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Peter Barnes: JCT 2005 and 2006 Contracts: What's New and What's Changed 23 January 2008

We welcomed Peter Barnes, a member of the East Anglia branch, who gave us a lightning tour of the new JCT Contracts introduced in 2005 and 2006 (and still coming). He started by setting out the structure of the new issue, with suites of multi-level contracts, most incorporating main contract, sub-contract and even sub-sub-contract and each with consistent colour-coded design. Contracts had been given a new layout, with clauses consistently grouped into sections to make it easier to find relevant conditions. Whatever the size and complexity of the new contract forms, there would be sections covering, for instance, payment, control of the work and completion.

Peter set the new contracts in the context of previous JCT standard forms, explaining that the principles and allocation of risk had not changed.

For larger works designed and/or detailed by or on behalf of the Employer, the Standard Form (now SB2005) remained the recommended contract. As before, there are With Quantities, Without Quantities and With Approximate Quantities versions, but no separate Local Authorities' editions. Each one has a standard 9 sections and 7 schedules. Optional provisions for Contractor design of parts of the Works and for sectional completion are built into the standard contract wording rather than requiring a separate supplement with its confusing list of clause amendments. In Peter's view the dreaded political correctness had crept in here just as in many other parts of contemporary life. Now we must get used to Adjustment of the Completion Date instead of extensions of time (the latter consigned to oblivion as it does not sit easily with the new provision for an earlier completion date following a Schedule 2 Quotation). Default retention is now 3% and there is an alternative provision for a Retention Bond.

For works designed by the Contractor to requirements prepared by or for the Employer and requiring detailed contract provisions, DB2005 replaces WCD98. The contract conditions will be administered by the Employer's Agent. In the payment provisions in this form, the Employer must now pay 'the amount due' (previously 'the amount applied for' could become the amount due). There's also a new up-to-the-minute Design Submission Procedure with 'A', 'B' and 'C' status - where have I seen that before? It's also been spelt out that the Contractor's Design liability is the same as that of an experienced designer of the relevant discipline - goodbye to 'fitness for purpose'.

The Intermediate Contract had now become IC2005, with ICD2005 where parts (not the whole) are to be designed by the Contractor. Both forms are suitable for works of simple content with no complex services requiring more contract provisions than in the Minor Works form. Provisions remain for named specialists. As with SBC2005, there are 'standard' options for sectional completion.

The Minor Works suite has a standard form (MW2005) and a design-and-build variant (MWD2005) which is suitable for contractor design of a part, not the whole works. Both provide for the Contract Administrator to administer the conditions.

In the spirit of the times, there is a partnering contract. This is called 'Constructing Excellence' (CE), as that is what will be achieved (obviously). As with all the best reforms, there is an Overriding Principle, in this case of encouraging collaborative behaviour, just in case we get bogged down in the everyday reality of laying one brick on top of another whilst it's raining buckets. And of course the contract has to remind us that we're part of a supply chain by being applicable at all levels - just don't get labelled as the weakest link. At the top of the chain, there is a contract between two parties (CE). Linked to this there is a Project Team Agreement (multi-party, as a team needs more than two members to be effective). Risk is shared by a pain/gain mechanism (similar to NEC), but as we're all excellent we should only be in a win-win situation. To keep us all on the straight-and-narrow, there is a Risk Register (what might go wrong) and Risk Allocation Schedule (who's holding the baby), and design obligations are spelt out. All this partnering and excellence is measured by KPI's (Key Performance Indicators) so that we can have a table of numbers rather than trying to assess Time, Cost and Quality (or even Commodity, Firmness and Delight, which soundseven more touchy-feely but which are much the same). Finally, there are Alternative Payment Provisions - no, not the sort guaranteed to appeal to cash-strapped employers.

To ensure consumer choice, there is a whole range of other contracts with initials and scope to gladden the heart of any Army adjutant - MP (Major Project Construction Contract), CM/A (Construction Management Appointment), PCC (Prime Cost Contract), MTC (Measured Term Contract), FA (Framework Agreement), FA/N (Non-binding Framework Agreement) and MC (Management Building Contract). As to scope, they'll cope with anything from T5 or an Olympic stadium - oops, wrong family of contracts - to changing a tap washer.

There is, as you would expect, guidance on how to cope with all this supermarket-style array of goodies: the Practice Note 'Deciding on the appropriate JCT Contract' - gratis from the JCT website, and additive-free (no initials and no colour-coding).

As widely reported the JCT has dropped its own adjudication procedures and opted into the Scheme for Construction Contracts (but with slight amendments - is anything sacred?).

At the beginning of Peter's talk, it seemed that just listing the new contracts would take up the allotted time (there'll probably soon be a diploma in JCT contracts and their identifying initials). But Peter managed to pack a lot more in and by the end we felt we had a good road map to guide us round the new world of the JCT.

Report (with additions) by Robin Orme

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