Contract Selection

Cambridge University: School of Architecture

Part 3 Course

Which Contract? - the JCT forms

30h March, 2007

Sarah Lupton MA DipArch LLM RIBA FCIArb

Partner, Lupton Stellakis

Senior Lecturer, Welsh School of Architecture

There are currently over 40 standard forms of building contract used in the UK, emanating from eight publishing sources. Of these, the forms of contract published by the Joint Contracts Tribunal Ltd (the JCT) are the most widely used. The JCT have recently re-published their entire suite of forms, which now includes ten core standard forms, many of which come in more than one version, together with numerous sub-contracts and warranties.

These notes outline some of the criteria that might be used in making a selection of procurement route and standard form. This is followed by a summary list of key standard forms currently published by the JCT

SELECTING A FORM

"the building contract is too frequently exploited as an adversarial weapon. This can occur for a variety of reasons, ranging from tendering procedures, economic conditions, realisation of risk, incompetence and occasionally someone being unreasonable.

In another respect there is too little reliance on the contract as a management tool that aids communication and understanding of what the parties want and expect from the project.

There is much to suggest that a contract, which defines the apportionment of risk and operational procedures, is a manifestation of good management practice." [1]

Procurement methods can be divided broadly into:

* Traditional: benefits in COST and QUALITY at the expense of TIME

* Design Build: benefits in COST and TIME but at the expense of QUALITY

* Management: benefits in TIME and QUALITY but at the expense of COST

This comparison is of course very simplistic, but can serve as a useful starting point for discussion. Within each category there is much variety which will depend on the particular form of contract. For example within traditional procurement there are significant differences between lump sum and measured term contracts. In addition, the boundaries between the categories are becoming increasingly blurred, for example many projects are now using a hybrid design-build/management form of procurement. Before one can determine for certain what the particular advantages or problems might be, it would be necessary to identify the exact form or forms of contract that will be used.

When selecting the procurement route or forms of contract to be used, numerous matters may need to be considered:

* the nature of the project and scope of the works

* the context - are there any strategic partnering or framework agreements?

* accountability - does the client wish for a single point responsibility?

* availability of information, particularly design information, at tender stage

* preferred tendering proceedure

* preferences as to programming - is an early start on site essential, or is a short period on site more important

* Where the responsibility is to lie for specific matters, eg for design

* the need for design by others

* likelihood of design changes

* budget - is it important to be able to know accurately the final cost before the project commences, or can a degree of risk be tolerated if it is likely to mean a lower overall figure

* payment - is this to be by valuation on a monthly basis, or are targets or incentive payments to be include

* need for general flexibility, eg in selection of specialist sub-contractors

* measure of control by client - how closely do they wish to be involved?

* experience - is the consultant team and the client familiar with this route?

One of the most important issues to consider is that of design liability. It is extremely important to assess in advance who will be responsible for the design of all parts of the building, even detailed matters such as ductwork and fixings. Once this is understood, then the correct contractual arrangement must be used, which makes it clear which party is responsible for design (eg consultant, main contractor, sub-contractor or supplier) and to whom. Where sub-contractors are responsible for the design of areas of the work, such as piling or mechanical services, then collateral warranties may be needed to the employer.

Finally, in making the selection of contract form, the architect should also bear in mind relevant legislation, including:

* Unfair Terms in Consumer Contracts Regulations 1994

* Construction (Design and Management) Regulations 1994

* Housing, Construction and Regeneration Act 1996

* Late Payment of Commercial Debts (interest) Act 1998

* Contracts (Rights of Third Parties) Act 1999

SUMMARY LIST OF JCT FORMS ACCORDING TO PROCUREMENT ROUTE

PARTNERING

Framework Agreement (FA 05)

Framework Agreement Non Binding (FA/N 05)

Non-Binding Partnering Charter

TRADITIONAL

(where the contractor is to carry out and complete the work, and subject to any express provisions to the contrary, has no obligation as to design. The terms are administered by an independent contract administrator appointed by the client. Sometimes also referred to as the conventional method of procurement.)

lump sum with quantities:

Standard Building Contract With