Presented by Peter Barnes

Presented by Peter Barnes
BLUE SKY ADR LTD JCT 2011 CONTRACTS Presented by Peter Barnes FCIArb, FCIOB, MRICS, MICE, MCInstCES, MSc BLUE SKY ADR LTD. Tel No. +44 (0) Mobile No. +44 (0) Blue Sky ADR Ltd

Blue Sky ADR Ltd www.blueskyadr.com
JCT Contracts are used in the vast majority of UK Construction Contracts – both Building Works and Civil Engineering Works. Although there is now a 2016 version of the Contracts, today we are dealing with the 2011 version of the Contracts. Blue Sky ADR Ltd

JCT stands for Joint Contracts Tribunal which was established in 1931 The main Members of JCT being • British Property Federation • Contractors Legal Group • Local Government Association • National Specialist Contractors Council • Royal Institute of British Architects • Royal Institution of Chartered Surveyors Blue Sky ADR Ltd

JCT Contracts Are formed by consensus between JCT Members. • JCT Council • ‘Colleges’ • Sub-Committees and Drafting Committees • The JCT produces many Contracts, Sub-Contracts, Agreements and Warranties Blue Sky ADR Ltd

JCT Contracts Have a very long heritage, and part of that heritage is the 1963 RIBA / JCT Form which I understand is regularly used in Nigeria even now. There are still may similarities between the 1963 JCT Form and the 2011 JCT Form. One major change has been that the JCT Contracts are now set out into Topic Sections rather than as a collection of unrelated Clauses (and we will return to this point later on) Blue Sky ADR Ltd

STANDARD FORM CONTRACTS The purpose of Standard Form Contracts (such as the JCT Contracts) is so that rather that produce an entirely new ad-hoc Contract for each Project, a ‘Standard Form Contract’ with terms that the Parties and participants are familiar with, may be used. Blue Sky ADR Ltd

STANDARD FORM CONTRACTS The purpose of Standard Form Contracts (and indeed any other Construction Contract) is to set out; ● What is to be provided; ● What is the standard of performance; ● When is the performance required; ● What is to be paid for, and when. Blue Sky ADR Ltd

JCT CONTRACTS There are many JCT Contracts / Sub-Contracts / Agreements and other documents available in the JCT Family of Contracts. Full details of those documents can be found at Blue Sky ADR Ltd

JCT MAIN CONTRACTS The most common JCT Main Contracts are; • Standard Building Contract • Intermediate Form • Minor Works • Design and Build Contract Blue Sky ADR Ltd

Standard Building Contract Primarily appropriate; • For larger works where most of the work has already been designed (usually referred to as the ‘traditional’ route) – although there is a Contractor’s Design Portion available • Where detailed contract provisions are required • Where the Employer is to provide the Contractor with Drawings and Bills of Quantities (the With Quantities and the With Approximate Quantities versions) or with Drawings and a Specification or Work Schedule (the Without Quantities version) Blue Sky ADR Ltd

Intermediate Form Primarily appropriate; • Where the proposed building works are of simple content involving the normal basic trades and skills without complex building services installation or other complex specialist works. • Where fairly detailed contract provisions are required. Blue Sky ADR Ltd

Minor Works Form Primarily appropriate; • Where the works involved are simple in character • Where the Employer is to provide Drawings and/or a Specification and/or Works Schedules to define adequately the quantity and quality of the works. • Where an Architect / CA is to administer the Contract. Blue Sky ADR Ltd

Design and Build Contract Primarily appropriate; • Where the Employer has defined his requirements and where the Contractor is not only to carry out the work but is also to complete the design for them. • Where detailed contract provisions are required. • Where the Employer is to provide the Contractor with the Employer’s Requirements and the Contractor is to provide Contractor’s Proposals and a Priced Contract Sum Analysis Blue Sky ADR Ltd

Types of Contracts Lump Sum Contracts For example SBC With Quantities and SBC Without Quantities Measurement Contracts For example SBC With Approximate Quantities Cost Reimbursable Contracts For example Prime Cost Building Contract Blue Sky ADR Ltd

The Contract that we are concentrating on today is the Standard Building Contract (SBC), and there are three versions of the SBC. ● SBC With Quantities (SBC/Q) ● SBC Without Quantities (SBC/XQ) ● SBC With Approximate Quantities (SBC/AQ) Blue Sky ADR Ltd

Standard Building Contract With Quantities (SBC/Q) The Employer must provide drawings and Bills of Quantities to specify the quantity and quality of work. The price and payment structure is based on a lump sum with monthly interim payments The lump sum is changed by the way of Variations only – being an add / omit onto the Contract Sum Blue Sky ADR Ltd

Standard Building Contract Without Quantities (SBC/XQ) The Employer must provide drawings and either a specification or work schedules (which must be read together). The price and payment structure is based on a lump sum with monthly interim payments The lump sum is changed by the way of Variations only – being an add / omit onto the Contract Sum Blue Sky ADR Ltd

Standard Building Contract With Approximate Quantities (SBC/AQ) The Employer must provide drawings and and a Approximate Bill of Quantities. The Contractor provides a tender sum which is only an indication of the likely price of the Works. The price and payment structure is based on the tender figure which is converted to a final sum on remeasurement and valuation. Interim payments are monthly Blue Sky ADR Ltd

The Standard Building Contract (SBC) is the template upon which all of the other forms are based upon. The clauses in the other forms are either added to or deducted from the clauses in the SBC. Therefore, the SBC is the best contract to concentrate on, as once that contract is understood, the other Contracts will follow that same format. Blue Sky ADR Ltd

The Standard Building Contract is a Contract between; • The Employer, and • The Contractor The other main participants being the • Architect / Contract Administrator; and • The Quantity Surveyor Blue Sky ADR Ltd

The Architect / Contract Administrator (CA) In some cases the Architect / CA will be acting as the Agent of the Employer but in other instances the Architect / CA will be acting as an independent decision maker. The Architect / CA is employed by the Employer, and advises the Employer on matters in connection with the project / building work and administers the Contract on behalf of the Employer with a view to securing completion of the Work in an efficient and economical manner. Blue Sky ADR Ltd

The Architect / Contract Administrator (CA) The CA is required to undertake a broad range of actions including the issuing of various certificates, various instructions and considering extension of time requests and loss and expense applications When acting as an independent decision maker, the Employer and the Contractor expect the Architect / CA to act fairly and independently as between the Employer and the Contractor. Blue Sky ADR Ltd

The Quantity Surveyor (QS) There are express provisions for the appointment by the Employer of a QS. A QS’s role is to extract quantities from the drawings and prepare Bills of Quantities, carry out measurements, value Variations and produce valuations of work completed by the Contractor. Generally, and as everyone in the Construction Industry knows, a good QS is worth his weight in gold. Blue Sky ADR Ltd

SBC Articles of Agreement ● The Recitals (which contextualise the agreement, the work required, the drawings and specification, if to be completed in Sections etc.) ● The Articles (which set out the scope of the Works, the Contract Sum, the Contract Administrator, the Quantity Surveyor, the form of dispute resolution) Blue Sky ADR Ltd

SBC Articles of Agreement ● The Contract Particulars (This section sets out the aspects of the contract that are particular to the project to which the contract relates). ● Attestation (The process of confirming that the Contract terms are correct and agreed, may be completed under seal (executed as a deed) or under hand. Blue Sky ADR Ltd

The structure of the SBC, is as follows; Conditions Section 1 Definitions and Interpretation Section 2 Carrying out the Works Section 3 Control of the Works Section 4 Payment Section 5 Variations Blue Sky ADR Ltd

The structure of the SBC, is as follows; Conditions Section 6 Injury, Damage and Insurance Section 7 Assignment, Performance Bonds and Guarantees Section 8 Termination Section 9 Settlement of Disputes Blue Sky ADR Ltd

The structure of the SBC, is as follows; Schedules 1 to 8 Including, Design Submission Procedure, Insurance Options, Third Party Rights, Forms of Bonds etc. Blue Sky ADR Ltd

Nearly all of the Clauses that are familiar from the JCT 1963 Form are in the JCT 2011 Form, but those Clauses are now grouped together under Section headings. Examples are given on the next slide. Blue Sky ADR Ltd

Item JCT 1963 JCT SBC 2011 Variations Clause 11 Section 5 Clauses 5.1 to 5.10 Practical Completion Clause 15 Section 2 Clause 2.30 Damages for Non-Completion Clause 22 Clause 2.32 Extension of Time Clause 23 Clauses 2.26 to 2.29 Loss and Expense Clause 24 Section 4 Clause 4.23 to 4.25 Determination Clauses 25 and 26 Section 8 Clauses 8.1 to 8.12 Blue Sky ADR Ltd

Design The Traditional JCT approach is for the works to be designed and detailed by the Employer or the Employer’s Consultants; which is then to be built by the Contractor. In the UK there is option for the works to be designed in outline by the Employer or the Employer’s Consultants, and for the Contractor to complete the Design and then carry out the Build. This is referred to as Design and Build – a common procurement route in the UK. Blue Sky ADR Ltd

Contractor’s Obligations The Contractor’s General Obligations are set out at Clause 2.1 which says; “The Contractor shall carry out and complete the Works in a proper and workmanlike manner and in compliance with the Contract Documents, the Construction Phase Plan and other Statutory Requirements, and shall give all notices required by the Statutory Requirements.” Blue Sky ADR Ltd

Materials, goods and workmanship Materials, goods and workmanship are to be of the standards described in the Specification and/or the Contract Bills (Clause 2.3.1) Where materials or workmanship are matters for the Architect / Contract Administrator’s approval, they must be to the Architect / Contract Administrator’s reasonable satisfaction (Clause 2.3.3) Blue Sky ADR Ltd

Setting Out It is the responsibility of the Architect / Contract Administrator to determine the Site Boundary, to determine any levels required, and to provide the Contractor with accurately dimensioned drawings and information to enable the Contractor to set out the Works. However, it is the Contractor that is responsible for setting out the Works, and any errors arising from inaccurate setting out are the responsibility of the Contractor (Clause 2.10) Blue Sky ADR Ltd

Architect / CA’s Instructions The Architect / CA is given the power to issue Instructions, and the Contractor is required to forthwith comply with those Instructions (Clause 3.10). All Instructions are to be in writing but there is the option of Oral Instructions to be confirmed back in writing by the Contractor (Clause 3.12) Blue Sky ADR Ltd

Possession of Site The Date of Possession is to be stated in the Contract Particulars. The Date of Possession is in practical terms when the Contractor will commence the carrying out of the Works. At that date the control of the Site is transferred to the Contractor, and the appropriate Insurances need to be in place. Blue Sky ADR Ltd

Completion of the Works / Practical Completion The required Date of Completion of the Works is to be stated in the Contract Particulars. When the Works are complete in the opinion of the Architect / CA then a Practical Completion Certificate is to be issued. At that time possession and control of the Site is transferred from the Contractor back to the Employer, and the appropriate Insurances need to be in place. Blue Sky ADR Ltd

Sectional Completion of the Works The Contract allows for the Works to be completed in Sections. When the Works in a Section are complete in the opinion of the Architect / CA then a Practical Completion Certificate is to be issued. At that time possession and control of that Section of the Site is transferred from the Contractor back to the Employer, and the appropriate Insurances need to be in place. Blue Sky ADR Ltd

Partial Possession The Contract allows for Partial Possession to take place. When that occurs, for all intents and purposes Practical Completion for the part taken into Partial Possession will have occurred and the relevant Insurances need to be in place. (Clauses 2.33 to 2.37) Early Use by Employer Clause 2.6 allows for the early use by the Employer. In such a situation the insurances need to be amended to suit. Blue Sky ADR Ltd

Extensions of Time Clause Notice of delay by Contractor, to say; • Material Circumstances • Cause or causes of delay • Identify Relevant Event(s) • Expected delay to Completion Blue Sky ADR Ltd

Extensions of Time (Relevant Events) Standard Building Contract With Quantities(SBC/Q) Clause 2.29 lists out 14 Relevant Events for Delay. These include for Variations, Instructions by the Architect / CA, suspension by the Contractor because of non-payment, exceptionally adverse weather conditions, and force majeure. Blue Sky ADR Ltd

Extensions of Time SBC Clause The Architect / CA to consider the Contractor’s extension of time entitlement upon receipt of a notice by the contractor. Therefore, the giving of a notice of delay by a Contractor is a condition precedent to the granting of an extension of time by the Architect / CA. Blue Sky ADR Ltd

Extensions of Time A Contractor may lose his right to a Extension of Time under clause if he has not put a valid delay notice in pursuant to clause 2.27. However, SBC Clause says that an Architect / CA is to consider the Contractor’s extension of time entitlement (within 12 weeks after Practical Completion) irrespective of any notices given by the Contractor. Blue Sky ADR Ltd

Liquidated Damages If a Contractor does not complete the Works by the original Completion Date or by any extended Completion Date then a Certificate of Non-Completion may be issued. If that occurs, and if the Employer gives the required notices, the Employer may deduct Liquidated Damages from the Contractor’s account (or recover the Liquidated Damages from the Contractor as a debt) at the Liquidated Damages rate set out in the Contract. Under English Law, Liquidated Damages cannot be a penalty. Blue Sky ADR Ltd

Retention There is a provision in the Contract for Retention Monies to be held. Retention is held until defects have been corrected. The standard level of Retention is 3% Half of the Retention held (i.e. 1.5%) is released when Practical Completion is achieved; the balance of the Retention is released when the Certificate of Making Good (Defects) has been issued. Blue Sky ADR Ltd

Defects and Rectification Period The Contract contains a Rectification Period. That period is normally 12 months after the Practical Completion Date, but could be 6 months after, or could be some other period after as set out in the Contract Particulars. The purpose of the Rectification Period is to make it an obligation of the Contractor to correct all defects that become apparent within the Rectification Period. Blue Sky ADR Ltd

Interim Payments Standard Building Contract With Quantities (SBC/Q) Monthly Interim Payments Payment Due Dates to be set out in the Contract Final Date for Payment, 14 days after the Payment Due Date Contractor may put in a Payment Application – but if he does not then Payment is still due. Blue Sky ADR Ltd

Interim Payments Standard Building Contract With Quantities (SBC/Q) Architect / CA’s Payment Certificates [Employer’s Payment Notices] to be issued no later than 5 days after the Payment Due Date A Pay Less Notice may be issued no later than 5 days before the Final Date for Payment. Blue Sky ADR Ltd

Interim Payments Standard Building Contract With Quantities (SBC/Q) Payment for Materials Stored Off Site is possible but only for the ‘Listed Items’ in the Contract. Blue Sky ADR Ltd

Interim Payments Standard Building Contract With Quantities (SBC/Q) Two options; Stage payments (if specifically chosen), or Gross Valuation (by default) Blue Sky ADR Ltd

Interim Payments Standard Building Contract With Quantities (SBC/Q) Gross Valuation (by QS) includes; The value of work properly executed, the value of Materials Stored On-Site, (where appropriate and Listed) the value of Materials Stored Off-Site, the Value of Variations, and the amount of any Loss and Expense. Blue Sky ADR Ltd

Final Payment Standard Building Contract With Quantities (SBC/Q) Payment Due Date, not later than 2 months after the later date of the end of the Rectification Period, the date of issue of the Certificate of Making Good, or the date that the Final Account statement was sent to the Contractor. Final Date for Payment, 28 days after the Payment Due Date Blue Sky ADR Ltd

Final Payment Standard Building Contract With Quantities (SBC/Q) Gross Valuation (by QS) includes; The value of work properly executed, the Value of Variations, and the amount of any Loss and Expense. Blue Sky ADR Ltd

Final Payment Standard Building Contract With Quantities (SBC/Q) The Final Certificate is the Employer’s Payment Notice A Pay Less Notice may be issued (by either Party) no later than 5 days before the Final Date for Payment. Blue Sky ADR Ltd

Final Certificate The conclusive and binding effect of the Final Certificate is set out at Clause 1.9 (i.e. in respect of the quality of goods, materials etc.; the adjusted Contract Sum; the extent of the extension of time; and the amount of Loss and Expense) To prevent the Final Certificate to be final and binding, adjudication (if applicable), arbitration or litigation must be commenced within 28 days from the date that the Final Certificate is issued. Blue Sky ADR Ltd

Interest and Suspension If a Contractor is not paid the monies that are due to it then the Contractor can claim Interest in line with the terms of the Contract (Clauses , and 1.1). If a Contractor is not paid the monies that are due to it then, after giving the required notices, the Contractor can suspend all or part of its performance until it has been paid (Clause 4.14) Blue Sky ADR Ltd

Loss and Expense Standard Building Contract With Quantities(SBC/Q) Clause Application for Loss and Expense by Contractor; • to make application as soon as it became apparent that regular progress has been affected. • Identify Relevant Matter(s) • Details of actual loss and expense may follow. Blue Sky ADR Ltd

Loss and Expense Standard Building Contract With Quantities(SBC/Q) The making of a valid application for loss and expense by a Contractor is a condition precedent to the ascertainment of loss and expense by the CA / QS. Blue Sky ADR Ltd

Loss and Expense (Relevant Matters) Standard Building Contract With Quantities(SBC/Q) Clause 4.24 lists out 5 Relevant Matters for Delay. These include for Variations, Instructions by the Architect / CA, an impediment, prevention or default by the Employer (or the Employer’s Persons). Blue Sky ADR Ltd

BLUE SKY ADR LTD Variations - SBC/Q
Clause 5.1 defines what a Variation is, that being the; The addition, omission or substitution of any work; The imposition by the Employer of any obligations or restrictions relating to access to site, limitations of working spaces and/or hours etc.

The Valuation of Variations (Clause 5.3 – SBC/Q) The Valuation of Variations may be by way of an agreed Variation Quotation process. Failing this the Valuation Rules are set out at clause 5.6.

The Valuation Rules (Clause 5.6 – SBC/Q) Allowance to be made for the addition / omission of the relevant design work. Where work is of a similar character to work in the Contract Bills, the valuation of the Change is to be consistent with the valuation in the Contract Bills (clause 5.6.1), making due allowance for any change in conditions (clause 5.6.2).

The Valuation Rules (Clause 5.6 – SBC/Q) Where there is no work of similar character in the Contract Bills, a fair valuation is to be made (clause 5.6.3).

The Valuation Rules (Clause 5.6 – SBC/Q) Where an Approximate Quantity is included in the Contract Bills which is a reasonably accurate forecast of the quantity of work, then the rates and prices therein will determine the valuation of a Variation.

The Valuation Rules (Clause 5.6 – SBC/Q) Where an Approximate Quantity is included in the Contract Bills which is not a reasonably accurate forecast of the quantity of work, then the rates and prices therein will determine the valuation of a Variation with a fair allowance being made for the difference in quantity.

The Valuation Rules (Clause 5.6 – SBC/Q) The omission of works will be in line with the values as set out in the Contract Bills. An allowance shall be made for the addition to or reduction of any specified ‘Preliminary’ items

BLUE SKY ADR LTD Variations - SBC/Q Dayworks (Clause 5.7 – SBC/Q)
Where the Change cannot be valued following the provisions of Clause 5.6, then a Daywork approach can be used. In this case Daywork Vouchers (Sheets) are to be submitted no later than 7 Business Days after the work has been executed.

Variations - Change of conditions of other work (Clause 5.9 – SBC/Q) If by complying with an Instruction requiring a Variation there is a substantial change in the conditions under which any other work is executed, that other work shall be treated as a Variation and shall be valued as such.

Injury, Damage and Insurance - SBC/Q Section 6 These breaks down into the following areas; ● Injury or death to Persons – Contractor’s Liability ● Damage to Property (other that the Works) – Contractor’s Liability ● Professional Indemnity Insurance – Liability of Contractor (where applicable) Blue Sky ADR Ltd

Damage to the Works - SBC/Q Section 6 There are three options; ● Option A – New Build All Risks Insurance by the Contractor ● Option B – New Build All Risks Insurance by the Employer ● Option C – Existing Structures Insurance of existing structures and works – Insurance by the Employer Blue Sky ADR Ltd

Assignment and Collateral Warranties – Section 7 of SBC/Q ● Neither the Employer nor the Contractor shall assign the Contract without the agreement of the other. ● Collateral Warranties may be required between the Contractor and the Purchasers, Tenants or Funders. Also Sub-Contract Collateral Warranties may be required. Blue Sky ADR Ltd

Termination – Section 8 of SBC/Q Three basic options; ● Termination by Employer – Default by Contractor ● Termination by Contractor – Default by Employer ● Termination by either Party Blue Sky ADR Ltd

Dispute Resolution – Section 9 of SBC/Q Mediation Adjudication Arbitration (not default position) Litigation (default position) Blue Sky ADR Ltd

QUESTIONS BLUE SKY ADR LTD BLUE SKY ADR LTD.
JCT 2011 CONTRACTS QUESTIONS BLUE SKY ADR LTD. Tel No. +44 (0) Mobile No. +44 (0) Blue Sky ADR Ltd

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