JCT Standard Building Contract SBC/Q

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1 JCT Standard Building Contract SBC/Q Michael Dunn FRICS FCIArb LLB LLM T: and E: m.dunn@rpp.co.uk Delivering Professional Solutions to the Property Industry

2 SBC 2011 Current documents Standard Building Contract With Quantities (SBC/Q) Standard Building Contract Without Quantities (SBC/XQ) Standard Building Contract With Approximate Quantities (SBC/AQ) other relevant documents Public Sector Supplement Named Specialist Update Sub contracts Collateral warranties 2

3 SBC 2011 Appropriate for larger works designed and/or detailed by or on behalf of the Employer, where detailed contract provisions are necessary and the Employer is to provide the Contractor with drawings and with bills of quantities to define the quantity and quality of work (SBC/Q) with approximate bills of quantities to define the quality and quantity of work which are to be subject to re measurement as there is insufficient time/information to prepare the detailed drawings necessary for accurate bills of quantities (SBC/AQ) with either a specification or work schedules to define adequately the scope and quality of work and where the degree of complexity is not such to require bills of quantities (SBC/XQ) 3

4 SBC 2011 Appropriate where a A/CA and Quantity Surveyor are to administer the conditions Can be used where the Contractor is to design discrete parts of the Works (CDP) where the works are to be carried out in sections private and local authority employers 4

5 SBC/Q Structure Generally Recitals Articles Contract Particulars ) of document ) Project specific ) details at front Attestation Provisions ) Conditions Schedules 5

6 SBC/Q 2011 Structure Conditions / Schedules Section 1 Definitions and Interpretation Section 2 Carrying out the Works Section 3 Control of the Works Section 4 Payment Section 5 Variations Section 6 Injury Damage and Insurance Section 7 Assignment, Third Party Rights & Collateral Warranties Section 8 Termination Section 9 Settlement of Disputes Schedules 1 Contractor s Design Submission Procedure 2 Variation and Acceleration Quotation Procedure 3 Insurance Options 4 Code of Practice 5 Third Party Rights 6 Forms of Bonds 7 Fluctuations Options 8 Supplemental Provisions 6

7 SBC/Q 2011 Structure Recitals description of the Works (Recital 1) identifies the priced Bills (Contract Bills) (Recital 2) priced Activity Schedule identifies the Contract Drawings (Recital 3) CIS ( Recital 4) Information Release Schedule (Recital 5) Employer Sections (Recital 6) Framework Agreement (Recital 7) Supplemental Provisions (Recital 8) Contractor s Designed Portion (Recitals 9 to 12) 7

8 SBC/Q 2011 Structure Articles Contractor s obligation (Article 1) Contract Sum (Article 2) Architect / Contract Administrator (Article 3) Quantity Surveyor (Article 4) CDM Co ordinator (Article 5) Principal Contractor (Article 6) Adjudication (Article 7) Arbitration or legal proceedings (Articles 8 & 9) Employer s representative (3.3) and clerk of works (3.4) 8

9 SBC/Q 2011 Structure Contract Particulars Parts 1 & 2 Part 1: General e.g. Section descriptions (6 th Recital) Supplemental Provisions (8 th Recital) Date(s) for Completion (1.1.) liquidated damages (2.32.2) Rectification Period default 6 months (2.38) frequency of interim payments i.e. due dates (4.9.2) insurance provision (6.7) 9

10 SBC/Q 2011 Structure Part 2: Third Party Rights & Collateral Warranties (7A to 7E) Third Party Rights or Collateral Warranties? (Schedule 5 or warranties) from Contractor in favour of purchaser & tenant funder collateral warranties from sub contractors in favour of employer purchaser & tenant funder 10

11 SBC/Q 2011 Third Party Rights / Warranties Consultant Employer Tenant Funder Main Contractor Purchaser Sub-contractor Solid lines = a principal contract Dashed lines = a warranty/3 rd pty rights 11

12 SBC/Q 2011 General Section 1 Definitions and Interpretation Definitions (1.1) capitalised words or terms Interpretation (1.2 to 1.11) e.g. priority of Conditions (1.3) reckoning of periods (1.5) calendar days! Contract (Rights of Third Parties) Act 1999 (1.6) Notices and other communications (1.7) issuing of A/CA Certificates (1.8) effect of Final Certificate (1.9) effect of other Certificates (1.10) 12

13 SBC/Q 2011 Documents Contract Documents Definitions (1.1) Contract Drawings Contract Bills no mention of specification! Conditions Employer s Requirements ) Contractor s identified in Contractor s Proposals ) Designed Contract Particulars CDP Analysis ) Portion Part 1 13

14 SBC/Q 2011 Documents Discrepancies etc. notification of discrepancies etc. in/between Bills, Drawings, etc. (2.15) obligation on Contractor Contract Bills prepared to SMM (2.13 &14) departures treated as a Variation (2.14.3) quality/quantity of work included within Contract Sum (4.1) inadequacy of design in ER (2.14.2) treated as a Variation unless addressed in CP 14

15 SBC/Q 2011 Quality Contractor s principal obligation (2.1 and Article 1) carry out and complete the Works in accordance with the Contract Documents etc. schedules etc. issued by A/CA ( ) Information Release Schedule (2.11) further drawings or details issued by A/CA (2.12.1) Contractor s Designed Portion (2.2) complete design/select specification not stated in ER or CP integration of CDP with other design with A/CA 15

16 SBC/Q 2011 Quality Workmanship & materials (2.3 see also 4.1) as described in the Contract Bills to the satisfaction of the A/CA Employer s Requirements / Contractor s Proposals standard appropriate to the Works Contractor to provide A/CA with reasonable proof that materials/goods comply with Contract Documents Contractor s responsibility (3.6) 16

17 SBC/Q 2011 CDP CDP identified at 9 th Recital Contractor s liability (2.19) reasonable skill and care not liable for any design included within Employer s Requirements (2.13.2) PI insurance (6.12 & 13) as built drawings (2.40) for CDP elements only license to use Contractor s Design Documents (2.41) subject to all monies due being paid 17

18 SBC/Q 2011 CDP Contractor s Design Submission Procedure i.e. Design Documents and Schedule 1 2 copies in format set out in ER A/CA respond within 14 days categories A/B/C 18

19 SBC/Q 2011 Sub Contracts Consent to sub contract (3.7) work / design Listing in Contract Bills (3.8) list minimum of 3 domestic sub contractor specialist naming supplement JCT Standard Sub Contract otherwise include (3.9) unfixed materials interest on late payment collateral warranties 14 days 19

20 SBC/Q 2011 Instructions A/CA s instructions instruction in writing (1.7) other than in writing ( 3.12) e.g. oral clerk of works directions (3.4) instructions e.g. Variations (5.1 & 3.14) postponement (3.15) / provisional sums (3.16) / remove non compliant work (3.18) non compliance with an Instruction (3.11) i.e. 7 day notice empowering provision (3.13) 20

21 SBC/Q 2011 Instructions A/CA s Instructions Contractor to comply with instructions (3.10) save that reasonable objection to a Variation under impacts on efficacy of design (CDP element) Variation Quotation (5.3) what is a Variation Quotation (5.3 and Schedule 2) within 7 days Contractor s notice of insufficient information 21 days provide quotation to QS open for acceptance 7 days acceptance by the Employer / A/CA Confirmation Instruction Acceleration Quotation (Schedule 2) 21

22 SBC/Q 2011 Instructions Work not in accordance with the Contract (3.18) remove defective work (3.18.1) leave and adjust Contract Sum (3.18.2) Employer consultation! inspection and tests (3.17) other work (Schedule 4 Code of Practice) Rectification Period (2.38) defects schedule of defects (2.38.1) defects prior to expiry (2.38.2) 22

23 SBC/Q 2011 Instructions A/CA Instructions valuation of Variations (Section 5) definition of a Variation (Section 5) agreed between Parties failing which valued by QS (5.2) the Valuation Rules Bill rates / prices etc. CDP 23

24 SBC/Q 2011 Payment SBC/Q 2011 is a lump sum contract adjustments to the Contract Sum (4.2,4.3, 4.4 & 4.5) adjustments to be included within interim payments (4.4) (note: SBC/AQ is not a lump sum contract but a re measurement contract) Payment provisions have to comply with Housing Grants Construction & Regeneration Act 1996 as amended by the Local Democracy, Economic Development and Construction Act 2009 Part 8 24

25 SBC/Q 2011 Payment Payment driven by dates due dates interim payments / final payment invoices? all reference to payments exclude VAT Provision for an advance payment (4.8) Contract Particulars bond (Schedule 6 Part 1) local authorities 25

26 SBC/Q 2011 Payment Interim Certificates issued by A/CA (4.10.1) should state amount due (e.g. Employer to Contractor) basis of calculation Interim Certificates issued (4.10.1) within 5 days of the due date (4.9) in Contract Particulars up to the month following practical completion thereafter every 2 months upon issue of Certificate of Making Good (2.39) Effect of Interim Certificates (1.10) 26

27 SBC/Q 2011 Payment Valuations for Interim Certificates prepared by Quantity Surveyor (4.10.2) Make up of interim payment (4.16 and 17) gross valuation works completed in accordance with Contract materials on and off site less (4.9.2) advance payment Retention amounts previously certified amounts paid against Interim Payment Notice / Payless Notice 27

28 SBC/Q 2011 Payment Contractor s Interim Application (clause 4.11) may submit not mandatory submitted not less than 7 days before the due date stating sum due and basis of calculation where no or no valid Interim Certificate is issued by A/CA then Interim Application becomes an Interim Payment Notice where no Interim Application is submitted and no or no valid Interim Certificate is issued the Contractor may submit an Interim Payment Notice submitted to QS 28

29 SBC/Q 2011 Payment Payless notice (clause 4.13) could be issued by either Employer or Contractor (i.e. Final Certificate) Employer to Contractor may be given by Employer or Employer s rep or A/CA or QS state amount due at date of notice and basis of calculation Contractor to Employer copy to A/CA state amount due at date of notice and basis of calculation Payless notice can only be given when either an Interim Certificate or Interim/Final Payment Notice has been given 29

30 SBC/Q 2011 Payment Amount paid to Contractor sum stated as due in the Interim Certificate Certificate issued even if amount is zero (clause ) subject to the issue of a payless notice where no or no valid Interim Certificate is issued the amount stated in the Interim Payment Notice (clause ) subject to the issue of a payless notice where a payless notice is issued the amount shall not be less than that stated in that notice. (clause ) 30

31 SBC/Q 2011 Payment Retention (4.18 to 20) default 3% bond in lieu of retention? fiduciary interest / separate bank account / investment reduced by 50% following issue of Practical Completion Certificate final balance released following issue of Certificate of Making Good Employer fails to make interim payment interest (4.12.6) suspension (4.14) termination ( ) 31

32 SBC/Q 2011 Payment 2005 Procedure interim payments A/CA issues Interim Certificate Employer issues proposed payment notice Employer s withholding notice Final date for payment 5 days 5 days 2011 Procedure interim payments 14 days Due date identified in Contract Particulars Within the 5 day period A/CA issues Interim Certificate Payless notice Final date for payment 5 days 5 days 14 days 32

33 SBC/Q 2011 Payment 2011 Procedure interim payments Due date identified in Contract Particulars A/CA to issue Interim Certificate within the 5 days Important if no proper interim certificate given Payless notice issued by Employer Employer s R A/CA QS Final date for payment Amount due? 5 days 5 days Contractor may submit an interim application not less than 7 days before due date x Contractor may issue an Interim Payment Notice 14 days plus x 33

34 SBC/Q 2011 Payment Final adjustment (4.5) 6 month period following practical completion for Contractor to submit documents after which 3 months for preparation of loss and/or expense statement schedule of adjustments to Contract Sum issued by A/CA 34

35 SBC/Q 2011 Final Certificate Final Certificate (4.15) issued no later than 2 months from the later of end of the Rectification Period issue of Certificate of Making Good issue of loss and/or expense statement / schedule of adjustments to the Contract Sum 35

36 SBC/Q 2011 Final Certificate Final Certificate should state (4.15) adjusted Contract Sum amount previously certified difference owed to either the Contractor or Employer i.e. the amount due the basis of the calculation Conclusiveness of Final Certificate (1.9) Final date for payment 28 days (4.15) 36

37 SBC/Q 2011 Payment Final payment Issue FC no later than 2mths after later of end of RP. issue of CMG issue of final account due date is date of issue or expiry of 2 months If no FC issued Contractor may issue a Final Payment Notice Payless notice from Employer or Contractor Final date for payment x days 5 days 28 days plus X 37

38 SBC/Q 2011 Time Start and completion Contract Particulars (1.1 & 2.4) Possession and progress (2.4 & 2.5) Contractor takes possession until practical completion Contractor to proceed regularly and diligently deferred possession by Employer for up to 6 weeks (2.5) Completion in Sections Recital 6 Contract Particulars insert details for Sections clauses drafted as the Works or of any Section e.g

39 SBC/Q 2011 Time Employer occupies site or earlier use of Works (2.6) storage / other use contractor s consent insurer aware and adjustment for premium Partial Possession (2.33 to 2.37) consent of the Contractor A/CA s statement not a certificate deemed practical completion insurance / Rectification Period / liquidated damages / Retention 39

40 SBC/Q 2011 Time Practical Completion Certificate (2.30) A/CA s opinion what amounts to practical completion? CDP as built drawings (2.40) CDM Regulations (3.23.4) Non Completion Certificate (2.31) what if an eot is subsequently granted? 40

41 SBC/Q 2011 Time Liquidated damages (2.32) rate in the Contract Particulars (per day / per week or part thereof) recover as a debt or by deduction from payments Non Completion Certificate issued notice that may withhold Payless Notice (4.12) 41

42 SBC/Q 2011 Time Adjustment of Completion Date (2.26 to 2.29) Pre Agreed Adjustment / Relevant Omission Contractor s notice required particulars A/CA is to respond within 12 weeks allocated time to each Relevant Event! (2.28.3) review period (12 weeks following practical completion) Relevant Events 14 nr sweep up provision includes Architect / QS (2.29.7) Contractor s programme ( ) 42

43 SBC/Q 2011 Loss and/or Expense Loss and/or expense (4.23 to 4.26) purpose? entitlement in principle / quantum Relevant Matters 5 number includes any act impediment etc. by Employer includes A/CA and QS 43

44 SBC/Q 2011 Insurance of the Works Insurance of the Works (6.7) Option A new works by Contractor Joint Names (6.8) / All Risks (6.8) Option B new works by Employer Joint Names / All Risks Option C Existing Structures and Works existing structures Joint Names / Specified Perils (6.8) new works Joint Names / All Risks 44

45 SBC/Q 2011 Dispute Resolution Supplemental Provisions negotiation by senior executives (paragraph 6) Reference to mediation (9.1) Adjudication (9.2) Legal Proceedings now default (Article 9) Contract Particulars Arbitration (Article 8 & 9.3 to 9.8) 45

46 Questions Delivering Professional Solutions to the Property Industry 46

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