Now we've started to use JCT2005, it's clear that contractors and contract administrators will have to handle extensions of time with more care
When the JCT2005 contracts started coming out last year there was a rush to analyse what had changed. It looked as if the words had been reordered and slightly altered but it seemed that the overall sense was the same. Now that the contracts are starting to be used on projects it is becoming clear that this is not the case.
A good example is the procedures related to what used to be known as extensions of time - now adjustments of the completion date. Gillian Birkby mentioned some of the changes in her article last week, but there is more.
The general approach taken by the 1998 and 2005 contracts will be familiar. The contractor has to notify the contract administrator of the cause or causes of a delay "whenever it becomes reasonably apparent that the progress of the works is being or is likely to be delayed". The contract administrator then has 12 weeks to give an extension of time and fix a new completion date with adjustments for relevant events, which are listed in the contract.
Those under the age of 50 won't know that the 12 week period was introduced in JCT1980 in order to bring some limit to the length of time the architect could take to make an extension of time decision. Nor will they know that it caused a real fuss. It was one of the reasons why there was such a slow take-up of the 1980 contract, as in those days it was presumably considered wholly unreasonable that there should be any time limit on the architect's decision-making process. This was despite the existence of a get-out clause for the contract administrator, which only had to deal with extensions when it had received "reasonably sufficient particulars".
Nowadays not many people would dispute that it is better for contract administrators to make these decisions quickly. So what changes have been made?
- The contractor has to give details of the effects of "each event". JCT1998 required this only for "relevant events".
- The contract administrator has to "decide" on extensions rather than "in writing to the contractor give an extension of time". This is a change in the words that seems to indicate a more active approach.
- The contract administrator's decision has to state the extension that it has attributed to each relevant event. Strangely, the obligation used to be that it only had to state which of the relevant events it had "taken into account".
- If the contract administrator's decision is that no extension of time is due then it has to notify the contractor of that in writing. This fixes an apparent anomaly in JCT1998, under which there did not appear to be an obligation for the contract administrator to respond to the contractor if an extension of time had not been granted.
JCT2005 tightens the rules on how contractors and contract administrators must approach extensions of time
As Gillian pointed out, the JCT1998 qualification that the contract administrator had to have "reasonably sufficient information" in order to be able to make a decision has been deleted.
In isolation these are incremental changes but overall the contract tightens the rules on how contractors and contract administrators must approach extensions of time. The contractor has to give a wider picture of all the delays and the reasons for them, and the contract administrator has to respond to all of the events and say in detail what it is giving extra time for. This has to be carried out as soon as possible and it has to be done whether or not enough detail has been provided.
This is a sea change from the way that some contract administrators have responded in the past, and is something that contract administrators and contractors will have to respond to.
The requirements of JCT2005 are still nowhere near as prescriptive or as quick as under the NEC contract but it is clear that the process which started in 1980 has just been pushed one step further.
Andrew Hemsley is managing director of consulting at Cyril Sweett