Our Project Management Associate, Brendan Hills offers a personal perspective on the forms of contract used at Lee Wakemans, and where he sees the industry trends heading.

Ding ding ding …. JCT 2016 vs NEC4 forms of Contract

Our Project Management Associate, Brendan Hills offers a personal perspective on the forms of contract used at Lee Wakemans, and where he sees the industry trends heading.

Over the last 15 years the forms of contract have been progressing faster and changing more frequently than ever before.

Just 10 years ago, we were still finishing off a couple of contracts using the JCT 1980 form of contract. We now have a plethora of options released in the last 2 years, many of which are untested in the courts and unfamiliar to the industry.

Recent Changes

Earlier this year, the release of NEC4 marks the further refinement of the ‘simple man’s contract’,when many of us are still getting to grips with NEC3. The revision introduces two new forms, the Design, Build and Operate (DBO) Contract and the Alliance Contract (ALC). NEC4 contains various changes to the programme, payment and compensation event clauses and some common sense changes to terminology, which have caused much confusion in the past.

In 2016 we saw some (relatively minor) revisions to the JCT family of contracts after they were completely re-written in 2005. The changes include redrafting of the payment regime and greater provisions for securities such as bonds and PCG’s. In my opinion, the most important changes are those relating to insurance provisions , which will simplify insurance arrangements considerably for refurbishment work in particular.

NEC, NEC, NEC

Following the Latham and Egan reports, the construction industry pendulum swung towards NEC contracts due to their strong partnering emphasis, when the JCT contracts at the time were considered adversarial. However since the release of the NEC3 suite and the widespread adopting of its principals, we are seeing this partnering ethos spill over into most contracting relationships.

JCT contracts have adopted some of the NEC principals and have released a partnering specific contract – the Constructing Excellence contract.The contract has in fact existed since 2006, and I have to say that I have never actually seen it used in anger.

What’s the flavour of the month in 2017?

At Lee Wakemans, we are increasingly finding that our clients and contractors have an inclination towards the old faithful JCT contracts, as the complexities of the NEC suite are causing frustrating levels of administration.

The problems that the NEC set out to solve have been by and large addressed by a shift in mindset within the construction industry as a whole. Long term relationships are valued, risk allocation is agreed fairly, negotiation of contracts is commonplace and the public sector is leaning heavily on frameworks.

Split opinions

Even within our office we have a great divide of opinions as to which suite of contracts is ‘the best’. We have some evangelical NEC supporters and a few JCT enthusiasts, all with interesting and varying viewpoints, which is probably a good indicator of the industry on the whole. Which side of the fence do you sit on?

Conclusion

This is my personal insight,based largely on our experiences here at Lee Wakemans as opposed to it being scientifically based. In 2015 90% of the contracts being run by Lee Wakemans were NEC3, however in 2017 this has reduced to approximately 30%.

We are yet to run a new NEC4 contract, although the pendulum may swing back that way after it gains some traction and some of the amendments have been tested by the courts. If I stare deeply into my crystal ball I think we may even see a resurgence in client prepared Bills of Quantities!

We’d love to hear your thoughts.

Notes

Lee Wakemans is a development consultancy that helps organisations create, develop and deliver built projects on time and in budget.

They provide four core development service offerings; Development Management, Project Management, Cost Management and Health and Safety Management.

Please contact Brendan Hills on 02920 442900.

  • Kenneth Booth, Magazine Manager

    With 15 years behind his belt in this sector, Kenneth has a keen interest in the construction and management of buildings, striving to learn more and more with each passing year. As a member of the launch team for Building Design & Construction Magazine, Kenneth has seen and followed some of the industry’s leading stories; whether it be the laying of the foundations for Heathrow’s terminal 5, the design and build of the Shard all the way through to the organisation and management of London 2012 Olympics, he's been there for the entire journey. Kenneth handles the majority of the sponsored and advertorial content, pushing the envelope of businesses looking to use Building Design & Construction as a mode of communication for their marketing agenda. With a profound understanding of how construction and property professionals can best put the right foot forward, Kenneth is able to support, and guide the marketing agenda of businesses of all shapes and sizes.

    You May Also Like

    Savills Office Space

    Savills Predicts One Year’s Supply of Space Over the Next Three Years

    With reference to Savills’ latest Regional Office Market Review & Outlook report, there are ...

    Interior design tips: Creating an illusion of a bigger space

    Interior design tips: Creating an Illusion of a Bigger Space

    A lot of students live in tiny spaces, littered with personal stuff and educational ...