SCL Astra

An Introduction to Standard
Forms

Edward Colclough, Senior Associate

Mark Pantry, Senior Associate
Agenda
• Standard forms and the procurement system
• JCT
• NEC
• Other forms:
• FIDIC
• Partnering and Alliancing
• Major Projects
• Term Contracts
• Sector specific
Basic Concepts

• Why standard forms?

• Standard forms and procurement must be considered together

• Traditional versus design and build

• Innovative procurement pathways and increased levels of sophistication

• Traditionally JCT has led the building market while engineering was
dominated by the ICE standard forms.

• Collaborative or partnering orientated approaches.

• Publicly procured projects subject to regulation.
JCT Design and Build
Contract
JCT – Why use a Standard Form?

• ‘It saves time’

• ‘It minimises transaction cost’

• ‘It allocates risk in a fair and recognisable way’

• ‘Standard forms are designed in a way that is comprehensive, and cover most of the
pitfalls which surround contractual relations in the building industry’

• ‘Standard forms reflect the benefits that are accrued through precedent – this is
achieved by defining benchmark provisions which reflect a generally acceptable
position in practice’

• ‘JCT contracts are developed via a cross-section of the building industry involved in the
contract process. This means that clients (private and public sector), consultants,
contractors, specialists, and sub-contractors are all involved in the development of JCT
contracts’

JCT Website
JCT Design and Build 2016

• Design and build procurement developed during

the 1960s.
• In 1981 the JCT published the With Contractor’s
Design standard form of contract.
• NBS National Construction Contracts and Law
Survey 2018 found 41% of respondents said that
the design and build was most frequently used.
• The JCT’s Design and Build Contract has
become a domestic contract of choice with
funders, employers and contractors experienced
in using it.
Schedules of Amendments

Lloyd QC noted in the case of Royal Brompton Hospital National Health

Trust v Hammond and Others (No. 9) [2002] EWHC 2037:

‘A standard form is supposed to be just that. It loses its value if those using
it or, at tender stage those intending to use it, have to look outside it for
deviations from the standard.’
Frequent amendments
Some basic funder/employer requirements are still missing:

• a single point of responsibility on the Contractor for the ERs and CPs;

• altering of payment and notice timescales;

• provisions detailing the novation of the design team;

• the Contractor’s copyright licence not being linked to payment;

• more comprehensive confidentiality provisions;

• express provisions regarding deleterious materials;

• obligations to comply with relevant third party agreements;

• express obligations to prevent nuisance and trespass in carrying out the works; and

• the ability for the Employer to freely assign the contract without the Contractor’s consent.
NEC4
NEC4 Core Principles

• Three core principles:

• Flexibility
• Simplicity and clarity
• Stimulus for good management

• NEC4 ECC Core Clause 10.2:

‘The Parties, the Project Manager and Supervisor act in a spirit
of mutual trust and co-operation.’
NBS National Construction
Contracts and Law Survey 2018
Use of NEC

‘We recognise the UK supply chain operates differently to France. The French
way is to go for large lump sum turnkey contracts. The UK supply chain is more
complex and relationship based. We’ll use the NEC form as it is more
collaborative and what we want on these plants is good solid relationships.’

‘We’ll be looking closely at how main contractors collaborate with their supply
chain.’

‘Nuclear work is about getting it right first time, every time. What we are doing is
running a marathon. We need to train for the marathon. So getting the right
people is a key issue.’

EDF
NEC4 Engineering and Construction
Contract (ECC)
• Six main options.
• Nine core clauses.
• Three dispute resolution options:
• W1 – Adjudication (where HGCRA does not apply);
• W2 - Adjudication (where HGCRA applies); and
• W3 – Dispute Avoidance Board (and HGCRA does not apply).
• Twenty two secondary options – the X Clauses.
• Three UK-specific options – the Y Clauses:
• Option Y(UK)1 – Project Bank Account;
• Option Y(UK)2 - HGCRA; and
• Option Y(UK)3 – third party rights.
• Z Clauses: ‘Additional conditions of contract’
NEC4 – Main Options

• Option A: priced contract with activity schedule.

• Option B: priced contract with bill of quantities.
• Option C: target contract with activity schedule.
• Option D: target contract with bill of quantities.
• Option E: cost reimbursable contract.
• Option F: management contract.
NEC4 – Z Clauses

NEC guidance notes:

‘only when absolutely necessary’

Rudi Klein, The X Factor, Building, 2 July 2010

‘What’s the point of using a standard contract if you’re going to add so
many extra clauses that you’re essentially creating a bespoke form?
Take Z clauses in NEC3 for example …’

Typical Z clauses:
• The provision of collateral warranties.
• Workmanship, design and prohibited materials.
• Assignment.
• Subcontracting.
NEC4: Early Contractor
Involvement

• New Optional X Clause (X22) building on previous guidance

• Turns the contract into a two-stage procurement process:
• Stage One: Contractor’s involvement in the design process;
• Stage Two: Contractor completes outstanding design and construction
of the works.
NEC4: Programming

Core Clauses 31.2 provides that the Contractor shows on their

programme:
• the starting date, access dates, Key Dates and Completion Date;
• planned Completion;
• order and timing of operations which the Contractor plans to do in
order to Provide the Works (including the work of others);
• provisions for float, time risk allowances etc;
• dates when the Contractor will need access, acceptances, information,
plant and materials;
• a statement of how the Contractor plans to do the work;
• anything else which the Scope requires.

Programmes are submitted to the Project Manager for acceptance

NEC4: BIM

BIM provisions have been expanded from NEC3

• Option X10: Information Modelling
• Client sets out the Information Model Requirements

• The Contractor prepares the Information Execution Plan to meet the

Information Model Requirements

• Client is liable for faults/errors in the Information Model (other than

defects in the project information supplied by the Contractor) and for
faults in information input into the Information Model by Others.
NEC4: Early Warning Procedure

Core Clause 15:

• The Contractor and the Project Manager are to give an early warning by
notifying the other as soon as either becomes aware of a relevant matter
which would:
• Increase to the total of the Prices.
• Delay in completion or meeting a key date.
• Impair the performance of the works.
• Early warnings added to the Early Warning Register (formerly Risk
Register). The Contractor and Project Manager (and Others if required)
are then required to attend an early warning meeting.
• The purpose of the early warning meeting is for those in attendance to
cooperate and discuss how the problem can be avoided or reduced.
Decisions focus on what action is to be taken next, and to identify who is
to take that action.
NEC4: Early Warning Procedure

Consequences:
• Contractor:

• Core clauses 61.5 and 63.7 – If the Contractor did not give an
Early Warning in relation to a Compensation Event then the
Compensation Event is assessed as if the Contractor had given
the Early Warning.

• Client:

• Breach of contract if Project Manager fails to give an Early

Warning notice.
Compensation Events

Core Clause 61.3:

‘The Contractor notifies the Project Manager of an event which has

happened or which is expected to happen as a compensation event if

• the Contractor believes that the event is a compensation event and

• the Project Manager has not notified the event to the Contractor.

If the Contractor does not notify a compensation event within eight weeks of
becoming aware that the event has happened, the Prices, the Completion
Date or a Key Date are not changed unless the event arises from the Project
Manager or the Supervisor giving an instruction or notification, issuing a
certificate or changing an earlier decision.’
Other Forms
FIDIC
• Fédération Internationale Des Ingénieurs-Conseils
• Conditions of Contract for Construction – Red Book
• Conditions of Contract for Plant & Design-Build –
Yellow Book
• Primarily utilised for international engineering and
infrastructure projects
• Red Book is a re-measurement contract; Yellow
Book is a lump sum contract
• FIDIC’s Golden Principles – “encapsulate the
essence of a FIDIC Contract”
• Fitness for purpose
Partnering Arrangements
• Contractual partnering arrangements:
• PPC 2000;
• JCT Constructing Excellence Contract 2016;
• Strategic Forum Model Form of Agreement for an Integrated
Project Team;
• Framework Alliancing Contract (FAC-1);
• Term Alliance Contract (TAC-1);
• NEC4 Alliance Contract.
• Non-contractual partnering:
• JCT Framework Agreement;
• JCT Partnering Charter (non-binding);
• NEC4 Option X12: Multiparty Collaboration.
Major Projects
• JCT Major Projects Construction Contract
• lump sum contract with standard form subcontract;
• initial employer design, developed by the contractor;
• a short document;
• mediation, adjudication, litigation.
• CIOB’s Time and Cost Management Contract Suite
• previously known as the Complex Projects Contract,
• traditional procurement or design and build;
• special conditions for construction management or management contracting;
• pricing might be fixed, target costs, measured term, fixed fee, or
reimbursement;
• partnering or alliancing may be incorporated;
• the focus is on programming, and the use of critical path networks.
Short Form Agreements

• JCT Minor Works Contract, and a version with contractor’s design

• Infrastructure Conditions of Contract (ICC) for minor works
• NEC4 Engineering and Construction Short Contract
Management Contracting and
Construction Management

• Management Contracting:
• fast track construction providing for the design to proceed as the
works are constructed;
• cost risks and design constraints;
• contractor becomes involved in the “buildability” of the project;
• packages of work let to specialist subcontractors by the management
contractor.
• Construction Management:
• the construction manager is part of the design team;
• packages are let directly by the client upon the recommendation of
the construction manager.
Term Maintenance and Facilities
Management Contracts

• JCT Measured Term Contract 2016

• NEC4 Term Service Contract
• Term Partnering Contract (TPC 2005)
Sector Orientated Standard
Forms

• Institute of Mechanical Engineers (IMechE) MF/1

• Institute of Chemical Engineers (IChemE) contracts suite
• Electrical Contractors Association (ECA) conditions of contract
• National Federation Demolition Contractors Form of Direct Contract
Questions?