JCT Design and Build Contract 2016 – What is new and how does it affect you?
Plus ca change, plus ca la meme chose! What has changed, nothing much! The apportionment of risk between the Employer and the Contractor remains unchanged in the unamended, standard document and as always the imposition of onerous conditions will come about through the introduction of bespoke amendments by Employer’s advisors – we are all familiar with this.
The JCT has taken the opportunity to amend the Design and Build 2016 contract to incorporate the changes to the CDM Regulations [Construction (Design and Management) Regulations 2015] and to make the BIM Protocol a term of the contract by introducing it as an option in the Contract Particulars.
On security, for performance the 2016 contract now has express provisions for the requirement of Parent Company Guarantees and Bonds; and there is now also an option for sub-contractors to be subject to the Third Party Rights Act rather than requiring collateral warranties. Bringing these requirements within the ambit of the contract will mean that there ought to be less need, or opportunity, for amendments to the Articles.
Insurance clauses in contracts are never the most straight forward reading and insurance cover is normally dictated by the providers rather than the standard contract. In the 2016 the JCT has endeavoured to provide an option for dealing with tenant’s carrying out works in buildings insured by their landlords. As ever, the effectiveness of this provision will depend on the insurance market’s reaction to it.
It is in the payment provisions that most contractors and specialists will see the biggest difference. The intention in drafting the new contract was to simplify the payment procedures and to make a transparent payment cycle covering main contractors, sub-contractors and sub-sub-contractors. The JCT says that this is ‘designed to reflect Fair Payment principles’.
The monthly payment cycle now continues through the interim payments during the contract period, through the defects rectification period and up to the final payment.
Interestingly there is now an express clause intended to ensure that ascertainment, and therefore payment, of loss and expense is carried out quickly and at the time – within 28 days of the Contractor notifying his initial assessment and then within 14 days of every update. The mechanism is there – however it will still be dependent on how well a contractor manages its notifications and records.
As with every new edition of the JCT Design and Build and family of contracts generally, what is at first strange and unfamiliar will soon become second nature with usage and the effectiveness of the changes, or otherwise, will soon become evident.
If you would like further clarity on the JCT updates, C-Link Partner, Commercial Risk Management can provide you with support, just get in touch.
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