The updates, primarily designed to modernise and streamline the contract administration process, introduce several changes which bring a renewed emphasis on collaboration, good faith and dispute avoidance to the JCT suite, James Ladner, a construction law expert at Pinsent Masons, said during a recent webinar.
“Requiring dispute avoidance through direct good faith negotiations first appeared in the supplemental provisions to the 2016 edition, but it was opt-in only and, in my experience, employers didn’t often opt in,” said Ladner. “JCT 2024 has made the provision mandatory and it now appears in the main contract in the dispute section above mediation and adjudication.”
Read more analysis of the JCT 2024 contract suite
Ladner said the mandatory provision went further than the equivalent NEC provision and should lead to better collaboration across the industry. “This is not just NEC clause 10 warmed up,” he said. “While the NEC requires mutual trust, the JCT also requires good faith. For each party to address those bad behaviours – that’s a contractual obligation now. Being able to call contractually for a senior executive meeting will be a powerful tool in unlocking trickier disputes.”
As a large proportion of project disputes centre on assessment and certification, Ladner believes this could help resolve disputes earlier and lead to fewer delays. “We’re going to see pressure brought to bear through the use of this dispute avoidance requirement and the collaborative working clause in order to seek to resolve disputes early,” he said. “My view is that these are positive changes to the JCT suite and I think we’ll see a lot of them in adjudication submissions and in the courts.”
The latest update to the JCT forms came in June when the JCT published a new Target Cost Contract, which built on the basic structure of the popular JCT Design and Build Contract, but changed the basis of payment entirely from the current fixed price model to a cost reimbursable model.
Anne-Marie Friel, a collaborative contracting and construction expert at Pinsent Masons, commented on the similarities and the differences between the Target Cost Contract and the NEC Option C model, which is widely used in the UK market and familiar to many working in industry. One of the differences is a subtle but significant change to permit allowable costs – defined as the actual costs that are reasonably and properly incurred in performing operations – to be applied for a maximum of seven days in advance of works commencing.
Friel said: “It’s a contrast to the NEC option, where costs are applied on a fully prospective basis usually at least a month in advance.” While Friel said the new seven-day rule may be attractive to employers, she warned there was a risk that some contractors “may push back” to avoid having to finance any gap between payments.
The JCT also allows users to define the contractor’s entitlement to overhead and profit – the contract fee – as either a lump sum or a percentage on allowable costs, which offers some users a welcome flexibility to only being offered a percentage approach. Friel added: “This is something that we often saw being introduced through amendments to the NEC to allow a lump sum to be used instead.”
Elsewhere, an update allowing notice provisions to be issued by email has been welcomed by the industry as a means to streamline communication processes throughout a project’s lifecycle. However, Ladner cautions that the provision could “create some trip wires for the future” given emailed certain specified formal notices only take effect the next business day. This could, he noted, create some problems in instances such as termination when emailed notices are issued before weekends or bank holidays. He said in such circumstances it may still be prudent for parties to issue such notices by hand.
Overall the revised JCT suite offers a number of positive features, but is still lacking in some details, said Michael Allan, construction law expert at Pinsent Masons. “It wasn’t intended to be a contract rewrite – it’s an evolution not a revolution – but I think they could have been bolder,” he said. “The main area I would say they missed the chance to lead or drive the market was in building safety.”
Although the design and build contract covers aspects of building safety, industry experts had initially expected the JCT updates to deal more specifically with the 2022 Building Safety Act as it relates to Higher Risk Buildings. However, Allan said the JCT made “a conscious choice” early on not to do that considering there may be a number of options for how parties might address the issues in the contract. Allan maintains this was an opportunity missed, believing “there was a chance, not taken, to provide strategic direction and in effect set the market on these topics”.
While JCT standard forms are widely used across the UK, Allan noted that Scotland does not yet have updates to the SBCC 2016 contract suites which will mirror the JCT 2024 forms to the extent that the updates apply for Scots law. He said the Scottish Building Contract Committee (SBCC) has reported that it is working on adapting the most commonly used JCT 2024 forms and is targeting the release of its first version of the JCT suite – the SBCC 2024 Minor Works form – in autumn 2025.