JULY 2011
JCT NEWS
THE JCT CONTRACTS UPDATE FOR THE CONSTRUCTION PROFESSIONAL
WORLD HERITAGE SITE UNDERGOES
WORK USING A JCT CONTRACT
A JCT Constructing Excellence (CE) contract
has been used by the Historic Royal Palaces
(HRP) for the first phase of conservation
works at the Devereux Tower at the Tower
of London. The works were completed
by the Chichester stone and conservation
specialists, Cathedral Works Organisation
(CWO) in collaboration with architects Carden
& Godfrey, English Heritage and Oxford
Archaeology. The works are part of a four-
year programme to conserve the inner curtain
wall on the Devereux Tower.
Tower of London
The tower was built between 1238 and
1272 by King Henry III. It was named after
Robert Devereux, the Earl of Essex, who
was imprisoned in the tower prior to being
executed for treason by Elizabeth I in 1601
following his attempted uprising.
3 6
The Architecture of Ode to the JCT
Austerity Measured Term
Contract
Richard Saxon CBE
Patricia Nathan-
Amissah - Charles
Russell LLP
SWEET & MAXWELL
HRP chose the CE contract as it was in
accordance with its partnering approach to
procurement – the contract is specifically
designed to promote partnership working and
has been used by HRP on other projects. It
enabled HRP to engage CWO as part of the
design team, allowing it to receive input from
CWO from the outset, and gain the benefit
of preliminary works, obtaining samples and
enabling works being carried out before the
contract for the conservation works were
finalised.
The Devereux Tower project involved
assessing the current level of deterioration
of the stone, to slow the rate of decay and
to preserve the fabric of the building using
traditional materials and methods with as
little intervention as possible. It also included
preparing the wall walk ready for visitors.
The project was particularly complicated as
it involved a building subjected to numerous
alterations over its 800 year history, all of
which were of historic interest and had to be
Tower of London
preserved where possible. The tower was
originally only two storeys high (it is now three)
Peter Hibberd, JCT chairman, said: “It is
and the roof was used as a gun platform.
pleasing to see that as JCT celebrates
Works, which required Scheduled Ancient its 80th birthday, as the country’s oldest
Monument Consent from English Heritage, established contract drafting body, one
were completed in eight months, with the of JCT’s newest forms of contract has
cladding and scaffolding being removed late been used on one of the country’s oldest
last year. buildings.”
8 10 11 12
Working North of Can insurance ever Education and JCT News Flash
the Border – Key catch up? Training Initiative
Differences between Bill Gloyn - Partner, announced, as JCT
JCT and SBCC
Jardine Lloyd Thompson celebrates landmark
Contracts European Real Estate; 80th Anniversary
Shona Frame - Immediate Past-President,
MacRoberts City Property Association
JCT NEWS
2 EDUCATION AND TRAINING NOT
EDUCATION VERSUS TRAINING
At JCT’s 80th birthday celebrations held at the RIBA
in April I had the privilege to announce the JCT’s
education and training initiative. This initiative is timely
because it comes at a time when the country and
the construction industry in particular are faced with
significant challenges. Education and training is and
always has been recognised as the most important
of issues. We are all aware of the saying ‘education,
education, education’ but does the way it is delivered
meet the needs of individuals and the communities in
Peter Hibberd
which they live?
The UK has some excellent ‘sandwich degrees’ and
other forms of placement within construction courses
but their existence is always severely threatened when
industry stops growing or faces higher than average
levels of risk. So rather than see growth in ways of
bridging the gap we tend to see a decline. Somehow
we need to further encourage and facilitate the
conversion of knowledge acquired through academic
study into a skill that can be used in the workplace –
learning by doing being the most obvious. Part time
courses were a traditional approach and many still offer

Chairman’s
the potential for bridging the gap between knowledge
In 2006 Don McKinnon at the World Teachers’ Day
accumulation and its application. However, it should
Conference said education is the key to everything
Letter and is the key to billions of human beings fulfilling
their unique potential. One would not disagree with
neither be left entirely to academia nor entirely to
business to ensure the conversion takes place; it must
be a joint effort and despite the extent of dialogue that
that but one can always question the form and nature
exists in some areas this must not only be extended but
of education. Education has to do more than fulfil a
more importantly acted upon.
human’s potential, it must also ultimately provide a
benefit to the community through the workplace: no In order to train for the workplace one must be clear
one is an island. This point touches on the education what you want people to accomplish and JCT is making
versus training debate – where education is acquiring the case that wherever you might be placed in the
knowledge, whereas training is acquiring skills by the supply chain a working understanding of construction
application of that knowledge. JCT throughout its long contracts is an essential component in the efficient
existence has always been about education, not just running of a project. JCT’s initiative therefore is,
education but also training and it wants to do more by amongst other things, aimed at not only encouraging
emphasising training throughout the supply chain and the accumulation of knowledge of construction
by further reducing the learning curve. procurement and of construction contracts but
importantly the application of that knowledge through
I have heard it said that today’s younger generation
training.
of employees want to be trained, not educated and I
have also heard it said that many employers are less We believe that this will not only lead to a more efficient
than satisfied with the ability of graduates to perform construction industry but will also stimulate wider
in the workplace. If these are valid observations then interest in the industry and what it has to offer both
it says something about the relationship of universities individuals and the communities in which they live.
and colleges with the workplace or indeed our
Peter Hibberd
understanding of what that should be. Survey data
Chairman of JCT
published by the Centre for Higher Education Research
and Information at The Open University in 2009 indicate
that the UK has one of the lowest rates of participation
in work placements in Europe, at around 30 per cent
as compared with France where it was over 80%. This,
to some extent, may help explain why some employers
hold the view that many people lack the appropriate
skills to operate within the workplace.

SWEET & MAXWELL

3 THE ARCHITECTURE OF AUSTERITY
RICHARD SAXON CBE

Architecture had a bull run in the UK from 1993 to 2008.

The profession had a sharply rising workload, eventually
drawing in thousands of professionals from overseas to
meet the demand. The quality and reputation of British
architecture boomed also, raising public awareness
through the media and the RIBA Stirling Prize and
winning work all over the world. CABE was formed to
promote better architecture. Architecture was named by
the government as a leading part of the newly identified
Creative Industries and architects earned £3 billion in
annual fees out of £14b for the whole construction
professional service sector in the 2007 survey by the
Construction Industry Council.
However, the cost of building rose inexorably faster than
RPI throughout the period, stretching affordability and
making substitutes like information technology more
attractive. Reports on the reform of the industry from
Latham (1994) through Egan (1998) to Morrell (2010) all
attacked its cost and wastefulness. Both Latham and
Egan thought that a 30% reduction in cost was possible
from improved process alone. Whilst some leading
clients did make big savings, the mainstream showed
little effect from those reports and the industry struggles Richard Saxon CBE
with ever-rising materials costs and regulatory burdens.
The latest load is that of reaching low carbon-dioxide
emission targets. Estimates of the cost of getting to To a profession where LC used to be shorthand for
zero-carbon (whatever that turns out to mean) vary up radical modernist Le Corbusier, it must now mean Low
to an extra 30% over the regulations of 2000. Carbon and Low Cost.

The coalition government has recently been blaming So how can we avoid an era of banality and cramped
architects for this situation. The education minister shoddiness in what little building gets done? Are there
castigates architects for extravagant design in BSF ways to reduce cost whilst increasing value and keeping
schools and a free-school champion says that relevant quality?
architects add no value and should be avoided. And
The conventional response to tight budgets has
there have been some very expensive examples as
always been to favour refurbishment over new build,
well as some great outcomes. Even the government’s
to lower the quality of specification and to minimise
Chief Construction Advisor says that we should be
the size of the building. Refurbishment scores well
softening the message that ‘good design’ is vital.
on the low carbon agenda, saving embodied carbon,
‘Good-enough design’ is all we need and can afford,
waste and cost, but the result may underperform.
says former CABE Commissioner Paul Morrell. He also
Lower specification can push up whole-life costs or
calls for a cut in construction costs sufficient to make
it can be a worthwhile simplification. Smaller area
low-carbon buildings cost no more than conventional
can be reasonable with new ways of working, or it
buildings. Thus the link has been made in the public
can be a false economy. The iron triangle, Area times
mind between expressive architecture and avoidable
Specification equals Cost, rules some cost consultants’
cost. ‘Good design’ in the sense that the now-gutted
minds. The Latham/Egan reformers saw however that
CABE has promoted becomes a ‘nice-to-have’ option.
the way we work adds major cost. We have some of the
Austerity architecture is what is wanted.
JCT NEWS
4 • Using Building Information Modelling (BIM) to
Fig 1: Opening Space between Value, Price and Cost.
Prof. Hennes de Ridder
most expensive buildings in Europe whilst paying low
wages and salaries to participants. UK productivity and
profitability in construction is low and many clients pay a
high price for low risk. Why is our lowest-tender system
producing such high prices?
The way ahead surely lies in both taking cost out of
the process and creating more value in the product.
Professor de Ridder’s graph (Fig 1) suggests a utopia
where buyers see value well above the price they pay
and suppliers keep costs well below price. Both do well.
The Toyota system called Lean Thinking suggests that
concentrating on what customers really value allows
cost to be taken out, making both margins grow. This
has to be our roadmap, raking out wasted effort whilst
increasing client satisfaction.
New ways to cut costs include:
• Using design-build teamwork to reach low-cost
solutions; not ‘here’s my design, what’s your price?’
but ‘here’s our goal, what’s your idea to get there?’
Teams formed early and incentivised to collaborate
and to beat a reasonable benchmark showed in the
Building-Down-Barriers (BDB) experiment in 1996-9
that they could cut whole-life costs and get well paid
for it. The American Integrated Project Delivery (IPD)
concept is prospering now, with client-led teams
delivering more for less.
SWEET & MAXWELL
reduce risk. BIM is a multi-dimensional CAD model
of the project which all participants share and
which reduces errors enormously by coordinating
designers and rehearsing construction. It can save
more than the cost of design on a job and goes on
helping the owner run the building over its life. It’s a
basic part of IPD.
• Reducing over-specification. We use belt and braces
in the UK, especially for M&E design. Over-regulation
needs to be reviewed as well.
• Using a smaller range of standard products and never
specials. Europe has ten times the range of products
available compared to the USA and many have small
orders but raise whole industry costs. Standard
assemblies and even building elements, like school
toilets and hotel bathrooms, can reduce cost.
• Building Offsite. Design for manufacture cuts waste,
time and risk. Elements can be manufactured directly
from BIM data. Higher air-tightness and insulation is
achievable and the building can start earning sooner.
New ways to raise value:
Better client leadership. Most public and many private
clients are inexperienced and risk-averse. Bringing
suitable client advisers on board at the earliest stage
reaps rewards by defining the project well and buying
design and construction intelligently. The RIBA now has
a cohort of accredited Client Advisers to offer, bringing
strategic thinking to bear so that the right product is
asked for and the right process used.
• Defining whole-life best value: A building costs more
to run over 20 years than it costs to build. And it
houses activity worth many times more. A good
value-seeking process optimises the outcomes for
the owner and occupier, sets acceptable operating
cost and then the capital budget to achieve those
goals.
• Spending more up front to spend less on building.
Ships, cars and aeroplanes all have more elaborate
design stages than they used to do in order to have
lower build and operating costs. Only construction
tries to save on preparation as an aim in itself,
condemning it to repeat old errors. A thorough
briefmaking and design process, with BIM and
constructor involvement, redistributes cost but can
cut it overall. As a current US slogan has it: “Pre-
work, not Re-work”.
5

Fig 2: Nurture Future School: a low-carbon, low-cost system by Tarmac and Cartwright Pickard Architects

• Commission well and operate to learn. Buildings
don’t work as well as designers and constructors
expect, and they don’t know why because they
are off the scene. A leap in customer satisfaction
and supplier understanding follows if you use
‘Soft Landings’, the commissioning and feedback
convention developed by consultants and
Cambridge University and now available from BSRIA.
For low-carbon building it’s an essential step.
The initial strategy-making for a project can cost less
than 1% of construction cost or 1/3000 of the value
delivered in the building over 20 years. The chance to
leverage high performance is large. We need cost-
effective buildings, not just cheap ones.
Perhaps UK architects’ iconic buildings will
increasingly be in the Gulf and in Asia. Let’s focus here
in the UK on understated value.

Austerity architecture could turn out to be elegant

and long-lasting. No one will thank us for dropping
unsympathetic standard schools onto sites as if they
were McDonalds. But we don’t need to go there (see
Fig 2). Low cost, low carbon architecture could be
high whole-life value through excellence in the process,
choice of simple strategies over complex ones, flexible
space working hard and a building made of standard
components and recycled elements of the former
building on the site. The last thing we should do is cut
down on the thinking.
Richard Saxon CBE is an accredited RIBA Client
Adviser at www.saxoncbe.com. Formerly chairman
of BDP and of Be, Collaborating for the Built
Environment, president of the BCO and vice-
president of the RIBA. He was also inaugural Povey
Lecturer for the JCT.
JCT NEWS
6 ODE TO THE JCT MEASURED TERM CONTRACT
PATRICIA NATHAN-AMISSAH - CHARLES RUSSELL LLP
Maintenance contracts differ from other forms of
procurement. The contract length can often be for
periods of between 3 to 5 years which, in these
difficult times, can offer contractors much needed
continuity of work and income. The form of contract
needs to cater for the ebbs and flows of work type,
volume and pricing. Choosing the appropriate
JCT contract for maintenance work needs careful
consideration and often choices can be fettered by
the comfort regular users of JCT contracts may have
Patricia Nathan-Amissah
with traditional lump sum contracts.
Generally, Measured Term Contracts or Framework
Agreements are best suited for maintenance,
improvement and in some cases minor works.
So how do Measured Term Contracts work? Usually
a contractor undertakes to carry out a series of works
orders placed over a period of years within a defined
geographical area – the work is then measured and
valued using rates in a pre-priced Schedule of Rates
or hourly rates which usually include a negotiated
contract percentage, applied to the relevant work.
To encourage economies of scale one contractor
may be appointed, however as the administration
of Connaught PLC shows, there is a benefit to
spreading the risk. To reduce the effect of contractor
insolvency two or more contractors may be appointed
to undertake the work required under a term
agreement. This also has the benefit of enabling direct
comparisons to be made and facilitating benefit of
common supply chains.
Many major clients such as registered landlords, local
authorities, churches, universities, care homes and
other large property owners, often use inappropriate
bespoke contracts or the wrong form of JCT contract.
Forms of Measured Term Contracts
Contracts let on a term basis often use the JCT
Measured Term Contract 2006 (JCT MTC), which was
first published in 1989 and is considered “tried and
tested”. The latest version of the JCT MTC is Revision
2 2009. There are other forms of term contracts
published by the NEC (NEC3 Term Service Contract
published in 2005) and the TPC 2005 ACA Standard
Form of Term Contract for Term Partnering – amended
2008.
JCT Measured Term Contract Revision 2
The JCT MTC is not written about or reported as often
as other JCT contracts and its use is dwarfed by the
SWEET & MAXWELL
more commonly used main forms of JCT contract.
As its title suggests, the JCT MTC is designed for use
where there is “a regular flow of maintenance and
minor works, including improvements, to be carried
out by a single contractor over a specified period
under a single contract”. Consequently other forms
may be better suited if the volume of work is not large
enough or where the work can be fully designed and
completed in less than a year.
The JCT MTC consists of over 40 pages of printed
conditions, many of which would be familiar to users
of other JCT contracts. The JCT MTC refers solely
to the Contract Administrator (as opposed to the
Architect). The Contract Administrator is usually a
surveyor engaged by the Employer and is intended
to be someone who is experienced and skilled in
construction procurement. The Contract Administrator
is responsible for administering the terms of the
contract in an impartial manner.
The latest JCT MTC Revision 2, as with other JCT
contracts, includes provisions relating to
• collaborative working
• health and safety
• cost savings and value improvements
• sustainable development and environmental
considerations
• performance Indicators and monitoring, and
• notification and negotiation of disputes.
There are other amendments to the text but generally
the contract remains unchanged from Revision 1.
The Articles, Recitals and Contract Particulars set
out the Contract Period (usually at least a year),
the Contract Area and the work types in respect
of which orders may be given. Unless otherwise
agreed between the Contractor and the Contract
Administrator orders will be of a size consistent
with the minimum or maximum orders stated in the
Contract Particulars, as long as they are reasonably
capable of being carried out within the Contract
Period. The Contract Particulars also include an
anticipated value of work but there is no guarantee of
work nor are there any provisions in the standard form
for exclusivity.
Not only does the contract include termination
provisions it also contains break notice provisions
7

which allow either party to reduce the duration of the

Contract Period by giving the other party at least 13 weeks
notice (or such shorter period of notice set out in the
Contract Particulars). The notice may expire at any time
not less than 6 months after the date of commencement of
the Contract Period. Consequently the break mechanism
cannot be used to reduce the Contract Period to less than
6 months but the period of notice required can be specified
as less than 13 weeks. The guidance notes suggest that
such break clauses are rarely used in practice.
The contract is designed for use where the Employer does
not commit to minimum order levels or to any degree of
exclusive dealings so the level of orders may fall below
expectation or where there is an unexpected and material
change in market rates or prices.
The JCT MTC makes no provision for liquidated damages
as the implementation of such clauses in term contracts
gives rise to difficulties in terms of a genuine pre-estimate
of loss, either with reference to individual orders or orders
collectively. The contractor will be liable to pay unliquidated
damages for a material delay or disruption in carrying out
any order.

JCT Framework Agreement 2007

The JCT Framework Agreement, which is a two party
agreement between the Employer and the “Provider”, is
designed for use as an umbrella agreement for underlying
contracts such as the JCT Design and Build Contract and
the Minor Works Building Contracts. Individual tasks are
instructed as required, subject to the pre-agreed terms of
the underlying contract. The Framework Agreement aims
to encourage the parties to work with all those involved in
an open, co-operative and collaborative manner and “in a
spirit of mutual trust” to achieve the objectives set out in the
Framework Agreement.

Conclusion
The JCT MTC is a stand-alone contract appropriate for
use by Employers who have a regular flow of maintenance
and minor works, whereas the JCT Framework allows
Employers to call off discrete contracts, which may be quite
diverse in nature. Both forms of contract can be used to
foster the collaborative and long term relationships with
suppliers that are now recognised as best practice.
If you require any further information arising from
this article, please contact Patricia Nathan-Amissah
at Charles Russell LLP by email at patricia.nathan-
amissah@charlesrussell.co.uk or by telephone on 01483
252638.
JCT NEWS
WORKING NORTH OF THE BORDER –
8
KEY DIFFERENCES BETWEEN JCT AND
SBCC CONTRACTS
SHONA FRAME - MACROBERTS
The aim of the Scottish Building Contract Committee
(SBCC) in its standard form contracts is to create as
much uniformity across the UK as possible, adopting the
JCT forms wherever possible. However, it remains the
case that because of the different legal system north of
the border, there are certain key differences in approach.
The SBCC standard forms have made the changes
required to the JCT forms to bring them in line with
Scots law and terminology but they do not change the
risk profile or make other substantive amendments. They
follow the JCT colour coding, section headings and
clause numbering and, as far as possible, follow the JCT
names and dates.
The SBCC forms are now published in one
amalgamated document so that it is no longer necessary
(as was the case with the JCT 80 and 98 forms) to read
a separate Scottish supplement into the JCT form. The
consolidated approach is one that users will find easier
to read.
Key differences are:
• Arbitration – Like the JCT form, the default dispute
resolution method is Court as opposed to Arbitration.
Where arbitration applies, the applicable legislation is
the Arbitration (Scotland) Act 2010 which came into
force on 7 June 2010. The Arbitration Act 1996 does
not apply in Scotland. The Arbitration (Scotland) Act
2010 is relatively brief, consisting of 37 sections, but
supplemented by 84 Rules contained in Schedule 1,
the Scottish Arbitration Rules. It can apply equally to
domestic, inter-UK or international arbitrations. The
Scottish Arbitration Rules are stated to govern every
arbitration seated in Scotland. Some of the Rules
are mandatory meaning they cannot be modified or
disapplied and some are non-mandatory (referred to
as the “default rules”). The default rules apply unless
the parties have agreed to modify or disapply them. It
is possible to disapply a rule in whole or in part. The
appointment of the arbitrator is dealt with by “Arbitral
Appointments Referees” which are bodies authorised
by the Scottish Ministers to act in this role.
• Adjudication – the Rules of the Scottish Scheme are
applied.
• Nominating bodies – the Adjudicator nominating
bodies are the Royal Incorporation of Architects
in Scotland, The Royal Institution of Chartered
Surveyors in Scotland, National Specialist
SWEET & MAXWELL
Contractor’s Council and Scottish Building
Federation. The Arbitrator nominating bodies are
the Chairman or Vice Chairman of the board of the
Scottish Building Contract Committee Limited and
the Chairman or Vice Chairman of the Chartered
Institute of Arbitrators (Scottish Branch).
• Off site materials and goods – JCT clause 2.25
provides that where a payment is made under the
contract of the value of the off-site materials, the
materials will become the property of the client
notwithstanding that delivery has not been made.
This is not contained in the SBCC contract because
in Scotland, under a building or engineering contract,
ownership of property can only pass when there
is both an intention to transfer ownership and
delivery. This can be achieved when the property is
incorporated into the works. It may also be achieved
when the materials are delivered to site and then
paid for by the Employer by inclusion in an interim
certificate. However, where the contract can be
characterised as a contract of sale, it will be subject
to the Sale of Goods Act 1979 and ownership of the
property may pass, by agreement, on payment being
made rather than on delivery. The way this is dealt
with is for the client to enter into a separate contract
for the purchase of the materials from the contractor
or sub-contractor so that the materials will no longer
form part of their contract. This is provided for within
SBCC clause 4.17. It is in quite different terms from
the equivalent JCT clause and provides that the
Employer may enter into a separate contract for the
purchase of materials or goods prior to their delivery
to site. If such a contract is entered into, the purchase
of the materials or goods is excluded altogether from
the building contract.
• Trust – A trust cannot be effectively created in
Scotland unless the parties divest control of the
relevant assets to the trustee. This means that most
trust mechanisms in English standard form contracts,
e.g. in respect of retention, will be ineffective under
Scots law.
• Signing – In Scotland the law in relation to the
formalities of the execution of contracts is contained
in the Requirements of Writings (Scotland) Act 1995.
To be validly executed a document requires to be
properly subscribed by each of the parties on its last
page. At least part of the written document must
appear on the page which is signed, and that page
 requires to be signed by at least one of the
parties. It is not appropriate for the parties
to sign on a blank page that is merely
attached to the document to be executed.
The proper method of subscription
• Third Party Rights – the Contracts (Rights
depends on the nature of the party signing.
A document may be executed in such a
way as to make it self-proving. The 1995
Act also sets out rules for the incorporation
of schedules and other attachments
to a document. Schedules should be
referred to in the document itself and each
schedule should be identified on its face
as being the schedule that is referred to
in the contract. There is no need generally
for a schedule to be signed unless it is a
contract which “relates to land”. There is no
Scottish equivalent to the English rule on
counterparts or exchange of contract.
• Registration for preservation and
execution – In Scotland the parties
• Prescription & Limitation – The law in
may agree to have the contract, and
more particularly any arbitration clause,
registered in the Books of Council and
Session in Edinburgh. Registration for
preservation means the document is kept
safe in the Register so it does not get lost.
Registration of the contract for execution
together with any decree arbitral that may
be subsequently issued means that any
arbitral award under the contract can be
enforced without the need to go to court for
enforcement.
of Third Parties) Act 1999 does not apply
in Scotland. The equivalent right in Scots
law derives from the Scottish common
law doctrine of jus quaesitum tertio. This
allows a third party who is not party to the
contract to obtain and enforce rights under
the contract. It is necessary to identify the
third party in the contract by name, as a
member of a class or as answering to a
particular description. It is also necessary to
show that the contracting parties intended
to benefit the third party. The third party
rights procedure is not commonly used.
Collateral warranties remain the preferred
option in Scotland.
Scotland on prescription and limitation of
claims is to be found in the Prescription
and Limitation (Scotland) Act 1973 and the
case law regarding its interpretation and
application. The short negative prescriptive
period is five years. This period runs
from the date any loss, injury or damage
occurred as a result of an act, neglect or
default. If the person who suffered the
loss, injury or damage was not aware and
could not, exercising reasonable diligence,
have become aware of its occurrence at
the time it occurred, then the period runs
from the date the person became aware
or could, exercising reasonable diligence,
have become aware. The long negative
prescription is twenty years which acts
as a longstop. This runs from the date of
the act, neglect or default rather than the
date of discovery of the defect. Relevant
proceedings (broadly court action or
arbitration) need to be commenced prior
to the deadline date otherwise the claim is
extinguished.
In general terms, the similarities between the
JCT and SBCC forms by far outweigh the
differences but it is important to bear in mind
the key differences above if contracting north
of the border.
Shona Frame is a Partner at MacRoberts
LLP. She is accredited by the Law Society of
Scotland as a Specialist in Construction Law.
She can be contacted on shona.frame@
macroberts.com
JCT NEWS
CAN INSURANCE EVER CATCH UP?
10 BILL GLOYN - PARTNER, JARDINE LLOYD THOMPSON EUROPEAN REAL ESTATE; IMMEDIATE PAST-PRESIDENT,
CITY PROPERTY ASSOCIATION

Fortunately, at least for those that can effect Where reinsurers do object to a particular risk
insurance, most serious disasters are covered. one often sees standard exclusions from most
The UK has a very mature market that has policies. One such risk is the legal liability that
seen, and responded to, most of the dangers might arise from working with asbestos. There,
that nature – and fellow humans – can throw of course, the insurance market has suffered
at us. enormously from the industrial disease claims
that started flowing during the 1970’s but
Occasionally something new comes along
which reached a peak some 20 years after. It
and, after a while, insurance usually steps
is not possible to estimate how much insurers
up to the plate and provides protection. A
will have to pay out but a recent estimate of
classic example was terrorism. After two
the total cost in the US alone put the potential
major bombings in London in the early 1990’s,
figure at over $200 billion. The relatively low
individual insurers, and their reinsurers, felt
premiums that these losses related to had
unable to shoulder the burden of another
often been collected decades earlier and
attack under the normal arrangements.
forgotten about, and so the volume of claims
However, with the support of H M Government
There are some changes afoot to the that hit the insurance market posed a severe
acting as re-insurers of last resort, the whole
insurance obligations in clauses 6.11 and threat to its stability. Fortunately, the situation
market got together and formed a mutual
6.12 (and associated Contract Particulars) was managed and now seems under control.
insurance company – the Pool Re – that
of the proposed 2011 version of the Design
enabled insurance to be offered. First this Not surprising that there is now a reluctance to
and Build contract. These relate to the
was against the risk of fire and explosion get involved with asbestos exposures. There is
requirement to include cover for asbestos
only but, after the atrocities of 9/11 – with a similar reluctance to get involved with toxic
and toxic fungal mould within the Professional
the world market removing any cover for mould; not yet a major problem in the UK but
Indemnity insurance that the contractor has
damage and subsequent losses arising out one that has reportedly led to some 30,000
to effect. Having been put there in the 2009
of an act of terrorism – the extent of the claims in the United States – at a cost of over
amendments, it is now planned to remove
protection was extended to an “all risks” basis, $500million. The fear, confirmed by an RICS
them as the required cover has proved difficult
including radioactive, chemical and biological commissioned report which estimated that
to obtain.
contamination. some 3 million homes in the UK are potentially
This change led me to think about the reason affected by it, is that toxic strains of mould are
That makes the cover available in the UK
for insurance being an integral part of the becoming more prevalent in the UK and may
arguably the widest anywhere in the world. We
obligations of both parties in the first place – to eventually lead to the volume of death, illness
are the envy of many other countries, giving
provide a financially secure way of transferring and property damage/valuation claims seen in
comfort to the many overseas investors that
risk. Insurance is a vital ingredient of relation to asbestos.
have put their money into the UK over the past
commerce; without it the risk that a business
decade. So, insurance does respond when No wonder that claims from mould are also
would fail in the event of a disaster would be
needed. becoming a widespread exclusion from
too great for many transactions to go ahead.
many types of policy – including professional
Reinsurers, mentioned earlier, are basically a
Risk is a moving target. As many people and indemnity. Also, understandable is JCT’s view
global group of mega insurance companies
businesses have found out over the past few that insurance against claims arising from
who insure the primary insurer – the one that
years, areas previously unaffected by flooding asbestos and toxic mould should therefore
issues the policy – against catastrophic losses
have experienced devastating damage and not form part of the standard contract
that would otherwise affect their financial
subsequent consequential losses. And that requirements.
stability. Consequently, reinsurers have
ignores the human tragedy often involved.
considerable power in dictating underwriting However, insurers do respond to demand.
Tragically, the catastrophic events in Japan
policy. Sometimes reinsurers take a particular Perversely, just as the requirement is being
seem to have been largely uninsured, due to
dislike to a certain risk and, being a basically removed a fledgling market has emerged
a lack of underwriting capacity for earthquake
unregulated global grouping, they can among specialist underwriters. So, anyone
and tsunami exposures.
therefore take decisions in concert – unlike who wants to retain the requirement for wider
direct insurers who must act so as not to cover may find it, that is if they look hard
offend anti-competitive legislation. enough and are not fobbed off by assertions
that it is not available.

SWEET & MAXWELL

 11 EDUCATION AND TRAINING INITIATIVE ANNOUNCED,
AS JCT CELEBRATES LANDMARK 80TH ANNIVERSARY
JCT used its recent 80th birthday
celebration to announce plans of its new
Education and Training Initiative.
Professor Peter Hibberd, JCT chairman,
introduced the initiative in his speech at a
special event held at the Royal Institute of
British Architects (RIBA) in London.
Hibberd will be championing education and
training throughout the year with a phased
roll-out, aimed at improving understanding
of the construction industry, and in
particular, procurement and construction
contracts.
Plans for the Education and Training
Initiative include:
• The JCT Academic Box Set, a
comprehensive tool for education
providers which includes the full set
of JCT contracts as well as a range
of benefits via membership of JCT’s
Education and Training Provider Group.
• Closer collaboration with institutions
providing construction-related courses,
with the creation of a bespoke JCT
module to enhance the understanding of
procurement and contracts.
• A competition for students with the
chance to win bursaries towards the
funding of courses.
• A dedicated area of the JCT website.
Peter Hibberd explained: “Many of the
industry’s problems could be addressed
through better education and training.
“...if trades and subcontractors had a better
understanding of contractual objectives,
contract provisions, and the impact of their
actions, many of the problems and disputes
which escalate up the supply chain could
be avoided.
“This is not just about skills; it is also
about understanding the industry, about
educating those within the industry, and
those entering it.”
80 years and counting...
“The announcement of the initiative marks
another exciting period for JCT, which enters
its 80th year at the forefront of the industry,
setting standards for construction contracts,”
commented Neil Gower, JCT chief executive
“Throughout its history JCT has been an
example of effective collaboration in the
construction industry. It was, and remains a
consensus-based organisation serving every
part of the construction supply chain. Through
the support of its members and the industry
as a whole, JCT continues to provide real
benefits. Its wide portfolio of construction
contracts is estimated to be used on 80% of
construction projects.”
The continued impact of JCT’s work across
the industry was reflected in the warm and
The Jive Aces: celebrating success with JCT
lively celebration at the RIBA on 12 April.
Recognition of JCT’s achievements was echoed across the industry:
“When it was established, JCT was revolutionary, [...] saving huge amounts
of time and money. [...] JCT has built on its leadership in the industry with
the recent introduction of provisions and guidance on sustainability and fair
payment.”
Mark Frisk MP, construction minister
“[...] It is a tribute to its success that it is now both the UK’s leading construction
contract authoring body and provides the largest portfolio of standard form
contracts in the world.”
Ruth Reed, RIBA president
“JCT is also a superb demonstration of the industry resolving its own issues. [...]
This consensus remains today, with all new and revised JCT contracts being
approved by all sides of the industry before publication.”
Tony Bingham, leading construction barrister and arbitrator
“JCT is proof if ever it was needed that whilst the world of commerce changes,
good ideas last. [...] It is worth reflecting on the man-hours the JCT saves our
sector each year through its sterling work on standardisation.”
Liz Peace, BPF chief executive
“Our Contracts in Use Survey showed them [JCT] to be leading the market in
contract use. [...] Clearly the market sees the JCT contract as the mainstay of
the construction industry in the UK.”
Robert Peto, RICS president
 JCT NEWS FLASH
NEW SERVICES AND PRODUCTS FROM JCT

JCT CONTRACTS 2011
EDITION
NEW ACT, NEW EDITION
The new edition of JCT Contracts – JCT 2011,
will cover the new payment legislation and
other updates. Currently, the Department for
Business, Innovation & Skills (BIS) are working
towards an implementation date of October this
year for the new Construction Act.
If implementation is confirmed by mid July
for October, JCT 2011 will be published in
September, to give you time to make the
transition to the new suite.
The JCT 2005 suite will remain available for
nine months after the implementation date and
will be labelled to show they no longer comply
with the current legislation.
If you are a current subscriber to JCT’s Digital
Contracts Service, you will receive your CD in
early September.
START YOUR TRANSITION
TO JCT 2011 WITH JCT
TRACKED CHANGE
DOCUMENTS
THE CHANGES TRACKED FOR YOU
To help make the move to the new edition of
JCT Contracts as smooth as possible, the JCT
have produced the JCT Contracts Tracked
Change Documents that show the tracked
changes to the existing JCT 2005 contracts
that will form the JCT 2011 suite of contracts.
Especially helpful for professional advisers
who have requested advance notice of the
changes so that they can advise their clients,
the Tracked Change Documents are available
in hard copy only.
HOW TO GET THE TRACKED CHANGE
DOCUMENT YOU NEED
The following Tracked Change Documents are
• Design and Build Contract 2011 Tracked
Change Document
• Intermediate Building Contract 2011
Tracked Change Document
• Intermediate Building Contract with
contractor’s design 2011 Tracked Change
Document
• Minor Works Building Contract 2011
Tracked Change Document
• Minor Works Building Contract with
contractor’s design 2011 Tracked Change
Document
All other contracts are available through
Docdel by emailing: sweetandmaxwell.
Docdel@thomson.com.
When you purchase a Tracked Change
Document through Docdel, you will receive
an unbound hardcopy print out of the PDF
version.

Watch the press and your JCT News for more

details. Email stanform@jctltd.co.uk to sign
up to receive the paper or E version.
JCT CONTRACTS
COMPLETE WORKS
available to order in bound hardcopy from your
local stockist.
• Standard Building Contract with Quantities
2011 Tracked Change Document
• Standard Building Contract with
Approximate Quantities 2011 Tracked
Change Document
JCT EDUCATION AND
TRAINING
The JCT Education and Training Provider
Pack includes a set of highly beneficial tools
and support for academic institutions and
other education and training providers.

JCT 2011 Complete Works comprises of E-mail us today at stanform@jctltd.co.uk to

• Standard Building Contract without find out more and register your interest.
a full set of JCT documents, in JCT branded
Quantities 2011 Tracked Change Document
binders, for your library or office.
Pre-order from your local stockist today.
JCT 2011COMPLETE WORKS
ISBN: 978-0-414-04793-8

You can find full pricing and a list of

stockists at jctcontracts.com

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SWEET & MAXWELL