs PPC2000 expressly recognises the recommendations of ‘Rethinking Construction’ and links these to the objectives of the partnering team on each Project. Achievement of these objectives is measured against agreed Key Performance Indicators.

• Supply chain partnering PPC2000 provides for finalisation of the supply chain on an open-book basis, encouraging partnering relationships with all specialists, and includes provision for key specialists to become members of the partnering team.

• Core group PPC2000 provides for a core group of key individuals representing partnering team members, who operate an early warning system for problems and who undertake regular reviews of progress and performance.

• Controls PPC2000 provides for both partnering and project timetables to govern the contributions of all partnering team members.

• Incentives PPC2000 provides for agreement of profit, central office and site overheads, with encouragement for partnering team members to agree shared savings and shared added value incentives. Payments can also be linked to performance against KPIs.

• Value engineering and value management PPC2000 expressly recognises both value engineering and value management techniques.

• Risk management PPC2000 provides a clear system for reducing, managing and sharing risks and for agreeing changes openly and equitably in advance.

• Non-adversarial problem resolution PPC2000 provides for a problem-solving hierarchy of senior individuals within each partnering team member’s organisation, working to strict time limits, with further reference of a problem to the core group.

• Partnering adviser PPC2000 recognises the role of partnering adviser who can document the relationships, commitments and expectations of partnering team members and who can provide an additional facility for problem resolution.