Using the attached case project, described in Appendix A of this brief, you are to prepare an individually written technical report addressing the following:
1) Explain what is meant by a “Letter of Intent” (LOI). Outline the key elements that are essential in a LOI and the risks to all the parties concerned. Why was Sebastian engaged based on a letter of intent and what are the risks of this action? Why would Sebastian in turn engage Kowalski on a letter of intent and not a subcontract?
2) What are performance bonds? Why are performance bonds used on construction projects? Analyse the range of types of performance bond arrangements used in construction. Why was the performance bond recommended by S&D on the case study project. Examine the risks inherent in the use of a performance bond.
3) Explain what is meant by the term ‘novation’? Why is novation used in the adopted procurement arrangement? Examine and demonstrate the associated implications, benefits and risks of novation for the parties to this project?
4) Overall recommendations arising from your appraisal of the case study project, paying particular attention to how the project was procured, the selection of J F Sebastian Builders Limited as main contractor, tendering and pricing approach used, and overall procurement and contractual arrangements.
