JCT Minor Work's Contract 2016 - what's new?
On 15 June 2016, the Joint Contracts Tribunal (JCT) launched its 2016 edition of the Minor Works suite of contracts comprising:
- Minor works building contract (MW 2016).
- Minor works building contract with contractor’s design (MWD 2016).
- Minor works sub-contract with sub-contractor’s design (MWSub/D 2016).
The new editions are intended to improve the functionality and ‘user friendliness’ of the JCT contracts and to comply with the new CDM Regulations 2015 and Public Contracts Regulations 2015. It is expected that similar updates to other JCT contract suites will follow in the coming months.
When is the Minor Works Building Contract suitable?
The JCT Minor Works Building Contract is suitable for relatively simple projects, to be administered by an Architect/Contract Administrator, which may require an element of design by the contractor but will not involve a bill of quantities or named sub-contractors.
Changes in the 2016 editions of the contracts that users should be aware of include:
To address the existing problem facing employers who are unable to secure all risks insurance of an existing structure, either in the joint names of the employer and the contractor or at all, there is now a new option which makes a simple reference to applying any such alternative insurance arrangements which the parties have agreed to adopt in those circumstances.
The details of these alternative insurance arrangements are to be set out in the contract particulars. Linked to this is now an express right for either party to terminate the contractor’s employment where it is just and equitable to do so following material loss or damage to any existing structure. This replicates the position under other contracts in the 2011 JCT suite of contracts.
Changes to payment provisions
1. Interim Valuation Date
With the intention of establishing a fairer approach to payment, a defined interim valuation date (IVD) has been introduced. Parties are able to agree their own IVD, failing which the first IVD will fall one month after the commencement date of the works and then at monthly intervals. It is intended that IVDs will operate at main contract, sub-contract and sub-subcontract levels, with the sub-contract IVD mirroring the IVD under the main contract. It remains to be seen whether this will actually improve payment practices.
2. Date for Payment
Rather than the previous four-weekly intervals from the commencement date, the due date for payment is now defined by reference to the IVD. In MW/MWD 2016 it is seven days and in MWSub/D 2016 it is 12 days after the relevant IVD in relation to each interim payment. The final date for payment of each interim payment is 14 days from its due date.
3. Contractor’s application for payment
MW/MWD 2016 now expressly permits the contractor to make an application for payment, rather than having to wait for the Architect / Contract Administrator to fail to issue an interim certificate before the contractor can issue a default payment notice. This will be a welcome change for contractors.
Incorporation of Construction (Design and Management) Regulations 2015
Amendments previously incorporated by way of the JCT Amendment 1: CDM Regulations are now integrated into the 2016 version of the contracts.
Building Information Modelling (BIM)
The new contracts briefly mention BIM, but only in the context of the Contractor’s Obligations and the Employer’s Requirements, which it is envisaged shall include “any applicable BIM or other communications protocol”. This is of no real surprise in the Minor Works contracts, but may be insufficient if replicated in the balance of the 2016 suite of JCT contracts.
The changes are generally welcome and do not significantly modify the allocation of risk under the JCT Minor Works contracts. Employers and contractors who incorporate JCT terms into their own bespoke contracting arrangements will need to ensure that appropriate amendments are made. We look forward to reviewing the rest of the 2016 suite when released.
News & Insights
Infra. Law – February 2018
Welcome to the latest edition of Infra.Law bringing you insight into issues facing the domestic and international infrastructure sector.
Escrow Accounts and Project Bank Accounts
This article considers how escrow accounts and project bank accounts may be used to mitigate the risk of insolvency.