Building Contracts - Bespoke & JCT

Question 1

What are the various forms of sub-contract commonly used?

Answer 1

• JCT (Joint Contracts Tribunal)
• NEC (New Engineering Contract)
• FIDIC
• Bespoke

Question 2

What are some considerations when selecting the most appropriate form of contract?

Answer 2

Nature of client
Cost, time, quality and risk allocation
Procurement choice
Value of work
Complexity of work
Size and location of work

Question 3

What is a bespoke contract?

Answer 3

They are tailor made to fit specific requirements of a project and often used when standard contracts are not suitable.

Question 4

What are the advantages of a bespoke contract?

Answer 4

• Written by legal experts
• Rights and obligations of each party clearly set out
• Parties should be more-so familiar with the provisions of the form

Question 5

What are the dis-advantages of a bespoke contract?

Answer 5

• Familiarity is decreased
• Expensive to draft
• Poorly drafted could lead to ambiguities
• Clauses or provisions may be untested in court.

Question 6

Have you amended a standard form of contract?

Answer 6

No. As consultants we do not have legal training and all amendments should be carried out by the legal team.

Question 7

What does JCT stand for?

Answer 7

Joint Court Tribunal

Question 8

What types of JCT are available to you?

Answer 8

o D&B
o SBC 2016
o Major Works Contract
o Minor Works Contract
o Intermediate Build Contract

Question 9

What key project characteristics influence which JCT contract is used?

Answer 9

1. Size, value and type
2. Need for contractor design
3. Certainty on final cost
4. employer experience
5. Programme requirements

Question 10

When would you use a minor works contract?

Answer 10

For smaller, basic construction project procured via the traditional method.

Question 11

Tell me about the JCT minor works contract

Answer 11

For small basic projects, non complex
Employer responsible for design
Normally administered by architect or contract administrator

Question 12

When would you use a JCT intermediate contract?

Answer 12

Designed for projects involving all recognised trades and skills where detailed contract provisions are needed for complex specialist work.
For contracts via the traditional method.

Question 13

When would you use the JCT SBC?

Answer 13

For large complex projects
Employer responsible for design
Works can be carried out in sections.
For contracts via the traditional method.

Question 14

When would you use a JCT major project contract?

Answer 14

Designed for large scale, major projects.
for contracts via the D&B method
Works are carried out by the contractors with experience and the ability to take greater risk

Question 15

When would you use a JCT D&B?

Answer 15

Designed for projects where contractor undertakes design and build. Where Contractor takes all the risk and quality only as good as the employers’ requirements. Is quick and cost certain, can be carried out in sections.

Question 16

When would you use a JCT Prime Cost?

Answer 16

Projects that require an early start on site
Design documents are not completed and wont be until work commenced.
suitable for projects using cost reimbursable or cost plus.

Question 17

When would you use a JCT Construction management contract?

Answer 17

Employer appoints separate trade contractors and a construction manager to oversee works for a fee.
Suitable for projects via the management method.

Question 18

What is a relevant event?

Answer 18

• An event, on or off site which causes delay to the completion date.
  o These are variations or instructions
  o Strike
  o Terrorism
  o Suspension by contractor for non-payment
  o Force Majeure.

Question 19

What happens when a relevant event occurs?

Answer 19

• As soon as the contractor notices a delay will occur, contractor must notify the Administrator in writing with clear substantiation with estimate of delay and why etc.
• Contractor administrator must respond within 12 weeks.
• If it has occurred, the contract administrator must assess the delay and issue a new completion date or EOT.

Question 20

What is force majeure?

Answer 20

• Something which happens which is out of our control
  o War, riot, terrorism acts, contamination, civil war, bad weather etc.

Question 21

Under a relevant event, is the contractor entitled to loss and expense?

Answer 21

• No, a claim to an extension of time only
• Contractor will need to demonstrate loss and expense.

Question 22

What is a relevant matter?

Answer 22

• A matter which the employer is responsible for.
• Effects the progress of the works
• May entitle the contractor to loss and expense.

Question 23

Example of relevant matter?

Answer 23

• Failure to give the contractor possession of the site
• Delays in receiving instructions
• Disruption caused by work carried out by employer

Question 24

What is a loss and expense claim?

Answer 24

Associated with delays but can be for any event where contractor incurs a loss due to the failure of the employer (Relevant matter)

Question 25

What is key when assessing loss and expense claims?

Answer 25

It should be ACTUAL loss incurred by the contractor
Prices in the BOQ, SOR or prelims should not be used as actual costs will be more.

Question 26

Do you need an EOT for loss and expense?

Answer 26

No. loss and expense can be due without an EOT.

Question 27

What are common heads of claims with Loss & Expense?

Answer 27

Prolongation/prelims, thickening of preliminaries (extra site supervision), disruption, financial charges (interest).

Question 28

What are prolongation costs?

Answer 28

Site management, accommodation, plant etc.

Question 29

What is Partial possession?

Answer 29

Contract may allow an employer to take partial possession of part of the works before they have been completed.

Question 30

What are the key points of partial posession?

Answer 30

Not agreed in advance.
Contractor must give consent.

Question 31

Can the contractor refuse to give partial posession?

Answer 31

Yes. it can only be taken with the consent of the contractor. It may hinder the contractor’s ability to complete remaining areas.

Question 32

What are the implications of partial posession?

Answer 32

Half retention released
Contractor’s responsibility for insuring the works ends.
Employer becomes responsible for damages of the works
The defect period commences.

Question 33

What is Sectional completion under the JCT?

Answer 33

Refers to a provision within the building contract which allows different completion dates for different sections of work.

Question 34

What is the difference between sectional completion and partial posession?

Answer 34

Sectional completion - it is pre-planned and defined in the contract documents
Partial completion - Employer knows that it wants one part of the works finished in advance of the rest.

Question 35

What are the main options for insuring works under the JCT?

Answer 35

Option A - Contractor maintains and takes out joint names all risks insurance of the works out for new buildings

Option B - Employer takes out and maintains and takes out joint names all risks insurance of the works out for new buildings

Option C - Employer takes out and maintains joint names all risk insurance of the new works and existing structure and contents. Option C is for renovations.

Question 36

What are contractor’s all risks insurance?

Answer 36

Covers protection against the loss or damage of the works being undertaken.
Policy will pay for the repair or replacement of the insured works following damaged caused by an insured event.

Question 37

What are specified perils?

Answer 37

Fire, Explosion, Earthquake, Flooding etc.

Question 38

What is subrogation?

Answer 38

Allows an insurance company that has paid a loss to step into the shoes of its insured to then sue a party that may be responsible for causing the loss.

Question 39

What is a joint names policy?

Answer 39

A policy in two or more names (the contractor and the employer)