Increasing Costs and Fluctuations Provisions

Blog Author: Peter Hibberd Recently, the Bank of England governor claimed that his ex-chief economist’s view that inflation may reach 4% was alarmist and that we should not overreact to rising prices. Overreacting is one thing but making sensible provision is another. Fluctuations in labour and material prices in relation to construction projects can, and do, quickly erode a contractor’s margin. Over recent years, price inflation has been benign, which has led to those entering building contracts giving less consideration to its impact and to…

Debating Digital

Blog Author: Richard Saxon CBE – Past Chair, JCT Debates are as much a form of entertainment as a way of reaching decisions. But they can still reveal true opinion usefully if the protagonists are so minded. At my school, we were allocated the ‘for’ and ‘against’ roles randomly, to sharpen our wits. As debates progress, positions can become more nuanced. An example of this was the online debate held by Infrastructure Intelligence magazine on the proposition: “That digital transformation is dependent on new forms…

Preparing for public procurement post-Brexit

Blog Authors: Graeme Young, Partner and Shona Murphy, Associate – CMS UK The UK left the European Union on 31 January 2020. Under the terms of the EU-UK Withdrawal Agreement, the current EU public procurement rules have continued in force in the UK during an 11 month transition period. That transition period expires on 31 December 2020. While the UK may still be able to agree a limited form of Free Trade Agreement (FTA) with the EU by the end of this year, it seems…

Construction Contract Execution During Covid-19 and Beyond

Blog Authors: Marcus Harling and Alistair Russell – Burges Salmon LLP Electronic signatures, data rooms, Mercury execution? Evolving working arrangements mean we should all double check exactly how to execute construction documents. Whilst smart contracts and digital signatures are still very much the immediate future, for most people they did not arrive in time to help with the complexities of contract execution created by the COVID-19 lockdown. Suddenly the traditional way of contract execution became almost impossible and old questions on remote Mercury compliant execution…

Suite of updated Covid-19 articles available from JCT website

JCT has made available a suite of new articles providing information about the impact of Covid-19 on construction projects and the contractual issues that arise. The new articles, authored by JCT past-chair, Peter Hibberd, follow on from the orginal article, “Coronavirus (Covid-19) and JCT Contracts”, released in April. The latest articles update the original information from the April piece, set out the guidance from Government and the Construction Leadership Council (CLC) and the important contract areas affected, and address the issues that need to be considered for future projects. The suite highlights specific issues that apply to the…

Are Milestone Payments an Adequate Payment Mechanism in Construction Contracts?

Blog Author: Martin Ewen – Fenwick Elliott In the recent case of Bennett (Construction) Limited v CIMC MBS Limited (formerly Verbus Systems Limited)¹ Court of Appeal considered whether milestone payments in a construction contract constituted an adequate mechanism for payment in terms of the Housing Grants, Construction and Regeneration Act 1996, as amended (“the Act”). Martin Ewen explains more. Facts Bennett contracted to Verbus the design, supply and installation of 78 prefabricated modular bedroom units for a new hotel in London. The units were to…

Construction Contract Mistakes: That Wasn’t Quite What We Meant

Blog Author: Victoria Peckett – CMS When rectifying contracts to fix drafting mistakes, what happens if the parties disagree on what was meant? Construction contracts are often so voluminous that it can be easy for mistakes to creep in when putting them together and for the executed contract not to reflect what the parties think they have agreed in all respects. Often these mistakes can be sorted out by agreement — either the parties will amend the erroneous parts in manuscript before dating them, or…

Alliancing With Excellence

Blog Author: Peter Hibberd Those involved with construction frequently berate themselves and others for its poor performance; often rightly. However, there remains a failure to recognise fully what can be done to improve. The tendency to concentrate simply on improving efficiency is not enough because one can be efficient without creating value. What must be improved is quality and productivity as these will create project life value for the client and a better return to the participants without increasing costs disproportionately. Those two objectives are…

Practical Completion

Blog Author: Peter Hibberd The recent Court of Appeal case of Mears v Costplan Services (2019) EWCA Civ 502 is seen by some to once again raise, amongst other things, the issue of whether contracts should precisely define what constitutes practical completion. Practical completion is sometimes contrasted to substantial completion and even practically complete. However, none of these terms requires work to be completed in all respects before it is certified or is deemed to occur. As stated in Mears, ‘If there is a patent…

Court of Appeal Clarifies Meaning of “Practical Completion”

Blog Author: Joe Bennet – Associate and Alistair McGrigor – Partner, CMS A Court of Appeal decision in March has provided authoritative guidance as to when “practical completion” of construction works will be achieved. The existence of patent defects which are more than trifling will be sufficient to prevent “practical completion” and the intended purpose of the works is of relevance only in determining whether such defects are trifling. This considerably narrows the approach adopted by the TCC at first instance which allowed greater scope…