JCT Design and Build contract 2016 - What's new?
Following on from the launch of the JCT Minor Works form in the summer, the JCT have now followed this up with the issue of the Design and Build form. The key alterations that will be of interest to practitioners are in changes to payment provisions, insurance provisions and the way requirements for collateral warranties and third party rights are set out.
Section 4 (Payment) has been revised and the following additions made:
- A new clause has been entered at 4.20 which provides a procedure for the prompt assessment by the employer of loss and expense claims. Prompt in this instance means within 28 days
- There is now greater flexibility in the fluctuation provisions as the contract now allows for an alternative bespoke fluctuation or adjustment formula. Fluctuation options B and C have also been removed from the contract but are still available on the JCT website
- Payment provisions have been simplified. The monthly cycle of payment due dates in the interim due date provisions now continues to apply after practical completion, through to the due date for final payment. Payments during the rectification period will now be paid every month rather than every two months
- Interim and final payments have been consolidated into a single sub-section of the notice requirements of the Housing Grants, Construction and Regeneration Act 1996.
General Insurance Provisions
JCT 2016 also looks to solve the problem of insuring existing structures. There is a new insurance option available to the parties which incorporates alternative insurance agreements for employers who are unable to ascertain insurance for an existing structure in the joint names of the employer and the contractor. This provision hopes to do away with the problems caused where the employer is not the owner of the building.
The general insurance provisions have also been consolidated bringing much of the content (previously found in schedule 3) into the contract itself.
Third Party Rights and Collateral Warranties
Part 2 of the Contract Particulars (Third Party Rights and Collateral Warranties) has been deleted. This has been replaced with the ability for the parties to append their own bespoke documents detailing whether third party rights or collateral warranties are to be granted. This will be referred to as the ‘Rights Particulars’.
- The JCT’s own amendments which have previously been published as Amendment 1 have incorporated into the contract itself to take account of the changes brought about by the Construction (Design and Management) Regulations 2015
- There is now a standard clause (7.3) which requires the contractor to provide a performance bond or PCG on the execution of the building contract. The Contract Particulars allow for optional expiry dates of the bond:
- Date of practical completion;
- Two weeks after expiry of rectification period;
- Date for issue of the notice of completion of making good
Overall the changes are welcome, but the JCT continues to overlook the requirement for single point responsibility for the entire design and construction of a project.
For more information, please contact Michael Chilton.