Does the JCT's major projects form offer the kind of single point responsibility that those who use design-and-build procurement require? Well, actually, yes
The advantage of design and build, a procurement route heavily promoted by the major contractors, is that it offers clients a single point of responsibility in relation to design and construction, coupled with a fixed price and a fixed completion date. How does the new JCT major projects form live up to the promises of single-point responsibility? Does it deliver what it promises, or does it duck key risks and offer escape routes for the contractor?
It is worth looking at the following areas:
Design warranty Most employers entering into a design-and-build contract want an undertaking from the contractor that the component parts of the building delivered will be up to scratch – that the roof will not leak, the cladding will not corrode, and so on. Some will go further and say they expect the contractor to warrant that the building will be "suitable for its purpose"– as an office building, a shopping centre or whatever. The form plainly delivers the first – materials and goods are required to be "reasonably fit for their intended purpose". It ducks the second by expressly excluding any suitability warranty, but it does cross-refer to the the form's guidance note, which sets out alternative model clauses delivering fitness for purpose responsibility. A partial success.Other warranties No complaints here. The form offers clear warranties in respect of compliance with statutory requirements, with performance specifications, that workmanship will be to the standard required, and so on.Ground conditions There is an option here: an employer that wishes the contractor to accept responsibility for ground conditions can leave the form unamended. If it is happy to accept that ground conditions give rise to a "change", then it can tick the relevant option in the appendix. A sensible compromise.Extensions of time In addition to breaches and acts of prevention by the employer that must give rise to extensions, the form offers extensions for force majeure, specified perils, the exercise of statutory powers and terrorism. It does not go on, as do traditional design-and-build forms, to give extensions of time for adverse weather, strikes, lock-outs, delays in receiving permission or approval from statutory bodies, inability to obtain labour and materials, etc. Again, a sensible and fair compromise.Named specialists Specialists can be named in the requirements and the contractor must accept an obligation to employ specialists so named. But there is no "nomination" allowing the employer to impose subcontractors on the contractor after the date of contract. The corollary is that there is none of the get-outs to which nomination gives rise under traditional JCT forms.Novation The form recognises the fact that novation is used on most large design-and-build contracts and provides a mechanism for achieving it. It does not include a form of novation agreement because of difficulties in securing a consensus with the consultants on the JCT."Development" requirements The form provides for assignment to funds or banks; it provides for third-party rights in favour of funds purchasers and tenants and it generally tries to anticipate the needs of developers. Other JCT forms, of course, ignore their requirements altogether.Payment procedures Simple and straightforward. Payment 14 days after receipt of the contractor's VAT invoice. No hedges and traps for the unwary, provided they produce a sensible pricing document.Disputes A mention of mediation, a provision for adjudication in accordance with the Scheme by a named adjudicator and, for the really entrenched, litigation. The most sensible mechanisms.
The major projects form offers an opportunity to ensure that on major projects design and build delivers what it promises
Ann Minogue is a partner at Linklaters. This piece was co-written with Julian Vickery, the chair of the JCT working party on the major projects form.