Project Details
Part i: Variation claim
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Date 1 June 2017 To Superintendent BSB Consultants Project Name: Residential Unit Complex, East Hills Contract Dated: 10 November 2016 Contract No.: AS 4000 1997 General Conditions of Contract The contractor refers to the Superintendent’s direction of Residential Unit Complex, East Hills by 30 August 2017. However, to provide a detailed quotation for the following variation: Setting up of split system air conditioners to each and every bedroom ($1,800 supply cost per unit inclusive of GST) Supplying and installing of ‘floating timber flooring’ in every Bedroom/Living/Dining/ area ($88/m2, Supply costs inclusive of GST). Attached is the thorough quotation of the variation obligatory Attached consists the information of contractor’s costs of giving the thorough quotations for the considered variation
The additional cost is required to be paid by the superintendent for the completion of the contract and same will be added to the contractual cost and changes will be presented in completion certificate of the Residential Unit Complex, East Hills contract with the cited number i.e. AS 4000 governed through regulations of 1997 General Conditions of Contract. – – – – – – – – – – – – – (Contractor) Swift Developments Pty Ltd |
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Date 2 June 2017 The Contractor, ABN 150 Darling Street East Hills NSW 2213 Attention: Head of Swift Developments Pty Ltd Residential Unit Complex, East Hills Contract No: AS 4000 1997 General Conditions of Contract Variation for the Contractor’s convenience I accept your application 1 June 2017, which I considered a proposal for a Variation for the ease of the Contractor made in accordance with Clause 9.3 of the General Conditions of Contract. The Superintendent will accept the proposal on the following circumstances: 1. If the contractor is in agreement that there will be no additional costs to the Superintendent, and no delaying in date of completion as a result of the Variation. 2. If the contractor guarantees that the variation does not: · Suitability of the work is affected in accordance with the primary objective; · Demand for any other variation or; · Creates an impact on any other work or guarantees. 3. Agreement of the contractor in not making any claim in accordance with Clause 15 of the of the General Conditions of Contract for extra costs or delay in the date of completion, (inclusive of materially adverse Site Conditions) which will not arise in case the Superintendent has not agreed on the Variation. If you desire to agree with this offer, then please inform me in written by 30th August 2017 at the time when the cited contract will be completed and to be accepted and must be accepted mention that the offer and terms are conditions are approved. Yours sincerely, – – – – – – – – – – – – – Principal Crown Holdings Pty Ltd |
Adjustments to the sum of contract
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Particulars |
Amount |
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Original sum of contract: |
$550,000 (Inclusive of GST) |
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Supply and installation of AC units |
$180,000 (Inclusive of GST) |
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Floating timber flooring |
$308,000 (Inclusive of GST) |
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Total cost of contract |
$1,038,000 (Inclusive of GST) |
Further, liquidated and delay damages will be in accordance with original contract i.e. $1000 per day and $1500 per day respectively. However, penalty will not be applicable on the delayed deadline as the same has been approved by Superintendent thus this provision will be applicable
Part i: Time extension claim
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The Contractor, Swift Developments Pty Ltd Contractor Address Contract Name Residential Unit Complex, East Hills Contract Number AS 4000 1997 General Conditions of Contract Extension of time – 3 Month Contract Details
Sir I submit to your extension of time claim dated (30 August 2017).In accordance with clause (insert the contract clause) of the General Conditions of Contract, the Principal grants extension/s of time: Setting up of split system air conditioners to each and every bedroom ($1,800 supply cost per unit inclusive of GST) Supplying and installing of ‘floating timber flooring’ in every Bedroom/Living/Dining/ area ($88/m2, Supply costs inclusive of GST). The Contractual Completion Date (as previously extended) was (31st May 2017). This extension of (3 Months) days makes (31st August 2017) the Contractual Completion Date Signed by Authorized Person – – – – – – – – – – – – – Swift Developments Pty Ltd |
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The Contractor, ABN 150 Darling Street East Hills Nsw 2213 Client acceptance On behalf of Principal Crown Holdings Pty Ltd, I accept your application 1 June 2017, on providing you extension of 3 months supported by the conditions of Clause 9.3 of the General Conditions of Contract. The extension is provided regarding the installation of AC and flooring work defined in the construction contract. Signed – – – – – – – – – – – – – Date – – – – – – – – – – – – – Kind regards Principal Crown Holdings Pty Ltd Yours sincerely, BSB Consultants Name |
Adjustments to the Date of practical completion
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Date for possession of site |
10th November 2016 |
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Date of variation approval |
1st June 2017 |
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Original contract date for practical completion |
30th May 2017 |
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New contract date for practical completion |
30th August 2017 |
Further, liquidated and delay damages will be in accordance with original contract i.e. $1000 per day and $1500 per day respectively, but same will be applicable from revised date of for practical completion of the contract. By considering this factor, the penalty will not be applicable on the delayed deadline as the same has been approved by Superintendent thus the provisions cited in original contract will be applicable from the revised date.
Part i: Progress payment claim
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Date 1st August 2017 To Superintendent: BSB consultants Project Name: Residential Unit Complex, East Hills Contract Dated: 10 November 2016 Contract No.: AS 4000 1997 General Conditions of Contract Progress payment claim No. 1 By considering the provisions of sub clause 37.1, the contract is entitled to claim the amount in against of performance provided by them till the period 30th July 2017 in addition to the amount due to the contract namely Swift Developments Pty Ltd. Due amount for the cited contract is enumerated as below:
This amount has been adjusted by considering retention of 5% for the purpose of security of contractor. In support of the progress claim following documents are attached: · Cost description · Bills and completion report · Other supportive documents Date – – – – – – – – – – – – – Contractor Swift Developments Pty Ltd. – – – – – – – – – – – – – Signature |
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Date: 2nd August 2017 To Principal: Crown Holdings Pty Ltd To contractor: Swift Developments Pty Ltd Project Name: Residential Unit Complex, East Hills Contract Dated: 10 November 2016 Contract No.: AS 4000 1997 General Conditions of Contract Progress Certificate number (1) This progress certificate has been provided in response to provide progress claim by contractor of $983,000. The superintendent hereby certifies the sum of $885,400
** This amount has been adjusted by considering retention of 5% for the purpose of security of contractor. Computation of this amount has been done by considering assessment of value of WUC done up to the date of 30th July along with the due amount by the principal to the contractor and excluding the amount of previous progress certificate. Date – – – – – – – – – – – – – Superintendent BSB consultants. – – – – – – – – – – – – – Signature |
An entity or individual can make a payment claim otherwise known as progress payment only on the date mentioned in the contract. This date called the reference date, if not specified, then the last day of every month is considered. A point to be noted is that just one payment claim can be made for every reference date (Bailey, Bell and Bell, 2011). It is not permissible to make a payment claim after 12 months of the completion of construction work or associated goods to which the claim pertains were supplied last unless otherwise provided in the contract. If a respondent party gets the payment claim, it should respond by serving the claimant party with a payment schedule outlining the sum that the former is willing to pay. The payment schedule should be served by the respondent within ten business days of getting the claim or any time before that.
Acquiring a summary judgment
The claimant party has the right to enforce a progress payment by appealing to the court for a summary judgment: in the sum of the payment claim, where payment schedule has been failed to be served by the respondent as per the Act.
Right to lien
The claimant party also has the right to lien over any unfixed material or plant which is provided to be used in the construction work, where a payment claim becomes due but is not paid.
Right to append work
The claimant also has the right to suspend his services being provided for the construction work with a 3 days-notice in advance. If the respondent does not pay the debt amount, he may be sued by the subcontractor for the due amount as if there was no assignment (Coggins, Teng and Rameezdeen, 2016). To save his side, the principal can put forth any defence which would have been at his discretion against the contractor had there not been any assignment or project, except a defence on the grounds of anything done by the respondent after the notice of debt has been served.
Variation Work
Yes, the principal is entitled to offset the amount included in a Progress Payment Certificate. Standard form contracts often supply a progress claim, and it must be considered to be a progressive certificate, in case the superintendent doesn’t issue the obligatory certificate by the scheduled time. Conversely, several cases (e.g., Aquatec-Maxcon Pty Ltd v Minson Nacap Pty Ltd (2004) 8 VR 16) recommended that the obligation of the superintendent to make payment certificate issuance to the contractor, providing of evidence is required to consider the progress claim.
A contractor would usually be allowed to interest, in case the superintendent is not able to issue a progress certificate by the scheduled time period (Evans, 2017). Even if the principle holds the right to withhold from an authorized amount to be owing for contractual breach will rely on the terms and conditions of the contract. Least requirement of the contract is to show an apparent intention regarding the principle to be permitted in the given situations.
Part i: time line
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Project Name: Residential Unit Complex, East Hills Contract Dated: 10 November 2016 Contract No.: AS 4000 1997 General Conditions of Contract |
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Timeline of project |
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Activity |
Proposed time |
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Assessment of entire work |
25th August 2017 |
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Inspection report from independent contractor |
26th August 2017 |
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Preparation of books of account |
26th August 2017 |
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Preparation of progress payment claim |
30th August 2017 |
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Submission of necessary documents to superintendent |
1st Sep 2017 |
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Final certificate |
5th Sep 2017 |
In spite of the rapid improvement in the construction market, various difficulties will be faced by the contractor due to an extension in the completion of the project. They have to suffer from various difficulties to get successful. Margins seem to be tough, and many firms are dealing in dollars (Adriaanse, 2016). However, they are not achieving success as desired. By considering this, some challenges have been identified that will be suffered by Swift Developments Pty Ltd are enumerated as below:
Undercapitalization— In the situation of delay of contract generally lack of liquidity is a significant issue. Operating money is significant to reach a Contractor’s desired goals and objectives (Morris, 2014). Capital is an essential part, a contractor cannot underestimate it, and capital is required to follow the most beneficial projects, and there must be available cash to finance those projects until draw can be obtained. A lot of bad decisions are made by the contractor when there is the unavailability of cash.
Bad Cash Flow- As everyone knows that getting paid is a typical task. It is very crucial to maintain a proper cash flow account in a contract accounting, like a proper recording of draws and record of each payment made by clients (Burr, 2016). An overlooked draw or a poor paying customer can create many troubles in a construction industry. A contractor must always be on top of its flows of cash and dates of draws.
Progress Payment Claim
Inadequate Planning- Understanding of human resource and cash problems can identify the achievement or collapse of any of the project. A contractor must not overrate its capabilities or undervalue its cash flows (Botero, 2015). Extensions are not pre planned due to which it is difficult to consider all the details and information of the extension of projects and plan accordingly.
Inflexibility- detailed arrangement of all plans and constantly analyse plan against reality. Be always prepared and planned to make changes during the weakening of plan. Operating without a plan or rejecting to estimate success versus plan has ruined many companies lead to down. A company must have an enthusiasm to transform the plan and learn from it (Rahmani, Maqsood and Khalfan, 2017). If a company hasn’t failed, then it has not given its full efforts. Nevertheless, learn from failures and implement that learning and put it in the next plan.
Uncontrolled Growth—when there is unnecessary delay in the contract; contractors lose vision of who they are and what they are competent of. To cope up with this, contractors are required to set out reasonable goals and grow itself at the same speed as their capabilities grow.
The legal position is sometimes misinterpreted regarding the approach of issuance of the final certificate. This has been cited on the point according to Australian contract law and offers a total overview of several forms of safety generally it is used to secure superintendents from defects (Boas, 2013). A universal misconception is the final certificate issue releases the contractor from all liabilities for the defects occurring in work.
However, final certificate issue consists extensive contractual and authorized allegations (Hughes, Champion and Murdoch, 2015). Therefore, it is significant to overview the provisions in the contract of construction regarding defects liability period (DLP) and proper and careful review of final completion certificate.
The final certificate usually:
- Shows that the work has been completed under the contract;
- Releases the contractor from liabilities for defects which would have been apparent from inspected work;
- Prompts the contractor’s return regarding all security held by the superintendent (Bailey, 2014);
- pave the way for formation of final books of account and settlement of the contractor’s final account; and
- Indicates contract completion.
However, the contractor is not fully discharged from the liability for a defect in work as it only becomes apparent after final certificate issuance (Lu, Flanagan and Ye, 2015). On the other hand, the employer holds no rights to call again the contractor to location (and the contractor as well no longer holds the right to contact to the site), it usually held during DLP, contactors is considered liable to the employer regarding arise of any of the defects (Bevan and Yung, 2015). Once, the issuance of the certificate is completed, the extent of the contractor’s liability to the superintendent will vary on the governing law of the contract and, in some situations, local laws will be applied in the project jurisdiction which will be applicable irrespective of the governing law of contract (Galland, 2017). By considering the applicability of present contract contractor will be liable for defects even if the certificate of completion is issued. However, the defect should not be due to the negligence of superintendent.
References
Adriaanse, M.J., 2016. Construction contract law. Palgrave Macmillan.
Bailey, I.H., Bell, M. and Bell, C., 2011. Construction law in Australia. Lawbook Company.
Bailey, J., 2014. Construction Law. Crc Press.
Bevan, E.A. and Yung, P., 2015. Implementation of corporate social responsibility in Australian construction SMEs. Engineering, Construction and Architectural Management, 22(3), pp.295-311.
Boas, H.C., 2013. Cognitive construction grammar. In The Oxford handbook of construction grammar.
Botero, D.E., 2015. Contract Interpretation Law in Australia: It Is a Maze, Not a Straight Way. IUSTA, 2(41).
Burr, A. ed., 2016. Delay and disruption in construction contracts. CRC Press.
Coggins, J., Teng, B. and Rameezdeen, R., 2016. Construction insolvency in Australia: reining in the beast. Construction Economics and Building, 16(3), pp.38-56.
Evans, P., 2017. The building and construction industry code of conduct (WA). Brief, 44(6), p.22.
Galland, J.P., 2017. Big third-party certifiers and the construction of transnational regulation. The ANNALS of the American Academy of Political and Social Science, 670(1), pp.263-279.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and management. Routledge.
Lu, W., Ye, M., Flanagan, R. and Ye, K., 2015. Corporate social responsibility disclosures in international construction business: trends and prospects. Journal of Construction Engineering and Management, 142(1), p.04015053.
Morris, D., 2014. Entire contract theory in construction. Brief, 41(3), p.8.
Rahmani, F., Maqsood, T. and Khalfan, M., 2017. An overview of construction procurement methods in Australia. Engineering, Construction and Architectural Management, (just-accepted), pp.00-00.
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