Preliminaries for Revision 2 to the JCT Standard, Intermediate, Minor Works, and Design and Build Contracts will be available with NBS Update 2009-3 and also on the NBS website. NBS Technical Author, Stuart Doran, outlines the main changes.
With the publication of Revision 2 2009 of the JCT contracts, the publishers, Sweet and Maxwell Thomson Reuters, will be withdrawing both the JCT 98 suite and the JCT 2005 Revision 1 Contracts. Guides to the revised contracts are available listing which clauses have changed from the Revision 1 June 2007 versions.
The principal revisions are:
- The ability to incorporate a framework agreement
- Recognition of the importance of sustainability
- Modifications to payment provisions
- Changes to professional indemnity insurance wording
- Amendments to conform to the Office of Government Commerce (OGC) Achieving Excellence in Construction (AEC).
Achieving excellence in construction and sustainability
These two principles have been incorporated into the various Contracts through new supplemental provisions. The provisions are optional and it must be stated in the Contract Particulars exactly which ones apply, but beware, they will apply by default, unless opted out of.
They include:
- Acceleration (only applicable in the Design and Build Contract): A quotation to be submitted by the Contractor where the Employer wants to investigate the possibility of achieving practical completion early
- Collaborative working: An obligation on the parties to work in a co-operative and collaborative manner, in good faith and in the spirit of trust and respect.
- Health and safety: An extension of the provisions already included in the body of the JCT Contract
- Cost savings and value improvements: A mechanism for the Contractor to propose value engineering changes to reduce the cost of the Works, their associated life-cycle cost, and to improve generally the environmental performance of the Works
- Sustainable development and environmental considerations: An obligation on the Contractor to provide information requested by the Employer regarding the environmental impact of goods and materials selected by the Contractor, together with the introduction of a mechanism for the Contractor to propose changes for the improved environmental performance of the Works
- Performance indicators and monitoring: A mechanism for the incorporation by the Employer of key indicators to measure the Contractor's performance
- Notification and negotiation of disputes: An obligation for the early notification of disputes and for senior executives to engage in good faith negotiations to resolve such disputes.
Payment
As well as the text of all the Contracts being simplified, the following have also been implemented:
- The optional provision for a retention bond has been added to the Design and Build Contract.
- New provisions for interim payments after practical completion, rather than being made as and when further amounts are due, require this at two monthly intervals
- Where the Employer fails to issue a certificate or issues it late, an entitlement for the Contractor to be paid interest from what would have been the final date for payment if a certificate had been issued on time.
With the proposed reform of payment and adjudication provisions in the Housing Grants, Construction and Regeneration Act 1996, as set out in the Local Democracy, Economic Development and Construction Bill (currently being read in the House of Commons), there will be yet more changes to the JCT contracts, possibly meriting a Revision 3. If necessary, NBS will respond to this.
Insurance
The Contracts include more defined terms and detailed particulars for professional indemnity insurance. For all but the Minor Works Contract, the default will now be that no insurance is to be provided in respect of pollution or contamination and a separate insurance limit will be applied to asbestos claims, reflecting the current PI insurance market practice.
Framework Agreements
These are used as an overarching/ umbrella agreement where a volume of work or services may be required. They necessitate an underlying contract for each 'task'. Although the underlying contract defines and determines the rights and responsibilities of the parties, the Framework Agreement contains several provisions which could have a bearing upon their formulation and administration, therefore, any overlap of contractual provisions must be carefully monitored.
