Construction contract administration

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Cons 0010-Construction contract administration 2019 Summer, end of term
assignment.
Notes:
1. You must answer the number of questions equal to the number of people in
your group. i.e. a 4-person group answers any 4 questions and a 6-person
group answers any 6 questions.
2. You will receive an overall group mark and an individual mark for the
question you answer. It is essential you identify which group number and
group member has answered which question.
3. The maximum words per question is 1250.Any words in your answer over
1500 will not be read. Supporting appendices are not included in the word
count.
4. Please use font size of 12 and a line spacing of 1.5.
5. Submissions should be made via Turnitin in Moodle.
6. ASSIGNMENTS ARE DUE ON 2 DECEMBER 2019 by 23:55. LATE
SUBMISSION WILL ATTRACT A PENALTY.
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Case 1
On 26 July 2014 Coin Builders Ltd (Coin) entered into a contract with Rosen Supply &
Services (Rosen) to demolish a 5 storey building known as the ‘Rosen Building’, and to
regrade the site and do the preliminary civil works. The site is located in a suburb of Sydney,
NSW. The project was to have been completed in 24 months and Coin was to be paid
$4 million.
History of the Tender
In late May 2014, Coin had responded to an invitation to tender from Rosen for the
demolition and site regrading for the Rosen Building. Specifically the invitation to tender,
which was advertised in the newspaper, read:
Project: Demolition of the Rosen Building, breaking up of the paved parking area,
removal of all debris and filling of the basement void and other associated civil
works.
On 10 June 2014 Coin received from Rosen the tender package, which included blueprints of
the Rosen Building, 4 contract drawings, the specifications, the contract and the tender form.
The 4 contract drawings were as follows:
a. Site Outline – a basic outline of the Rosen Building and existing conditions at the site
prior to demolition.
b. Site Plan – rough grading, which indicated the rough grade elevations to which Coin
was to grade the site and the final grade elevations.
c. Civil works- drawings indicating the associated civil works required.
d. Site Sections – which included an outline of some existing items to be demolished and
removed from the site.
A pre-tender meeting was held on 3 July 2014. Rosen’s project manager (Bill) and Coin’s
project manager (Dave) attended. At that meeting Dave asked how much of the retaining
wall was to come down and were there any other problems with the site. He was told “no
worries mate it’s a good site but you need to read the drawings”. Dave also visited the site.
Based on this conversation Coin decided to allow for normal excavation with rock not
occurring above 3.0 meters from the surface.
In the tender document submitted by Coin, Coin certified that Coin had visited the site and
become fully conversant with conditions required to perform the work of the contract; that it
had satisfied itself of the suitability, quality and quantity of surface and sub-surface material
to be encountered and that any failure to do so would not relieve it of the responsibility of
performing the work. This certificate was attached as an appendix to the contract.
Tenders closed on 12 July 2014. Coin was the successful bidder
Extracts from the commercial conditions of contract are set out below:
18 Entire Agreement.
The parties intend that this agreement, together with all attachments, schedules, exhibits, and
other documents that are referenced in this agreement and refer to this agreement:
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a. represent the final expression of the parties’ intent and agreement between the
parties relating to the subject matter of this agreement,
b. contains all the terms the parties have agreed to relating to the subject matter, and
c. replaces all the parties’ previous discussions, understandings, and agreements
relating to the subject matter.
19 Direction of variations
The Subcontractor shall not vary Work under the Subcontract (WUS) except as directed in
writing by the Subcontract Superintendent pursuant to this subclause 19.
The Subcontract Superintendent, before the date of practical completion, may direct the
Subcontractor to vary WUS by any one or more of the following which is nevertheless of a
character and extent contemplated by, and capable of being carried out under, the
provisions of the Subcontract (including being within the warranties):
(a) increase, decrease or omit any part;
(b) change the character or quality;
(c) change the levels, lines, positions or dimensions;
(d) carry out additional work;
(e) demolish or remove material or work no longer required by the Main Contractor.
No direction by the Subcontract Superintendent shall constitute a direction under this
subclause 19 unless it is in writing and expressly states that it is a direction under
subclause 19.
20. Waiver
Any waiver or relaxation by The Principal or The Superintendent partly or wholly of any
provision of or right relating to the Subcontract is valid only if in writing and signed by The
Principal. Any such waiver or relaxation is restricted to its written terms and unless expressly
stated otherwise applies to a particular occasion only, is not continuing and does not
constitute a waiver or relaxation of any other provision or right.
22 Subcontractor may give notice of Variation
If the Subcontractor considers that any Direction or other event or circumstance involves a
Variation, then the Subcontractor must, as a condition precedent to any Entitlement arising
out of, or in connection with, the relevant Direction, event or circumstance, within two (2)
Business Days of receipt of the Direction or the occurrence of the other event or circumstance
(as applicable), and in any event prior to acting upon the Direction, event or circumstance, so
notify The Principal by a written notice titled “Clause 22 Notice of Claimed Variation”. This
notice must state the reasons for the Subcontractor’s opinion. If the Subcontractor fails to
satisfy the condition precedent referred to above, the Subcontractor shall have no Entitlement,
and releases the Principal from any claim, arising out of, or in connection with, the relevant
Direction, event or circumstance.
23 Claim for extension of time
Subject to the Subcontractor complying with its obligations under subclause and 23.1 and
23.2, the Subcontractor shall be entitled to such extension of time as the Superintendent
assesses.
23.1 Form of claim for an extension of time
A claim for an extension of time must:
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(i) be submitted by the Subcontractor to The Superintendent within the 3 Business Days of
the commencement of the event, occurrence or matter causing the delay;
(ii) be titled “Extension of Time Claim”; and
(iii) identify in detail the following items:
(iv) the extent or likely extent of the delay;
(v) the cause of delay (including evidencing the facts of causation);
(vi) the critical activity or activities delayed or which may be delayed;
(vii) how the cause of delay impacted or is expected to impact upon the critical activity
delayed; and
(viii) the measures which the Subcontractor has adopted or proposes to adopt to overcome or
minimise the consequences of the cause of delay.
23.2 Conditions precedent to extension of time
It is a condition precedent to the Subcontractor’s entitlement to an extension of time to the
Date for Practical Completion that:
(a) the cause be a qualifying cause of delay;
(b) the Subcontractor has not caused or contributed to the cause of the delay;
(c) the Subcontractor has promptly, competently and prudently taken all practicable measures
to avoid or minimise the cause and effects of the delay;
(d) if the delay continues for 10 working days the Subcontractor must provide a notice in the
form outlined in clause 23.1 and entitled continuing claim for delay. The Subcontractor shall
submit a similar notice for each subsequent 10 days the delay continues;
(e) have complied with clause 23.1;
23.3 Qualifying cause of delay
A Qualifying cause of Delay means:
(a) any default of the Subcontract Superintendent, the Main Contractor or its consultants,
agents or other contractors;
(b) any default of the Superintendent, the Principal or its consultants, agents or other
contractors Subcontractor;
(c) An instruction, issued by the Superintendent ,including an instruction which is found to be
a variation, which impacts on the critical path;
(c) other than:
(i) a breach or omission by the Subcontractor;
(ii) industrial conditions or inclement weather occurring after the date for practical
completion;
Payment Claim Information
The date for submission of a progress claim is the 24th of each month and payment of this
claim is required by the 15th of the next month.
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QUESTIONS
1. On commencing work Coin found:
a. Rock at a depth of 1.0 meters.
b. The site was contaminated with asbestos.
This resulted in considerable extra costs.
Your claim for extra costs was rejected by the Superintendent who cited clause 18 and the
appendix containing Coins certificate regarding the site.
You are asked by Dave if he should declare a dispute
Assuming you met the notice period requirements Advise Dave if have any avenues of claim
and if so what are they. Please discuss in detail the strengths and weaknesses of your
potential action.
2 Based on case 1, A dispute was declared and during discovery you find the that Rosen were
in possession of a soils report which showed rock at a depth of 1.0 meter and the asbestos.
However, this was sent to Rosen’s geology department and Rosen’s project team were not
aware of its existence.
Would this modify the likelihood of success of your claim and if so why? (Discuss in detail).
Would it make a difference if Rosen’s project manager had sent a company wide email
asking for all available information of the site and received no response from the geology
department?
3 In the situation described in case 1 you have put in three claims for other issues without
meeting the notice provisions which the Superintendent has accepted, but on your claim for a
forth matter the Superintendent rejects for failure to comply with the notice provisions.
Dave suggest you can claim using unjust enrichment or implied promise to pay.
(a) Advise Dave on the strengths and weakness of a claim under these headings.
(b) What other avenues would you suggest could be used to pursue Coin’s claim.
(c) How would you defend against claims made on the basis you suggest?
What strategies could have been employed by the Superintendent to grant your first three
claims whilst reducing any likelihood of future claims without the required notice
succeeding?
4: During the contract the Superintendent deletes 20% of Coin’s scope:
a) Do you have any right to object or is this within the power of the Superintendent?
b) You subsequently find that the Superintendent has placed your scope in another
contract package and let the work. Have your rights changed and if so in what regard
and what action do you recommend that Coin take?
c) How would you react to the approach you suggest if you worked for the
Superintendent?
The Superintendent issues a variation for a fifth matter. You complete the work but when
you submit your claim the Superintendent refuses payment on the grounds that the scope
of this variation was already in the original contract.
Dave asks you should Coin pursue the claim? What do you advise Dave and why?
5 You serve your progress claim on Rosen on 24th Nov 2014 for $ 247,500 and by 9th
December 2014 you have not received a payment schedule and on 15 December 2014 you
receive a payment of $ 135,000 accompanied by the Superintendent’s certificate.
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You contact Rosen and they advise you that they only have to pay what the Superintendent
certifies and that is what they have done.
(a) Dave tells you he wants the whole of the claim.
(b) Is Rosen correct or can you ask for adjudication? If you decide that adjudication is
appropriate discuss how you would progress your claim up to and including your
adjudication application. If you decide adjudication is not appropriate what alternative
strategy would you suggest?
(c) If you were acting for Rosen describe how you would respond to the strategy outlined
by you for Dave.
In your answers please ensure you cite any time requirements and what the result of failure to
comply with those time requirements would be.
6 Discuss the following:
• The conditions required for discharge by frustration.
• The meaning of, and the conditions required for, the innocents party to terminate as a
result of:
o Breach of an essential term.
o Breach of an intermediate term.
o Breach of a warranty.
o Repudiation of contract.
• Discuss the standard you must reach when you issue a notice of termination.
• Describe what is required in a show cause notice.
• If the other party breaches the contract what are the dangers to you in ignoring the
breach. What would be the best strategy if you wished to accept the breach. What
would you do if you wished to continue with the contract?
7 In the situation described in case 1 you were delayed by the actions of the superintendent.
A. Dave asks for your advice and says given that this delay was not your fault do you
have to incur any costs to mitigate the delay?
B. Irrespective of your advice in A, in the interests of maintaining good relations, Dave
authorises the expenditure of $20,000 to mitigate the effect of the delay. The attempt
fails. Your claim for this expenditure is denied by the superintendent. Advise Dave of
your rights in this situation.
C. The superintendent then instructs you to accelerate to make-up lost time and refuses
to pay your costs. What should Dave do in this situation?
What are the requirements for a global claim to succeed?

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