CPCCBC4003A Select and Prepare a Construction Contract Assessment

This assessment has been designed to allow you to provide partial evidence of your competence in the unit CPCCBC4003A Select and prepare a construction contract. Read the scenario below that relates to the building of the Casey residence and complete the tasks outlined in questions 1 to 6 that follow.

in partnership with
CPC40110 Certificate IV in Building and
Construction
CPCCBC4003A Select and prepare a construction
contract
Project
Assessment
Student name: XXXXXX
Student number: XXXXXX
Assessment: 32639/01

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32639/01 CPCCBC4003A Select and prepare a construction contract
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Assessment submission
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32639/01 CPCCBC4003A Select and prepare a construction contract
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Introduction
This assessment has been designed to allow you to provide partial evidence of
your competence in the unit CPCCBC4003A Select and prepare a construction
contract.
Note: you will need to complete additional assessments as you progress through
your course to demonstrate competence for all aspects of the unit.
In completing your final assessments, you will show evidence of your ability to:
 Identify and analyse the essential elements, sections and clauses of a
business contract.
 Select an appropriate contract for the works to be undertaken.
 Prepare the contract
Project
For this project you will use the Casey plans that you have used in previous
learning and assessments. You will also select an appropriate contract for the
project, analyse the contract elements and prepare a contract for the client.
In this assessment you need to:
 select the appropriate contract for the construction of the Casey residence,
which is a Class 1a, low-rise, residential building
 explain why you chose the contract and analyse key features of the contract
 prepare the contract.
Read the scenario below that relates to the building of the Casey residence and
complete the tasks outlined in questions 1 to 6 that follow.
Scenario
Imagine that you are the licensed builder at Sullivon Constructions responsible
for planning the building of the Casey residence that is located in New South
Wales. You have been involved in several discussions with the client Steven
Kennedy about his vision and needs for the construction and it is now time to
prepare the contract.
Respond to the tasks below to ensure you select, analyse and prepare an
appropriate contract for the client.
A. List and briefly describe the three (3) basic elements that make up a typical
contract.
(i) The Offer
For a pact to be binding, there ought to be a proposal. An offer is an
assertion to accomplish or cease from performing, which is prepared in
exchange for a return assurance to do the same. The party who pledges the
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agreement is known as the offeror and offers a proposal outlining assured
footings.
(ii) Acceptance of the Offer.
Recognition of an offer is the communication of agreement to its conditions.
Recognition must largely be prepared in the way indicated by the proposal.
If no method of acceptance is quantified by the proposal, then approval
may be made in a way that is rational under the conditions. An approval is
only binding, conversely, if the offeree knows of the proposal, the offeree
demonstrates a plan to admit, and the approval is communicated as an
undisputable and unrestricted contract to the footings of the offer.
(iii
)
Consideration.
Every party to an agreement ought to offer something of significance that
encourages the other party to come into the contract. The decree calls this
exchange of principles “consideration.” The worth traded need not
comprise of money. Instead, it may entail of an assurance to execute a
performance that one is not lawfully necessary to do or an assurance to
desist from an act that one is lawfully allowed to do.
B. Briefly describe the situation and/or type of work suitable for each type of
contract listed below and outline why it would be suitable for use on the Casey
residence, or not: (max. 50 words each)
(i) Small Works from $5,000 – $20,000 contract:
This type of contract is endorsed for vocation works (such as carpentry,
painting, tiling), minor add-ons to the existing structure and makeovers,
repairs, maintenance and enhancements to suburban possessions up to a
value of $20,000. This kind of contract has the least requirements. This can
be used for painting and joinery works in Casey’s residence.
(ii) Small Works over $20,000 contract:
This type of a contract requires a more detailed and extensive home
building procedure. This contract is exercised in major renovations,
beautification and landscaping and, in construction of recreation facilities
such as a swimming pool. This is suitable for beautification and landscaping
of Casey’s residence.
(iii
)
Cost Plus contract:
This is a type of contract whereby the contractor is paid the incurred cost in
the activities carried out plus a certain percentage as a profit. This kind of
contract is applicable in the purchase of construction materials and labour
used in the construction. This can be used in the purchase of construction
materials and the labour to be used.
(iv
)
Renovations and Additions contract:
This is a type of contract recommended for renovations of existing
structures (such as replacement of roofs and floor tiles) or extensions to the
existing building. This type of contract is not applicable in Casey’s
residential construction since it’s a new building.
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(v) NSW Residential Building contract:
This is a type of contract that is recommended by Australian standards in
construction of new dwellings and for renovations and additions. This type
of contract can be adopted in Casey’s residential construction.
C. Review the Casey plans and then download and complete the nominated
sections of the NSW Fair Trading Home building contract for work over
$20,000 template, using the specifications below.
Note: Save the file using the same file name as this assessment document,
identifying it as ‘doc2’ and submitting it with the assessment document.
(i) Refer to page 14 of 29 of the contract and complete the ‘Schedule of
Progress Payments’ using the following information:
(a) Item ‘1’ in the ‘Stages of work’ table should include the total
‘estimated cost’ of $368,540.00 for the Casey residence.
(b) Calculate the ‘Less deposit’ amount at 10% of the overall cost and
insert this amount in the second line of the table.
(c) Insert the following items in the remaining lines of the ‘Stages of
work’ table and calculate the amounts of each item - insert in the
‘Amount (including GST)’ column.
 Site Establishment and Earthworks - 10%
 Floor/Slab – 20%
 Wall and Roof Framing to lock-up – 30%
 Fix-out to Practical Completion – 20%
 Handover, including Landscaping – 10%
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(ii
)
Explain why you think the ‘Wall and Roof Framing to lock up' would be 30%
of the overall estimated cost (maximum 100 words).
(
iii)
Refer to page 12 of 29 of the contract and complete the ‘Provisional Sum
Schedule’ by inserting the following information:
 Boring and placement of concrete piers - $5,360.00 for 20.0 metres
depth has been allowed. An additional charge of $268.00 for every
additional metre will apply.
 Allowance for Landscaping of $5,000.00.
(i
v)
Refer to page 13 of 29 of the contract and complete the ‘Prime Cost
Schedule’ by inserting the following information:
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Wall and roof framing is a stage of transforming from a very coarse
looking interior to something similar to the house you are anticipating.
This stage involves activities such as installing roof and wall
insulations, tile installation, air condition installation, carpentry,
plumbing, electrification and paint works. The finishes work are quite
involving and most pricey in a construction contract. For this reason,
the lock up stage is entitled the highest percentage of the contract
sum. In our case 30%.

 Toilet pans and cisterns – $589.43 each
 Bath tub (1 off) – $554.66
 Vanity units – $378.33 each
 Porcelain shower bases – $431.78 each
 Laundry tub (1 off) - $211.21
 Kitchen sink (SS) (1 off) - $461.47
 Polyethylene Slimline 1100 L rainwater tank (1 off) - $2,970.24
 Hot Water Unit (1 off) - $1049.97
(v
)
Prepare a final ‘rise and fall’ amount in the table below, when the
Provisional Sum allocations have increased by 20% and the Prime Cost
allocations have decreased by 6%. Two examples are provided:
Item Provisional
Sum
Allowed
Prime Cost
sum
Allowed
Increase
by 20%
Decreas
e by 6%
New
Amoun
t
Bored concrete piers 5360.00 1072.00 6432.00
Landscaping 5000 1000.00 6000.00
Toilet pans and cisterns 1178.86 70.73 1108.13
Bath tub 554.66 33.28 521.38
Vanity units 378.33 22.70 355.63
Porcelain shower bases 862.94 51.78 811.16
Laundry tub 211.21 12.83 198.38
Kitchen sink 461.47 27.69 433.78
Rainwater tank 2970.24 178.44 2791.8
Hot water unit 1049.97 63.00 986.97
TOTALS 19639.2
3
Therefore, the client must pay an additional sum of $963.4
(v
i)
List the three mandatory documents that must be included in the contract.
1. Articles of agreement and conditions of contract.
2. Bill of Quantities.
3. Specifications.
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(vii
)
List three other documents that may also be included in the contract.
1. Schedules of work.
2. Insurance policies
3. Drawings
(viii
)
Complete the following statement in relation to defect rectification:
“The contractor must rectify omissions and defects in the work which
become apparent within the period of 12 months from the date the work
has been completed.”
D. What are the two main legislative regulations used in NSW that you need to
consider when selecting and preparing the contract?
1. Environmental Planning and Assessment Act 1979
2. Environmental Planning and Assessment Regulation 2000
E. List three possible causes for the termination of a contract?
1. Lack of ability, as well as lack of productivity or poor quality of work.
2. Noncompliance and correlated issues such as dishonesty or breaking
footings and conditions of the contract.
3. Joint mistake. If parties arriving into a bond are erroneous about the
details relating to a contract.
F. Complete the table below to explain the key terms, clauses and procedures
of a valid contract and provide examples of how each works in practice.
Contract item Explanation of contract item Example
Payment
schedule
e.g. Specifies the construction
stage and the percentage and
amount that is required to be
paid by client
Client payments could be
scheduled in the contract
in line with scheduled
compliance inspections
with final payment being
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made at the handover
stage. A builder may not
ask for more than a 10%
deposit paid up front.
Offer and
acceptance
An offer is an exposed call to
any person wishing to agree
the assurance of the offeror
and normally, is castoff for
facilities and
amenities. Approval happens
when an offeree decides to be
jointly bound to the rules of
the contract by
giving consideration, or
something of importance like
money, to close the deal.
Jack's Construction
Company received an order
from Yummy Plum
Smoothie Shack for the
construction of a
production plant. Jack has
accepted the offer to
construct the plant. It is
expected that payments
will be done according to
the terms of the contract.
Breach of
contract
This is a disappointment,
without lawful justification, to
accomplish any assurance
that forms all or part of the
construction agreement.
Jack’s Company agrees to
construct the production
plant for Yummy smoothie
plum, and the two agree on
the purchase price of
$1,000,000. However
Yummy company fails to
pay Jack’s progressive
payments as per the
contract. Following, Jack’s
company can reasonably
assume that Yummy is in
anticipatory breach. This
enables Jane to file a
lawsuit against Yummy for
breach of contract.
Prime cost
items
This is a budget in the
agreement for the supply of
essential items not yet finally
selected.
for example taps or door
furniture.
Provisional
sum items
A budget projected by a cost
consultant, for a detailed part
of the works that is not yet
well-defined in adequate
feature for tenderers to
precisely price.
Supply and installation of
hot water services and
floor tiles.
Insurance This is a contract,
characterized by a policy, in
which a contractor receives
monetary protection or
compensation against
damages from an insurance
company.
Upon award of the
construction of the
production plant, Jacks
Company insures the
project against potential
losses.
Defects
liability
period
A period after practical
completion in the course of
which a building contractor
holds liability under a building
Usually six or 12 months
for construction projects
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contract for dealing with
any defects which manifest
themselves.
Dispute
resolution
This refers to any means
applied to solve disputes
among the parties involved.
Most of the construction
contract disputes are
solved in court of laws as
per laid terms of the
contract.
Practical
Completion
A construction agreement
generally outlines practical
completion being when all
works are finalized, apart
from any flaws or oversights
which do not stop the
structure from being used for
its anticipated purpose.
Client occupies the
premises upon practical
completion of the
production plant.
Variations This is an alteration to the
constraint of works in
a construction contract in the
form of an addition,
changeover or exclusion from
the original scope of works.
All the variations in
construction works are
accounted for and lead to
addition or subtraction of
the total cost of the
contract by the client.
Contract
Termination
This is process of ending the
contract before it is
performed by the involved
parties.
The construction of
production plant for
Yummy company was
terminated when the
company failed to honour
the progressive payment
schedule as per the
contract.
Liquidated
damages
The whole amount of
payment an aggrieved party
ought to receive, if the other
party breaks the contract.
Jack’s Company received
$50,000 liquidated
damages upon failure by
Yummy’s company to
honour the contract.
Retention
sum
A fraction of the sum
specialized as unpaid to the
service provider on a
temporary certificate, which
is withheld from the amount
due and retained by the
client.
Client retains 5% to ensure
that the contractor properly
completes the activities
required of them under the
contract.
Rise and Fall This is the fluctuations of cost
such as provisional and prime
cost. The exact cost of the
items or services fluctuates
against the set cost by the
consultant during quotation.
Rise and Fall sums are
calculated when the
Provisional Sum allocations
have increased by 20% and
the Prime Cost allocations
have decreased by 6%.
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Items to submit as evidence for this assessment:
1. Completion of responses to questions A to F 
2. Completed NSW Fair Trading contract 
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