Procurement routes for JCT contracts

Traditional contract and procurement

The bulk of JCT contracts are traditional contracts, which generally separate the design and construction stages. The consultants lead on design and the contractor takes full responsibility for the carrying out and completion of the works. Another key attribute of such traditional forms is a consultant acting on behalf of the employer as contract administrator and again this can be seen in most JCT contracts.

These contracts are often very complex, using legal language and take considerable time to understand. There is a rigid separation of the parties and their rights, obligations and risks. This sometimes results in a lack of co-operation and can encourage defensive and adversarial behaviour. Risk is often passed down the supply chain to contractors and subcontractors. There is often a 'sort it out later' mentality where time and cost problems are left to the end of the project resulting in protracted final accounts and disputes.

Under these forms, there is usually little opportunity for overlap of design and construction stages and there has been much criticism that these contracts polarise the parties resulting in extreme inefficiencies (particularly time and cost to the client) and encouraging disputes. Design and build forms and more sophisticated procurement procedures (2-stage tendering, for example) overcome some of the interface problems between design and construction stages and this is one of the reasons for the popularity of design and build forms.

The above problems and inefficiencies are probably common to most industries and contracts. Also note that the JCT forms have a long history and are, therefore, tried and tested. Moreover, they are focused on the client's main requirements of time and cost certainty and give the client and his or her staff considerable control over the construction process. These contracts are drafted by an industry-wide committee (the Joint Contracts Tribunal) and therefore reflect the current consensus and thinking in the industry.

Traditional contracts reflect the status quo and what the industry can achieve in terms of project and contract administration. Most sectors of the construction industry are probably happy to use these forms.

Non-traditional contracts and procurement

The last 20 years has seen the emergence of a variety of new construction standard forms that claim to overcome many of the problems of traditional contracts and traditional procurement. Sometimes referred to as 'collaborative' or 'partnering' contracts, they are very different to traditional contracts in that they require some form of collaborative working to unite the various project parties to avoid polarisation. These forms are relatively new in legal and contract management terms and have still to prove themselves, however, some such forms, such as the NEC3, are now being favoured by government bodies.

The majority of JCT contracts are 'traditional' contracts but since JCT revision 2 (which appeared in 2009), JCT contracts incorporate some collaborative clauses via a Supplemental Provision Schedule found at the back of the appropriate JCT contract. These provisions include for collaborative working, early warning of disputes and performance indicators. Whether these provisions will make much difference to the operation and behaviour of those that use JCT contracts is debatable.

The JCT suite only has one non-traditional/collaborative type of contract and that is the JCT Constructing Excellence Contract (CE). The CE contract is a simpler contract than other collaborative forms (for example, the NEC3 and PPC2000 forms) but will still require collaborative working and a different approach to contract administration. This is for use within the construction supply chain. The JCT CE is a very new form and is essentially untested in the market. The JCT Construction Excellence Contract (CE) 2016 appears to be rarely used and if your client wants to use a collaborative form, then the NEC suite may be a better choice.

Traditional versus non-traditional contracts

The claims that non-traditional/collaborative contracts overcome the problems of traditional contracts are yet to be proved particularly in the courts and in an economic downturn. There have been many studies on these forms but hard evidence of increased efficiency appears elusive although the idea that teamwork must result in efficiencies does make sense. Whether a legal document like a contract can encourage teamwork is debatable. It is, however, worth noting that although there was some increase in claims and disputes during the 2010/2011 recession there has not been a return to the hostile claims environment of previous recessions and this may be due to the more collaborative environment of today's construction industry. Most of the new suites of contracts also incorporate streamline payments and insurance provisions in particular the JCT 2016 contracts, whereby fair payment principles are employed.

It is important than the client's view on such forms is ascertained. Some clients are keen to try these forms while others prefer to keep to tried and tested traditional forms. Even where the client does not have a view on the matter or is prepared to accept the practitioner's recommendation, it is vital that you understand the form you recommend particularly if you have not used a non-traditional contract before. The 2008-2011 recession in the UK appears to have caused some clients to return to traditional procurement/contracts in the belief this achieves better value. Most of the new contracts contain building information modelling (BIM) provisions allowing for a BIM protocol.

Currently, the public sector appears to be the biggest user of collaborative forms. The Office of Government and Commerce (OGC) recommends the use of the NEC suite of contract although an OGC review of construction contracts in January 2009 found that the JCT Constructing Excellence (CE) standard form satisfies all the principles of the OGC's Achieving Excellence in Construction initiative. That said the OGC still only recommends the NEC suite and the CE is little used in practice.

In 2009, the Institution of Civil Engineers (ICE) decided to solely endorse the NEC3 suite of contracts (a collaborative suite of contracts). This suggests that ICE considers the NEC forms more appropriate for civil engineering projects and this must have some bearing on the commercial building side of the construction industry.

Note that non-traditional contracts often have to be prepared differently, requiring the contract documents to be re-formatted under different headings and definitions. Moreover, the contract administration of such forms is very different from traditional contracts placing new demands on project staff. Therefore, staff will require training and additional resources and this will have to be reflected in the fee for the work.