JCT 2024: bold change or cosmetic surgery?


The Design and Build element of the JCT 2024 suite of contracts was unveiled in April – but do lawyers think it represents meaningful change?

It’s been eight years since the construction industry saw the launch of the previous suite of Joint Contract Tribunal (JCT) documents.
At that point, events such as the Covid pandemic, spiralling inflation and economic recession – as well as the horrors of the Grenfell Tower fire – were almost unimaginable.

In April, the JCT began rolling out a new suite of documents for the construction sector, starting with the publication of JCT Design and Build 2024 (DB2024).

A new edition of the JCT standard has been broadly welcomed as long overdue, given how the ‘black swan’ events of recent years have affected the construction industry.

However, some lawyers believe that the changes merely border on the cosmetic.

Building Safety Act provisions

DB2024 reflects the changed legal landscape since 2016 by accommodating dutyholder provisions in the new Part 2A of the Building Regulations, which arose from the Building Safety Act (BSA) 2022.

Ben Patton, a partner at law firm Ashurst and a member of the JCT 2024 drafting subcommittee, said that Article 7 of the new document enables the parties to specify who the principal contractor and principal designer are for the purposes of the building safety regime.

“This is critically important because these two appointments – principal contractor and principal designer – are required by statute to be made in writing,” he said. “What we’ve done is to make it very user-friendly.”

DB2024 allows a single organisation to be responsible for the building safety requirements in a project. In JCT 2016, separate bodies performed the principal designer and principal contractor roles, so there was no single entity with overall accountability.

In addition, one of the clauses in DB2024 addresses compliance with both the Construction Design and Management (CDM) Regulations and Part 2A of the Building Regulations.

“For higher-risk buildings, further bespoke amendments to the standard form will be required”

Arash Rajai, RPC

Overall, Patton said the JCT adopted a “light-touch approach” that mirrors the CDM regulations when drafting DB2024. He added that the new contract standards “do not include additional provisions that may be considered as necessary in respect of higher-risk building [HRB] work”.

His rationale was that HRBs are just one of many project types for which JCT contracts may be used, so “including those specific provisions would not be appropriate in a more generic and widely available contract”.

But other lawyers believe that HRBs are the kind of potentially complex and contentious construction projects that require specific treatment in a contract model.

RPC partner Arash Rajai said that the JCT’s approach was surprising. He told Construction News: “We understand the JCT’s desire to ensure that the contract is useable for as many different projects as possible. Nevertheless, employers should be aware that for higher-risk buildings, further bespoke amendments to the standard form will be required.”

Hawkswell Kilvington partner Rachel Heald said that DB2024 omits a specific reference to the fact that work on HRBs cannot progress without gateway two approval from the Building Safety Regulator (BSR).

“For projects involving HRBs, I am starting to see bespoke clauses included to deal with these issues,” she said.

Extensions

Under DB2024, contractors can now claim an extension of time, loss and expense if asbestos, contaminated material or unexploded ordnance are discovered on site.

“The claim to have modernised the JCT is questionable, and I can foresee some interesting debates”

Marc Preston, Construction Dispute Experts

And with the experience of Covid in mind, JCT has also included epidemics in the list of “relevant events” under which an extension of time is allowed.

Mayer Brown associate Charles Pacey noted that this should reassure contractors. “When Covid first emerged, we were thinking, ‘This is out of the blue so is this [cause for] force majeure?’ It was quite a tricky question to answer, whereas now we’ve got this clear framework.”

He added: “I expect parties will still want to scrutinise the detail of those new relevant events and check that they’re comfortable that it reflects the risk allocation that’s actually been agreed between employer and contractor, or [between] contractor and subcontractor.”

Working collaboratively

A new Article 3 in DB2024 strengthens the requirement for clients and contractors to work cooperatively and collaboratively, in good faith and with mutual trust and respect.

“The 2016 contract did have some provisions relating to that, but they were supplementary provisions so they didn’t apply by default. They’ve now been elevated to core conditions of the contract,” said Pacey.

“It encourages the senior people from both sides to meet and try and resolve the dispute together in good faith before they go down the arbitration or adjudication route. And I think that would be welcome, because on a live construction project, you want to resolve disputes cost-effectively and as quickly as possible.”

Sharing pain and gain

Later this year the JCT will formally release its Target Cost Contract (TCC), a new addition to the suite that aims to spread construction risk between clients, contractors and the supply chain. JCT drafting subcommittee member John Riches, who is managing director of quantity surveying firm Henry Cooper Consultants, gave a sneak preview of the TCC on 1 May.

Under the TCC, the contractor would not only carry out and complete the works, but it would also complete the design. The client would employ an agent such as an external consultant to administer the contract conditions.

Unlike DB2024, the TCC does not provide a lump sum. Instead, the contractor would be paid “allowable” costs together with a contract fee – either a fixed sum or a percentage of the allowable cost as determined in the negotiated contract.

In addition, a “difference share” may be payable as calculated under the contract “so there’s pain/gain sharing”, said Riches. He added: “It’s an odd thing to talk about when you’re using something which is supposed to de-risk things, so let’s hope there’s not much pain.”
The difference is determined by deducting the allowable cost plus the contract fee from the target cost. It’s then distributed in proportions that the parties choose in the contract particulars.

Mayer Brown associate Charles Pacey said the arrival of the TCC could signal a recognition that the high inflation of recent years, coupled with material supply problems and labour shortages, means that fixed-price lump-sum contracts are less attractive.

“Actually, the TCC might be more appropriate so that the parties can better allocate costs risk between them, while making sure there’s a focus that the project is completed as cost-effectively as possible,” he added.

Carbon reduction

Contractors are also now required to provide information about the environmental impact of their materials. And a new provision – previously optional – encourages the contractor to suggest economically viable amendments that “may result in an improvement in environmental performance and sustainability” and “a reduction in environmental impact”.

This is a positive step towards meeting the objectives of the Construction Playbook, said Marc Preston, a qualified surveyor and director of Construction Dispute Experts. “However, the wording remains unchanged so there is no obligation, and what form ‘encouragement’ takes is up to the employer. It will be interesting to see how this develops, as ‘encouraging’ may not in practice represent a stride towards the net-zero commitment.”

Light-touch approach

Preston also expressed concern that provision for the proactive identification and management of risk, ensuring it is dealt with by the correct party in the supply chain, has been missed in DB2024.

“The claim to have modernised the JCT is questionable, and I can foresee some interesting debates following the update of the list of relevant events for entitlement to extensions of time and the relevant matters for entitlement to loss and expense,” he added.
The light-touch approach has laid JCT open to the argument that its changes do not go far enough.

For example, Weightmans solicitor David Lukic argued that DB2024 represents “more of a tinkering around the edges than a real shift in policy, and many will be disappointed by the limited scope of the updates”.

A JCT spokesperson told CN that the criticism misunderstands the purpose of the new contract. “The changes are considered important in order to ensure that the contracts remain up to date,” they said. “They are not designed to introduce major shifts in policy or risk allocation. JCT’s remit is to provide for the legal rights and obligations of the contracting parties to achieve the objectives of project delivery and its payment.

“We note that the changes have been overwhelmingly well received by many legal commentators and the industry.”

A ‘missed opportunity’ on mental health

JCT missed an opportunity to include mental health provisions in DB2024, according to Construction Dispute Experts director Marc Preston, who is also chief executive of New Foundation Counselling.

In a paper released on LinkedIn, he said: “JCT is the predominant contracting framework. Inclusion for the provision of mental health in the 2024 iteration creating an equal footing with physical health should be beyond discussion and debate.”

He wrote to the JCT during the drafting process to press his case. “Research has established one of the main purposes of rules/law is to provide legitimacy. Laws also influence social norms and force behavioural change,” Preston argued.

“Changing the JCT contract would create and legitimise a new social norm and practice for the industry and, most importantly, create a social stigma for not addressing mental health needs completely, reversing the current prevalent stigma around mental health.
“Simply, it is critical that construction sites make efforts to align with modern professional workplaces and have the necessary processes in place to monitor and engage with worker wellbeing. None of this is reflected in the new JCT 2024.”

A JCT representative told CN: “The CLC [Construction Leadership Council] is currently leading the construction industry’s work on mental health issues, which JCT is supporting.”



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