JCT Design and Build Contract
In this article I’ll discuss the principles of Design and Build Contracts by reference to the Joint Contracts Tribunal (JCT) suite of contracts. This is followed by a clause by clause guide to using the JCT Design and Build Contract.Read article
Chapter 1 – Introduction to the JCT Design and Build Contract
What is Design and Build Contracting?
“Design and Build is a contractual arrangement in which the contractor offers to design and build a project for a value inclusive of both the design and construction costs.”
In Design and Build Contracting there is reference to three key stakeholders:
- The Employer – the client for the overall project
- The Contractor – the Main Contractor on the project
- The Subcontractor(s) – any Subcontractor(s) employed on the project
The simple concept that makes Design and Build Contracts different to traditional is that the Employer seeks to transfer more design responsibility to the Contractor. The Contractor has greater design input on a Design and Build Contract than with the traditional procurement route. Under the JCT Design and Build Contract, the Contractor has an equal-level of design responsibility as the Architect.
Design and Build is a modern Procurement Route in construction, unlike in other industries where it has been in use for a long period of time. Construction has lagged behind due to the emergence of architecture as a profession that has led the industry for the majority of the past century.
Chapter 2 – Where to find key Clauses
It can be difficult to identify Clauses in the JCT Design and Build Contract with ease. The table below extracts the page number and Clause reference for the important day-to-day Clauses.
|The Contract Sum||Articles of Agreement||Articles||3||Article 2|
|The Date of Completion||Articles of Agreement||Contract Particulars||8||1.1|
|The Date of Possession||Articles of Agreement||Contract Particulars||8||2.13|
|Liquidated Damages (LADs)||Articles of Agreement||Contract Particulars||9||2.29.2|
|Rectification Period (DLP)||Articles of Agreement||Contract Particulars||9||2.35|
|Valuation Dates||Articles of Agreement||Contract Particulars||11||4.7.2|
|Retention Value||Articles of Agreement||Contract Particulars||12||4.18.1|
|Extension of Time Clauses||Conditions||Clause 2||37||2.23|
|Practical Completion||Conditions||Clause 2||39||2.27|
|Interim Payment process||Conditions||Clause 4||48||4.7|
|Changes (Variations)||Conditions||Clause 5||56||5.1|
|Valuation Rules for Variations||Conditions||Clause 5||56||5.4|
|Dispute Settlement Provisions||Conditions||Clause 9||76||9|
|Design Submission Procedure||Schedules||Schedule 1||78||2.8|
Chapter 3 – How to use the JCT Design and Build Contract?
The JCT Design and Build Contract is a detailed and lengthy contract with over 100 pages, but it is designed to be simple to navigate if you know where to look. The Contract is split into three sections; the Articles of Agreement; the Conditions and the Schedules.
These sections are further broken down into subsections. Using the table below, the key Sections, Subsections, Clauses and Page numbers are identified based on the 2016 edition of the JCT Design and Build Contract.
|Articles of Agreement||Agreement and Recitals||1 – 2|
|Articles||3 – 5|
|Contract Particulars||6 – 17|
|Attestation||18 – 24|
|Conditions||Clause 1||Definitions and Interpretation||25 – 31|
|Clause 2||Carrying out the Works||32 – 41|
|Clause 3||Control of the Works||42 – 46|
|Clause 4||Payment||47 – 55|
|Clause 5||Changes||56 – 58|
|Clause 6||Injury, Damage and Insurance||59 – 66|
|Clause 7||Assignment, 3rd Party Rights, Collateral Warranties||67 – 69|
|Clause 8||Termination||70 – 75|
|Clause 9||Settlements of Disputes||76 – 77|
|Schedules||Schedule 1||Contractors Design Submission Procedure||78 – 79|
|Schedule 2||Supplemental Provisions||80 – 85|
|Schedule 3||Insurance Options||86 – 88|
|Schedule 4||Code of Practice||89|
|Schedule 5||Third Party Rights||90 – 94|
|Schedule 6||Forms of Bonds||95 – 103|
|Schedule 7||JCT Fluctuations Option A||104 – 107|
Chapter 4 – Navigating and Understanding the JCT Design and Build Contract
1. The Articles of Agreement
Articles of Agreement and Recitals (pages 1 – 2)
This section of the Contract is where you will find details of the date of the Contract and who the parties to the contract are – their registered company name, registered address and company registration number.
The Articles (pages 3 – 5)
There are nine different Articles included in this section of the contract and in effect the Articles provide headline details on the major agreements within the Contract. A description of each is provided in the table below:
|Article Number||Article Title||Description|
|Article 1||Contractor’s Obligations||The Scope of the Contractor’s Works|
|Article 2||Contract Sum||The Price for delivering these Works|
|Article 3||Employers Agent||States who the Employers Agent is|
|Article 4||Employers Requirements and Contractor’s Proposals||States what The Employers Requirements and the Contractor’s Proposals are|
|Article 5||Principle Designer||States who the Principle Designer (for CDM) is|
|Article 6||Principle Contractor||States who the Principle Contractor (for CDM) is|
|Article 7||Adjudication||The rules for Adjudication in the event of a dispute|
|Article 8||Arbitration||The rules are for Arbitration in the event of a dispute|
|Article 9||Legal Proceedings||States English courts have jurisdiction for all disputes|
The Contract Particulars (pages 6 – 17)
The Contract Particulars in the JCT Design and Build Contract state the aspects of the Contract that are bespoke and particular to the specific project. This section includes:
- Where to find the Employers Requirements and Contractors Proposals
- Where to find the Contract Sum Analysis (breakdown of the price of the works)
- The Date for Completion of the Works
- The Date for Possession of the Site
- Sectional Possession and Sectional Completion dates
- The rate of Liquidated Damages
- The length of the Rectification Period
- The Retention percentage
The Attestation (pages 18 – 24)
The Attestation pages are the area of the Contract where the signatures and details of the individuals who signed the contract can be found. You will also find whether the Contract is signed under hand or as a Deed.
There are key differences between contracts signed as a Deed or Under Hand. Executing a contract as a Deed means that the limitation period for starting legal proceedings for a breach of contract is significantly longer – 12 years rather than six if signed underhand.
2. The Contract Conditions
Clause 1 – The Definitions and Interpretations (pages 25 – 31)
This section deals with how the Contract is to be interpreted by the parties and potentially by any third party in the event of a dispute.
The Definitions explain the formatting of the Contract. For example, when a word or phrase in the Contract starts with a Capital Letter this is a defined term in the Contract. This means the term can be defined by the list of definitions on Page 25 of the Contract, which explain exactly what that word means in the context of the Contract.
Knowledge of this fact makes understanding and using the Contract much easier. Here are some examples:
- “Contract Sum” is defined in the Contract as “the sum stated in Article 2”.
- “Business Day” is defined as “any day which is not a Saturday, a Sunday or a Public Holiday”
With regards to Interpretation, pages 29 to 31 detail how the Contract and the terms and conditions within it are to be interpreted. This is useful to understand in the event there is a disagreement regarding any matters during the project.
An example of its application could be used in the event there is a disagreement about the Scope of Works:
- The Employer states that a brick wall is included in the Scope as it’s shown in the Contract Scope of Works document.
- The Contractor states the brick wall is excluded by referring to an email where it was excluded during Tender Stage. This email excluding the brick wall is however not included in the Contract.
In this case, Clause 1.3 of the JCT Design and Build Contract regarding Interpretation is useful as it states:
“The Agreement and these Conditions are to be read as a whole. Nothing contained in any other Contract Document or any Framework Agreement, irrespective of their terms, shall override the Agreement or these Conditions.”
This means that the Contract Document is the entire agreement between the two parties and only documents included within it are relevant. Therefore, the Contractor’s email excluding the brick wall is irrelevant as it’s not a Contract document.
An understanding of the Interpretation clauses is important as it allows the parties to understand what the agreement is with clarity. It’s good practice to refer to this section before signing a Contract.
Clause 2 – Carrying out the Works (pages 32 – 41)
Clause 2 of the JCT Design and Build Contract lays out what the Contractor’s obligations are. Clause 2 includes many Clauses and Sub-Clauses which define the criteria under which the Works will be completed. The Clauses are summarised below:
Contractor’s Obligations – Clauses 2.1 and 2.2 are focused upon the minimum expectations of the Contractor for the Works with a failure to meet the requirements effectively being a breach.
The Contractor under Clause 2.1 is required to “complete the Works in a proper and workmanlike manner” and to comply with the Laws of the country, including Health and Safety while Clause 2.2 focuses on materials, goods and workmanship selection in order to ensure these are suitable.
For example. the Contractor is obligated to “take all reasonable steps” to make sure its employees and operatives working on the project hold Construction Skills Certification Scheme (CSCS) cards which, in theory, would increase the quality of the workmanship and Health and Safety practices across the project.
Possession – Clauses 2.3 to 2.6 detail the process of the Employer handing over the site to the Contractor. From the Date of Possession, the Contractor is obligated to “regularly and diligently proceed” which means that the Contractor must maintain regular progress of the Works. This wording obligates the Contractor to work every day moving forward until the works complete.
Clause 2.4 also states that if the Contract Particulars allow it, the Employer can delay the Date of Possession by up to six weeks.
Contract Documents – Clauses 2.7 to 2.9 provide an explanation on where the contract Documents shall be held; what constitutes construction information and also how the site boundaries are defined. It’s is key that, on the Date of Possession being provided to the Contractor, the Employer should have already defined the site boundaries to the Contractor.
Discrepancies and Divergences – Clauses 2.10 to 2.16 are important clauses in respect to the commercial management of the project.
Given large volume of documents included in the contract, there will be a discrepancy between contract documents. These Clauses explain how to manage discrepancies and confirm who is responsible and whether the matter constitutes a Change that often leads to an impact in terms of time and money.
An example of the application of this Clause is as follows:
If the Contractor identifies a discrepancy within the Architect’s Drawings (Employer’s Requirements) the Contractor is to notify the Employer of this and can confirm the cost of both and their intention to complete the cheaper option. If the Employer chooses the more expensive option, this is treated as a Variation to the contract sum.
Design Work, Liabilities and Limitation – Clause 2.17 allows the parties to understand the Design Liability and Limitation of the Contractor under the JCT Design and Build Contract. The Contractor has major obligations and the same level of responsibility as the Architect under a JCT Design and Build Contract. This is confirmed by the following wording:
“…the Contractor shall … have the same liability to the Employer … as would an architect or other appropriate professional designer…”
Fees, Royalties and Patent Rights – Check this Clause to understand the impact of Fees, Royalties and Patent Rights deriving from the design works. What the contract says here is that any Royalties or Fees (relating to the Employer’s use of the design) are deemed to be included by the Contractor in the Contract Sum and cannot be charged as extra.
Unfixed Materials and Goods – property, risk etc. – This Clause relates to ownership and payment of Materials on and off site as well as who holds the risk for damage to these materials.
Where payment for materials on site has been made, the materials become the property of the Employer and ownership of the materials is transferred. In terms of which party is responsible for loss or damage to them once ownership is transferred, check which Insurance Option, B or C, has been selected in Schedule 3 (Insurance Options).
Adjustment of Completion Date – More commonly referred to as Extension of Time, the Adjustment of the Completion Date Clauses are found from 2.23 to 2.25. These are some of the most important and commonly used Clauses in the Contract as they explain the grounds upon which a Contractor must submit a Notice of Delay and how a Contractor is able to adjust the completion date (apply for an extension of time).
Often, the Commercial success of a project hinges on the Contractor making regular Notices of Delay. Read our article on Giving Notice for more information on this.
Relevant Events – A Relevant Event is an event during the progress of the works that causes a delay to the completion date and potentially gives the Contractor rights to request an Extension of Time. Clause 2.26 defines in detail what constitutes a Relevant Event under the JCT Design and Build Contract. For more explanation of Relevant Events please refer to our article titled the JCT and Relevant Events
Practical Completion, Lateness and Liquidated Damages – These Clauses deal with matters relating to Practical, Sectional and Non-Completion under Clauses 2.27 and 2.28. A key matter which often drives disputes is covered under Clause 2.29 which defines the exact rules that the Employer must follow if they wish to apply Liquidated Damages due to late completion by the Contractor.
Partial Possession by Employer – This Clause allows the Employer to take Partial Possession of the Project during the construction works and before Practical or Sectional Completion.
Taking Possession in “parts” is interesting as in some cases the Employer can request the early Possession of parts of the site and should this happen it can be of benefit to both parties. For the Contractor, it can lead to the early release of retention and a reduction in their insurance obligations and the value of Liquidated Damages.
This kind of arrangement is not uncommon and an example of when this could happen is in the Construction of a Residential Tower. It may be that that the Tower is 10 storeys high and when levels 1 to 5 are finished, the Employer can move tenants in on these floors while Fit-Out works on the upper levels finishes.
Defects – Clauses 2.35 and 2.36 state what the Contractor is required to do upon completion of the project in regard to defects and making good any defects during the Rectification Period. This Period is usually 12, 18 or 24 months long. The length of the Rectification Period is confirmed on page 9 of the contract (in the Contract Particulars).
Contractor’s Design Documents – Clauses 2.37 and 2.38 state how and when the Contractor must provide As Built Drawings which are drawings showing the final details of the project as constructed. These are required as during the construction process elements of the design are often changed on site due to physical constraints not foreseen during design.
As Built Drawings are important and tied to the release of the Practical Completion certificate by the Employer. The Contractor needs to have a procedure in place for managing and issuing As Built Drawings to ensure this does not impact the release of the Practical Completion Certificate.
The Clause also confirms that by signing the Contract, the Contractor grants the Employer unreserved rights to use its drawings and that this will not infringe any Copyright legislation.
Clause 3 – Control of the Works (pages 42 – 46)
Access and Representatives – Clauses 3.1 and 3.2 are very simple and confirm that, always, the Contractor must allow the Employer access to the works and further, that the Contractor must appoint a nominated Site Manager at the start of the Works to be approved by the Employer.
Sub-Contracting – these conditions describe the basis upon which the Contractor can subcontract elements of the work. The Contractor is not permitted to subcontract the whole or any part of the Works and, perhaps more importantly the Design, without the Employer’s prior consent. It is rare for consent to be withheld as the Employer must always act reasonably. However, the terms do require the Contractor to notify and receive consent.
Employer’s Instructions – This section confirms the Contractor’s obligations to comply with reasonable instructions from the Employer. Should reasonable instructions not be complied with in seven days, the Employer can instruct others to complete the works and where an additional cost (a cost higher than it would’ve been incurred using the Contractor) is incurred, this can be deducted from the Contract Sum.
The Contractor does have a right to reasonable objection of instructions under Clause 3.9.2 which states that any instruction which alters the standard of any of the materials or goods can be reasonably rejected by the Contractor given their design obligations on the project.
CDM Regulations – Clause 3 refers to both parties’ statutory obligations to one another regarding the CDM Regulations.
Clause 4 – Payment (pages 47 – 55)
Contract Sum and Adjustments – This section of the Contract is all about money and on what grounds the Contract Sum can be adjusted. Clause 4.2 states that the only reasons for adjusting the Contract Sum are for costs associated to the following:
- Agreed Variation Works
- Agreed Acceleration Works
- Agreed Fluctuations (see Contract Particulars)
- Agreed Loss and Expense
- The Instruction of Provisional Sums
Taxes – Clauses 4.4 and 4.5 refer to the application of VAT and CIS taxes to the Contract Sum.
Payments and Notices – Clause 4.7 to 4.11 deal with the construction payment process under the JCT Design and Build Contract. This payment mechanism is compliant with the most recent UK legislation from 2009, the Local Democracy, Economic Development and Construction Act and the Clauses are summarised as below:
- Clause 4.7 – Explains that the Employer shall make Interim Payments to the Contractor and that the Due Date shall be seven days after the Valuation Date and five days later the Employer shall submit their Payment Notice to the Contractor.
- Clause 4.8 – This clarifies what must be included in a Payment Notice and that it should show “the basis on which the [payment value] has been clarified.”
- Clause 4.9 – States that 14 days after the Due Date the Final Date for Payment falls. This date is the date when the Employer will transfer funds to the Contractor. This Clause references a “Pay Less Notice”; for more information on what a Pay Less Notice is refer to our article titled the JCT and Pay Less Notices.
- Clause 4.10 – This Clause clarifies the “Pay Less Notice”; for more information on what a Pay Less Notice is refer to our article titled the JCT and Pay Less Notices.
- Clause 4.11 – In the event of non-payment or non-compliance with the above-mentioned Clauses, the Contractor has the right to suspend works and the process for doing so is explained in this Clause.
Interim Payments – calculations of sums due – Clause 4.12 to 4.15 identify the different valuation methods available to the parties under the JCT Design and Build Contract.
Listed Items – Clause 4.15 refers to “Listed Items” in the Contract that are pre-agreed items to be included in interim payments for payment off-site. Listed Items will include the value of such materials and once paid, ownership passes to the Employer.
Retention – Clause 4.16 to 4.18 confirms how the Retention value (see 4.18.1 of the Contract Particulars) is withheld and then paid back. During the Contract Works 100% of the retention is withheld form payments and then when the works reach Practical Completion 50% of the retention is released, with the remaining 50% released upon expiry of the Rectification Period.
Loss and Expense – Loss and Expense is cost that results from the impact of Relevant Events. Where a delay event has caused costs for either party this can be claimed as Loss and Expense and added/subtracted from the Contract Sum.
Clause 4.20 clarifies the basis for doing this and states that “as soon as is reasonably” possible the Contractor must notify the Employer of Loss and Expense (also known as a Relevant Matter) and provide cost advice including any evidence of the costs in support. Within 28 days, the Employer must then reasonably confirm their acceptance or otherwise to these costs.
Final Statement and Payment – Clause 4.24 obligates both parties to act promptly to conclude any commercial discussions after Practical Completion of the Works. The Contractor is required to submit their “Final Statement” (final cost assessment) within three months of Practical Completion and the Employer then has two months to conclude its assessment.
Clause 5 – Changes (pages 56 – 58)
General – This Clause deals with Changes or as they’re more commonly known, Variations. Clause 5.1 clearly defines what matters are considered Variations.
The Valuation Rules – these Clauses deal with how each party must Value the price of any variation and assessment falls under two main headers:
- Measured Works (Clause 5.4) – Where there is an increase in the Scope of Works the price should be consistent with the price in the Contract Sum Analysis. For example, if the Contract Sum Analysis says Curtain Walling is charged at £500 per m² and there is an instruction for an extra 10m² this is to be charged at 10m² x £500. If there is no applicable rate in the Contract, then “a fair valuation shall be made” by both parties.
- Daywork (Clause 5.5) – Where the works can not be valued in line with Clause 5.4 – perhaps because they’re particularly one-off in their nature, or unique works not included in the Contract – they’re to be valued on a Daywork basis as per the rules in this Clause.
Clause 6 – Injury, Damage and Insurance (pages 59 – 66)
Personal Injury and Property Damage – Clauses 6.1 to 6.6 deal with the Contractor’s obligations regarding Insurance and having suitable cover in place in the event of Personal injury or Property damage. This insurance protection must be held and maintained throughout the lifecycle of the project.
Insurance of the Works and Existing Structures – Clauses 6.7 to 6.14 are to be read in conjunction with the Contract Particulars and the Schedules of the JCT Design and Build Contract. The Contract Particulars (page 13) state which Insurance Option has been selected (Option A, B or C) and Schedule 3 details the implications of implementing this.
Professional Indemnity Insurance – Professional Indemnity Insurance, often referred to as PI cover, must be held by the Contractor to cover its professional expertise in the field of design. The Contractor holds the same level of liability as an Architect under the JCT Design and Build Contract and must hold Professional Indemnity insurance confirming this level of expertise.
Joint Fire Code – compliance – Clauses 6.17 to 6.20 are to be read in conjunction with the Contract Particulars if the particulars state the Joint Fire Code applies. If it does apply refer to these Clauses for its application.
Clause 7 – Assignment, Performance Bonds and Guarantees, Third Party Rights and Collateral Warranties (pages 67 – 69)
Assignment – Assignment is a legal term used in contract and property Law. It is the process whereby a person, the assignor, transfers rights or benefits to another, the assignee. The JCT Design and Build Contract does not allow Assignment of the Contract by either the Contractor or the Employer and Clause 7.1 confirms this.
Performance Bonds and Guarantees – Clause 7.3 states that if the Contract Particulars (page 15) confirm that the contract includes for a Performance Bond then immediately upon signing of the Contract, the Contractor is to provide a Performance Bond to the Employer.
Third Party Rights from Contractor and Collateral Warranties – Clauses 7A to 7E deal with the rights of 3rd Parties to the Contract.
An example of a 3rd party is a future Tenant or a Funder who may have rights to the Contract at a later stage. These 3rd parties may need to enforce specific terms of the contract and these Clauses give them the rights to do so.
For example, if the project was supposed to use certain, long-lasting, materials which it does not, these Clauses allow the 3rd party to enforce a contract term or to highlight a breach.
Collateral warranties are more express agreements associated with specific 3rd parties such as a known tenant and provide for the duty of care in the Contract to be extended by one of the contracting parties to the 3rd party (not in the contract). A simple example of the relevance of this is the Design and Build Contractor owes a duty of care to the future occupier of the development in so far as any subsequent defects which may arise are concerned.
As with Performance Bonds and Guarantees, always check the Contract Particulars (page 16) to see which 3rd Party Rights or Collateral Warranties apply to the specific Contract.
Clause 8 – Termination (pages 70 – 75)
General – This Clause deals with Contract Termination. The JCT Design and Build Contract require one or both parties to meet certain obligations. If these obligations are not met, the parties involved can enforce contract termination Clauses to void and close the contract.
One of the most common reasons for Termination is when one of the parties becomes insolvent and can no longer administer their obligations. Clause 8.1 details what the definition of insolvent means regarding a Company; a Partnership; an Individual or a Person.
Termination by the Employer – Clause 8.4 states the various reasons for which the Employer is permitted to terminate the Contract. The Employer must give notice stating the breach and the Contractor then has 14 days to remedy the breach. If the Contractor does not remedy, the Employer can terminate the Contract “on, or within 21 days from” the expiry of the 14-days.
If the Contractor is terminated, Clause 8.7 details the steps the Employer can take to appoint other persons to complete the works.
Termination by the Contractor – Clause 8.9 states the differing reasons for which the Contractor is permitted to terminate the Contract.
One of the main reasons is a lack of payment in accordance with Clause 4.9. Lacking payment is one of the primary drivers for Contractor Termination and the Contractor must give notice of any breach giving the Employer 14 days to remedy the matter. If the Employer does not, the Contractor has the right to terminate the Contract “on, or within 21 days from” the expiry of the 14-day period.
Termination by either Party – Clause 8.11 deals with more general causes for Termination whereby events outside of both parties’ control occur (i.e. civil commotion, terrorism, government intervention etc.). Where these events cause serious delay to the Contract either Party can give notice of their intention to terminate as per the rules in Clause 8.11.
Consequences of Termination – Clause 8.12 confirms how costs (Loss and Expense) flows as a result of termination and how both parties should act in the case of termination.
If the Contract is terminated by the Contractor – the Contractor must as soon as is reasonably possible (within two months) prepare and submit details of the account including the value of the works completed; the cost of removal from site and any other loss and expense incurred. The Employer then has 28 days to assess the submission and is obligated to reasonably pay what is due.
Clause 9 – Settlement of Disputes (pages 76 – 77)
General – In the event of a dispute, the JCT Design and Build Contract provides three different remedies that are available to the parties to stimulate resolution. Each have their advantages and disadvantages and are more suited to certain applications which should be considered dependant on the context of the dispute.
Mediation – The JCT Design and Build Contract advocates the cheapest and quickest route. Mediation is a structured process where a neutral 3rd party (The Mediator) assists the parties in resolving the dispute through specialist negotiation techniques.
The problem with Mediation is that the result is non-binding and the Mediator cannot impose a decision on the parties. Any settlement must be on the basis that the parties voluntarily agree to accept it. With more contentious or high-value matters this is unlikely.
Adjudication – Adjudication is another common form of dispute resolution that became familiar in UK construction with the implementation of the 1996 Housing Grants Construction and Regeneration Act. Adjudication is quick and relatively inexpensive but is still likely to be costlier for both parties than Mediation depending on the complexity of the issue.
Clause 9.2 details how the parties can instigate Adjudication and refers to the Contract Particulars for details of who the nominated contract Adjudicator is. The benefit of using Adjudication over Mediation is that the decision is binding. However, it’s possible for the ruling to be overruled if the dispute is referred to Arbitration or litigation (Court).
Arbitration – This is a form of alternative dispute resolution which enable the parties to resolve disputes outside the courts. Arbitration sees any dispute being concluded by Arbitrators (a panel of one or more persons) and the decision is legally binding and enforceable. Clause 9.3 details the procedures and roles of both parties and the Arbitrator under the Contract.
The Contract Schedules
Schedule 1 Design Submission Procedure (pages 78 – 79)
This section of the Contract is where you will find details on exactly how the Design Submission Procedure works and how the parties are to interact during the design stages of the project.
The Conditions state that:
- The Contractor shall submit its drawings to the Employer
- Within 14 days of receipt of these drawings, the Employer shall communicate to the Contractor, whether the document is considered to be A, B or C Status Contractor.
What do these statuses mean?
- A Status: The document is 100% perfect and the Contractor can proceed.
- B Status: The Contractor can proceed with the document but must incorporate the comments of the Employer.
- C Status: The Contract cannot proceed and must resubmit the document for approval.
A practical note here is that this process can be mis-used to the detriment of the Contractor and progress of the works. Please consider therefore, that the Employer is only able to mark a document with a B or C status where:
“the Employer [expressly confirms] that it is not in accordance with the Contract”
Therefore, the Employer must explain – by reference to the Contract – exactly why the Design Submission is not suitable. The Employer cannot simply state B or C status on the grounds of whether they like the design for example.
Schedule 2 Supplemental Provisions (pages 80 – 85)
This section details Supplemental Provisions that are to be used in the Contract if the Contractor Particulars state they’re to be used (see page 6, 7th Recital). Where these Supplemental Provisions are stated as “Apply” then the Terms included in the Schedule become enforceable conditions to be followed by both parties.
Schedule 3 Insurance Options (pages 86 – 88)
In Clause 6 of the Conditions it is noted that Insurance Options A, B and C could be chosen at the outset of the Contract. Schedule 3 simply details what the practical implication of the various options are and how they’re enforced. Refer to page 13 of the Contract Particulars to see which Insurance Option applies to the specific contract.
Schedule 4 Code of Practice (page 89)
The Code of Practice is a Schedule which relates to Clause 3.13.3 of the Conditions (page 45) for Work that is not considered to be in accordance with the Contract and is designed to make the operation of opening or testing the Works simple and standardised. This Clause provides a detailed procedure of what to do in this instance.
Schedule 5 Third Party Rights (pages 90 – 94)
This Schedule refers to Clause 7 of the Conditions regarding 3rd Party Rights. Check the Contract Particulars (page 16) to see which, if any, 3rd Party Rights apply to the specific Contract and then follow this Schedule for the procedure for applying the rights.
Schedule 6 Forms of Bond (pages 95 – 103)
The JCT Design and Build Contract simplifies the process of using bonds in the Contract by providing standard templates for; Advance Payment Bonds (Part 1); Off-Site Material Bonds (Part 2) and Retention Bonds (Part 3) within Schedule 6.
Check pages 10 to 12 of the Contract Particulars to see whether Bonds apply to the Contract and if so, use these standard templates to implement them.
Schedule 7 JCT Fluctuations Option A (pages 104 – 107)
On very large schemes which last for several years, the JCT Design and Build Contract has a Fluctuations provision. Fluctuation provisions provide a mechanism for dealing with the effects of inflation which on major, long-lasting projects, can be significant.
On larger schemes, the contractor can provide a tender based on current prices and then the Contract, using Schedule 7, makes provision for price fluctuations to specified items over the duration of the project.
The Fluctuation Clause in the JCT is almost exclusively limited to larger projects as with shorter projects, the Contractor is deemed to have included for any minor fluctuations within their Contract Sum. To see if the Fluctuation provision applies in the Contract check page 10 of the Contract Particulars.
Chapter 5 – Summary and Conclusion
Since inception, the JCT Design and Build Contract has grown in popularity and usage in the UK Construction Industry. There are few Employers who dislike the Contract as it provides a high-quality alternative to the Standard Building Contract and offers increased cost certainty from an earlier stage.
This form of contract is however complex and must be studied in detail at tender and contract execution stage so that both parties understand their obligations under the Contract form.