Blog authors: Karen Clarke and Christopher Dickson – CMS Cameron McKenna
The JCT launched its much awaited new suite of building contracts with the publication of its revised Minor Works family. The Minor Works building contracts (with options for contractor design or not) and a form of sub-contract that can be used in conjunction with the main form (also making provision for sub-contractor design) together constitute the first three agreements in the JCT’s new 2016 edition (“JCT 2016”).
The 2016 editions of the remaining agreements will be rolled out during the second half of the year and into next year too (these will also be labelled ‘2016’) with the next instalment due out after the end of the summer holidays. As yet, the Scottish Building Contract Committee has not released details of its planned dates for publishing its Scots Law versions of the JCT building contracts, but it has confirmed that the SBCC contracts will be issued in the same order as the JCT new forms.
The new JCT 2016 suite is the JCT’s third edition in little more than decade. Ten years ago, a wholesale revamp of the entire family of contracts coincided with the JCT’s 75th anniversary. Five years ago, the 2011 edition made changes to its agreements to make them compliant with the updated Construction Act.
Looking at the Minor Works agreements and anticipated changes to the suite as a whole (based on press statements released by the JCT), the new edition icorporates some interesting new features and noteworthy changes.
- JCT 2016 reflects the Public Contracts Regulations 2015 and includes provisions for use by public bodies, contractors and sub-contractors on public sector projects. The 2015 Regulations replace the previous UK public sector procurement regime and aim to make public procurement more accessible to small businesses.
- It is almost 15 months since the CDM Regulations 2015 came into force (click here to view our detailed webinar on CDM 2015). The new forms incorporate the JCT’s own 2015 amendments (previously published as Amendment 1) to make the building contracts CDM-compliant.
- In 2011, the JCT published a 45 page document entitled Public Sector Supplement. Aimed primarily at public sector clients and their contract administrators (although the amendments proposed could also be used by private sector clients keen to ensure that the principles covered apply in their agreements and supply chain too), the document dealt with three issues – BIM, “Fair Payment” and “Transparency”. JCT 2016 incorporates into the new suite certain provisions from this supplement:
- BIM – The UK government mandate was that all centrally procured public sector projects be undertaken implementing BIM, Level 2 by April this year (Scottish public sector projects are to adopt BIM Level 2 by April next year). JCT 2016 now makes express provision for BIM or other communications protocols to be included in the Contract Documents.
- Transparency – In 2013, the government published a policy paper 2010 to 2015 government policy: government transparency and accountability. The JCT Public Sector Supplement includes a model clause authorising disclosures by public sector clients in accordance with the Freedom of Information Act 2000. JCT 2016 now includes this clause within its Supplemental Provisions Schedule.
- Fair Payment – In 2007, the OGC launched its Guide to Best Fair Payment Practices (which included a Model Fair Payment Charter – intended to apply to government contracts entered into on/after 1 January 2008). The publication was supported by both government and industry. In 2013,Construction 2025, the government’s longterm vision for the construction industry, cited equitable financial arrangements and certainty of payment as critical to success for the industry. In 2014, the government launched a Construction Supply Chain Payment Charter to build upon the payment provisions of the Construction Act (as amended), the Late Payment of Commercial Debts Regulations,the Fair Payment Charter and Prompt Payment Code. JCT 2016 incorporates a number of changes designed to reflect these principles including Interim Valuation Dates which will operate at main contract, subcontract and sub-subcontract levels.
- The revised payment provisions have also been simplified more generally with clearer Construction Act notice requirements, a procedure for prompt assessment of loss and expense claims and flexibility in relation to fluctuations provisions.
- Under the interim payment due date provisions, the monthly cycle of payment due dates now continues to apply after practical completion, up to the due date for the final payment; this is consistent both with the new loss and expense ascertainment procedure and Fair Payment principles.
- In the new JCT building contracts for larger works (to follow), there will be an extension of Insurance Option C (Insurance by the Employer of Existing Structures and Works in or Extensions to them) to allow for alternative solutions to the problems typically encountered by tenants (and domestic homeowners) in obtaining existing structures cover for contractors. This approach is reflected within Section 5 itself of the new Minor Works forms. In addition, JCT 2016 consolidates (within the conditions) general provisions applying to Insurance Options A, B and C (evidence of insurance, insurance claims and reinstatement work).
- In the new JCT building contracts for larger works (to follow), JCT 2016 will include provisions for the grant of performance bonds and parent company guarantees and extend the optional provisions for obtaining collateral warranties from sub-contractors to include (as an alternative) the granting of third party rights by sub-contractors.Finally, the new suite includes sundry changes to make the contracts more user-friendly and improve functionality. JCT 2016 aims to be fit for the future and provide greater clarity and flexibility.
For further information please contact Karen Clarke, Partner, London (Email: karen.clarke@cms-cmck.com, Tel: +44 (0) 20 7367 2448) or Christopher Dickson, Senior Associate, Glasgow (Email: Christopher.dickson@cmscmck.com, Tel: +44 141 304 6284).
Note: Blog posts are the views of the author(s) and do not necessarily represent the views of JCT.