INTRODUCTION

Many parties to construction projects will be familiar with the Joint Contracts Tribunal’s (the“JCT”) suite of standard form contracts, which are the most widely used in the UK construction market.
The most popular forms in the JCT suite are the Standard Building Contract (“SBC”) (based on a “traditional” procurement route where the employer commissions the design) and the Design and Build form (where the contractor carries out the design and is the employer’s “single point of contact”). Also included in the suite are various sub-contracts and ancillary documents such as collateral warranties.
The JCT has announced that the suite will be updated in early 2024. Changes include modernisation, changes to the extension of time provisions, a new target cost contract, and legislation and case law updates.
This article details the new features in the 2024 editions of the JCT suite and sets out some features that arguably could have been included.

WHAT’S NEW?

The 2024 editions will incorporate the following changes:

Modernisation:
The amendments under this heading include:

• Adopting gender-neutral language.
• Providing for electronic working (including execution by electronic signature and the facility for notices to be sent electronically).
• A new fluctuations hub.
• Including supplementary provision 10 (good faith negotiations) as a mandatory provision.
• Including changes to adopt the objectives of the Construction Playbook including collaborative working, sustainable development and environmental considerations.

Extensions of time:
Broadening the grounds for extensions of time to include contamination, asbestos and unexploded ordnance, reflecting the increasing number of brownfield construction sites. The assessment period for extension of time claims will also be reduced from 12 to 8 weeks. New Relevant Events to include Epidemics (e.g.: Covid 19) and statutory undertakers to be dealt with as statutory providers.
Target cost contract:
Including a target cost contract and sub-contract. Under a target cost contract, the contractor is usually paid its allowable cost plus a management and/or profit fee, and any deviations from the target costs are split between the parties using a “pain/gain” mechanism.

Legislative changes:
Incorporating the provisions of the Corporative Insolvency andGovernance Act 2020 (which makes clauses allowing a supplier to terminate for client insolvency invalid) and the Building Safety Act 2022 (which includes a “gateway” regime for“higher-risk buildings”) and regulations made under it.

Case law changes:
Clarifying the liquidated damages provisions to reflect the decision in Triple Point Technology Inc v PTT Public CoLtd [2021] UKSC 29, namely that liquidated damages apply up to termination, and the employer can claim general damages after termination.
Future-proofing:
Considering the Construction Playbook document (which sets out policies and guidance for public sector procurement) and including previously optional provisions regarding collaborative working, sustainable development and environmental considerations.

WHAT’S MISSING?

The above changes are welcome although the 2024 editions could have included further amendments to deal with common issues on the construction projects. Such amendments include:

Retention:
Amending the retention provisions to encourage contractor cash flow while maintaining the employer’s security for defects in the works. For example, by including a cap on retention deductions or a tapering rate of deductions.

Prolongation claims: 

Including a liquidated rate for contractors’ prolongation claims. A liquidated prolongation rate would give the parties certainty and reduce the time and cost of loss and expense disputes.

Programme:
The JCT 2016 Design and BuildContract does not expressly refer to a construction programme. The JCT 2016 SBC refers to the contractor’s master programme in clause 2.9 and under the Contract Particulars at 2.9.1.2, it is stated if the programme should be critically path linked. However, the contractor's master programme is only required to be updated when applying for an extension of time. In comparison, the NEC suite of contracts includes the provision of an accepted Programme.
The Accepted Programme is obligatory under the NEC contract and is required to be updated by the contractor in the timeframe specified in the Contract Data Part 1 (usually monthly). Many of the contractual mechanisms under the NEC suite of contracts are predicated on the accepted programme. From the evidence of statistical analysis, it has been established that many construction disputes are caused by delays in projects. Would it therefore not be sensible for the JCT suite of contracts to have an express reference to a contractor’s programme with mandatory provisions for revisions at a specified timescale?

Early warning mechanism:
The JCT contracts do not include provisions to identify and notify of potential risks to the contract that may affect price or time. In contrast, the NEC suite has an express obligation for both parties to notify of potential risks under the early warning mechanism. Under the NEC4 contract, there is also an obligation to review and seek to mitigate the notified early warnings at an early warning meeting. The frequency of these meetings is stated in the Contract Data Part 1 (usually monthly). Would It not be appropriate for the JCT 2024 suite of contracts to include provisions analogous to that of NEC4 to encourage the mitigation of risk?

WHAT’S NEXT?

The 2024 editions of the JCT contract will reflect changes in the legal, commercial and social environment since the last substantial amendments in 2016. The JCT could, however, have been more adventurous, particularly in relation to retention, which is a contentious topic in light of the recent spate of large main contractor insolvencies.

We await further information from the JCT as to the release date for the 2024 editions. In the interim, please contact Prettys’ construction team if you need assistance selecting, reviewing or amending a JCT contract.