Changes to JCT contracts explained
The JCT has updated its design and build contract. Trowers & Hamlins partner Stuart Wilson and associate Mark Pantry explain the key changes.
Stuart Wilson (top), Mark Pantry
The 2016 edition of the JCT Design and Build Contract (JCT DB 2016) was released on 22 September 2016 replacing the previous 2011 edition.
The key new features of the JCT DB 2016 are:
The payment provisions have been revised and consolidated to follow the approach originally presented in the 2016 editions of the JCT Minor Works Building Contracts.
Interim Valuation Dates have been defined and the parties to the contract are free to set these. Subsequent Interim Valuation Dates are the same date in each month. The due dates for payment are now defined as being seven days from the relevant Interim Valuation Date. The final date for payment remains 14 days from the due date.
The JCT has stressed that in certain circumstances the Interim Valuation Dates may be altered to the nearest business day in a particular month. This will have an impact on the due date, the date for issuing payment notices and pay less notices and the final payment date. Employers and Employer’s Agents can therefore no longer rely on payment dates and payment notice dates being the same each month and should take appropriate steps to prevent dates being missed.
2. CDM Regulations
The JCT DB 2016 incorporates the changes under the Construction (Design and Management) Regulations 2015 so that it is compliant with the terminology of those regulations, including the replacement of the CDM Coordinator with a Principal Designer. General health and safety provisions are added by the inclusion of optional Supplemental Provision 6.
The provisions relating to insurance generally have been consolidated and Insurance Option C (joint names insurance by the Employer of existing structures and the works) has been amended to allow for the inclusion of a “C.1 Replacement Schedule”.
The inclusions of the “C.1 Replacement Schedule” will provide Employers with flexibility, particularly where they are tenants of a building in multiple occupancy, allowing them to procure insurance for the works and existing structures through their landlord. Employers who are not familiar with Insurance Option C should continue to take specialist insurance advice where works are being carried out within existing structures.
4. Building Information Modelling (BIM)
JCT has taken a light touch approach towards the inclusion of BIM in the JCT DB 2016. The Contract Particulars include a section where the BIM Protocol is to be identified. The amendments suggest that the JCT view the BIM Protocol as a separate document forming part of the Contract Documents (i.e. not forming part of the Employer’s Requirements or Contractor’s Proposals). The BIM Protocol is not intended to override the terms of the Agreement and the Contract Documents and must be drafted accordingly.
The BIM Protocol is also, unless other provisions are made, to include the design submission procedure for the works.
5. Public Contract Regulations
The JCT DB 2016 incorporates the provisions of the JCT Public Sector Supplement 2011 relating to fair payment and transparency. Two new Supplemental Provisions (numbers 11 and 12) add provisions covering the Freedom of Information Act 2000 (FOIA) and the Public Contracts Regulations 2015 (PCR); these optional provisions apply where the Employer is a Local or Public Authority or body (including Registered Providers) which is subject to the provisions of the FOIA or PCR.
In addition, the JCT DB 2016 includes specific provisions allowing the contract to be terminated by the Employer for specific breaches of the PCR and additionally incorporates provisions (including 30-day payment obligations) which are intended to be passed down to the contractor’s subcontractors and supply chain.
Fluctuation Options B and C are no longer in the JCT DB 2016 but can be accessed on the JCT’s website. This reflects a general movement towards fixed price contracts or, where fluctuation provisions are agreed, bespoke amendments.
The inclusion of new clause 1.10 has made all requirements for “consent” in the JCT DB 2016 to be not unreasonably withheld or delayed. Note that the giving of consent by either party to an assignment of rights by the other remains at the complete discretion of the consenting party.
8. Security Documents
The JCT DB 2016 has followed established practice in the market to include provisions for the Contractor providing a Performance Bond and/or Parent Company Guarantee for the benefit of the Employer. The form of Bond and Guarantee is not included in the contract and so Employers should seek appropriate legal advice.
Trowers & Hamlins will be running breakfast seminars in the next few months on the changes included in the JCT DB 2016. The seminars will be aimed at users of the JCT Design and Build Contract, if you would like to be notified of the date of these sessions please email: [email protected]