This document is not to be taken as a legal interpretation of the provisions governing public procurement. All parties must rely exclusively on their own skills and judgement or upon those of their advisors when making use of this document. The Government Construction Contracts Committee (GCCC), the National Public Procurement Policy Unit (NPPPU) and the Department of Public Expenditure & Reform and any other contributor to this guidance note do not assume any liability to anyone for any loss or damage caused by any error or omission, whether such error or omission is the result of negligence or any other cause. Any and all such liability is disclaimed.
Capital Works Management Framework
Guidance Note
Public Works Contracts
GN 1.5 1
Foreword 6
Chapter 1: Introducing the Contract 7
Overview 7
1.1 Key Elements of the Contract 8
Overview 8
1.1.2. Key Contract Dates 28
1.1.2. Key Contract Dates, Continued 29
1.2 Contract Types 30
Overview 30
1.2.1 Employer-Designed (Traditional) Projects 32
1.2.2 Contractor-Designed (Design-and-Build) Contracts 35
1.2.2 Contractor-Designed (Design-and-Build) Contracts, Continued 36
1.2.3 Investigation Forms of Contract 37
1.2.4 Public Works Contracts and Heritage Strategy 38
1.2.5 Framework Agreement 42
1.3 Legal Issues Relating to the Contract 48
Overview 48
1.3.1 Main Points of Law 49
1.3.2 Indemnities 51
1.3.3 Executing the Contract / Executing the Contract as a Deed 52
1.3.4 VAT and the Contract 58
Chapter 2: Managing the Pre-Contract Phase
60
Introduction 60
2.1 Suitability Assessment and Procurement of Specialists 62
Overview 62
2.1.1 Suitability Assessment of Contractors 63
2.1.2 Procurement of Specialists 64
2.1.3 The Employer and Specialist Subcontracts 76
Overview 77
2.2.1 General Requirements 78
2.2.2 Archaeology and Special Interest Areas 79
2.2.3 Site Investigation 80
2.2.4 Ground Conditions 81
2.2.5 Utilities 82
2.3 Bonds and Guarantees 83
Overview 83
2.3.1 Bid Bond 84
2.3.2 Parent Company Guarantee 85
2.3.3 Performance Bond 86
2.3.4 Retention 89
2.3.5 Regulations and Model Forms 90
2.4 Insurance Provisions 91
Overview 91
2.4.1 Insurance Requirements 92
2.4.1 Insurance Requirements, Continued 93
2.4.1 Insurance Requirements, Continued 94
2.4.3 Insurance Details 99
2.5 Risk Management 102
Overview 102
2.5.1 Delay and Compensation Events 103
2.5.2 Weather Events in Public Works Contracts 106
2.5.2 Weather Events in Public Works Contracts, Continued 107
2.5.3 Price Variation 112
2.5.3 Price Variation, Continued 113
2.5.3 Price Variation, Continued 114
2.6 Preparing to Invite Tenders 119
Overview 119
2.6.1 Compiling the Works Requirements 120
2.6.2 Completing the Schedule 124
2.6.2 Completing the Schedule, Continued 125
2.7 Evaluating Tender Submissions 138
Overview 138
2.7.1 Comparing Tender Costs 139
2.7.2 Adjusting Details within Tender Pricing 142
2.7.3 Adjusting for VAT Errors 144
2.7.4 Evaluating Insurance Options 148
2.7.5 Tender Evaluation Example 149
2.7.6 Letters of Intent and Acceptance 152
Chapter 3: Administering the Contract 153
Overview 153
3.1 Preliminary and Routine Considerations 154
Overview 154
3.1.1 Starting a Project 155
3.1.2 Communications and Meetings 156
3.1.3 Maintaining Confidentiality and Secrecy 159
3.1.4 Value Management 160
3.2 Responsibilities in Relation to the Contract 161
Overview 161
3.2.1 The Employer’s Responsibilities 162
3.2.2 The ER’s Responsibilities 163
3.2.3 The Contractor’s Responsibilities 166
3.2.4 The Project Supervisor’s Responsibilities 174
3.2.4 The Project Supervisor’s Responsibilities 174
3.3 Managing the Works in Progress 176
Overview 176
3.3.1 Project Documentation 177
3.3.2 Site Management 179
3.3.3 Quality Assurance in Progress 182
3.3.4 Interim Payments 184
3.3.5 Actions on Substantial Completion of the Works 188
3.3.6 Resolving Disputes 190
3.3.7 Suspension of Works 193
3.3.8 Termination of Contract 194
3.3.8 Termination of Contract, Continued 195
3.4 Managing Risk in Progress 199
Overview 199
3.4.1 Responsibility for Loss and Damage 201
3.4.2 Delay and Compensation Events during the Project 203
3.4.2 Delay and Compensation Events during the Project, Continued 204
3.4.2 Delay and Compensation Events during the Project, Continued 205
3.4.3 Managing Contract Insurance 213
3.5 Calculating Price Variation (PW-CF1 to PW-CF5) 215
Overview 215
3.5.1 PV1: Proven Cost Method 217
3.5.2 PV2: Formula Fluctuations Method 221
Appendices 236
Overview 236
Appendix A: Comparison of Minor Works Contracts and Traditional Contracts 237
Comparison Table 237
Appendix B: Pre-Tender Checklists 239
B1: Invitation to Tender Checklist – Employer’s Choices 239
B2: Consents and Licences Checklists 240
B3: Invitation to Tender Checklists 243
B4: Tender Evaluation Checklist 244
244
Appendix C: Price Variation Calculation under PV2 (Formula Fluctuations Method):
Worked Examples
(PW-CF1 to PW-CF 4) 245
C1: Worked Examples – Overview 245
C2: Example – Hyperinflation in the price of materials within the fixed-price period 248
C3: Example – Hyperinflation in the price of fuel within the fixed-price period 249
C4: Example – Increase in the price of materials after the fixed-price period 250
C5: Example – Increase in the price of fuel after the fixed-price period 252
C6: Example – Increase in the cost of non-reusable temporary works after the fixed-price period 253
C7: Example – Increase in labour costs after the fixed-price period 254
Appendix D: Department of Finance Guidelines on Methods of Measurement 255
D1: Introduction 255
D2: Amendments required when using CESMM3 256
D3: ARM4 and Supplement 1 263
D3: ARM4 and Supplement 1, Continued 264
