Professional Documents
Culture Documents
Index
Introduction............................................................................................................................................................................................... 3 Summary of Main Changes..................................................................................................................................................................... 3 General Trends .................................................................................................................................................................................... 3 Changes to Layout, Terminology & Numbering.......................................................................................................................... 3 Relevant Events .................................................................................................................................................................................... 4 Third Party rights................................................................................................................................................................................. 5 Local Authority Contracts ................................................................................................................................................................ 5 Payment notices & withholding payment ...................................................................................................................................... 5 Retention ............................................................................................................................................................................................... 5 Dispute resolution............................................................................................................................................................................... 5 Adjustment of Completion Date..................................................................................................................................................... 6 Sectional Completion ......................................................................................................................................................................... 6 No Nomination provisions ............................................................................................................................................................... 6 Contractors Design Portion............................................................................................................................................................ 6 Contractors Design Submission ..................................................................................................................................................... 6 Professional Indemnity Insurance .................................................................................................................................................... 7 Contractors Obligations................................................................................................................................................................... 7 The New Schedule of Contracts and Subcontracts........................................................................................................................ 8 JCT Standard Building Contract with Quantities 2005 ................................................................................................................11 General Changes ...............................................................................................................................................................................11 Specific Changes.................................................................................................................................................................................11 Important Changes and Implications ............................................................................................................................................13 JCT 2005 Design and Build Contract................................................................................................................................................14 General Changes ...............................................................................................................................................................................14 Specific Changes to the Design and Build form.........................................................................................................................14 Important Changes and Implications ............................................................................................................................................14 JCT Intermediate Building Contract 2005 .......................................................................................................................................15 General Changes ...............................................................................................................................................................................15 Specific Changes to the Intermediate Building form ................................................................................................................15 Significant Items that have not changed.......................................................................................................................................15 Important Changes and Implications ............................................................................................................................................15 JCT Minor Works Building Contract 2005 .....................................................................................................................................16 General Changes ...............................................................................................................................................................................16 Specific Changes to the Minor Works Building form ..............................................................................................................16 Important Changes and Implications ............................................................................................................................................17 CPD Questionnaire 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Introduction
The Joint Contracts Tribunal (JCT) has recently revised and published their new standard forms of contract as a new suite of JCT 05 contracts. The style of the various forms of contract has been revised to make identifying the appropriate contract a more straightforward process, using colour coding and single and double squares on the cover to denote main and subcontracts respectively. Attempt has been made to standardise the contracts and several new contracts have been introduced to reflect changes in the industry since the previous edition, for example, the introduction of a new Framework Agreement. There is a greater procurement range and effort has been made to simplify terminology and reduce legalese to enable ease of understanding and administration. This CPD pack provides a summary of the main changes to the contracts compared with the JCT 98 edition. Upon completion of this pack you should have a knowledge and understanding of: The Main Changes between JCT98 and JCT05 The implications of any changes on the role of the Contract Administrator and or Quantity Surveyor The uses and applications of the different JCT forms
In addition, certain terms have been changed, such as Defects Liability Period, which is now Rectification Period and Determination which has been amended to Termination. Also, the Certificate of Completion of Making Good Defects is now simply the Certificate of Making Good. The 1998 and the 2005 forms permit a change to the completion date to take account of matters beyond the control of the Contractor and also to take account of work being withdrawn from the Contractor, with the consequence that the period of time for completion of the works could either increase or be reduced. These situations are now covered under the heading Adjustment of Completion Date rather than Extension of Time. As a result of such changes, standard documentation such as certificates and tender documentation will have to be revised to incorporate the new terminology. The conditions have been grouped into more logical sections and the order of the clauses has been changed. Order of Clauses are changed and grouped as: 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 and collateral warranties Section 8 Termination Section 9 Settlement of Disputes
Relevant Events
The Relevant Events which adjust the Completion Date have been reviewed, with a single catch-all term used to sweep up several Relevant Events that were previously stated individually. The phrase used within the contract is: Any impediment, prevention or defaultby the Employer The following Relevant Events have been deleted from the contract: o o o o o o o o o o Execution of work not forming part of the contract Supply of materials and good for the employer The contractor not receiving in due time instructions which it applied for in writing Failure by the Employer to give ingress or egress from the Site Non compliance by Employer with CDM Regulations Failure by Architect to comply with Information Release Schedule Inability, beyond the contractors control (and which he could not foresee) to secure labour and goods or materials Any change in Statutory Requirements which affects the works Delay by Nominated Subcontractors and Nominated Suppliers (25.4.7) Delay due to shortage of labour or materials (25.4.8)
The following Relevant Events remain unaffected, delays caused by: o o o o o Architects variations Architects Instructions re discrepancies, postponement, provisional sums (except defined work), antiquities, opening up works Deferred possession Approximate quantities where quantities are inaccurate Suspension for non payment 4
o o o o o o
Delay by Statutory Authorities Exceptionally adverse weather Specified perils Civil commotion, terrorism Strikes, lock outs Exercise of Statutory powers
Retention
Whilst retention remains 5% for the Minor & Intermediate forms, the standard level of retention has been reduced from 5% to 3% for Standard Building Contract and the Design and Build form.
Dispute resolution
The JCT 05 forms recognise the increasing utilisation of mediation, and the new forms contain a clause that allows for consideration of mediation of disputes as an impartial method of settling disputes, where both parties agree. The Adjudication provisions have been simplified from previous editions and are now carried out under the Scheme for Construction Contracts, with provision for selection of a specific Adjudicators Nominating Body in the Contract Particulars. 5
There has been a change to the default dispute resolution model from arbitration to litigation. Although the forms provide an option for disputes to be arbitrated should the parties require.
Sectional Completion
The Contract Particulars refer to Sectional Completion dates and, if these are inserted within the Particulars, the Contract will operate to give effect to the Parties intentions.
No Nomination provisions
The Design and Build and Standard Building forms no longer make provisions for nominated sub-contractors or suppliers.
o o
Contractors Obligations
No change except for reference to Contractors Design Portion. No obligation to check Employers design (clause 47 guide) Contractors design responsibility same as that of Architect Must comply with Architects Instructions for integration of Contractors design work with design works as a whole
procedures and only limited procedures are required under the contract and the Employer will have provided his requirements to the Contractor. designed by or on behalf of the Employer and where the Employer appoints a representative to exercise the powers and functions of the Employer under the Contract. Can also be used where the works are to be carried out in sections Major Project Construction Contract (MP) Subcontracts Major Project Subcontract (MPSub) Construction Management Contracts used where the client is to enter into separate trade contracts and where a Construction Manager is appointed to administer the conditions on behalf of the Client. Construction Management Trade Contract (CM/TC) Construction Management Agreement (CM/A) Construction Management Tender (CM) Contraction Management Trade Contractor Collateral Warranty for a Funder (CMWa/F) Contraction Management Trade Contractor Collateral Warranty for a Purchaser or Tenant (CMWa/P&T) Management Building Contracts used for large scale projects requiring and early start on site where works are designed by or on behalf of the Employer but full design information is not available before the works commence and where the design is of a sophisticated or innovative nature requiring specialists. The Employer will provide the Contractor with Drawings and Specification and where a management contractor is to administer the conditions. Management Building Contract (MC) Subcontracts Management Works Contract Tender and Agreement (MCWK) Management Works Contract Conditions (MCWK/C) Management Works Contractor/Employer Agreement (MCWK/E) Prime Cost Building Contracts used for projects requiring an early start on site where the works are designed by or on behalf of the Employer but where it is not possible to prepare full design information before works commence and where detailed provisions are necessary and the Employer is to provide a specification showing items of work and where Quantity Surveyor and Contract Administrator is to administer the conditions on behalf of the Employer Prime Cost Building Contract PCC Measured Term Contract used where the Employer has regular maintenance and minor work to be carried out by a single contractor for a defined period of time. Works are instructed from time to time and measured and valued on the basis of a Schedule of Rates and where a Contract Administrator and Quantity Surveyor administer the conditions on behalf of the Client Measured Term Contract MTC Housing Grant Works Building Contract used for works to a domestic building and where works are simple with design being undertaken on behalf of the Employer and where a grant is paid by a Local Authority in respect of the work. The Employer provides drawings and specification and a Contract Administrator is appointed to administer the conditions Housing Grant Works Building Contract (HG) 9
Adjudication Agreement appropriate for the appointment of an adjudicator in respect of any construction dispute arising under any JCT Contract, Subcontract or Agreement Adjudication Agreement (Adj) Adjudication Agreement Named Adjudicator (Adj/N) Framework Agreement appropriate for the procurement of construction or engineering related works over a period of time and for use alongside most standard forms of contract. The non binding forms is used where the parties do not wish to enter into a legally binding framework but wish to create a collaborative working environment (NEW) Framework Agreement FA (NEW) Framework Agreement (non binding) FA/N Generic Contracts appropriate where the main contract is a JCT form and used for a small package of work with straight forward content and low risk. Subcontracts Short Form of Sub Contract (ShortSub) Sub-sub contract (SubSub)
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Specific Changes
The payment system remains unchanged but is clearer with regard to payment notices and withholding notices. This follows the Housing Grants, Construction and Regeneration Act and requires two notices to be issued by the ACA after the Interim Certificate has been issued by the ACA a payment notice and a withholding notice. If care is taken to ensure that reasons for withholding are given, then the payment notice may also serve as the withholding notice and one the initial notice is required. The Employer is responsible for issue of these notices, not the ACA. The standard sum for retention has been decreased from 5% to 3%. The JCT 05 form includes a new section called Contract Particulars at the front of the document which includes all project specific information and is frequently completed by hand. JCT 98 placed most of this information at the end of the contract and spread throughout the Recitals, Articles and main text of the contract. Whilst JCT 98 provided for arbitration in all disputes under the contract, JCT 05 has changed the default position from arbitration to litigation. Obviously, the parties can amend the default position if they prefer to resolve disputes via arbitration. The adjudication process has been changed and is now carried out under the rules of the Scheme for Construction Contracts Regulations 1998 rather than JCTs own rules. The contract also includes a new clause which suggests that the parties consider the mediation of disputes. 11
It has been common practice over recent years to accommodate the needs of third parties where subcontractors designers and the like entered into collateral warranties with funders and purchasers. The need for such warranties has been slightly tempered due to the introduction of the recent Contract (Rights of Third Parties) Act 1999, which provide certain rights to third parties such as funders and purchasers. In JCT 98, if you required a collateral warranty it was necessary to purchase the standalone supplement and incorporate the terms on a job by job basis. Now JCT 05 in section 7 includes a standard set of rights for each kind of third party that typically requires them. The rights themselves are set out in Schedule 5 and may take the form of collateral warranties or alternatively by adoption of the Contract (Rights of Third Parties) Act 1999. The provision of rights to third parties is not mandatory but must be specifically selected in Part 2 of the Contract Particulars. Under JCT 98 a contract would automatically terminate in the event that a party became insolvent. This has changed in JCT 05 under which a contract will not automatically terminate unless a notice of termination is served. Importantly, the parties can now agree the methods of electronic communications by completing the Contract Particulars section. This could mean that email can now be deemed a contractual method of serving notice. The JCT 05 includes provisions that were previously addenda or separate supplements to the main contract. These are the Sectional Completion Supplement, the Contractors Designed Portion Supplement and also the Collateral Warranties and Fluctuations. Like JCT 98 the new JCT 05 Standard Building Contract is a contract for which the Employer is expected to employ its own design team. However, unlike JCT 98, the new form includes facility for an element of design work to be carried out by the Contractor the Contractors Design Portion. A key distinction for the new Standard Building Contract is that the Contractor is now obliged to obtain PI insurance, which was not a previous requirement of the 1998 Contractors Design Portion. The new JCT 05 Standard Building Contract includes provision to allow the adjustment of the time for completion to preserve the Employers right to the deduction of liquidated damages. The Relevant Events giving rise to the need to adjust the Completion Date have been revised and updated. For instance the Contractor is now more thoroughly responsible for his supply chain including labour and materials as the clauses relating to labour relations and strike difficulties have been deleted. In addition, The ACA must now state reasons when adjusting the Completion Date.
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General Changes
There are a limited number of substantive changes in the new form, and the changes generally are generic and follow the general changes to the 2005 suite as a whole. JCT have introduced a number of key concepts and changes from the previous 1998 edition. These changes and principles are found across the whole suite of 2005 contracts. These general changes are not repeated below. The reader should refer to the general changes detailed above relating to the JCT Standard Building Contract with Quantities 2005 above. Changes specific to the Intermediate Building Contract are considered below.
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General Changes
As with the Intermediate Building Contract, there are a limited number of substantive changes in the new form, and the changes generally are generic and follow the general changes to the 2005 suite as a whole. JCT have introduced a number of key concepts and changes from the previous 1998 edition. These changes and principles are found across the whole suite of 2005 contracts. These general changes are not repeated below. The reader should refer to the general changes detailed above relating to the JCT Standard Building Contract with Quantities 2005 above. Changes specific to the Minor Works Building Contract are considered below.
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CPD Questionnaire
1. In which 2 key areas have the JCT contracts been amended to simplify use?
2.
Give three examples of changes in terminology which will necessitate amendments to standard documents previously issued under the 98 form:
3.
4.
How have the requirements of the Contracts (Rights of Third Parties) Act 1999 been incorporated in the new form?
5.
What key changes within the contracts will influence the way the Contract Administrator/Quantity Surveyor deals with an Adjustment to Completion Date?
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