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JCT DB 2016 - update

Tue 08 Nov 2016

The JCT has now released its updated Design and Build Contract and associated sub-contracts, as part of its update of its suite of contracts. Updates to the Standard and Intermediate Contracts are to be issued next year, but the changes are expected to follow a similar format.

The key changes from the Design and Build 2011 are intended to reflect changes in market practice and are summarised below:

1. Loss and expense must now be ascertained by the Employer within specified periods (28 days in respect of the Contractor’s initial assessment, and 14 days for subsequent assessment). Whilst this is designed to avoid frequent delays in Employer’s Agents assessing loss and expense, it fails to address the difficulty of assessing loss and expense when it is not yet possible to establish the final effect on the Contractor of any delay or disruption. The updated form (and associated guidance) also fails to make clear whether the Contractor’s notification (the process for which, the contract provides must be complied with) is a condition precedent to its entitlement to payment. 

2. Interim payments must still be made in accordance with the Housing Grants, Construction and Regeneration Act 1996 (as amended) however the contractual mechanism has been amended as follows:

a. Interim Valuation Date (IVD) is to be stated in the Contract Particulars. Subsequent IVD’s will be on the same day each month, or the nearest Business Day in that month.

b. due dates for interim payments are 7 days after the IVD, unless the Interim Payment Application is received after the IVD.

c. Payment Notices and Pay Less Notices must be issued no later than 5 days after the relevant due date and no later than 5 days before the final date for payment respectively.

As before, care should be taken in choosing the IVD and in diarising the relevant due date and dates for issue of notices, particularly where an Interim Payment Application is received after the IVD.

3. Final payment process now mirrors that related to interim payments, with the same 14-day payment period applying to both, and interim payments during the rectification period being on a monthly basis (rather than every two months).

4. Insurance provisions have been re-organised and consolidated, with much of the detail moving to section 6 of the contract. JCT has also provided for an alternative arrangement in the event that insurance cannot be obtained by an Employer under Option C (alterations or extensions to existing structures) allowing for bespoke insurance arrangements.

5. Consents and approvals required under the contract may now not be unreasonably withheld or delayed (save in relation to any consent to an assignment). This will affect Employers who wish to retain absolute rights of approval, for example, in relation to the choice of replacement materials.   

6. BIM Protocol references have been included for the first time, acknowledging that Contractors may be oblige to comply with a  BIM Protocol, which will be prepared by the Employer’s team and included as a contract document. Whilst this goes some way to incorporating BIM into contracts, successful implementation of BIM will still depend on the Employer’s team clearly detailing its “Employer’s Information Requirements”, and dealing with the liability and responsibility of the same accordingly in the contract.   

7. Collateral warranties and third party rights, as previously detailed at Part 2 of the Contract Particulars, must now be detailed in a separate document

8. Termination by local or public authorities in accordance with the Public Contracts Regulations 2015 which require a contracting authority to be able to terminate a public contract where:

a. The contract has been subject to a substantial modification that required a new procurement procedure to be started;

b. At the time of contract award, one of the mandatory exclusion criteria applied and the contractor should have been excluded from the procurement procedure;

c. The ECJ has held that the contract should not have been awarded to the contractor in view of a serious infringement of the obligations under the EC Treaty and Public Contracts Directive.  

Terminations under paragraph a. and c. are treated as neutral events; termination under paragraph b. is treated as a contractor default.

For more information on the changes, please feel free to contact Eleanor Kilminster, or register for our breakfast seminar on 23 November 2016. 

Eleanor Kilminster
T. +44(0) 7593 5145

E:. ekilminster@wslaw.co.uk