Following the publication of the new JCT Design and Build
Contract 2016 on 22 September 2016, it is expected that the updated
SBCC Design and Build Contract for use in Scotland won't be far
behind, although a definitive date for publication has not yet been
given. It is anticipated that the new SBCC Design and Build
Contract, once published, will incorporate similar amendments as
its JCT equivalent. It is, therefore, important to be aware of the
key updates included in the Design and Build Contract 2016.
Some of the key updates include the following:
these have been simplified, including consolidation of interim and
final payment provisions and the incorporation of a procedure for
the prompt assessment of loss and expense claims, setting out
specified timeframes/procedures for ascertaining such claims.
Insurance of existing
structures: there are revised insurance arrangements,
including alternative options for parties to agree their own
arrangements where works are being undertaken to an existing
structure (Insurance Option C), helping to resolve the situation
where, for example, a tenant is carrying out works and is unable to
obtain all risks insurance in the joint names of the employer and
Performance bond / Parent
Company Guarantee: there is now a standard clause
requiring the provision of a performance bond or parent company
guarantee (although JCT has not published a form for either of
BIM Protocol: with
the increasing use of BIM in the construction industry, there is an
option for complying with a BIM Protocol. If this is required, the
parties would require to arrange for the BIM Protocol to be
prepared and included in the contract documents.
Third Party Rights:
there is now an option for sub-contractors to provide third party
rights or collateral warranties to certain beneficiaries.
Construction (Design and
Management) Regulations 2015: the necessary changes have
now been incorporated directly into the contract, rather than being
a standalone amendment.
approvals: there is now a new clause stating that where
consent or approval of one of the parties is required, this should
not be unreasonably delayed or withheld (although this specifically
does not apply to consent relating to an assignment which remains
at the discretion of the relevant party).
Various other minor amendments have also been made as well as
certain changes relating to public sector employers (i.e. the
incorporation of provisions from the JCT Public Sector Supplement
2011 in respect of fair payment and transparency and certain
aspects of the Public Contracts Regulations 2015). The motivation
behind these amendments is the ambition of the Construction Supply
Chain Payment Charter (Charter) (reissued by the Construction
Leadership Council in August 2016), being an initivative of the
Government's Fair Payment Campaign, seeking to reduce payment
terms in the supply chain to an industry standard of 30 days and to
move to zero retentions by 2025.
Generally, the updates to the JCT Design and Build Contract 2016
attempt to reflect current market practice and it is expected that,
overall, they are likely to be welcomed by the construction
industry. In terms of the position in Scotland, we will have to
wait and see what changes the SBCC incorporate into the SBCC Design
and Build Contract but it is expected these will broadly follow the
same route as JCT.
The material contained in this article is of the nature of
general comment only and does not give advice on any particular
matter. Recipients should not act on the basis of the information
in this e-update without taking appropriate professional advice
upon their own particular circumstances.
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Back in Issue 05 of IQ, we examined the decision in Yam Seng PTE Ltd v International Trade Corporation Ltd and looked at whether a general obligation of good faith could be implied into contracts made in accordance with English law.
A recent report1 by Global Construction Perspectives and Oxford Economics forecasts that by 2030 the volume of construction output will grow by 85% to US$15.5 trillion worldwide, with China, the US and India leading the way and accounting for 57% of all global growth.
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