Solicitor Kate Primrose outlines what might be expected to happen in Scotland in reference to the JCT Design and Build Contract 2016.
Following the publication of the new JCT Design and Build Contract 2016 on 22 September 2016, it is expected that the updated SBCC Design and Build Contract for use in Scotland won’t be far behind, although a definitive date for publication has not yet been given.
It is anticipated that the new SBCC Design and Build Contract, once published, will incorporate similar amendments as its JCT equivalent. It is, therefore, important to be aware of the key updates included in the Design and Build Contract 2016.
Some of the key updates include the following:
- Payment provisions: these have been simplified, including consolidation of interim and final payment provisions and the incorporation of a procedure for the prompt assessment of loss and expense claims, setting out specified timeframes/procedures for ascertaining such claims.
- Insurance of existing structures: there are revised insurance arrangements, including alternative options for parties to agree their own arrangements where works are being undertaken to an existing structure (Insurance Option C), helping to resolve the situation where, for example, a tenant is carrying out works and is unable to obtain all risks insurance in the joint names of the employer and contractor.
- Performance bond / Parent Company Guarantee: there is now a standard clause requiring the provision of a performance bond or parent company guarantee (although JCT has not published a form for either of these).
- BIM Protocol: with the increasing use of BIM in the construction industry, there is an option for complying with a BIM Protocol. If this is required, the parties would require to arrange for the BIM Protocol to be prepared and included in the contract documents.
- Third Party Rights: there is now an option for sub-contractors to provide third party rights or collateral warranties to certain beneficiaries.
- Construction (Design and Management) Regulations 2015: the necessary changes have now been incorporated directly into the contract, rather than being a standalone amendment.
- Consents and approvals: there is now a new clause stating that where consent or approval of one of the parties is required, this should not be unreasonably delayed or withheld (although this specifically does not apply to consent relating to an assignment which remains at the discretion of the relevant party).
Various other minor amendments have also been made as well as certain changes relating to public sector employers (i.e. the incorporation of provisions from the JCT Public Sector Supplement 2011 in respect of fair payment and transparency and certain aspects of the Public Contracts Regulations 2015). The motivation behind these amendments is the ambition of the Construction Supply Chain Payment Charter (Charter) (reissued by the Construction Leadership Council in August 2016), being an initivative of the Government’s Fair Payment Campaign, seeking to reduce payment terms in the supply chain to an industry standard of 30 days and to move to zero retentions by 2025.
Generally, the updates to the JCT Design and Build Contract 2016 attempt to reflect current market practice and it is expected that, overall, they are likely to be welcomed by the construction industry. In terms of the position in Scotland, we will have to wait and see what changes the SBCC incorporate into the SBCC Design and Build Contract but it is expected these will broadly follow the same route as JCT.
- Kate Primrose is a solicitor at MacRoberts LLP