With government support design to get Britain building again, tried and tested JCT contracts mean the construction industry can get back to work with confidence as it takes a prime role in jumpstarting the economic recovery, says Peter Hibberd
The construction industry, in keeping with most other industries, is going through one of the most challenging periods known to those currently employed. In April this year, construction activity, according to the ONS, fell by 40% month-on-month for new works and around 38% for repair works.
Not surprising given lockdown, but a degree of miscommunication meant that many contractors stopped working when they could have continued, albeit with restrictions.
As we emerge from lockdown and business takes on a semblance of normality, the construction industry is expected to be at the forefront as government announcements abound. Once again, its use as a prime economic regulator is to play a significant part.
‘Build, build, build’
In addition to the plans for increasing infrastructure expenditure there is the Prime Minister’s, “Build, Build, Build” announcement, which sets out that from September new regulations will provide greater freedom to change the use of buildings and land without the necessity to obtain planning permission, in a move to kickstart the construction industry and speed up rebuilding.
It is proposed that under new rules, existing commercial properties, including newly vacated shops, can be converted into residential housing more easily. This comes alongside a financial package of measures that includes, among other things, a £12bn affordable homes package.
There is also the Chancellor’s Summer Statement, which includes £2bn for grants for green home improvements as part of £3bn plan for decarbonising housing and public buildings, and the temporary relief of Stamp Duty Land Tax (SDLT).
Plans are one thing, action is another, especially when the precise detail is still embryonic. Action depends on many things, not least that lockdown will change our view of housing and the workplace. Similarly, it will change businesses view of how they operate and will lead to significant restructuring in parts of our economy at a faster pace.
Inevitably, there will be major doubts as to what and when things should be done. Confidence is the key to a successful economic uplift, something currently in short supply; that must change.
Opportunity and the need for small-scale building works by business and homeowners is certainly there. Many business premises will require renovation or alteration to meet changed needs and expectations.
The proposed planning changes are likely to facilitate such action. Other businesses will need to catch up on repair work that has not been carried out because of lockdown restrictions.
In terms of homes, there is the stimulus of the Green Homes Grant scheme for home improvements that save energy. Furthermore, SDLT relief may stimulate housing sales and, where it does, there is much potential for updating and extending properties as well as for repair.
Confidence is key
To go ahead with any building work, particularly in current economic conditions, confidence is an essential requirement and there is every reason to find it. It is also essential to enter a building contract but fortunately this is one area where confidence need not be a problem because of the availability of the tried and tested JCT building contracts.
A large majority of building projects are small, and it is those projects that should now flow from government’s stimulus and facilitate recovery. JCT publishes two versions of Minor Building Works 2016 (MW) for such projects, one with contractor’s design, the other where there is no design by the contractor.
The with contractor’s design contract also has its own Minor Works Sub-Contract with subcontractor’s design for use where that specialist designs. The subcontract for use where there is no specialist design is the JCT Short Form of Contract.
Although MW contracts are for work that is simple in character, which is either wholly designed or leaves part to be designed by the contractor using the Contractor’s Designed Portion, they provide a complete framework including payment, insurance, liquidated damages, rectification period and termination.
MW is a lump sum contract based on drawings and other documents, sufficient for the contractor to price the works. In terms of payment and dispute resolution, it complies fully with the Housing Grants, Construction & Regeneration Act 1996 as amended. The contract form requires the completion of the Articles, Recitals and Contract Particulars, which provide a significant degree of control and operational flexibility.
It contains Supplemental Provisions covering collaborative working, health and safety, value engineering, sustainable development, performance indicators and notification of disputes, which provisions always operate unless disapplied. Other supplemental provisions, for use where the employer is a local or public authority, cover transparency and the Public Contracts Regulations.
Badly thought-out works of alteration, renovation and retrofit can throw up difficulties and provide poor value or worse. Ad hoc changes by way of retrofit for improved eco performance can be a particular problem. A whole project view, ideally by someone with specific expertise is preferable. As both contracts require an Architect/Contract Administrator to administer the conditions, it may be appropriate for such a person to fulfil that purpose as the designer.
Guidance Notes in respect of the contract are contained within the contract form, where reference is also made to a user checklist which can be downloaded from the JCT website. The layout and wording of the contract, together with the guidance and checklist, make using the JCT Minor Works Contract straightforward. It does all that one needs to contract successfully.
In addition, for use in specific situations, JCT also publishes a Repair and Maintenance Contract for commercial use (2016) and two Home Owner/Occupier Contracts (2015), one where there is a consultant appointed to oversee the work.
