Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
This is good news for many of our clients who are looking to re-procure term contracts, such as repairs and maintenance or gas installations and servicing contracts, using the traditional JCT approach.
The new form is much the same as its predecessor but with the following helpful changes:
CDM Regulations 2015
The contract has been updated in line with the Construction (Design and Management) Regulations 2015. This means “bye-bye” to the CDM Co-ordinator and having to remember to incorporate the JCT CDM addendum, and “hello” to the Principal Designer. The new 2016 version adds flexibility by allowing the party appointed as Principal Designer and/or Principal Contractor to be different on an order-by-order basis. However, it is worth adding, that there is no warranty that the contractor is competent to fulfil these roles.
New terms fit for employers who are a local or public authority
The public sector and registered provider users of the JCT 2011 suite are used to incorporating lengthy Schedules of Amendments and JCT supplements to bring the standard form contracts in line with their additional legal and regulatory obligations. The 2016 suite now includes a number of additional clauses, specifically for employers who are a local or public authority that will reduce (but sadly not eliminate) the need for bespoke amendments. Changes include:
- Public Contracts Regulations 2015: new clauses are included that comply with the termination and subcontractor requirements of these procurement regulations.
- Fair payment: the contract incorporates Fair Payment Charter Principles, which go beyond those already required by the Public Contracts Regulations, such as ensuring that the sub-contracts share a common valuation date with the main contract.
- BIM protocol: the contractor can now be required to work to a BIM protocol.
- Transparency: terms dealing with disclosure in accordance with the Freedom of Information Act 2000 and the Government’s transparency policy are now included as supplemental provisions.
There have been small changes to the payment provisions; the most significant being that payment following order completion will become due earlier than under the 2011 form, so you will need to take note of these changes in order to meet the new deadlines.
The insurance clauses look quite different. The primary change is that either the employer or the contractor can now be required to have All Risks Insurance to cover loss or damage relating to the works themselves. Under the 2011 form, there was no option (unless added by your Schedule of Amendments) – this insurance was the contractor’s responsibility.
So does this mean you can do away with your Schedule of Amendments altogether? Not on your nelly! There are a number of reasons that the 2016 version, like its 2011 predecessor, is not 100% fit for purpose. For example:
- The balance of risk under the contract has not changed from the 2011 version, so you will still need a Schedule of Amendments to “rebalance” the contract. For example, to avoid difficulties in recovering costs to put right defects that arise later, you may want to add a new provision clarifying that any approval by the contract administrator of the contractor’s materials or workmanship does not diminish the contractor’s obligations under the contract;
- As part of your strategy for ensuring there is no modern slavery in your supply chain, you will want to add appropriate warranties and termination provisions as well as mirrored terms that trickle down the supply chain to sub-contractors; and
- The works may be taking place in your residents’ homes, so you will want to be able to: require the contractor’s staff to have DBS checks; place obligations on the contractor, in relation to handling personal data about residents; and ensure that the contractor adheres to the promises you have made in your residents’ handbook.
Changes to phrasing and clause numbers in the new 2016 contract means that, unfortunately, it will not be sufficient for you to just change the number “2011” on your existing Schedule of Amendments to “2016” in the hope of updating your precedent bank quickly. Instead, to ensure that you make the right changes to the contract and that they are correctly incorporated, we strongly recommend that you take legal advice when pulling together your new Schedule of Amendments.
For further information
Should you have any questions about the JCT Measured Term Contract 2016, please contact Beulah Allaway.
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