JCT Standard Building Contract
The JCT Standard Building Contract is a detailed contract designed for large, complex construction projects that require detailed provisions. It’s part of the JCT suite, which offers a range of contracts to cover most projects.
Let’s look at the projects best suited to the JCT Standard Contract, and whether it’s the best choice for you.
What is the JCT Standard Building Contract?
The JCT Standard Building Contract is intended for substantial construction projects that require detailed contractual provisions and administration. There’s no hard limit, but most Standard Building contracts have a value of at least £1 million. It’s adaptable to suit varying projects, but it can need legal review and amendment for specific requirements.
It’s often used by commercial clients like developers, local authorities, housing associations and institutional investors.
The other major contract providers – including FIDIC and NEC – also provide contracts to cover similar projects. So, if you’re not tied to one provider, it’s worth investigating the best options for your organisation, and even for specific projects.
Features of the JCT Standard Building Contract
The Standard Building Contract works well with most large-scale construction projects. There are a few key points to consider if you’re thinking about using it for your projects.
Detailed provision
Because it’s designed for complex projects, the Standard Building Contract offers comprehensive, in-depth provision for all aspects of the project.
Fixed payment structure
The Standard Building Contract provides a comprehensive payment structure, spread over the life of the project. Interim valuation dates, usually monthly, are specified in the contract. Interim payments are then usually due seven days after each interim valuation date.
So regular monthly payments are made, based on the valuation of completed work. This helps to maintain cash flow and helps reduce payment disputes.
Who is responsible for design?
The Standard Building Contract is geared towards the employer taking responsibility for the project design, usually through an architect or design team. There’s also a contract option for a ‘contractor’s designed portion’, where the contractor is responsible for specific parts of the design.
Who administers the project?
The administrator is appointed by the employer. They are usually the project architect, quantity surveyor or a dedicated contract administrator.
How are project variations dealt with?
The Standard Building Contract includes a formal process to manage changes to the project (referred to as variations). Variations include any change to the design, quality or quantity of the project. Instructions for variation by the employer must be issued in writing or, if given verbally, confirmed in writing.
The value of the variation should be agreed upon between the employer and the contractor. If agreement can’t be reached, the contract administrator or quantity surveyor can set the value based on market values.
How are disputes dealt with?
Disputes are managed through a structured resolution process with several formal and informal options, depending on the severity of the claim.
Negotiation
The first step is simple, direct negotiation between the parties without involving anyone else. This can often be the fastest and cheapest way to resolve a dispute, but it relies on both parties being willing to cooperate and find an agreeable solution.
Mediation
If negotiation fails, mediation is the next step. It’s a voluntary, non-binding process with a neutral third-party mediator who tries to help parties reach a mutually acceptable agreement. Mediation tends to preserve business relationships and is usually quicker and cheaper than formal procedures.
JCT contracts require parties to consider mediation requests seriously, to avoid more formal procedures.
Adjudication
Either party can refer a dispute to adjudication at any time. This is a statutory and contractual process designed to resolve disputes quickly, usually within 28 days. It’s well-suited to construction disputes where paused work can have serious knock-on consequences.
The adjudicator is an independent expert who reviews the evidence and makes a binding decision that can only be overturned by arbitration or litigation.
It’s cost-effective and efficient, helping to maintain cash flow and project progress.
Arbitration
Arbitration is a more formal and legally binding process. An impartial arbitrator examines the evidence before giving a final decision or award. Both parties must agree to arbitration in advance. It’s often chosen for complex disputes that need a definitive resolution without using the court system.
Arbitration procedures are similar to court procedures, but offer more flexibility and confidentiality.
Litigation
If all else fails, disputes can be taken to the public court through litigation. This involves formal, public court hearings, and any decisions are legally binding and enforceable.
Litigation can be time-consuming and expensive. Parties also lose privacy, as the court hearings are public. But if other routes have failed, litigation can provide a resolution.
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Standard Building Contract 2024 updates
The whole JCT contract suite was revised in 2024, with some major changes across the board. These are some of the changes to the Standard Building Contract.
Constructor’s design liability
The 2024 update changes the wording of the contractor’s design liability, particularly in the contractor’s design option. Contractor’s design liability is now specifically limited to a duty to exercise reasonable skill and care. The contract states that the contractor is not responsible for any ‘fit for purpose’ obligation, except where imposed by statute. This means that the contractor is not responsible for any particular outcome. They must carry out the design with reasonable professional competence.
Electronic communication and execution
For 2024, the contract modernises communications by allowing parties to specify email addresses for serving notices and other official communications. Electronic signatures are now explicitly allowed for executing contracts and deeds, bringing the contract in line with standard modern practice.
Risk allocation for ground conditions
In the 2024 contract, the employer takes the risk for certain unforeseen ground conditions, including asbestos, contaminated materials and unexploded ordnance. Previously, the employer was responsible only for antiquities. This aligns the contract with the Design and Build Contract[1] 2024 and clarifies responsibilities.
Termination payment
The term ‘termination payment’ was added in the 2024 update to clarify the procedure for final payments when a contract is terminated. It improves clarity and fairness in termination accounting.
Good faith clause
A mandatory new good faith clause means parties must behave collaboratively, honestly and respectfully at all times. This is intended to encourage cooperative relationships and reduce disputes. It replaces the previous optional collaborative working provision.
Sustainability and environmental considerations
Some previous optional provisions on sustainable development and environmental considerations are now mandatory. This reflects changes in government policy and an increasing focus on environmental responsibility.
Language
As with other contracts in the JCT suite, the language throughout has been updated to be gender neutral.
Liquidation damages
New wording clarifies that liquidated damages continue to accrue until all works are completed or the contract is terminated. This reflects recent supreme court decisions and means that delay damages are consistently applied.
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