A golden opportunity lost

The JCT has revised its whole suite of contracts and restyled them JCT 2005. Following James Davison’s critique in last week’s QS News, Roger Knowles offers his take on the changes made in the latest revision.

Restyling

JCT 2005 presented a marvellous opportunity to bring these contracts up to date since a great deal of the wording goes back to 1980 when JCT 80 was produced. The major projects form was published in 2003 which seemed to indicate the direction the JCT was intending to take. The contract is easy to follow by those who are expected to use it on a daily basis, with nothing superfluous and employing an economy of words. Unfortunately this format has not been followed in the production of JCT 2005. While the print style is much improved, sensible headings and subheadings introduced and the dreary grey paper replaced, the final analysis still has the same old wording.

Nomination

The guide notes say the new forms adopt a section headed format aimed at greater standardisation over the full range of contracts but also indicate that the content should as far as possible be familiar to the users of JCT 98. Having decided to change little in terms of the wording, the new contracts presented the JCT with an opportunity of dealing with matters in a consistent manner across all the forms but unfortunately, with few exceptions, it did not. The nomination of a subcontractor which is a major feature of JCT 98 is an example.

Nomination under JCT 98 is something of a nightmare due to its complexity. In light of various court decisions during the past 20 years or so it has been recognised that the risk associated with the appointment of subcontractors should be borne by the main contractor. The JCT has therefore sensibly eliminated the nomination provisions when producing JCT 2005. If the employer or its consultants wish to retain the selection of specialists then the method set out in the contract is for a list of at least three names to be included in the contract documents leaving the contractor to make the choice.

This way the risk lies with the main contractor. It would have been sensible for this method to be adopted in the intermediate contract but it was decided to retain the JCT 98 named subcontractor provisions which allows for a sole named specialist to be included in the contract documents leaving some of the risk with the employer.

Contractor’s design

As a result of the changes in JCT 2005 there is an inconsistency in the way the contracts deal with contractor designed work. The contractor’s design portion supplement used in JCT 98 has gone, and where the contractor designs only part of the work the contractor’s design, provisions have been incorporated in the standard building contract. It has been recognised that, with the rise in the use of the contractor’s design facility, provision should be included for contractor’s design in the intermediate building contract. However instead of incorporating these requirements into the intermediate building contract to mirror the provisions of the standard building contract there is now a separate intermediate building contract with contractor’s design for use where the contractor designs part of the works.

A great deal of effort seems to have been expended in producing revised documents, without producing very much that is new

Retention

Retention has been something of a hot potato over the past few years, so it would have been sensible if the JCT had adopted a consistent approach to this matter. The major projects contract leads the way by making no provision for retention. A different method has been adopted in the standard building contract where there is an option of using a retention bond or the withholding of retention. The Intermediate building contract takes a different approach in providing for payment of 95% of the value of the works in respect of interim payments.

A golden opportunity of dealing with retention in a consistent manner has been lost.

Composite contract

The major difference between the intermediate building contract and the standard building contract is the manner in which they deal with contract documents. Options are provided in the two intermediate building contracts for the parties to choose whether to employ a Bill of Quantities, specification or works schedule.

If a decision is made to use the standard building contract then it is necessary to choose whether to employ the with quantities, without quantities or the with approximate quantities which are issued as separate contracts. The differences between these five alternatives could easily be accommodated in one contract. This would leave the minor works contract for the small jobs and the major projects contracts for turnkey work.

A great deal of effort seems to have been expended by the JCT in producing revised documents which now number 57 main contracts, subcontracts, warranties guides and the like without producing very much which is new. An exception is the framework agreement which replaces the hopelessly inadequate practice note dealing with partnering.