Advantages and disadvantages of JCT contracts

NNODI Group · 8 min read

The JCT family in brief

The Joint Contracts Tribunal publishes a suite of standard building contracts, currently the 2024 editions, graded by size and procurement route: Minor Works, Intermediate, Standard Building Contract, Design and Build, Major Project, Management and Construction Management forms, plus measured term, prime cost and framework agreements. Each comes with its own sub-contract, and the Design and Build form is by some distance the most used on developer-led residential and commercial schemes.

The advantages

Familiarity and precedent. Contractors, sub-contractors, funders, insurers and lawyers all know JCT. Pricing is predictable because tenderers are not pricing an unknown form, and decades of case law tell you how most clauses will be read.

Defined roles. Employer, contractor and a contract administrator or employer’s agent, each with clear duties. Certification, valuation and extensions of time follow a set process.

A form for every scale. A house extension and a fifty-million-pound scheme can both be let on JCT without bespoke drafting, using the form that matches the size and risk of the job.

Light administration. Compared with NEC, a JCT contract can be run with fewer formal notices and less real-time process, which suits projects with a settled design and a modest management team.

Funder acceptance. Institutional funders are used to JCT Design and Build with a schedule of amendments, collateral warranties and third-party rights. At Clarendon Road, Wood Green, we negotiated the JCT Design and Build contract for Haringey’s first co-living scheme within a gross maximum price forward-funding structure, and the funder’s due diligence accepted the risk allocation.

The disadvantages

Change is valued after the event. JCT values variations against the contract sum once they have been instructed and carried out. Unlike the NEC compensation-event quotation, there is no built-in obligation to agree the cost before the work is done, so the employer often learns the price of change at the next valuation.

Time and money can become adversarial. Extensions of time and loss and expense are claimed and assessed through separate mechanisms, and the assessment can lag the event by months. Disputes tend to accumulate towards the final account rather than being dealt with as they arise.

Design liability is lighter than employers expect. Under the standard Design and Build form the contractor’s design liability is one of reasonable skill and care, not fitness for purpose, unless the contract is amended. Employers who assume they have bought a guaranteed outcome are often surprised.

Amendments shift risk, sometimes too far. Almost every developer-led JCT contract carries a schedule of amendments. Proportionate amendments protect the employer and the funder; excessive ones are priced by the contractor as risk, resisted by the supply chain, or simply not performed on site.

The Employer’s Requirements decide the outcome. On Design and Build, what the employer gets is what the Employer’s Requirements describe. Thin or contradictory requirements are the most common root cause of Design and Build disputes we see.

Payment discipline is unforgiving. The payment and payless notice regime, which JCT aligns with the Construction Act, punishes an employer who misses a notice date with an obligation to pay the sum applied for. Administration lapses cost real money.

What changed in the 2024 editions

The JCT 2024 editions modernised the suite rather than rewriting it. Among the changes: provisions responding to the Building Safety Act, collaborative-working and sustainability provisions brought into the main text, epidemics and changes in law addressed as grounds for time and, in some cases, money, a shorter period for the contract administrator to assess extensions of time, and electronic communications and notices provided for as standard. Projects still let on 2016 editions are not wrong, but new appointments should be on the 2024 forms.

Choosing the right JCT form

• Minor Works for small, simple jobs with a short programme and little design by the contractor.
• Intermediate for medium-sized building work of a conventional kind, where some contractor design may be needed.
• Standard Building Contract for larger traditional projects with a complete design, with or without quantities.
• Design and Build where the contractor takes on design completion and single-point responsibility, the common choice for residential development and forward-funded schemes.
• Major Project for experienced employers and contractors on large, complex projects who want a leaner form and bespoke risk allocation.

Getting the best from JCT

Write the Employer’s Requirements as if a dispute will one day turn on them, because it may. Keep the schedule of amendments proportionate and negotiate it early with the contractor rather than imposing it at contract stage. Agree a contract sum analysis that lets change be valued on a known basis. Run the payment and notice calendar as a hard discipline. And treat extensions of time and loss and expense as things to assess promptly, not to defer to the final account. Independent cost and contract advice at procurement stage is where most of this value is created; it is far cheaper than the dispute it prevents.