JCT contracts suite

The JCT produces 2 Design and Build forms:

• a standard Design and Build form (the Design and Build Contract); and
• a form for experienced users only (the Major Project Construction Contract).

Both contracts are lump sum contracts.

Design and Build Contract (DB)

The current JCT standard Design and Build Contract is the Design and Build Contract 2016.

This is a sophisticated contract requiring considerable experience to be used effectively. The employer provides the initial design and sets out his or her requirement in a contract document called the 'employer's requirements'. The initial design can be very basic to almost complete. The contractor completes the design (called the 'contractor's proposals') and then carries out the works using both the employer's requirements and contractor's proposals (which together form the design of the works).

Adequate time and great care must be paid to the employer requirements, as there is little scope for change or variations later without substantial time and cost impacts.

There is no independent contract administrator under this form. Instead the employer uses an 'employer's agent' who administers the contract, but most of the contract procedures (payment, adjustment of the completion date, etc.) are performed by the employer. Article 3 of this form makes it clear that the employer's agent has 'full authority' to act for the employer.

The 2011 form introduced a Schedule 2 Part 2 'Supplemental Provisions' that reflects the principles of the Achieving Excellence in Construction (AEC). These supplemental provisions are incorporated via the Contract Particulars and practitioners need to give serious consideration as to whether to incorporate these provisions as they can mean substantial additional work for them and their client as well as the contractor. This in turn could affect project costs and the contract sum.

The 2016 revision introduces big changes to payment, seeing the introduction of aspects of the government’s fair payment charter. Interim valuation dates will operate at main contract, subcontract and sub-subcontract levels. Due dates after practical completion change from the bi-monthly process to monthly in the 2016 JCT suite. The 2016 revision also sees a simplified procedure for loss and expense claims, which includes prompt assessment. The CA will make an assessment of the claim within 28 days and, upon receiving additional information from the contractor, will be required to respond within 14 days.

Contract selection

The JCT Design and Build Contract is appropriate for construction works where:

• the employer's requirements are relatively straightforward and can be conveyed via the initial design information included in the employer's requirements;
• the employer is prepared to let the contractor to take the lead on completion of the design;
• the employer is prepared to compromise on design, allow contractor inputs on buildability and not to interfere in this process;
• fast-tracking is required although it is important to note that such fast-tracking is not guaranteed;
• this form of contract is probably unsuitable for small works due to the extensive and onerous provisions, and probably requires projects of value of £500,000 upwards. This is a rough guide and much will depend on the nature of the project;

Contract price

This is a lump sum contract with considerable price certainty. There is, however, little scope for change and it is likely that any substantial change requested by the employer is likely to have severe time and cost impacts. Variations under this contract are called 'change' and there are provisions for loss and expense.

Contract set-up

A design and build contract should have a structure along the following lines:

Novation of the design team

This is common practice although it is not required and is not envisaged by the JCT Design and Build. There are disadvantages to novating the design team as well as advantages. If there are plans to novate the design team then this must be made clear at time of tender and a suitable amendment included in the Design and Build Contract.

Contract administration

As discussed some of the key requirements for successful JCT contract administration are established at the pre-contract stages of a project and these include:

• a complete design (vital for traditional contracts) or employer's proposals (for Design and Build Contracts);
• tender practices that establish a fair price for the construction of the works;
• a realistic contract period for the completion of the works; and
• an agreed contract document that is ready and executed before the start of the works.

Major Project Construction Contract (MP)

The current version is the Major Project Construction Contract 2016.

This contract is for large projects where both employer and contractor are sophisticated and experienced construction users. The contract is surprisingly lean and both employer and contractor must have their own detailed in-house procedures to manage this contract effectively. The contractor carries the burden of project risk with this form. This contract does not appear to be used much in practice, with only 10 instances noted in 2010 (RICS contracts in use survey 2010).

Again the employer provides the initial design and sets out his or her requirements in a document called the 'requirements' and the contractor completes the design (called the 'proposal') and then carries out the works. Adequate time and great care must be paid to the requirements by the client and his or her construction team, as there is little scope for change later.

As a rough guide, this form is probably suitable for experienced parties working on large projects from around £10 million upwards (2010 prices).

Contract structure and set up is similar to the JCT Design and Build Contract.