Source: https://ru.b-ok.org/book/905199/07e9c5
Timestamp: 2020-02-24 21:24:57
Document Index: 676110890

Matched Legal Cases: ['art 1', 'art 2', 'art 3', 'art 1', 'art 2', 'art 3', 'art 3', 'art 1', 'art 1', 'art 3', 'art 1', 'art 1', 'art 3', 'art 2']

JCT 2005: Clause by Clause | Phil Griffiths | download
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* Uses a novel clause-by-clause approach to explain the important JCT 2005 contract * Written by an experienced author, explaining in simple English the meaning and relevance of each clause to avoid common misunderstandings * Includes up-to-date legal cases that explain the development and interpretation of the contract The Joint Contracts Tribunal's suite of contracts (commonly known as JCT 2005) are the most commonly used in the UK to procure major building work. Understanding the contracts, and which to use, is vital knowledge for all students on construction-related HND or degree courses, but these clauses can contain convoluted language, leading to confusion. This easy-to-follow guide takes the reader through the JCT 2005 building contracts clause by clause, in an easy-to-follow format, in simple but effective language that eliminates misinterpretation. Spilt into 3 sections, this book provides a summary of the current JCT Contracts, identifying which to use for what type of work, along with an analysis of their risk, liability, documentation, design responsibility and financial procedures, ensuring that JCT 2005 Building Contract: clause by clause is the vital, definitive reference for the aspiring construction professional. Phil Griffiths is a lecturer at Nottingham Trent University with interests in contract administration, finance and project management. He graduated from Nottingham Trent Polytechnic in 1971 and worked as a quantity surveyor in local authority and a medium sized construction company. He also spent some time as a director of a small construction company and is a freelance estimator. * A new textbook for all built environment students that uses a novel clause-by-clause structure to explain the important JCT 2005 contract* Written by an experienced author it explains in simple English the meaning and relevance of each clause helping to avoid common misunderstandings* Contains a chapter of up-to-date legal cases that explain the development and interpretation of the Contract
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Mehrebenenanalyse: Eine Einfuhrung fur Forschung und Praxis
JCT 2005:
Copyright © 2010, Phil Griffiths, published by Elsevier Ltd. All rights reserved
The right of Author Name to be identified as the author of this work has been
Department in Oxford, UK: phone: (⫹44) (0) 1865 843830, fax: (⫹44) (0) 1865 853333,
ISBN–13: 978-1-8561-7518-0
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Part 1: Contract Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Minor Works Building Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Intermediate Building Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Design and Build Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Management Building Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Constructing Excellence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Prime Cost Building Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Measured Term Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Major Project Construction Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Part 2: An Analysis of the SBC/Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Articles of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 1: Definitions and Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 2: Carrying out the Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 3: Control of the Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 4: Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Section 5: Variations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130
Section 6: Injury, Damage and Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137
Section 7: Assignment, Third Party Rights and Collateral Warranties . . . . . . . . . .149
Section 8: Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153
Section 9: Settlement of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164
Schedule 1: Contractor’s Design Submission Procedure . . . . . . . . . . . . . . . . . . . . .168
Schedule 2: Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170
Schedule 3: Insurance Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172
Schedule 4: Code of Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .180
Schedule 5: Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183
Schedule 6: Forms of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191
Schedule 7: Fluctuations Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199
Part 3: Legal Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215
Legal References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
During the early years of the 21st century, the Joint Contracts Tribunal (JCT) decided
to update and modernise their collection of construction contracts. Consequently a
number of revamped contracts were published during 2005, with more following over
the next few years. As part of their review, the JCT took the opportunity to employ a
new uniform style and structure in the majority of their contracts. The contract conditions were largely unchanged from the previously published contracts, although some
significant changes were made in response to current commercial and contractual
Part 1 of the book undertakes a review of these updated JCT contracts. The purpose
of the review is to identify the type of construction work for which each contract is
best suited, to examine the format and content of the contract and, finally, to compare
and contrast the contract conditions with those of the JCT Standard Building Contract
with Quantities (SBC/Q). This is not intended to be an in-depth analysis and should be
viewed as an introduction to the suite of contracts currently published by the JCT.
By contrast, Part 2 takes an in-depth look at one of the JCT’s standard forms of contract, i.e. the SBC/Q. This part of the book comprises a clause-by-clause analysis of the
contract and provides an explanation as to the rationale and operation of each clause.
The purpose of this section is to act as an aid in the interpretation and understanding
of the sometimes complex language found in the SBC/Q. To assist in this process, the
layout of this section deliberately mirrors the JCT style and format so that the text may
be easily compared with the SBC/Q and vice versa. Although the use of the SBC/Q has
diminished in recent years, it still provides a solid basis for good management and contract administration. Many of its clauses and procedures are to be found in the other
JCT contracts and, as a consequence, a good understanding of the SBC/Q should lead
to an improved understanding of contract administration in general.
The lesson to be learnt from Part 3 is that, no matter how much care is taken by legal
draftsmen in preparing contract conditions, situations will often arise where two parties will read the same clause and arrive at conflicting interpretations. The courts may
be used to resolve an argument of interpretation, but even they struggle at times to
unravel the complex contract wording before they can arrive at the ‘correct’ interpretation. However, the courts’ decisions can often be of assistance in determining how a
clause should be read and how it should operate. As a consequence, Part 3 of the book
reviews a number of legal cases that have helped to shape the current JCT contracts
and assisted in the interpretation of some of the more complex areas of the contract
here a building project is to be undertaken, the client will have to engage a considerable number of individuals and organisations to provide him with advice,
services, materials and goods. To ensure that the work progresses smoothly, it is essential that all the parties involved are fully aware of their role within the project and have
clear guidelines as to their rights and obligations throughout the project. This may be
achieved through the use of a series of suitable contractual agreements.
A contract may come into existence through a verbal agreement, an exchange of
letters, standard conditions of trading or a standard form of contract. All these agreements are legally enforceable, but arguably some are more so than others. For example,
with a verbal agreement, who is to know what was really agreed between the parties,
and how will the passage of time affect people’s memories and recollections?
In most instances, it is not a legal requirement for any contract to be evidenced in writing unless the parties have agreed to enter into a contract as a deed. But, for obvious
commercial reasons, the vast majority of contracts will be entered into by using a written form of contract. The advantage of having a written form of contract is that there
will be express terms written into the document to lay down clearly the rights and obligations of the parties involved; therefore, if a dispute arises during the progress of a
project, it should be possible to determine who is at fault and what procedures should
be followed. If necessary, the contract conditions would also provide the key details in
the event of a legal action for breach of contract.
The vast majority of major building works are carried out in accordance with the
terms and conditions of a written form of contract, and frequent use is made of published standard forms of contract. Over the years, there has been a steady growth in
the development and publication of standard forms of contract, a fact that reflects, to
some extent, the increasing diversity of procurement methods, which clients are now
prepared to utilise (e.g. design and build, management fee, fast-track, partnering, guaranteed maximum price, target cost). The choice of contracts can at times be bewildering, and this can be compounded by a failure to understand and interpret complex
contract conditions and procedures. As a consequence, there are a number of parties
who would like to see contract documentation simplified.
Currently, there are two organisations producing the majority of standard forms of contract used on UK building projects. These organisations are the Joint Contracts Tribunal
(JCT), which produces the aptly named JCT forms of contract, and the Institute of Civil
Engineers (ICE), which is responsible for the New Engineering Contract (NEC) suite
of contracts. There are other organisations that also produce standard forms of contract for building works but they are not widely used. The JCT and ICE have adopted
contrasting methods of producing standard forms of contract to meet the varying
demands of the construction industry. The JCT has taken the approach of producing
a specific standard form of contract for each type of procurement route that may be
selected, whereas the ICE, through the publication of the NEC documentation, has supported a move towards a more simplified, standardised and user-friendly form of contract documentation.
The NEC documentation comprises a set of core clauses, which will apply to any chosen
procurement route. The client then selects from one of the six main procurement
options (i.e. options A to F) and finally he has a choice of a further 20 optional clauses,
any of which may be selected for incorporation into the contract. By opting for the NEC
approach, it is possible to build up a collection of contract documentation suitable for
any procurement approach the client may wish to adopt, and through the use of core
clauses (which will apply to all NEC contracts), it becomes easier for parties within the
construction industry to become familiar with the NEC style of contract administration.
It is interesting to note that this style of contract administration was being championed
as far back as the mid-twentieth century in the Banwell Report1:
A multiplicity of conditions of contract for use in circumstances which vary only to
a limited degree is not in our view conducive to a ready understanding between the
parties to contract of their respective rights and obligations, and causes much work
in checking variants and making adjustments. Many have expressed views in favour
of a single form of contract for all building and civil engineering work…we believe
that a common form is both possible and practicable.
Furthermore, in 1994, Sir Michael Latham gave strong support to the NEC, although he
did suggest that a number of alterations should be made for it to satisfy his guidelines
on what comprises an effective form of contract. One minor suggestion was that
its name should be changed to the ‘New Construction Contract’ to show clearly that
it was adaptable for use on both engineering and building projects. Consequently, in
1995, the main contracts for use with the NEC were renamed as the ‘Engineering and
Construction Contracts’.
Despite the support for a common form of contract, there is a counterargument to this
approach. It may be argued that a set of common documentation cannot fully take
into account all the nuances and requirements of each different procurement route. As
a result, the common documentation may provide a satisfactory contract package but
it may not always provide the level of detail that some clients require. This may be why
the JCT has adopted a significantly different approach to its contract documentation
compared with the NEC.
The policy of the JCT is to produce a discrete standard form of contract for each type of
project or procurement route commonly used in the UK. As a result, the JCT publishes
a large selection of standard forms of contract and documentation as listed below:
Repair and Maintenance Contract (Commercial) (RM)
Standard Building Sub-Contract (SBCSub/A and SBCSub/C)
Standard Building Sub-Contract with sub-contractor’s design (SBCSub/D/A and
SBCSub/D/C)
Design and Build Sub-Contract (DBSub/A and DBSub/C)
Major Project Sub-Contract (MPSub)
Management Works Contract (MCWK/A and MCWK/C)
Intermediate Sub-Contract (ICSub/A and ICSub/C)
Intermediate Sub-Contract with sub-contractor’s design (ICSub/D/A and
ICSub/D/C)
Sub-sub-contract (SubSub)
Framework Agreement (Non-binding) (FA/N)
Consultancy Agreement (Public Sector) (CA)
The JCT also produces an adjudication agreement, a non-binding partnering charter,
a large number of collateral warranties and agreements for home owners. A complete
and up-to-date list of JCT documents may be obtained from its website.
With this bewildering choice of standard forms of contract, the question often arises
as to which form the client should be advised to adopt; there is always a danger that
in some projects, the form of contract is selected more because of the adviser’s familiarity with it than because of its suitability. For example, recent Royal Institution of
Chartered Surveyors (RICS) Contract Surveys2 show that some projects let on the JCT
Minor Works form were far in excess of the then recommended £125,000 limit; similarly, the Intermediate form was being used on projects in excess of the then recommended limit of £300,000. Because of the anonymity of the surveys, it is not possible
to know the reasoning behind this choice of contract, but a swift inspection of the
Minor Works form will show that it is a very brief document; to many, this may appear
a very commendable attribute but, if problems arise on site, the contract conditions
may be of little use, as the clauses cover only some of the major aspects of the construction work. They tend to give only generalised information instead of the detailed
procedural information frequently found in other JCT contracts, such as the Standard
Building Contract with Quantities (SBC/Q). What may be only a minor issue on, say, a
£75,000 project could, if it were to occur on a £5 million project, have serious consequences, and it is necessary, therefore, to have a form of contract that is compatible
with the size, complexity and type of work being undertaken.
The drawbacks to having such a multiplicity of contract forms are, firstly, the difficulty
of becoming familiar with the critical obligations and liabilities of each form, and secondly, the more onerous task of identifying the subtle variations of each form. In some
instances, identical contract conditions have been used within the JCT contracts, but
occasionally there are slight variations to the wording of the contract conditions to
reflect the specific requirements of that contract. As a result, it is possible for parties
to make administrative errors because they are not familiar with the standard form of
contract being used.
The following section provides a review of some of the JCT standard forms of contract
in current use. The review will identify the circumstances that may be considered in the
selection of an appropriate contract along with an analysis of how the contract is to be
administered. Finally, each contract will be compared alongside the JCT SBC/Q to identify some of the key differences within each contract.
Minor Works Building Contract (MW and MWD)
Any clause numbers used in the following text refer to the Minor Works Building
Contract with Contractor’s Design (MWD).
The JCT Minor Works Building Contract (MW) is one of the smallest and simplest forms
of contract produced by the JCT for commercial projects. The JCT does produce a
number of very basic contracts for householders, but these contracts do not fall within
the scope of this book. From a review of the Contracts in Use survey3 commissioned by
the RICS, it is possible to see that the MW contract is one of the most frequently used
contracts in the UK. In the 2004 survey, it was shown that nearly 23% (by number) of
the contracts captured by the survey were let on the MW form, which would seem to
indicate that this is an important and widely used contract. It is certainly widely used,
but its importance is diminished by the fact that it is responsible for only 2.4% of the
work by value. This survey return clearly indicates that the contract is frequently used
but mostly on low value projects.
Recommended Use of Minor Works
The advice currently provided by the JCT is that this contract should be used on
projects where the work is of a fairly simple nature. In the Practice Notes produced for
previous editions of this contract, the JCT used to advise that the contract was appropriate for projects up to a maximum contract value (in 2004, this figure was £125,000).
However, in the 2005 version of the contract, the JCT has obviously decided that the
advice to use the contract on works of a simple nature is a more appropriate guideline
than stating a maximum contract value. Advice relating to the earlier editions of this
contract also stated that the time period for the works should be short enough so that
a full fluctuations provision was not required. The reason for this advice is that the MW
is a fixed-price contract with an option to allow the recovery of fluctuations relating to
Interestingly, the JCT also provides recommendations for where the MW contract
would not be suitable. It should not be used as a design and build contract; it is possible to require the Contractor to carry out some of the design work but the contract
is not appropriate in situations where the Contractor is to be responsible for designing
all the works. Furthermore, the contract is not suitable for projects where bills of quantities are required, or where work is to be carried out by named specialists or where
detailed control procedures are required. These last recommendations are obviously in
recognition of the fact that the MW contract was drafted on the basis that it would be
used only for works of a simple nature.
In normal circumstances, the works are to be designed by the Employer (or designed
on his behalf ) but, where the Contractor is to design a portion of the works, this is to
be clearly defined and detailed. The Employer is expected to provide the Contractor
with drawings and/or specification and/or work schedules that are sufficient to allow
the Contractor to assess both the quantity and the quality of the work required. Also,
the Employer is expected to appoint a Contract Administrator to manage the works in
The JCT has taken a different approach from the SBC/Q in dealing with Contractor’s
design work in the MW contract. In the SBC/Q, there is an optional provision (using
the Seventh to Tenth Recitals), which is to be used when the Contractor is required to
carry out some of the design work. The same standard form may, therefore, be used
for projects that have no Contractor-designed work as on those that do have an element of Contractor-designed work. The JCT did not follow this approach when drafting
the MW contract and, as a result, the contract is available in two different formats. The
contract may be purchased as the JCT Minor Works Building Contract or, alternatively,
as the Minor Works Building Contract with Contractor’s Design. The JCT has obviously
decided, because of the type of client that may use the MW contract and the type of
work carried out, that it would be more appropriate to have a separate contract for
instances where an element of Contractor design is required.
The format of the MW form is similar to the majority of the current JCT contracts. The
Articles of Agreement, Recitals and Contract Particulars are placed at the beginning of
the contract document, followed by the Conditions (broken down into nine sections)
and finally, the Schedules. At the end of the contract, there are four pages of guidance
notes, whereas other JCT contracts have guidance notes produced as a separate document. Although the MW form tends to mirror the format and structure of the SBC/Q,
the content is significantly reduced. The clauses within the contract tend to be worded
more briefly and simply than in the SBC/Q and a considerable amount of detail has
been removed from this contract. This again reflects the fact that the contract has been
developed for use on small projects of a simple nature.
Minor Works Compared with JCT SBC/Q
One of the main differences in the articles is that there is no provision within the MW
for the appointment of a quantity surveyor (QS). This is because there is no provision
for a bill of quantities within the contract documents; therefore, the financial duties
normally undertaken by a QS have been allocated to the Architect/Contract Administrator (A/CA). Another major omission is that there is no express procedure to provide
third party rights, or for the Contractor to provide collateral warranties.
Within this section, there is confirmation that the Contracts (Rights of Third Parties) Act
does not apply to this contract. A third party does not have any right to enforce a term
There are a number of omissions in the MW relating to the possession of the works and
access to the works. There is no express term in the contract that allows the Employer
to delay giving possession of the site to the Contractor. The Employer has no right
to use any part of the works to store goods and materials during the progress of the
works, and there is no provision that would allow the Employer to take over part of
the works through partial possession. Finally, there is no provision that would allow the
Employer (or people engaged by the Employer) to carry out works on site while the
Contractor is still in possession of the site.
In connection with carrying out the works, there is no specific requirement for the
A/CA to provide the Contractor with levels and details to allow the works to be correctly set out. It would have to be implied that this information will be provided in
the contract documents or through clause 2.4, where it is stated that the ‘Architect/
Contract Administrator shall issue any further information necessary for the proper carrying out of the Works’. There is also no requirement for the Contractor to provide a
master programme to indicate how he intends to carry out the works.
Delays are a fairly common occurrence on building projects and these are normally dealt
with by incorporating an extension of time clause into the contract. The procedures for
dealing with a delay in the MW form are far simpler than in the SBC/Q. The Contractor
still has to notify the A/CA of any apparent delay to the works, but only where this has
been caused by reasons beyond his control, i.e. the Contractor does not have to give
notice of delays where he is at fault. Unlike in the SBC/Q, there is no list of ‘relevant
events’ that is to be used to identify whether an extension of time is allowable or not.
As long as the Contractor can show that a delay was caused by reasons beyond his control, he should be able to claim an extension of time. Having granted the Contractor an
extension of time, the A/CA does not have the power to subsequently reduce the extension if, at a later date, he omits work from the project. Similarly, after the issue of the
Practical Completion Certificate, the A/CA has no power to review the current completion date, i.e. he cannot alter the completion date to an earlier or later time; therefore,
under the MW form, once the A/CA has awarded an extension of time he may not subsequently alter it in the light of works being omitted or after an end-of-project review.
The MW form has a Rectification Period. The length of this period is to be stated in the
Contract Particulars. If no period is stated, then by default, it will be 3 months, compared to a default period of 6 months in the SBC/Q. The A/CA may instruct the Contractor to remedy defects within the Rectification Period; there is no mention of the A/CA
producing a schedule of defects as in the SBC/Q but there is nothing mentioned in the
wording of the MW to prevent the A/CA from producing such a schedule. It is important
to note that in the SBC/Q the A/CA has a 14-day period beyond the Rectification Period
in which he may instruct the Contractor to remedy defects or to produce his schedule
of defects, whereas in the MW form he must act within the Rectification Period.
Again this is a significantly cut-down version of the conditions contained within the
SBC/Q. With regard to basic administration, there is no provision for the Employer to
have a clerk of works on site, and there is no provision for the Employer to delegate
some, or all, of his duties to an Employer’s Representative. There is no express term
entitling the A/CA, or his authorised personnel, to reasonable access to the works or
to the Contractor’s (or sub-contractor’s) workshops and premises. If, for any reason,
the original A/CA ceases to be engaged for the works, there is no procedure detailing
whether, or how, another A/CA is to be appointed, although it would be implied by the
contract terms that another A/CA will have to be appointed (see Croudace Ltd v The
London Borough of Lambeth, 1986).
As in the SBC/Q, the Contractor is required to have on site a ‘competent person-incharge’. However, this person is expected to be on site only at reasonable times,
whereas the SBC/Q requires such a person to be on site at all times. Again, this subtle change in wording is a reflection of the nature of work being undertaken. On some
small projects, it is not realistic to expect a Contractor to retain such a person on site
throughout the whole working day.
There is a provision within the contract for the Contractor to sub-let all, or part, of the
works, but there is no procedure allowing the Employer or A/CA to give the Contractor
a list of preferred sub-contractors, or to name a sub-contractor. In an earlier Practice
Note (Practice Note M2), it was stated that the Employer may name a sub-contractor in
the tender documents, but a warning was given that there were no relevant contract
conditions to help in the administration of this procedure, and there was no standard
form of sub-contract available for a named sub-contractor.
Where the Contractor does decide to sub-let the works, there is only a very limited requirement as to what terms must be incorporated into the subcontract. These
requirements are that any sub-contract should incorporate conditions that allow for
the payment of interest on late payments made by the Contractor, and that the subcontractor’s employment is to be terminated immediately upon the termination of
the Contractor’s employment. By comparison, the SBC/Q requires a greater number of
terms and conditions (eight in total) to be incorporated into any subcontract.
The A/CA may issue the Contractor with instructions. For the instruction to be valid, it
must be in writing. In the MW form, the method of dealing with oral instructions differs
from the approach used in the SBC/Q. If the A/CA issues an oral instruction, he must
confirm it in writing within 2 days. The Contractor has no role to play in this situation
and will have to rely upon the A/CA to comply with the contract procedure. By comparison, the SBC/Q places the onus on the Contractor to give initial written confirmation
of an oral instruction within 7 days. In the ‘with contractor’s design’ form of contract
(MWD), it is only with the Contractor’s consent that the A/CA may issue an instruction
affecting the design of the contractor’s design portion (CDP) works; the Contractor
cannot unreasonably withhold his consent. However, the A/CA may alter the Employer’s Requirements through a variation instruction, even if this requires the Contractor
to change his design as a consequence. Unlike the SBC/Q, there is no procedure for the
Contractor to query the validity of an instruction issued by the A/CA.
Variations are the key means by which the A/CA may change or develop the design
during the progress of the project. Clause 3.6 details the authority of the A/CA to issue
variations but, unlike the SBC/Q, there is little information on what constitutes a variation. A variation is basically defined as an instruction to make an addition to, or an
omission from, the works, or a change to the works. A variation may also include an
instruction to carry out the works in a specific order or time frame. The Contractor has
no right of reasonable objection to this last category of variation, whereas in the SBC/Q
a right of objection does exist.
Whenever a variation is issued there is almost always a cost implication. In the MW
form, the value of any variations is to be agreed between the A/CA and Contractor
before the work is actually carried out. In the SBC/Q, the value of variations is to be
agreed between the Employer and Contractor, but there is no requirement for this to
be done before the work is executed. Where the A/CA and Contractor are unable to
agree the value of a variation, it becomes the responsibility of the A/CA to value the
work. Very little information is given about how the variation is to be valued, apart
from ‘a fair and reasonable basis’, using prices from the contract documents where relevant. However, the A/CA is to include any direct loss and/or expense incurred by the
Contractor as a result of the variation. By contrast, the SBC/Q provides a detailed set
of valuation rules for the pricing of variations and specifies that loss and/or expense
should not normally be included in the valuation of a variation.
A significant role of the A/CA is to ensure that the quality of the works is in accordance
with the contract documents, i.e. the Contractor is providing work to the quality and
standard specified in the relevant documents. In the SBC/Q, there are specific provisions
for the A/CA to open up and test the Contractor’s work, and procedures that may be followed once defective works have been identified; the A/CA is also permitted to issue
instructions where he considers the Contractor is not carrying out the works in a workmanlike manner. There are no comparable terms in the MW form. Although clause 2.1
identifies the Contractor’s obligations to execute the works in a workmanlike manner and
in accordance with the contract documents, there are no clauses identifying what the
A/CA may do if the Contractor fails to comply with these standards. Again, it would have
to be implied that the A/CA could take reasonable action to have the work remedied.
Finally, in the MW, there is no section dealing with the potential problem of discovering
antiquities during the progress of the works. In this situation, the parties would have to
rely upon any relevant statutory requirements, or reach an agreement upon how the
work is to proceed.
In the SBC/Q, it is expected that interim payments (progress payments) will be made on
a monthly basis (i.e. a calendar month), whereas in the MW form, payments are to be
made every 4 weeks (i.e. a lunar month). The Contractor is entitled to receive payment
for the works properly executed, including the agreed value of any variations (which
may include payment for loss and/or expense) and for materials on site (but there is
no allowance for offsite materials). The Employer is required to pay a percentage of the
progress payment. The percentage is stated in the Contract Particulars and the default
figure is 95%. This is a slightly different approach to the SBC/Q, where the payment
rules allow the Employer to retain an agreed percentage from payments due (e.g. normally 3% or 5%). In the SBC/Q, the amount so retained is described as retention, and the
Employer is responsible for holding these monies in trust for the Contractor. By comparison, under the MW, the Employer is allowed to hold back a percentage of the progress
payment, the amount held back is not referred to in the contract conditions as retention (although retention is referred to in the heading of clause 4.3). It has no trust status
and the Contractor has no right to request the Employer to hold the retained money
in a separate bank account. There is no provision within the MW form for the Employer
to make an advance payment, and there is no provision for the Contractor to submit
his own application setting out what he considers should be included in a progress
Within the payment provisions, there is reference to a ‘penultimate certificate’, which is
to be issued 14 days after the date of practical completion. This is basically the same as
a progress payment certificate, with the exception that the Employer must now pay the
Contractor a higher percentage of the progress payment; the default figure is 97.5%. In
effect, this certificate is releasing, to the Contractor, half of the money that has been
withheld from the previous progress payments. The fact that this certificate is referred
to as being a penultimate certificate must imply that the A/CA will issue no further payment certificates until the issue of the Final Certificate. In the SBC/Q, interim certificates
continue to be issued after practical completion, as and when they are required.
Apart from the variations clause, there is no other provision within the MW form that
would allow the Contractor to submit an application for loss and/or expense where the
regular progress of the Works has been disrupted through the default of the A/CA or
Employer. Under clause 3.6, the Contractor is entitled to receive payment for any loss
and/or expense incurred as a result of a variation instruction or as a result of the Employer’s compliance, or non-compliance, with his construction, design and management
(CDM) obligations under clause 3.9. In a situation where the Contractor’s progress was
impeded through any other action or default of the Employer, etc., the Contractor would
still have a common law right to sue for breach of contract. However, such litigation can
be time-consuming and expensive. The Contractor and Employer may try to negotiate
a settlement, but the contract provides no guidance to help them in this matter.
Under the MW form, the Employer does have the right to recover liquidated damages
if the Contractor is late in completing the works. However, unlike the SBC/Q, there is no
procedure for the A/CA to issue a non-completion certificate as a condition precedent for
the Employer to recover these damages. If the Contractor is late in completing the works,
the Employer may recover the damages from the Contractor as a debt, i.e. request the
monies from the Contractor, or he may deduct the damages from monies due to the
Contractor. If the Employer intends to recover the damages from a progress payment
or Final Certificate, he must, in compliance with the Housing Grants, Construction and
Regeneration Act (HCGRA), issue the appropriate withholding notice, i.e. a notice issued
at least 5 days before the final date for payment. Additionally, where the Employer intends
to recover the damages from the Final Certificate, he must write and inform the Contractor, no later than the date of issue of the Final Certificate, of his intention to do so.
Through the operation of clause 4.11 the contract sum may be adjusted to take
into account fluctuations in government taxes and levies, and this is the default situation with this contract. However, it is possible to delete clause 4.11, in which case the
project becomes a fixed-price contract, i.e. there will be no fluctuations allowed. This is
obviously a reflection of the short time period envisaged for any project let under this
The Final Certificate procedures allow the certificate to be issued far more speedily than in the SBC/Q. The Contractor is to provide the A/CA with the necessary
documentation to allow the final account to be prepared; the default period for delivering these documents is 3 months from the date of practical completion. The Final
Certificate should be issued within 28 days from receipt, by the A/CA, of the Contractor’s documentation (provided the Contractor has made good all notified defects and
received the Certificate of Making Good). Unlike the SBC/Q, there is no advice provided
as to the finality of the Final Certificate in relation to disputes that may arise after its
issue, therefore it must be appreciated that the issue of the Final Certificate may not
be used as conclusive evidence that certain matters have been settled. As a result, any
aspect of the contract may be referred to litigation after the issue of this certificate.
Section 5: Injury, Damage and Insurance
The liability and insurance section of the MW form is similar to that of the SBC/Q,
although a large amount of detail has been stripped out and certain insurances and
procedures have been omitted. The Contractor’s liability for damage or injury to people
or property (other than to the works themselves) mirrors that of the SBC/Q. Where the
works comprises all new construction, then the Contractor is required to take out the
necessary insurance (clause 5.4A). Unlike in the SBC/Q, there is no optional provision for
the Employer to take out insurance for all new works if he so wishes. Where the works
comprises construction work within or adjoining an existing property, it is the Employer’s obligation to arrange the necessary insurance (5.4B). It should be noted that the
level of insurance required for new works is limited to ‘specified perils’ in contrast to the
‘all risks’ cover required by the SBC/Q. Sub-contractors should also be aware that, unlike
the SBC/Q, they do not enjoy the benefit of the specified perils cover on new works.
It is possible for either the Contractor or Employer to ask for proof that the required
insurances are in place. However, if either party is in default (i.e. a required insurance
has not been obtained, or has lapsed, or the level of cover is insufficient), there is no
express term to allow the non-defaulting party to obtain the necessary cover and to
recover the associated costs.
Although the Minor Works form MWD, provides for an element of the works to be
designed by the Contractor, there is no requirement for the Contractor to obtain
professional indemnity insurance. If, therefore, problems arise with the Contractor’s
design work, there may well be no insurance in place to cover any claims made by the
Employer against the Contractor. Further omissions in the insurance section, when
compared with SBC/Q, are that there is no insurance procedure to cover damage to
adjoining buildings where it can be proven that the Contractor was not negligent (see
Gold v Patman, 1958). Also, there is no specific mention of terrorism cover and no mention of the Joint Fire Code. The lack of mention of the Joint Fire Code is understandable
when it is considered that the MW form should be used only on projects of a low value.
However, a few Employers do ignore the advice provided by the JCT and use the MW
form on large projects that may have to comply with the Joint Fire Code.
The termination section of the MW form is very similar to the SBC/Q. However, one
slight difference between the two forms is the procedure to be followed when either
party commits a ‘specified default’. Under the MW form, it is permitted to terminate the
Contractor’s employment where the defaulting party has continued with a default for 7
days after receiving a default notice. The SBC/Q, on the other hand, requires the default
to have continued for 14 days from the notice. Unlike the SBC/Q, the MW form does
not contain a procedure to deal with the situation where a defaulting party ceases a
default within the notification period, but repeats the default at a later period. In such
a situation, the innocent party would have to go through the termination procedure
all over again, whereas the SBC/Q allows for a termination notice to be issued within a
reasonable time of the repeated default.
An omission from the MW form is that there is no procedure to deal with the situation
where an Employer has terminated the Contractor’s employment but subsequently
fails to carry on and complete the works. The problem for the Contractor is that the
financial statement (which sets out whether he is entitled to any further payments from
the Employer, or whether he in contrast owes money to the Employer), is not prepared
until a reasonable time after the completion of the works (see Tern Construction v RBS
Garages, 1992).
Section 7: Settlement of Disputes
This again tends to reflect the content of the SBC/Q insofar as disputes may be referred
to mediation, arbitration or adjudication. Under the HGCRA, an adjudication clause is a
statutory requirement in most construction contracts, although there are exceptions.
The JCT in its guidance notes identifies that, where the Employer is a ‘residential occupier’, the HGCRA is not applicable and it is not necessary to have an adjudication clause
within the construction contract.
The MW Building Contract is a relatively simple form of contract and is available in two
formats, i.e. with contractor’s design (MWD) or without contractor’s design (MW). To
complement the MWD form, the JCT has produced a standard form of sub-contract to
be used where a sub-contractor is responsible for some, or all, of the design work, i.e.
the Minor Works Sub-Contract with sub-contractor’s design (MWSub/D). However, a
Contractor is not obliged to use this form of subcontract.
The MW form is similar to the SBC/Q in layout and general content, although a considerable amount of detail has been removed from the contract conditions. It is a lump
sum contract, although it is not designed to be used with a bill of quantities. As a result,
the Contractor must provide the Employer with a priced specification, or a priced work
schedule or a schedule of rates. Because of its brevity, lack of detail and procedures, the
MW form is adequate for simple work of a short-term nature, but should not be considered for larger and more complex projects.
Intermediate Building Contract (IC and ICD)
The Intermediate Form of Contract was first published in 1984. Prior to this date, small
works would be let on the MW form and anything larger would be let on the Standard
Building Contract (SBC). However, in 1980, the JCT published a new edition of the SBC,
which received considerable criticism from the architectural profession and employers. It
was claimed that the new contract was too lengthy and complex, as well as being biased
towards the contractor, so the demand grew for a simpler form of contract that would be
suitable for medium-sized projects. As a consequence of this demand, the JCT introduced
the Intermediate Form of Contract.
In 2005, the Intermediate Form was retitled as the Intermediate Building Contract (IC)
and was made available in two versions: the basic version (referred to as the IC) and an
alternative version with a provision for contractor’s design (referred to as the ICD). To
assist in the administration of the IC, the JCT has produced a number of complementary documents:
Intermediate Building Contract Guide – This is a 24-page document that identifies
the main differences between the 1998 and 2005 versions of this contract, and then
provides a fairly detailed summary of the key conditions within the contract.
Intermediate Sub-contract (comprising ICSub/A and ICSub/C) – This sub-contract
may be used by a Contractor when engaging domestic sub-contractors. It is not
mandatory for a Contractor to use these JCT sub-contract forms. However, where they
are used, a Contractor can be confident that there should be no conflicts between the
sub-contract and main contract forms. Similar forms are available where the subcontractor is responsible for some of the design work (i.e. ICSub/D/A and ICSub/D/C).
Intermediate Named Sub-contract (comprising ICSub/NAM/A and ICSub/NAM/C) –
These forms are to be used where the Contractor has to engage a named subcontractor. Where a named sub-contractor is to be appointed, the Contractor
has to use the form ICSub/NAM/A and, by entering into this agreement, both the
Contractor and named sub-contractor automatically agree to the contractual terms
contained within ICSub/NAM/C. These forms may be used whether or not the subcontractor has a design responsibility.
Intermediate Named Sub-contract Tender and Agreement – This is a 27-page
document that is referred to as ICSub/NAM. This document contains the forms to
be completed by the contract administrator, sub-contractor and Contractor during
the naming process, i.e. Invitation to Tender (ICSub/NAM/IT), Tender (ICSub/NAM/T)
and Agreement (ICSub/NAM/A). The use of these forms is mandatory.
Collateral Warranties – There are a number of standard forms produced by the JCT
that may be used with the Intermediate Contract.
Recommendations for Use of Intermediate Building Contract
The general advice provided by the JCT4 is that the IC is suitable for projects where the
Where the building works are of a simple nature involving basic trades and skills,
and where there are no complex building service installations or other specialist
work of a complex nature;
Where the works are designed by or for the Employer;
Where fairly detailed contract provisions are required; and
Where the Employer is to provide the Contractor with drawings and other
associated documents that clearly define the quality and quantity of work to be
In 2001, the JCT 5 recommended that, as long as the above criteria were met the IC
would normally be appropriate for projects not exceeding £375,000 in value and where
the contract period did not exceed 12 months, although a further comment was made
to the effect that, in certain circumstances, the IC may be suitable for projects where
these values are exceeded. To reinforce this last point, the JCT has removed any reference to time and value in its latest Practice Note and has left this aspect to the professional judgement of the Employer’s advisers.
The IC follows the format of the majority of the JCT contracts and is structured under
the following main section headings:
Section 6: Injury, Damage and Property
Section 7: Assignment and Collateral Warranties
Section 9: Settlement of Disputes
From the above, it can be seen that the IC has an identical layout to the SBC/Q and
it must be appreciated that, although the IC has been developed for medium-sized
projects of a simple nature, the contract document is still lengthy (80-plus pages) and
fairly complex. In fact, the IC is much closer to the SBC/Q in form and content than it is
to the MW form. A lot of the wording used in the IC is the same as, or very similar to, the
SBC/Q, although a significant amount of procedural information has been omitted. The
fact that the IC and SBC/Q are similar can be an advantage in the fact that construction
professionals can move from one form of contract to the other and be totally familiar
with their contents. However, there are some differences in obligations and liabilities
between the two forms and care should be taken to avoid confusion between the two.
The following sections will review some of the key aspects of the IC and identify where
the form differs from the SBC/Q.
Tendering Documentation (see 3rd and 4th Recitals)
The IC has been prepared to allow the Employer a considerable degree of flexibility in
his tender documentation. The contract documents will always include contract drawings, but then the Employer is allowed a choice of documentation, as follows:
work schedules, or
bills of quantities, and
employer’s requirements for when the ICD edition is being used.
The Contractor is required to provide the Employer with a lump sum price for the
works (see Article 2) and a breakdown of that price. There are two ways in which the
Contractor may provide the breakdown and the Employer should identify which
method is required through the Fifth Recital. For example, under Option A the Contractor is required to price whichever of the above documents has been provided by the
Employer, and this will become the Priced Document. Option B will apply only where
a specification has been provided as one of the tendering documents. Under Option B,
the Contractor is not required to price the specification, but he is required to provide
the Employer with a lump sum and either a Contract Sum Analysis, in accordance with
any requirements of the Employer, or, as an alternative, the Contractor may provide a
Schedule of Rates. Whichever Priced Document is provided, it will become the ‘Priced
Document’ for the purposes of the contract. Where Option B is adopted, it is important
to be aware that the ability to price variations ‘accurately’ will depend upon the quality
of the pricing information supplied by the Contractor, therefore an Employer may be
advised to request a fairly detailed contract sum analysis in preference to a schedule
of rates. Finally, there is an option to request the Contractor to provide a priced activity
Intermediate Contract Compared with SBC/Q
Note: any clause references used in the following text relate to the Intermediate
Building Contract with contractor’s design (ICD).
The content of the Recitals pages is very similar to the SBC/Q, although the order in
which some of the information is provided has been changed. The articles are virtually
identical to those found in the SBC/Q. The remaining sections, i.e. contract particulars,
Third Party Rights and Attestation pages, are also very similar in layout and content to
the SBC/Q, with the exception that there is no provision to provide third party rights
under the Contracts (Rights of Third Parties) Act.
This section is very similar to the SBC/Q, and in many instances the terms and clauses
are identical. One area of difference is that clause 1.6 clearly identifies that the
Contracts (Rights of Third Parties) Act is not to apply to the IC.
This section is very similar in detail to that of the SBC/Q, although the order in which
a few of the clauses appear has been altered and some items have been omitted. For
example, there is no requirement for the Contractor to provide a master programme.
This is possibly a reflection that the IC was originally drafted for use on projects of no
more than 12 months’ duration and with a simple content. The procedures relating to
the notification of delay and the granting of an extension of time have been slightly
simplified. The Contractor must still give a notice if he feels the work is, or is likely to
be, delayed but he is not required to identify whether any of the causes of the delay is
a Relevant Event. Furthermore, the A/CA is required to inform the Contractor, within
a reasonable time, whether or not an extension is to be granted, whereas the SBC/Q
requires the A/CA to notify the Contractor within 12 weeks of receiving the required
particulars. The IC does have an additional Relevant Event, i.e. A/CA instructions in relation to named sub-contractors given under clause 3.7 and/or Schedule 2. A more significant difference between the IC and SBC/Q is that the Contractor’s right to request
an extension of time is reduced where the works have run on beyond the completion
date, or any extended completion dates (clause 2.19.2). Where the Contractor is carrying out the works beyond the completion date, the A/CA may only grant an extension
of time for the following events:
Clause 2.20.1 variations
Clause 2.20.2 various instructions
Clause 2.20.3 deferring possession of site
Clause 2.20.4 inaccuracy of Approximate Quantities
Clause 2.20.5 rightful suspension of works by Contractor
Clause 2.20.6 defaults by Employer, A/CA, QS or Employer’s Persons
It can be seen that all the above events are the responsibility of the Employer (or
people working for the Employer); therefore, if any so-called ‘neutral’ events occur,
(i.e. exceptionally adverse weather conditions, force majeure, loss or damage caused
by specified perils) then no extension of time will be allowed. The logic behind this
approach is that the Contractor is in breach by failing to meet the completion date and
should therefore bear the risk of such delaying events that may arise after this date.
Unlike in the SBC/Q, the A/CA does not have the authority to reduce a previously granted
extension of time in the light of work that has been subsequently omitted. After practical completion, the A/CA has a period of 12 weeks where he has the option of reviewing any extensions of time that have been previously granted (in the SBC/Q, the A/CA is
obliged to carry out this review); he may grant further extensions of time (either as the
result of reviewing a previous decision or even where the Contractor has failed to give
the required notice) but again he cannot reduce any extensions of time already granted.
As in the SBC/Q, the role of administering the works on behalf of the Employer is given
to the A/CA (see Article 3) plus the Employer may also engage the services of a clerk
of works. Under the IC, the clerk of works acts only as an inspector; he has no right (in
contrast to the SBC/Q) to issue the Contractor with directions. In accordance with most
JCT contracts, the A/CA is permitted to exercise his control through the issue of instructions. Any instructions given by the A/CA must be in writing, but there is no procedure
to deal with the situation where the A/CA gives a verbal instruction. This is surprising
because even the MW form places the A/CA under an obligation to provide a written
confirmation, within 2 days, of any verbal instructions.
The A/CA is given the power to issue instructions through clause 3.8 and the Contractor
is under an obligation to comply with them forthwith. It is important to remember that
the right of the A/CA to issue instructions is determined by the contract conditions and
he can do so only in circumstances allowed for by the contract. The following are some
of the circumstances where an A/CA is permitted to issue instructions under the IC.
Deduction from Contract Sum for errors in setting out
Deduction from Contract Sum for defective work
2.11.1 Instructions necessary for the Contractor to complete the works
2.13.1 Inconsistency between Contract Documents
2.15.1 Divergences from Statutory Requirements
Postponement of the work
Open up work for inspection/testing
Failure of work or materials
The exclusion of persons from the works
The Quantity Surveyor to ascertain loss and expense
6.13.1.2 Remedial measures in response to the Joint Fire Code
Schedule 2 para. 2 Failure to enter into a sub-contract
Schedule 2 para. 4 Changing a named sub-contractor
Schedule 2 para. 5 Naming a sub-contractor against a provisional sum
Schedule 2 para. 7 Determination of named sub-contractor
It can be seen from the above that the powers of the A/CA under the IC are very similar
to those in the SBC/Q, with the exception of the extra duties that come into existence
where the A/CA decides to appoint a sub-contractor through the naming process. The
naming process is explained below.
Under the naming process, the A/CA is able to select a specific sub-contractor to carry
out part of the works, and to require the Contractor to employ that sub-contractor. A
sub-contractor may be selected by the A/CA by being named in the tender documentation sent to the Contractor (procedure 1) or, during the progress of the project, by
issuing an instruction against the expenditure of a provisional sum (procedure 2). A
Contractor cannot make an objection to the identity of a sub-contractor named in the
tender documentation, but does have the right of objection to a sub-contractor named
in an instruction regarding a provisional sum. The objection must be made within 14
days from the date of the instruction.
Even though a sub-contractor has been named in the tender documentation, or in an
instruction to expend a provisional sum, the A/CA may still have the work carried out
by another sub-contractor. The procedure is to issue an instruction to omit the work
and substitute it with a provisional sum, and thereby allow the A/CA to name the new
sub-contractor in an instruction against the expenditure of that provisional sum. This
procedure may only be utilised prior to the Contractor notifying the A/CA that he has
entered into a sub-contract with the named person.
If an A/CA wishes to name a sub-contractor, through either procedure 1 or procedure 2,
he must provide the Contractor with a full description of the work to be executed, and
he must use the standard documentation provided for this process, i.e. the Tender and
Agreement ICSub/NAM. This documentation is made up of three separate documents:
ICSub/NAM/IT Invitation to Tender
ICSub/NAM/T Sub-contractor’s Tender
ICSub/NAM/A Agreement
The Contractor is to give written notification to the A/CA of the date when he entered
into the sub-contract with the named person. Where a sub-contractor is named in the
tender documents, the Contractor is required to enter into a sub-contract within 21
days of entering into the main contract. This obviously puts the Contractor under pressure at an early stage to finalise his programming and liaise with all his sub-contractors
to agree details and dates. Likewise, if an A/CA wishes to use this procedure for naming,
he must have all details finalised before the main contract tender documentation may
be sent out. Where a sub-contractor is named against a provisional sum, there appears
to be no stipulated time period for the Contractor to enter into a sub-contract, only
a limit of 14 days in which to put forward a reasonable objection to entering into the
sub-contract with the named person.
If the Contractor and proposed sub-contractor cannot reach agreement, the Contractor
must promptly notify the A/CA and specify which particulars are preventing an agreement from being reached. If the A/CA is reasonably satisfied that the Contractor’s notification is valid, then he is to issue an instruction, which may
change the particulars to overcome the problem,
omit the work, or
omit the work and substitute a provisional sum.
The contract offers no advice as to what action the A/CA should take if he is not reasonably satisfied with the validity of the Contractor’s notification. Once an agreement has
been reached between the Contractor and sub-contractor, the Contractor is to inform
the A/CA of this fact and confirm the date the agreement was concluded.
Whichever naming procedure is adopted by the A/CA, the Contractor is obliged to pay
the named sub-contractor the amount quoted in NAM/T. Where the sub-contractor is
named in the tender documents, the Contractor is obliged to price the work described
in the tender documents and will receive payment for this from the Employer via interim
valuations. The payment procedure is not quite so simple, however, where a subcontractor has been named post contract (i.e. as the result of an instruction to expend
a provisional sum). In this instance, the amount to be paid to the Contractor will have
to be agreed between the Contractor and Employer or, where there is no agreement,
the amount will be determined by the QS (clause 5.2). No advice is given on how this
amount is to be determined. Whichever valuation method is used, the named subcontractor will not be affected as they are guaranteed payment in accordance with
their tender NAM/T.
The Contractor is to advise the A/CA, as soon as is reasonably practicable, of any events
that may lead to the termination of the named sub-contractor’s employment. If a
named sub-contractor’s employment is terminated, then the Contractor must inform
the A/CA, stating the relevant circumstances. Where a sub-contractor’s employment is
terminated, the A/CA must issue an instruction:
naming a replacement sub-contractor, or
for the contractor to make his own arrangements for completion (i.e. the contractor
may complete the work himself or sub-let the work), or
omitting the remaining work.
The above has been only a brief review of the ‘named sub-contractor’; the full procedural details may be found in Schedule 2 of the IC.
If the Contractor wishes to sub-let the design for his CDP work, he must first get the
permission of the A/CA (not the Employer as in SBC/Q).
There is no procedure to deal with the discovery of antiquities.
There is a completely different procedure for dealing with defective works. In the IC,
upon the discovery of work or materials that are defective, the obligation is on the Contractor to provide written proposals of what action he will take to show that there is no
other similar defective work elsewhere. If the Contractor fails to provide this information within 7 days, or his proposals are considered inadequate, the A/CA may issue the
Contractor with instructions to carry out further tests as necessary. If a defect is considered to be so serious that the A/CA is not prepared to wait 7 days for the Contractor’s
proposals, then again the A/CA may issue instructions for further tests to be carried out.
All these tests are at the Contractor’s expense. If the A/CA does issue the Contractor
with an instruction to carry out further tests, etc., the Contractor has the right to challenge the instruction if he considers it to be unreasonable. If the Contractor is not satisfied with the A/CA’s response to his challenge, the issue may be resolved through the
use of one of the dispute resolution procedures. Finally, there is no procedure, during
the progress of the works, for the A/CA to instruct the Contractor that an item of defective work may remain and for the contract sum to be subsequently adjusted, although
such an instruction may be issued during the Rectification Period (clause 2.30).
Section 4: Payment Provisions
The payment provisions under the IC are very much the same as under the SBC/Q. The
Contractor is entitled to receive payments on account for the work executed and for
materials on site. The payment is usually made on a monthly basis as a result of interim
valuations prepared by the QS, or based on an application submitted by the Contractor. The Employer is to pay the Contractor within 14 days of the date of the Interim Certificate. However, the Employer is generally only required to pay a percentage of the
value of work and materials (4.7.1), although some items have to be paid in full, e.g.
insurance premiums, statutory fees, loss and/or expense claims (4.2.2). The default percentage to be paid by the Employer is 95%, although it is possible to change this in the
The 5% that has not been paid by the Employer is released in the following manner:
2.5% within 28 days of date of Practical Completion
2.5% after 28 days from date of Final Certificate
The money that is withheld by the Employer is not referred to as retention, as in SBC/Q,
although it is treated in a similar manner. Where the Employer is not a local authority, it
is stated that the amounts not paid in interim payments shall be held by the Employer as
‘fiduciary trustee’, which means the money is held in trust by the Employer for the benefit of the Contractor. However, unlike under the SBC/Q, there is no provision for the Contractor to request that this money be held in a separate bank account as a safeguard in
case the Employer gets into financial difficulties. Also note that the final 2.5% is released
after the issue of the Final Certificate and not at the end of the Rectification Period or
issue of the Certificate of Making Good, whichever occurs last, as under the SBC/Q.
Through clause 4.15 the default position of the IC is that fluctuations are limited to
changes in taxes and levies, although it is possible to delete this option in the Contract
Particulars and as a result there would be no fluctuations allowed. Interestingly, named
sub-contractors may be required by the Employer to operate under the same conditions as the main contract (i.e. no fluctuations or limited fluctuations) but they may also
be allowed to claim full fluctuations under the formula method (i.e. a method of recovering fluctuations that is not available to the Contractor). In order to determine what
fluctuations apply to a named sub-contractor, it will be necessary to look at section T3
of the sub-contract tender (ICSub/NAM/T).
The rights of a Contractor to request additional payment to cover loss and/or expense
resulting from a disruption to the regular progress of the works are very similar to the
SBC/Q.
It is usually essential in any building project to make allowance for variations to the
design and quality of materials. Again the basis for issuing and valuing variations
is very similar to the SBC/Q. It is initially expected that the Employer and Contractor
will agree the value of any variations; if they cannot agree, the task will pass to the QS
(unless the Employer and Contractor appoint another party) to value the variation in
accordance with the ‘valuation rules’. The valuation rules are very much reliant upon
the Priced Document, which may be a priced bill of quantities, priced work schedules,
priced specification or a contract sum analysis or a schedule of rates. Variations to CDP
work are to be largely based upon the CDP Analysis.
The final sections of the IC deal with insurances, assignment and collateral warranties,
termination and settlement of disputes and generally follow the procedures contained
in the SBC/Q. The one major difference is that there is no reference to giving third party
rights through the Contracts (Rights of Third Parties) Act, as this legislation is specifically excluded from the IC.
The IC is designed for use on medium-sized projects of a fairly straightforward nature.
The Employer must be in a position to provide the Contractor with fairly detailed
design documentation to enable the Contractor to provide a lump sum tender,
although it is possible to have the Contractor design a portion of the works through
the use of the contractor-designed version of the Intermediate Contract (ICD). The
Employer is also expected to engage the services of an architect (or contract administrator) and a QS, and if he wishes he may also employ a clerk of works. The layout
and content of the IC is very similar to the SBC/Q, although a few of the clauses have
been simplified and some items have been omitted altogether. Possibly the most notable difference between the two forms is the introduction of the named sub-contractor
procedures contained within the IC.
Since the 1980s, there has been a steady growth in the use of the Design and Build procurement approach, and in 2004 it was estimated that nearly 43% of building work (by
value) was being undertaken by this method.6 The DB contract is suitable for projects
where the client wants a contractor to take on the responsibility for both the design
and construction work, for an agreed lump sum. The format and the conditions of contract are very similar (and sometimes identical) to the SBC/Q, especially as the SBC/Q
now incorporates conditions that deal with CDP Work. Because there is such a similarity between the DB and SBC/Q forms of contract it is important to be aware of where
the two forms differ.
The contract documents comprise the agreement and conditions (i.e. the DB form of
contract), the employer’s requirements, the contractor’s proposals and a contract sum
analysis. There is no reference to drawings being contract documents, although they
will obviously be contained within the Employer’s Requirements and the Contractor’s
Proposals. There is no bill of quantities, although they may be introduced through
the use of the supplemental provisions, which are to be found in Schedule 2. There is
no mention of an A/CA, clerk of works or QS, although the Employer is expected to
appoint an Employer’s Agent (see Article 3). This person may be a construction professional (e.g. architect, engineer, QS or project manager) or an individual from the
Employer’s organisation. Although this person is named in Article 3, the Employer may
replace them at any time. The Employer should notify the Contractor of any new nomination, but does not need to have the Contractor’s consent. The Employer’s Agent has
full authority to act on behalf of the Employer under these conditions. If the Employer
wants the Employer’s Agent to have only limited authority under these conditions, he
must write to the Contractor and notify him of the limitations. As there is no A/CA in
the DB contract, it becomes the responsibility of the Employer (or Employer’s Agent) to
issue certificates and instructions, and to grant extensions of time.
The obligations of the Contractor for carrying out the works are basically the same as
under the SBC/Q, where CDP work has been included; i.e. to carry out and complete the
works, complete the design works and select materials where they are not specified in
the Employer’s Requirements or Contractor’s Proposals and give all necessary statutory
notices. Two additional clauses are to be found in this section of the DB: firstly, there may
be a requirement for the Contractor to provide samples of the standard of workmanship
or quality of goods to be provided (clause 2.2.3) and secondly, there is a requirement
that the Employer must define the site boundaries (clause 2.9). The Contractor’s right
to request an extension of time is very similar to the SBC/Q. The relevant events that
allow the granting of an extension of time are very similar, although the DB does have
an additional relevant event where there has been a delay in receiving permission or
approvals from a statutory body, and which the Contractor has taken reasonable steps
to reduce (e.g. this could relate to problems with gaining planning permission).
Again there is very little difference between the DB and SBC/Q with regard to the control of the works (Section 3), although under the DB contract, the Employer has no
right to issue an instruction excluding one or more of the Contractor’s operatives from
With regard to interim payments under the DB contract, there are two methods
that may be used to value the work carried out by the Contractor: Alternative A and
Alternative B. The Contract Particulars should identify which option is to be used; the
default position is that Alternative B is to be used. Under Alternative A, the Contractor
is entitled to be paid on a stage payment basis. A number of work stages will be identified in the Contract Particulars and priced on a cumulative basis. As the stages are completed, the Contractor is to submit an application for payment for the cumulative value
of the works (taken from the Contract Particulars) at that stage. Under Alternative B, the
Contractor is to make an application for payment on the dates set out in the Contract
Particulars. The payment is based upon the value of work and design work executed by
the Contractor by that date. Alternative B is basically the procedure used in the SBC/Q,
with the exception that the value of work is assessed on the contract sum analysis
submitted by the Contractor, instead of on a bill of quantities. Regardless of whether
Alternative A or B is used, the contractor may also claim the cost of Changes (variations), listed offsite materials and fluctuations. Materials on site may only be claimed
under Alternative B. The interim payments are based on the Contractor’s applications,
and the Employer must pay within 14 days from the date the application was received.
The Employer is able to deduct retention from payments from the Contractor, but there
is no alternative provision to allow a retention bond as a replacement for retention.
The Contractor is the party responsible for preparing the final account and a final statement. These documents should be submitted to the Employer within 3 months of practical completion. The final account is the Contractor’s assessment of the total cost of
the works and the final statement is like the Final Certificate under the SBC/Q; it states
the amount of money payable to the Employer or Contractor in settlement of the final
account. If the Contractor fails to produce the final account and final statement within
the required time frame, the Employer may take on the responsibility for producing
these documents. However, this is an option, not an obligation. If the Employer intends
to take on this task, he must have allowed the Contractor the 3-month period to produce
the documents and then give the Contractor a notice to the effect that, if the Contractor fails to produce the documents within the next 2 months, the Employer may himself
prepare the documents. Even if an Employer issues this notice, he is under no obligation to prepare the documents; it is still his option. Regardless of which party prepares
the final account and financial statement, the documents are conclusive evidence that
the amounts are correct, unless they are challenged within the appropriate time.
A Contractor’s right to claim for loss and/or expense is similar to the procedures under
the SBC/Q, although there is an additional event in DB that allows the Contractor to
submit a claim. This additional event relates to delays in obtaining permissions or
approvals in relation to development control, e.g. planning permissions.
The section dealing with variations is similar to SBC/Q. One of the most obvious differences is that variations are referred to as ‘Changes’ in the DB contract. The value of any
Changes is to be agreed between the Employer and Contractor. If they cannot agree on
a value, the next step will normally be for the work to be valued in accordance with the
valuation rules as in SBC/Q, but as in this instance there is no QS to apply the rules, it is
once more down to the Employer and Contractor to reach an agreement by using the
valuation rules. Although the wording of the valuation rules differs slightly between the
DB and the SBC/Q, the general principles to be used in valuing the work are the same.
The biggest drawback to using the valuation rules under the DB is the lack of detailed
cost information. In the SBC/Q, the bill of quantities provides a detailed breakdown of
the Contractor’s costings, whereas in the DB contract the bill of quantities is replaced by
a contract sum analysis, which normally provides only a very broad breakdown of the
project costs and may be of very limited use when trying to apply the valuation rules.
There are a number of schedules at the back of DB. Possibly one of the most significant
ones is Schedule 2, which introduces a number of additional contract conditions that
can impact substantially on the administration of the project. The use of Schedule 2 is
optional and reference will have to be made to the Contract Particulars to see whether
the Schedule applies or not.
The first paragraph of the Schedule is an optional provision and again the Contract
Particulars will identify whether or not it applies. If the paragraph does apply, the Contractor is required to appoint a site manager to act in place of the competent person
in charge referred to in clause 3.2. The person selected to be site manager must be
approved by the Employer and be appointed (by the Contractor) before work starts on
site. Having made the appointment, the Contractor cannot remove or replace the site
manager without the Employer’s consent, which cannot be unreasonably delayed or
withheld. The site manager is to attend meetings called by the Employer when reasonably required to do so, and must keep accurate site records that comply with any specific requirements of the Employer, as set out in the Employer’s Requirements.
The second paragraph of the Schedule allows the introduction of ‘Named Sub-contractors’. Through this process an Employer may use the Employer’s Requirements to name
a person whom the Contractor is required to engage as a sub-contractor. The naming
procedure in the DB is different from the IC to the extent that the JCT has not produced
any standard documentation to assist with the procedure; there are no standard forms
of tender and agreement.
Where the Employer has named a person in the Employer’s Requirements, the Contractor is normally required to enter into a sub-contract with that person as soon as possible after entering into the main contract. On some occasions, it may not be possible
for the Contractor to enter into a sub-contract with the named person, e.g. there may
be basic disagreements about the service the named person is able to provide, the
timing of the service, or problems with insurance or liability. If this situation arises, the
Contractor must inform the Employer. If the Employer accepts that the Contractor has
a genuine problem with the named person, he must do one of the following:
Resolve the problem by issuing a change instruction that would then allow the
Contractor to enter into a sub-contract, or
Issue a change instruction to omit the named sub-contract work and follow that
up with an instruction that details how the work is to be dealt with.
If the Employer chooses to omit the named sub-contract work, he may not subsequently instruct that the work be carried out by another named person, but he may
instruct the Contractor to find another person to carry out the work. Alternatively, the
Employer could arrange to have the work carried out separately from the main contract, as allowed under clause 2.6.
Once a named sub-contractor is appointed, the Contractor should not terminate
his employment without the Employer’s consent. Where a named sub-contractor’s
employment has been terminated, the Contractor becomes responsible for completing the remaining sub-contract works. The Contractor will be paid for these works as
though they were a ‘Change’, unless he failed to obtain the Employer’s consent to terminate the named sub-contractor’s employment, or the termination was as a result of a
default of the Contractor. The Contractor must inform the Employer of any monies he is
able to recover from the named sub-contractor as a result of the termination, and these
monies are to be taken into account when valuing the Change.
Paragraph 3 gives the Employer the option of using bills of quantities to describe
the work in the Employer’s Requirements. This could be a realistic option only where
the works have been substantially designed by, or on behalf of, the Employer before the
Contractor is asked to submit his proposals, e.g. a novated design and build project. If
the Employer wishes to use bills of quantities, the Employer’s Requirements must state
what measurement rules were used to prepare the bills. If there are any mistakes in the
bills, they are to be corrected and treated as a Change to the Employer’s Requirements;
therefore, any errors will be at the Employer’s expense. The advantage of using bills of
quantities is that they provide a much more detailed breakdown of the Contractor’s
costs than would a contract sum analysis. They can therefore assist the Employer in
agreeing the value of Changes and assessing the value of formula fluctuations.
Paragraph 4 introduces a procedure that is similar to the SBC/Q Schedule 2 Quotation.
The procedure is triggered off by the Employer issuing an instruction that would, in the
opinion of the Employer or Contractor, require:
the valuation of a Change or provisional sum work, and/or
an adjustment of time for a Relevant Event, and/or
an assessment of loss and/or expense under clause 4.19.
In the event of one or more of the above situations arising, the Contractor is not to
comply with the instruction and must, within 14 days, or other agreed time, provide
the Employer with the following estimates, where relevant:
the required adjustment to the contract sum for complying with the instruction;
what additional resources may be required;
any extension of time that may be required; and
the amount of any direct loss and/or expense that may be incurred.
The Contractor and Employer should try and agree the estimates within 10 days of
receipt, whereupon they become binding on both parties. If agreement cannot be
reached, the Employer may withdraw the instruction, or instruct that it is to be complied with and dealt with under the normal contract conditions. If the Contractor fails
to comply with the requirements of paragraph 4, then the instruction will be dealt with
under the normal contract conditions, but the Contractor will not be entitled to any
payment for the instruction until the issue of the Final Statement.
It is important to note that there are instances when this ‘Paragraph 4’ procedure may
be ignored. For example, an Employer may state in the instruction (or within 14 days of
issuing the instruction) that the Contractor is not required to provide estimates. Also,
within 10 days of the issue of the instruction, the Contractor may put forward an objection to complying with all or some of the procedure. The Contractor’s objection has to
Paragraph 5 modifies the contract conditions relating to the assessment and payment
of direct loss and/or expense. Clause 4.19 entitles the Contractor to receive payment for
loss and/or expense on the basis that he informs the Employer of the disruption to the
progress of the works and provides information to support his application. As the loss
and/or expense is assessed, it will be paid to the Contractor through interim payments.
Under paragraph 5, the Contractor is required to provide the Employer with estimates
of his loss and expense at the same time as his applications for an interim payment;
therefore, the Contractor is keeping the Employer informed on a regular basis of his
estimated loss and expense. Within 21 days of receiving the estimate, the Employer
may, if he wishes, ask the Contractor for more information and details to support the
estimate, but within the same time period the Employer must give the Contractor one
of the following notices to the effect that:
the Employer accepts the estimate, or
the Employer wishes to negotiate the estimate, and if agreement cannot be
reached it is to be referred to adjudication, or
clause 4.19 is to be used to deal with the claim in place of paragraph 5.
Where the estimates are accepted or agreed, they will determine how much the Contractor receives; they cannot be adjusted at a later stage. If the Contractor fails to provide the estimates as required, the loss and expense will be assessed under clause
4.19 but the Contractor will not be entitled to payment until the issue of the Final
The DB contract is a lump sum contract and there are three key contract documents to
be used in conjunction with it. Firstly, the Employer’s Requirements, which is a document
similar to a client’s brief, identifying what the Employer wants from his completed
building. This document may be prepared in some considerable detail or it may provide just basic requirements, leaving the Contractor to flesh out the detail. Secondly,
in response to the Employer’s Requirements, the Contractor produces and submits his
own proposals (the Contractor’s Proposals); this document illustrates how the Contractor intends to design and produce a building to meet the Employer’s Requirements.
Thirdly, to assist with the financial administration of the project, the Contractor will
provide a breakdown of his lump sum tender by producing a Contract Sum Analysis.
The DB contract is a complex and fairly lengthy document containing just over 100
pages. It is very similar in size and complexity to the SBC/Q, and there is a high degree
of commonality between the contract conditions of the two forms. There is a significant difference with regard to the administration of a DB project in that there is no
A/CA to administer and control the works and no QS to assist with the financial aspects
of the works. The responsibility of administering the project rests with the Employer and
Contractor, although the Employer is able to delegate this role to an Employer’s Agent.
As previously mentioned, many of the contract conditions contained within the DB contract are identical to those found in the SBC/Q, especially now that the SBC/Q contains
procedures for CDP works. Some of the differences that do exist between the two forms
have been identified in the above text, but perhaps some of the most significant differences lie within the optional clauses contained within Schedule 2 of the DB contract.
The Management Building Contract (MC) is predominantly designed for large-scale
and possibly complex projects where the Employer would like an early start on site
at a time when the detailed design is still to be agreed. Under the management contracting approach, the Employer engages a contractor (the management contractor)
to supply the site facilities and to perform the site management role. The Management
Contractor will in turn engage sub-contract organisations (works contractors) to carry
out the construction work. The Employer will engage a number of professional advisers to assist with the design and cost implications of the project, although some of the
design work can be passed on to the works contractors. Where the Employer uses the
MC contract, he is obliged to appoint an A/CA and a QS (Articles 3 and 4); the other
members of the Consultant Team are identified in Article 5, or may be notified to the
Management Contractor at a later date. The Management Contractor’s key personnel
are identified in the Contract Particulars.
The format and layout of the MC reflects the current style adopted by the JCT and the
document is broken down into the following sections:
Section 2: Carrying out the Project
Section 3: Control of the Project
Section 5: Works Contracts
Annexe A: Site Facilities
Annexe B: Services
A number of items included in Part 1 of the Contract Particulars are not normally found
in JCT contracts. With reference to clause 1.1, the Contractor is required to list the names
of his key personnel engaged on the project and identify their role. The accompanying
footnote explains that it is important to indicate which key personnel are site-based
and which are off site, the reason being that the financing of the site-based personnel
is dealt with as part of the prime cost of the project, whereas the cost of the offsite personnel is covered by the management fee. A Review Date is to be inserted into the Contract Particulars (see clause 2.1.2); the Consultant Team and Contractor are expected to
agree the basic pre-construction details by this date. Details of the Prime Cost are to be
inserted (see clause 4.1.1); these details are only provisional at this stage and are supplied as an aid to negotiations during the pre-construction phase. Details are also to
be provided to show how the management fee is to be calculated and, finally, details
of the pre-construction services are to be supplied by the Management Contractor.
Because of the uncertain nature of a management construction procurement
approach, it is not always possible to set out firm details in the contract documents
during the pre-construction phase. Once this phase has been finalised therefore, it may
be necessary to firm up or alter some of the previous provisional details in Part 1 of the
Contract Particulars. This may be achieved through the use of Part 3 of the Contract
Particulars, i.e. the Supplemental Particulars. Here the parties can set down the Project
Total Cost Plan, confirm the dates of possession and completion, provide details of the
Prime Cost that may have been agreed, confirm how the management fee is to be calculated and set out details of the services to be provided by the Management Contractor during the construction period.
The MC form of contract is similar (or identical) to the SBC/Q in many areas but, because
of the management role of the Contractor, there are also a number of substantial and
minor differences between the two forms. Some of the minor differences relate to the
wording used in the MC contract; e.g. the main works are referred to as the Project, subcontractors are referred to as Works Contractors and the sub-contract works are referred
to as the Works. The MC also introduces some terms and concepts that may be unfamiliar to users of the SBC/Q, e.g. Acceleration Quotation, Consultant Team, Construction Period Fee, Pre-construction Fee, Management Fee, Site Facilities, Review Date,
Notice to Proceed and Project Cost Plan. All these terms are identified within Section 1,
along with a brief explanation of how the terms are to be used within the MC.
In this section, the MC generally follows the layout and wording of the SBC/Q, with the
exception of the earlier clauses that reflect the different role taken on by a Management Contractor. For example, before the Management Contractor can make a start on
site he requires a ‘Notice to Proceed’. To obtain this notice, the Management Contractor
has to comply with certain obligations; during the pre-construction period he must cooperate with the Consultant Team and provide the Pre-construction Services identified
in Annexe B. Furthermore, on or before the ‘Review Date’ (a date stated in Part 1 of the
Contract Particulars), the Management Contractor is required to liaise with the Consultant Team so that agreement may be reached on the following details:
The Project Cost Plan that is to be prepared by the QS in collaboration with the
consultant team and management contractor;
The date of possession, if it is to be different from the one provisionally identified
in Part 1 of the Contract Particulars;
The date for the completion of the project;
The specific details regarding the supply of the site facilities and construction
period services;
The final project specification and drawings, where necessary;
The prime cost (i.e. the cost of the project calculated in accordance with Schedule
The supplemental particulars to be found in Part 3 of the Contract Particulars,
which is where certain provisional and contract detail is finally set out in the
Following this consultation period, the A/CA should notify the Employer of the proposed terms and advise whether it is practicable to start the construction work. If the
A/CA fails to notify the Employer within the required time frame, the Employer may be
given a notice by the Management Contractor warning that his employment will be
terminated unless the A/CA gives a proper notice. Where the A/CA has given a proper
notice, and the Employer accepts the proposed terms, he should inform the Management Contractor to set the construction work in motion, i.e. give the notice to proceed.
If the Employer fails to properly give the notice to proceed, the Management Contractor has the right to request the Employer to issue either the notice to proceed or
a notice terminating the Management Contractor’s employment. If the employer fails
to respond to this request within the due time, the Main Contractor’s employment is
deemed to be terminated. Under normal circumstances, the Management Contractor
would still receive his Pre-construction Period Fee.
Having received a notice to proceed, the Management Contractor must ensure that the
project is carried out in a workmanlike manner and in accordance with the contract
documents, the contract documents being the project drawings, project specification,
project cost plan, as well as the agreement, conditions and Annexes A and B of the
MC form. Furthermore, the Management Contractor is also required to carry out the
project in an economic and ‘expeditious’ manner. This last requirement is an attempt to
ensure that the Management Contractor undertakes his management role effectively.
The Management Contractor is also required to fulfil further management tasks during
the construction period, e.g.:
Collaborate with the Consultant Team, prepare project programmes as necessary
and provide the construction period services listed in Part 2 of Annex B;
Enter into works contracts in a timely manner to allow the project to be completed
Ensure the required site facilities are provided;
Supervise and monitor the works contractors;
Provide continual project supervision and assist with the management and
organisation of the project; and
Keep records, as required, to allow the QS to be able to assess the prime cost of the
This section sets out the administrative detail and procedures for the control of the
project. Although some of the detail contained within the MC is the same as in the
SBC/Q, there are procedures within the MC form that differ from the SBC/Q. Some of
the differences to be found in the MC form are as follows:
The A/CA and QS have the right to inspect the Management Contractor’s project
documentation to assist in both the running of the project and the assessment of
payments due to the Management Contractor.
The Management Contractor must ensure that his key personnel are normally
available and fulfilling their roles on the project and that he maintains the necessary
management personnel for the supervision of the project and the site works.
The selection of works contractors is to be agreed between the Management
Contractor and A/CA. Normally, a works contractor is required to be willing to enter
into a current and unamended form of Management Works Contract Agreement,
a Management Works Contractor/Employer Agreement (a collateral warranty)
and into third party rights or collateral warranties where required. It is important
for the Management Contractor to appreciate that he is liable to the Employer, in
most instances, for the performance of the works contractors. If the Management
Contractor wishes to sub-let some of his pre-construction or construction period
management services, he must get prior approval from the Employer, or from the
A/CA acting on behalf of the Employer.
An innovation of the MC is that the A/CA may issue an instruction requesting an
‘Acceleration Quotation’, the procedures for which are set out in Schedule 6. There
are some slight similarities between an Acceleration Quotation and the Schedule 2
Quotation to be found in SBC/Q but the main purpose of an acceleration quote is to
obtain an earlier completion date for the project, or a section, or to try and reduce
an extension of time that is being currently assessed, or to alter the sequencing
or timing of any work on the project. The Management Contractor can decline to
give a quotation if he has a reasonable objection. If not, he must inform the A/CA
of the proposed revised completion date, and of the lump sum required by each
works contractor affected by the instruction. In some instances, he may state that it
is impracticable to calculate a lump sum and that the work will have to be assessed
under the normal contract conditions. If the Employer accepts the quotation, the
A/CA is to issue a Confirmed Acceptance.
The payment procedures of the MC tend to mirror the procedures contained within
the SBC/Q, although there is a significant difference in the items for which a contractor
is entitled to receive payment, e.g. the Management Contractor is entitled to receive
payment for his management fee, which is broken down into a pre-construction fee
and a construction period fee. The pre-construction fee may be a fixed fee or a variable
fee, depending on the contract documentation, and will be paid through interim certificates issued before the date of possession, at the times set out in the Contract Particulars. Similarly, the construction period fee may be a fixed fee or an adjustable fee.