Suzanne Reeves kicks off an occasional series on the contracts behind major projects with a look at the JCT contract used for the Oval’s new stand
Unless you have been hibernating for the summer you’ll know that England’s victory in the nail-biting Ashes cricket series hinged on the final test played at the Brit Oval. The match showcased the four-storey OCS stand, which increased the ground’s capacity and included corporate hospitality and media facilities.
The £25m redevelopment is believed to be the first project to be procured using the JCT Major Project Form, which is designed for large and complex projects, particularly those in excess of £10m. This form of contract was instrumental in bringing the project in on time and budget – the consequences of it not being ready for the Ashes test would have been disastrous for all concerned. The building contract was agreed in about a month from beginning to end, which was exceptionally good going for a project of this size and complexity.
Surrey County Cricket Club wanted to proceed on a design-and-build basis with single point responsibility. A contract was needed that gave Taylor Woodrow, the contractor for the job, the freedom to manage its work in a time and cost effective way.
Before the publication of the MPF the frontrunners would have been a heavily amended JCT With Contractors Design 98 form or a totally bespoke contract. The MPF fitted the bill because it is less prescriptive than other forms. Its approach is that once the employer has defined its requirements, the contractor should be permitted to undertake the project without relying on the employer for anything more than access to the site, review of design documents and payment. In particular, there is no requirement for the employer to issue any further information to the contractor as all design information beyond that contained in the requirements will be produced by the contractor. The MPF puts more risk on the contractor but the risks are identified and allocated appropriately. The contract encourages the identification of risk at an early stage and the principle is that the risk is borne by the party best able to manage it.
Another advantage of the MPF is that it is short and user-friendly. It does not include many of the extensive provisions contained in the other JCT contracts and is easier for a client not “in the know” to understand. However, JCT does recommend that the MPF be used by sophisticated and knowledgeable parties and that it should be used by employers that have in-house contractual procedures and regularly undertake major projects (see “Is the Major Project Form right for you?”, factfile). Although Surrey CCC did not fall into that category, it had engaged a project team experienced in major stadiums.
Since the MPF is less detailed than other standard form contracts, it is more flexible. This worked well on the Brit Oval redevelopment as it enabled the particular requirements and peculiarities of the project to be accommodated. For example, it had to provide for county games being played at the ground during the 2004 cricket season while the works continued and for the contractor to move off site completely for the 2004 internationals, including the test match.
The MPF gives the contractor access to the site rather than exclusive “possession”. This made it easy to establish where and when the contractor would have access to carry out works. It raised the issue of which party would be responsible for any damage to the works caused when games were being played. The MPF provides for project insurance, which we were able to tailor to cover the unusual programme and eliminate the double insurance that often occurs on major projects.
The MPF provides for rights to be given to funders, purchasers and tenants by way of the Contract (Rights For Third Parties) Act as opposed to standalone warranties. Although there is no alternative provision for warranties, we found on this project (as on many others) that the funders preferred to have standalone warranties. In this case the MPF was amended to provide for this, and also for warranties from the principal design subcontractors. The only other amendments that were made to the MPF were to take account of the particular requirements of the works.
The contract had to provide for county games being played while the works continued and for the contractor to move off site for the 2004 internationals
The MPF also allows for the novation of consultants if this is required (although JCT have not yet published a form of novation). This enabled the contractors to take over responsibility for the consultants that had originally prepared the concept design. The architects, as principal design consultants, engaged the other designers as subconsultants, thereby streamlining the design responsibility.
Strictly speaking under the MPF the contractor is responsible only for any additional design work that is required beyond that contained in the requirements prepared by the employer, and not for the contents of those requirements or the adequacy of the design contained within them. This did not reflect Surrey’s wish that there should be single point design responsibility. However, because the contractor was involved with Surrey’s project manager from a relatively early stage, it was prepared to agree to a similar amendment to that often seen in JCT WCD, namely that it was satisfied that its proposals on how it would undertake the project met the employer’s requirements; and also that it accepted responsibility for all design contained in the requirements and the proposals.
The consequences of any changes to the employer’s requirements or the contractor’s proposals are mainly determined under the MPF on an “all inclusive” basis up front. This means they include any loss or expense that might be incurred as a consequence of the change. Variations or changes are usually an important area of risk for an employer but the provisions of the MPF enabled Surrey CCC and its advisers to keep abreast of the full cost and time effects of any change as the project progressed and also to have that information before a decision was made whether or not to implement a change.
As with many projects there was not much room for cost over-runs. The provisions in the MPF encouraged the contractor to suggest amendments to the requirements or the proposals if they would result in financial benefit to the employer. In addition, Surrey CCC took comfort from the fact that if the programme had slipped badly, the contract contained a built-in acceleration procedure.
The experience of using the MPF on the Brit Oval has had the tangible results in the form of the splendid stand which was on display in the test match. Perhaps those procuring the Olympic stadiums should take note.
Is the Major Project Form right for you?
The JCT Major Project Form (MPF2003) has been renamed the Major Project Construction Contract (MP2005) in the JCT 2005 suite of contracts. It is similar to its predecessors but for details of the minor changes made, refer to the JCT MP2005 guide. MPF 2003 will now be phased out and replaced by the new form.
The JCT recommends that the MPF2003/ MP2005 is appropriate:n For major works where the employer regularly procures large-scale construction work and where the contractor is experienced and able to take greater risk than would arise under other JCT contracts
It can also be used:
Suzanne Reeves is a construction partner at Wedlake Bell, which advised Surrey County Cricket Club on all the legal work involved in the Brit Oval redevelopment