JCT Contracts An Overview. Michael Dunn FRICS FCIArb LLB LLM T: E:

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1 JCT Contracts An Overview Michael Dunn FRICS FCIArb LLB LLM T: E: Delivering Delivering Professional Professional Solutions Solutions to the to Property the Property Industry Industry

2 Background to JCT Contracts JCT Ltd JCT Board Chair & CE JCT Council Chair & Vice JCT drafting sub Committee Chair & Vice Directors from British Property Federation Limited Contractors Legal Group Limited Local Government Association National Specialist Contractors Council Limited RIBA RICS Scottish Building Contracts Committee Limited Five colleges (47 members) Employers, Clients and Local Authorities (BPF, Local Government Association) Consultants (Association for Project Management, Chartered Institution of Civil Engineering Surveyors, Royal Institute of British Architects, Royal Institution of Chartered Surveyors) Contractors (Contractors Legal Grp Limited) Specialists and Sub-contractors (National Specialist Contractors Council) Scottish Building Industry (Scottish Building Contract Committee Limited) 2

3 Background to JCT Contracts Outline history of JCT contracts 1870 RIBA with London Builders Society 1909 RIBA Conditions of Contract 1931 Joint Contracts Tribunal formed (RIBA Conditions of Contract) 1939 RIBA Standard Form 1963 JCT Standard Form of Contract (private & local authority version with & without quantities) 1967 JCT Prime Cost Contract 1968 JCT Agreement for Minor Building Works 1981 JCT Intermediate Form of Building Contract 1981 JCT Standard Form of Contract with Contractor s Design 1998 JCT Ltd formed 1998 JCT Standard Forms of Contract 2005 JCT Standard Forms of Contract 2007 JCT Constructing Excellence Contract 2011 JCT Standard Forms of Contract 1980 JCT Standard Form of Contract 3

4 Traditional procurement - lump sum Overview of JCT Suite of Contracts Standard Building Contract 2011 With and Without Quantities (SBC/Q & SBC/XQ) Intermediate Building Contract 2011 (IC &ICD) Minor Works Building Contract 2011 (MW&MWD) Major Project Construction Contract 2011 (MP) Constructing Excellence Contract 2011 (CE) Building Contract for a Home Owner / Occupier who has not appointed a consultant to oversee the work (HO/B) 2005 (revised July 2009) Building Contract and Consultancy Agreement for Home Owner/Occupier (HO/C & HO/CA) 2005 (revised July 2009) Home Repair and Maintenance Contract (HO/RM) 2006 (revised November 2009) Repair and Maintenance Contract (RM) 2011? 4

5 Overview of JCT Suite of Contracts Traditional procurement - measurement Standard Building Contract With Approximate Quantities (SBC/AQ) Measured Term Contract 2011 (MTC) 5

6 Overview of JCT Suite of Contracts Traditional procurement - cost plus Prime Cost Building Contract 2011 (PCC) Design and Build Design and Build Contract 2011 (DB) 6

7 Overview of JCT Suite of Contracts Management forms Management Building Contract (MC) 2011 Management Works Contract Agreement Tender Agreement (MCWC/A) and the Management Works Contract Conditions (MCWC/C) 2011 Construction Management Construction Management Appointment (CM/A) 2011 Construction Management Trade Contract (CM/TC)

8 JCT : An Overview Traditional Lump Sum Contracts : SBC, IC and MW 2011 Standard Building Contract 2011 With Quantities (SBC/Q) Without Quantities (SBC/XQ) other relevant documents Public Sector Supplement Named Specialist Update Sub contracts Collateral warranties Pre Construction Services Agreement Project Bank Account Documentation fair payment transparency BIM 8

9 Traditional Lump Sum Contracts : SBC, IC and MW 2011 Standard Building Contract 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) bills of quantities/drawings/conditions quantities/contract sum 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) specification/work schedules/drawings quantities (?)/contract sum 9

10 Traditional Lump Sum Contracts : SBC, IC and MW 2011 Standard Building Contract 2011 A/CA and Quantity Surveyor to administer the conditions interim payments variations delay and loss & expense contractor designed portion quality where the Contractor is to design discrete parts of the Works (CDP) where the works are to be carried out in sections Third Party Rights or Collateral Warranties? (Schedule 5 or warranties) 10

11 JCT Contracts : An Overview Traditional Lump Sum Contracts : SBC, IC and MW 2011 Consultant Employer Tenant Funder Main Contractor Purchaser Solid lines = a principal contract Dashed lines = a warranty/3 rd pty rights Sub-contractor 11 SBC only

12 Traditional Lump Sum Contracts : SBC, IC and MW 2011 JCT Intermediate Building Contract 2011 contractor designed portion two versions - with (ICD) and without design (IC) work of simple content generally recognised as basic trades or skills without complex services or specialist works contractor can be required to design discrete parts of the works (ICD) where fairly detailed contract provisions are required for use on a basis of with or without quantities. Drawings together with bills of quantities or specification or work schedules work can be adequately specified but has Named Sub-Contractor provision 12

13 Traditional Lump Sum Contracts : SBC, IC and MW 2011 JCT Intermediate Building Contract 2011 a lump sum contract with periodic payments no measurement or prime cost option no design and build option employer appoints A/CA and QS to administer provisions interim payments variations delay and loss & expense quality provision for Named Sub-Contractors 13

14 Traditional Lump Sum Contracts : SBC, IC and MW 2011 JCT Intermediate Building Contract 2011 There is no schedule covering a contractor s design submission procedure variation and acceleration quotation procedure third party rights code of practice 14

15 Traditional Lump Sum Contracts : SBC, IC and MW 2011 JCT Minor Works Building Contract 2011 contractor designed portion two versions - with (MWD) and without design (MW) work of a simple character employer provides design drawings/specification/work schedules/schedule of rates not for use with bills of quantities contractor can be required to design discrete parts of the works (MWD) no completion in sections not suitable where named specialists required not suitable when detailed procedures are required administered by an A/CA no QS provisions significantly different from SBC and IC e.g. extension of time basic provisions 15

16 Traditional Measurement Contract : SBC/XQ Standard Building Contract (XQ) 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 approximate bills of quantities to define the quality and quantity of work which are to be subject to measurement as there was insufficient time/information to prepare the detailed drawings necessary for accurate bills of quantities (SBC/AQ) contract documents bills of approximate quantities/drawings quantities/ascertained final sum as SBC/Q & XQ except no contract sum 16

17 Traditional Prime Cost Contract : PC 2011 Prime Cost Contract (PC) 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 scope of works cannot be defined prior to commencing works e.g. refurbishment works on listed buildings / fire damaged building requiring immediate repair insufficient time to define the works prior to commencing the works Specification and drawings define scope of work excluded work no CDP sections 17

18 Traditional Prime Cost Contract : PC 2011 Prime Cost Contract (PC) 2011 contract administered by A/CA and QS appointed by Employer interim payments variations delay and loss & expense quality based on cost design and works can overlap no contact sum (estimated cost) contactor reimbursed on costs plus a Contract Fee or lump sum cost of staff / direct work force 18

19 Traditional maintenance contracts: RM and MTC 2011 Repair and Maintenance Contract (Commercial) repair or maintenance works on specific buildings or sites short one-off small works undertaken from time to time employer experienced in commissioning such work works tendered (?) specification /drawings pricing lump sum measure (agreed schedule of rates / hourly rates) mixture of the two form of tender returned / employer signs to accept and returns a copy to the contractor could be referred to in employer s purchase order administered by employer key areas not catered for - contractor design / retention / liquidated damages 19

20 Traditional maintenance contracts: RM and MTC 2011 Measured Term Contract (MTC) (measured contract) employers who have a building stock to cover planned regular maintenance together with one off improvements competitive tenders on nature of work / geographical area / duration one contractor to deal with on pre agreed terms employer to appoint CA each job initiated by an order from the CA contract required to show type of work covered by orders / list of properties in the Contract area anticipated overall value of work (not guaranteed) maximum and minimum order value given 20

21 Traditional maintenance contracts: RM and MTC 2011 Measured Term Contract (MTC) orders can be given a priority e.g. an A code requiring a response within 4 hours duration minimum 1 year usually no longer than 3 years document is an enabling contract which allows specific work to be generated and valued in accordance with the rates, prices and percentages in the documents could be the National Schedule of Rates or some other rates can be fixed or subject to fluctuation state who is to measure and value CA contractor could be a minimum value above which CA values interim payments possible otherwise certificate issued within prescribed periods for single payment 21

22 Design and Build 2011 Appropriate when detailed contract provisions are required the contractor is to carry out and complete the design and the works the employer administers the contract provisions employer usually engages an agent to administer the contract the relevant documents Employer s Requirements Contractor s Proposals Contract Sum Analysis Contract Conditions (Contract Particulars) & Schedules 22

23 Employer s Requirements the brief e.g. floor area/lighting etc statement of facts to be taken into account e.g. site conditions / services contract information specific functions of employer s agent, quantity surveyor and clerk of works if required Contractor s Proposals the response to the ER drawings, specifications, models, perspectives, videos, method statement, programme, etc Contract Sum Analysis Design and Build 2011 basis for valuation of Changes and interim payments should include/identify cost (fees) for design work 23

24 General points no impartial contract administrator employer s agent acting for employer statements and notices - no certificates priority between ERs and CPs? contractor s design responsibility is that of reasonable skill and care contractor not responsible for any design in ER s design approval procedure - does not relieve contractor of liability lump sum contract - monthly payments or milestones supplemental provisions Design and Build 2011 stepped down PI insurance change and loss & expense quotations 24

25 Management Contracting General points suitable for fast-track complex projects where minimal design information is available at the start / allows early on site start with overlap of design and construction allows early buildability and programming input by the contractor single point contractual and payment responsibility for employer preliminaries and management fee can be fixed - a degree of price certainty / fee for pre-construction services employer retains quality control scope for client changes employer involved in letting works packages generally low risk for contractor as little responsibility for package contractors e.g. defaults, bankruptcy tends to be prime cost in nature uncertainty with cost until cost plan fixed / final works package let 25

26 Management Contracting Employer Consultants Management Contractor WP Contractor WP Contractor WP Contractor 26

27 Construction Management General points employer in control of the process fully integrated design and construction process construction manager acts on behalf of the Employer programme / works package contractors process is very flexible project needs to be sufficiently large or complex to be cost effective employer needs processes in place for entering into direct contracts with many trade contractors e.g. making numerous monthly payments employer retains the risk for the works package contractors employer retains responsibility for performance of design team uncertainty with cost final works package let 27

28 Construction Management Employer Consultants Construction Manager WP Contractor WP Contractor WP Contractor 28

29 Constructing Excellence Contract JCT were looking to provide a contract that would encourage collaborative and integrated team working would get participants to recognise the importance of risk management would provide flexibility in use (e.g. traditional or design & build) could be used throughout the supply chain The purpose behind adopting collaborative working was to increase efficiency reduce waste (time, effort and materials) / pre and post construction achieve value (maximum output from minimum resources) provide for all parties in the supply chain to share the benefits 29

30 CE appropriate for use Constructing Excellence Contract to procure construction works main and sub-contracts to procure professional services when seeking to engender collaborative and integrated working Can be used whether or not supplier to undertake design for lump sum or target cost when sections are required by either the Contractor or Employer 30

31 Constructing Excellence Contract Key features of documents can be used on one-off projects or those let under a framework drafted in simple terms the provisions are brief based on a collaborative team approach includes an overriding principle provision for a risk register and a risk allocation schedule optional Project Team Agreement supporting documents need to be detailed 31

32 Questions 32

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