On 8 th July 2020 Chancellor Rishi Sunak, announced in his Summer Statement a “stamp duty...
JCT 2016 building contract changes
The 2016 JCT building contracts have been released over the past few months and the updated Standard Building Contract suite was released on 22 September 2016. This suite has now replaced the 2011 Standard Building Contracts and all subsequent amendments. This article explores the key changes that have been made and, in practical terms, what the changes mean.
There are three principal changes to the Articles in the 2016 suite. These are as follows:
- Article 5 replaces “CDM Co-ordinator” with “Principal Designer”. This brings the terminology in line with the Construction Design and Management Regulations 2015;
- Article 6 deletes the reference to the Site Waste Management Plans Regulations 2008 as these Regulations were revoked in 2013;
- Article 8 refers to the updated version of the Construction Industry Model Arbitration Rules (CIMAR).
- In practice, these amendments really just serve to bring the terminology and references in line with current legislation and will have no impact on the effect of the contracts.
The 2016 contract particulars are no longer in two parts. Previously under the 2011 contracts, part two dealt with third party rights and collateral warranties. This has been deleted under the 2016 suite of contracts, leaving it for the parties to produce a separate document detailing what rights are to be granted to additional parties. There is provision at section 7 in the main body of the contract particulars to append a separate document of this nature. This is intended to allow the parties greater flexibility.
The other amendment which is likely to be of interest involves the insurance provisions. The 2016 editions allow the parties to dis-apply the insurance options provided in the contract particulars and adopt their own arrangements in situations where the policy required under the JCT contract may not be appropriate or indeed available to them. This is likely to be seen as a welcome change and will highlight the risks involved at an earlier stage.
Most changes have been made to the payment conditions under the 2016 contracts. Whilst these are the most widespread, the amendments are largely stylistic and relating to approach rather than altering the substance significantly. The main changes to payment are as follows:
- Monthly Interim valuation dates apply throughout the construction period and the rectification period;
- The employer must promptly assess (within 28 days) claims for loss and expense;
- A bespoke fluctuation or cost adjustment formula can be used, replacing fluctuation options B and C;
- The period of time between the due date and the final date for payment with interim and final applications differed under the 2011 suite. This has now been standardised as 14 days for both.
The inclusion of fair payment clauses are intended to make the suite more appealing to public bodies.
Building Information Modelling (BIM)
BIM is the use of digital modelling in the construction industry to assist in the design and build of projects. The ability to be able to digitally plan a build assists in the projection of costs from a much earlier stage.
The government mandated that all public sector construction projects must use BIM by 2016. The inclusion of BIM in the new suite of JCT contracts, therefore, makes them more appealing to public bodies.
Throughout the 2016 edition there have been changes made to defined terms and certain terminology has been replaced, largely to bring it in line with changes to legislation. These changes are unlikely to have much of an impact in practical terms.
The changes have made the suite of contracts more concise and user friendly. The amendments are likely to make the JCT suite of contracts more appealing to the public sector. The JCT has now launch updated versions of all its forms of contract. These should now be used rather than the 2011 versions.
For more advice, please contact Peter Allen at our Chelmsford office on 01245 453813 or email firstname.lastname@example.org .