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National Construction Contracts and Law Survey 2013

National Construction Contracts and Law Survey 2013

 

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Contracts and Law

JCT Constructing Excellence Contract

by Roland Finch
NBS Technical Author

The JCT Constructing Excellence Contract (JCT/CE) was launched by Sir Michael Latham on 1 March 2007. He described it as "highly readable", "user friendly" and "practical".

So what is it about? The contract itself has its roots in the "collaborative contract" originally published in 2003 by BE – a joint venture between the Reading Construction Forum and the Design and build Foundation (and now part of Constructing Excellence).

The document has been extensively reworked and reissued as JCT/CE, together with an optional Project Team Agreement and a Guidance Note.

JCT claim that their contract is:

Appropriate:

  • For the procurement of construction works and construction related services
  • For use throughout the supply chain including the provision of professional services
  • For use where participants wish to engender collaborative and integrative working
  • For use in partnering.

Can be used:

  • Whether or not the supplier is to design
  • Where the works are to be carried out in sections
  • For Target Cost or Lump Sum.

The CE contract uses different terms for the parties; instead of Employer and Contractor favoured by other JCT documents, they are called Purchaser and Supplier respectively.

The purpose is to facilitate use of this form at any stage in the supply chain – including subcontracts and consultancy appointments.

On the face of it, that doesn’t appear too radical, but the JCT/CE can also lay claim to being JCT’s first specially drafted "partnering" contract, which sets it apart from the others in the family, even those which may have been used with JCT’s own Practice Note 4 (Series 2) and its non-binding partnering charter.

The key feature of the JCT/CE is that it introduces the concept of an "overriding principle" of collaboration under which the parties must support collaborative behaviour and confront that which is "anti-collaborative". The authors compare this to the "overriding objective" under the English Civil Procedure Rules. This principle extends beyond the parties to the contract to include adjudicators, courts and others deciding disputed under the contract.

The contract also introduces the concept of a "project team". Typically this will comprise the Client, Lead designer, Lead supplier and those other suppliers considered to be of importance to the project. Membership can vary during the course of the contract so some suppliers may join for those periods while their services are current, such as foundations or finishes, but leave when their element of the work is completed.

The project team is supposed to guide the successful delivery of the Project through its design and construction (clause 2.3) In order to achieve this they are required to "meet regularly".

The project team do not have the power to issue instructions, this function being reserved for the Purchaser.

The project team is required by clause 2.6 to give serious consideration to drawing up and
adopting a project protocol setting out the aims and objectives of the Project Team with regard to the delivery of the Project and the development of their working relationships
.

There are two other important documents: the Risk Register and the Risk Allocation Schedule. The former identifies those items to be managed during the course of the project. The latter is agreed by Purchaser and Supplier to allocate responsibility for dealing with each item during the project. Responsibility for the preparation of the register is described in the Contract Particulars.

The JCT CE supports two payment arrangements; either Target Cost, which can include a mechanism for Guaranteed Maximum Cost, or the more familiar Lump Sum Price where scheduled or milestone payments may be agreed.

Section 6 contains optional provisions for measuring and reviewing performance against agreed Key Performance Indicators.

In summary, JCT believes this contract has the following main attributes:

  • Encourages collaborative behaviour
  • Usable throughout the supply chain
  • Utilises a risk register and risk allocation schedules
  • Meets the needs of local authorities who wish to partner with suppliers
  • Alternative payment regimes i.e. target cost and lump sum
  • Provides for incentivisation
  • Addresses the OGC’s attributes set out in Achieving Excellence in Construction.

It seems the Office of Government Commerce (OGC) finally agrees with the last point because early in 2009 they agreed to endorse the use of this contract as part of their Achieving Excellence in Construction initiative, whereby central Government departments and public sector organisations "commit to maximise, by continuous improvement, the efficiency, effectiveness and value for money of their procurement of new works, maintenance and refurbishment".

Preliminaries sets for use with the JCT CE contract will be added to NBS shortly.

Related NBS information:

Articles:

Selected links:

April 2009

 

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