Revision 2 of JCT 2005 forms

United Kingdom

The Joint Contracts Tribunal (JCT) has recently published Revision 2 to the Standard Building Contract, the Design and Build Contract (DB) and the Minor Works Contract.

Main Changes

The main changes in Revision 2 include:

  • Simplification of the payment provisions in particular, and across the Articles and Conditions more generally
  • Additional provisions which reflect and build on the Office for Government Commerce’s (OGC) Achieving Excellence in Construction (AEC) criteria
  • New provisions which acknowledge the increasing importance of sustainability

The Revision 2 changes will be rolled out across the whole JCT suite over the next few months.

Victoria Peckett, head of the construction procurement and drafting team in London, is chair of the JCT drafting sub-committee.

These changes are examined in further detail below:

Simplification of the Payment Provisions

One of the key changes relating to payment is that the JCT has recognised that the requirements for payment post practical completion were not as clear or as certain as they might be. They have therefore amended these provisions so that payments should be applied for/certified at 2-monthly intervals up until the Notice of Completion of Making Good Defects.

Other changes have been made, for example, in the DB the standard form retention bond has been inserted into the Schedules and if antiquities (such as fossils) are discovered on the site, this could now potentially be a ground for a loss and expense claim.

AEC Criteria and Sustainability

These changes are to be implemented through a schedule (the Schedule of Supplemental Provisions), which will apply unless the contract is amended to state that it does not. The intention is that these provisions should apply unless a JCT Framework Agreement is already in place between the parties or they have other contractual arrangements dealing with the same issues. The clauses cover the following:

  • Collaborative Working

This wording requires the parties to the contract to work in a collaborative way through co-operation and collaboration, in good faith and in a spirit of trust and respect.

  • Health and Safety

The JCT contracts already require compliance with health and safety legislation but this obligation goes a step further and requires contractors to comply with (non-statutory) codes. It also emphasises the importance of certain training and consultation requirements in the legislation in force.

  • Cost Savings and Value Improvements

These clauses are intended to encourage the contractor to propose changes to the works which might lead to a cost saving for the employer. Such cost savings may be to the costs of the works themselves or to lifecycle costs. If the employer decides to implement a particular change then the parties will negotiate its value, financial benefit and any adjustment to the Completion Date and it will be confirmed in an instruction.

  • Sustainable development and environmental considerations

The JCT carried out an industry-wide consultation on sustainability last year and earlier this year it published a guidance note: Building a sustainable future together. Revision 2 contains new clauses intended to provide a flexible framework under which the parties can incorporate sustainability provisions. It encourages the contractor to suggest economically viable changes to the works which would result in environmental benefits to the works or the lifecycle of the building.

  • Performance indicators and monitoring

These indicators are most relevant to framework agreements but could be used for specific incentives in projects and allow the employer to monitor and assess the contractor’s performance by reference to any performance indicators identified in the contract.

  • Notification and negotiation of disputes

Subject to section 108 of the Construction Act (which allows the parties to go to adjudication at any time), the parties are required to notify each other if there is a matter which could lead to a dispute or difference. Following this, senior executives named in the contract particulars are to meet as soon as possible to negotiate with a view to resolving the matter, to try to avoid the costs of adjudication (or other forms of dispute resolution).

Revision 2 to the other contract families, including the Intermediate Building Contract, will be rolled out over the next few months.

Conclusion

Revision 2 provides welcome clarification on payment post-completion. The newly inserted AEC principles are a useful addition and should help the use of the JCT in the public sector. Despite the current economic conditions, it is positive to see the JCT leading the construction industry by including standard sustainability provisions.