On 22 September, the JCT’s long-awaited 2016 Edition of the Design and Build Contract (DB) was published. This follows the release by JCT of the 2016 version of the Minor Works suite of contracts, the short form sub-contract and the sub-subcontract.
The 2011 version has not been overhauled, there are no surprises but on the whole, the changes are welcome.
There has been a significant redrafting of section 4 (Payment) where the changes are designed to reflect fair payment principles and simplify the provisions. The changes have the desired effect. The drafting around items that may adjust the Contract Sum has been simplified. Following case law and in accordance with the fair payment principles the monthly interim payment due date will continue to be applicable after practical completion until the due date for the final payment.
The payment section has been streamlined to make the Construction Act notice requirements clearer. Consequently, the clause is more user-friendly. For example, the detail regarding Pay Less Notices for interim and final payments is dealt with in one clause, and the provisions relating to the Final Statement have been rationally moved to the end of the section.
In contrast to the clarity of the payment provisions generally, one new provision that may cause some debate is clause 4.20, which introduces a new procedure for dealing with loss and expense claims. The contractor is to provide early notification (as soon as it becomes or should have become reasonable apparent) of any likely loss and expense incurred and the likely effect on progress of any loss and expense claims. The level of information to be supplied by the contractor is clear. Upon receipt of the contractor’s assessment, the employer is to notify the contractor of its ascertainment of the loss and expense within 28 days of receipt of the initial assessment and within 14 days of each subsequent update. More is expected of both parties from this provision, particularly the Employer. It seems that the new procedure is intended to be a condition precedent to the contractor’s entitlement to loss and expense but there has been some debate over this from commentators already.
The DB 2016 has moved with the times. It now reflects the Public Contract Regulations 2015 for public sector appointments. The edition has been updated in line with the Construction (Design & Management) Regulations 2015, incorporating the changes set out in Amendment 1. The references to the Site Waste Management Plans Regulations 2008 which were revoked on 1 December 2013 have now been removed. The new edition also makes provision for the BIM Protocol in recognition of the government mandate that all centrally procured public sector projects be undertaken implementing BIM, Level 2 by April 2016.
The drafting is now more flexible. The insurance provisions have been consolidated generally and the changes to Insurance Option C address a longstanding issue for tenants carrying out works in multi-let buildings. Tenants considering Insurance Option C for existing structures are now able to disapply the requirement for Joint Names cover. Previously this obligation hindered the ability of such employers to obtain appropriate insurance, but under DB 2016 they can instead include bespoke provisions tailored to their particular requirements. This amendment corresponds with the anticipated trend towards refurbishing existing properties, which is a likely consequence of the legislative changes relating to the energy efficiency of buildings.
As an alternative to collateral warranties, sub-contractors may be required to provide third party rights.
Provision has been included to enable Employers can complete the contract particulars so as to require the contractor to provide a performance bond and/or parent company guarantee, the wording of which the parties are free to agree.
Whilst the changes made are welcome there is nothing surprising or revolutionary here. Most of the common ways in which lawyers amend the JCT DB, to suit bank-funded projects for instance, have not been addressed. As such, the importance of a well drafted schedule of amendments has not been removed.
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