Construction standard form update - JCT D&B 2016

Hot off the press from JCT is the new 2016 edition of its standard form Design and Build Contract, together with an associated guide, which were published at the end of last month. It is expected that a new edition SBCC D&B will follow shortly with equivalent amendments, although we await confirmation of a release date.

As well as numerous minor changes to tighten drafting and simplify some sections, the key changes contained in the new JCT 2016 D&B Contract are as follows:

Payment Provisions

The current payment provisions have undergone a makeover and now include the following:

• Interim valuation dates will be established which operate along the supply chain (in the interests of fair payment);
• Monthly payment cycles will continue to run on after practical completion, up to the due date of the final payment;
• The period of time between the due date and the final date for payment for both interim and final payments is consolidated at 14 days;
• Fluctuation options are amended and there is now a greater choice in fluctuation provisions; and
• A new procedure for speedy assessment (within 28 days) by the employer of loss and expense claims has been introduced.

Performance bonds and parent company guarantees (PCGs)

• The new form includes a requirement for the contractor to provide either a performance bond or a PCG. Notably, no form of either security is prescribed and instead parties are to agree on a form.

Insurance _ Existing Structures

• There are now options for parties to agree on bespoke insurance arrangements for works to be carried out to an existing structure in place of Option C ("Joint Names Insurance by the employer of existing structures or works in or extensions to them"). This assists if a joint names policy would not be suitable, for example, where a tenant (as "employer") would be carrying out work to its premises within a large multi-let building where responsibility is for the landlord to insure the existing building.
• Overall, the insurance provisions have been simplified: many of the provisions which were previously found dotted around the various insurance options now appear together in Section 6.

CDM Regulations 2015

• In line with its published amendment in 2015 to the 2011 suite of contracts, JCT has now updated the contract to accommodate the CDM Regulations 2015.

BIM Protocol

• Given the growing use of BIM in construction projects, there is now an option to comply with a BIM Protocol (which would be prepared and form part of the "Contract Documents" appended to the contract).

Public Contracts Regulations 2015

• The new form assists public sector employers, with the incorporation of the Public Sector Supplement 2011 and reflection of the Public Contracts Regulations 2015 and its provisions. For example, there are now express termination events available to the employer when a substantial modification that required a new procurement procedure to be started has occurred or when at the time of contract award, one of the mandatory exclusion criteria applied and the contractor should therefore have been excluded from the procurement procedure. Although these rights would be implied in any public contract, JCT now sets out detail around these and the consequences of exercising them.

Third Party Rights and Collateral Warranties

• The form provides for a "Rights Particulars" document which is to be prepared by the employer, sets out the sub-contractors who are required to grant rights to third parties, identifies such third parties and specifies whether rights are to be granted as third party rights or through collateral warranties.

Consents and approvals

• With the exception of a party giving consent to an assignment, there is a new clause which creates a general obligation on the parties not to withhold consent or approval unreasonably (where such approval or consent is required under the contract).

What next?

The changes introduced in JCT 2016 would appear to make the form more user friendly and may slightly reduce the length of schedules of amendments to the standard form imposed on contractors by employers. They will therefore bring the standard form more in line with current industry practice and will likely be well-received by the industry once road tested. Watch this space for an update on the release of the equivalent SBCC D&B updated form.