In this series we shed some light on some of the key people who are involved with or give their time to support JCT, to ensure that all areas of the construction industry are represented and can contribute to the development of our contracts. We will look at how our interviewees contribute to JCT specifically, and gain their views on JCT’s wider role within the industry.
JCT Director, NSCC
JCT Council Member
Member of the JCT Payment Review Working Group
Justin Perry is an independent construction consultant specialising in providing contractual and project management support both in the UK and internationally. Justin has spent 30 years in construction, primarily in specialist foundation businesses as both commercial director and managing director.
Justin is now Managing Director of Perry Vale Associates Limited, based in Oakham, Rutland and
provides support to clients across the UK and, more recently, in Canada and the USA. Notable UK projects include Wembley Stadium, The Shard, Heathrow T2, Westfield London and Westfield Stratford.
Internationally, Justin has drafted a bespoke partnering agreement for a diamond mining project in Canada and has successfully negotiated a settlement agreement on a dam remediation scheme for the United States Federal Government.
JCT: Justin, how did you first come to be involved with JCT? Why do you think it is important to be involved?
JP: I first became involved in industry representation when I joined the Contracts Committee of the
Federation of Piling Specialists (FPS). They asked me to represent them at the National Specialist Contractors Council (NSCC) who in turn asked me to represent them on JCT Council. I attended my first Council meeting in 1999.
I subsequently became chairman of the NSCC contracts Committee and in consequence I became a Director of JCT in 2001.
JCT produces contracts for use across the construction industry from domestic home improvements to high profile towers and stadia and these contracts become the benchmark for all of the contractual relationships that these projects generate. Even though the forms are often heavily amended at all levels of the construction team, it is vitally important that all industry stakeholders engage in development of the standard forms to ensure that the starting point represents a fair balance of risk and responsibility.
Each of the JCT colleges represents thousands of members of all sizes, many of whom do not have
access to in-house legal and contractual expertise. It is absolutely crucial that colleges are able to confidently advise their members that if they use an unamended JCT Form of contract, appropriate to the work they are performing, then both they and their client will have a contract that protects their interests and supports performance of their obligations.
JCT: You are a member of JCT’s Payment Review Working Group, can you tell us about your role in the group and what the priorities have been in preparing for the new 2016 edition?
JP: The Payment Review Working Group was originally established to update the JCT payment provisions across the suite to reflect the changes that were made to the Construction Act in 2011. Since then, the Group has served as a vehicle to keep all payment related matters under review and to respond to changes in industry practice.
Most recently, the Group has focussed on re-organising the existing payment provisions to make them flow more logically and to make them easier to understand. In particular, the timings of notices at Main Contract and Sub-Contract level have been adjusted to allow higher tier stakeholders to receive their notices before they are due to issue the equivalent notices to lower tier stakeholders. The overall periods for payment at each tier have not changed but the process of giving notices is now more reflective of what happens in practice in the market.
This is an example of JCT contracts trying to reflect the “real world”. The fact is that sub-contract payment terms are routinely amended and the timing of notices is often given as a reason for doing this. There is now no need to make such amendments as the industry practice is now in the standard forms and it is hoped that this will encourage higher tier stakeholders to make more use of standard forms.
There is always work to do on the issue of payment and I expect further developments as the Prompt Payment code and the Fair Payment Charter become more established.
JCT: Do you have any personal career highlights? What are you most proud of about the construction industry as a whole and where do you think it most needs to improve?
JP: Having come from a quantity surveying, rather than an engineering background, becoming Managing Director of an industry leading ground engineering specialist was a particular highlight. I was also very privileged to have been able to take a leading role in the specialist contracting sector’s contributions to various industry reforms such as the Latham Review of the Construction Act and Fair Payment initiatives.
JCT: What do you think makes JCT unique? What are the benefits of the way in which JCT contracts are produced?
JP: JCT is the only contract drafting body thatrepresents all of the major stakeholder groups in the industry. It also allows parties that do not have a direct interest in a particular contract to raise issues and suggest improvements that can prevent unintended consequences. Another, often undervalued, JCT asset is the fact that the language and the concepts have been tried and tested in the courts and users have certainty as to what clauses mean and how they should be operated.
JCT: What do you see as the main challenges for the construction industry over the next five years?
JP: In my view, the single biggest issue over the coming years will be whether the industry can really embrace BIM and realise its potential. There appears to be a lot of focus on what the technology can do but not enough on how the risks of managing a shared model should be allocated. One of the greatest opportunities that BIM provides is the ability to virtually build the project and foresee interface sequencing clashes ahead of time and take action to prevent them. However, design and build procurement routes do not easily lend themselves to this because the multiple parties providing input into the design do not have any contractual mechanism to resolve clashes between themselves; two or more designers may well have complied with their brief for their part of the design but the two briefs might be incompatible and so there will be disputes as to who is responsible for devising and paying for the solution. Quite often one part of the design may be much more advanced than another so that it is too late to change it, which limits the range of solutions available.
The whole point of BIM is to see clashes in advance and produce the solution that is the most effective for the project; what it does not address is who pays for the changes in design or sequence that are needed to solve the issue. It is quite common for standard JCT clauses to be amended to make each individual contractor and specialist responsible for integrating their design with the design of others but this doesn’t solve the problem, it just creates potential for disputes.
Individual specialists often do not have access to a model when they are bidding and the other specialists with whom they will interface may not even have been selected. It is therefore impossible for them to know precisely how their best value offer will interact with other best value offers for other parts of the work. It is vital that, as BIM protocols and contractual provisions begin to develop and become standardised, mechanisms are devised to encourage individual expert specialist designers to develop innovative proposals while protecting them from being penalised if they are not compatible with other work elements over which they have no control.
Traditional procurement routes are far easier to manage, because they have a single point of responsibility for design. Some means of carrying the concept of a single owner of the model needs to be developed for design and build procurement routes, whilst retaining the benefits of being able to attract the innovation and development that specialist providers can bring.
Another huge potential that BIM provides, that does not seem to be getting much attention relates to safety. BIM allows you to model time as well as activity so you can see when different trades will be physically competing for space; which is one of the single biggest causes of accidents on construction sites. People are very aware of the hazards of their own trades, but are often not as aware of the hazards presented by the trades around them. Being able to sequence operations to minimise multiple concurrent activities will have an enormous benefit in terms of health and safety.
BIM technology has the potential to transform the construction industry in terms of safety, quality and
predictability of cost and delivery, but there is a risk that it could become little more than a high tech means of producing the same inefficiencies and risks that have dogged the industry for decades. BIM needs to be at the heart of construction to be used effectively, not bolted on as a design tool – and to do this, the industry has to be willing to change its approach to risk management on construction projects.
JCT: Does JCT have a wider role to play in the industry beyond producing contracts?
JP: Absolutely. I believe that JCT should setting the standards for the way the industry stakeholders deal with each other and with the wider public. JCT, as an organisation, should have a clear, publicly stated position on what are acceptable ethical, environmental and social standards for construction industry participants. These positions should then be reflected in their contracts.
JCT contracts are intended to be capable of being used by parties who do not necessarily have access to specialist legal advice or who are not especially familiar with the workings of the construction industry. As such, they should be a model that JCT can promote as being a fair and reasonable set of procedures and risk allocations that are reflective of what the industry currently considers best practice.
The contracts therefore should act not only as tools to administer projects but as a benchmark for how people should behave and expect to be treated. JCT has the ability to develop and encourage best practice as well as to reflect it.
For example, if JCT decided to publicly support the aspiration for removing retentions from construction by 2025, it could change the default retention amounts in all its standard contacts to 0%. Individual companies could continue to insert higher figures if they chose to but in doing so they would have to be showing a positive desire to do the opposite of what the industry is committed to achieving. This is much more difficult to justify than simply using a default of 3 or 5%.
By forcing individual companies to have to consciously decline to follow best practice, JCT can influence behaviours and help the industry to move towards the more collaborative model that all its stakeholders desire.
Justin Perry can be reached at email@example.com.