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The JCT Design and Build Contract is suitable where the employer wants the contractor to take responsibility for finalising the design and delivering the construction. If the employer wants a single point of design responsibility, meaning the contractor is liable to it for the whole of the design and construction of the project, the contract will need to be amended by its legal adviser.
Under the Design and Build model, the employer provides a set of Employer’s Requirements, defining their needs, objectives, and performance criteria. The contractor responds with Contractor’s Proposals, setting out how those requirements will be met. These documents are annexed to the contract. It’s most effective when the employer has:
A clear performance brief
A desire for price and programme certainty
Amendments which provide for “single point of responsibility”, thereby reducing the interface risk in the design as between the contractor and any designer team members
In an unamended JCT Design and Build Contract, which does not provide for a single point of design responsibility, the contractor is not usually liable for the contents of the Employer's Requirements, including any design, and the employer may have to pay the contractor to remedy any inadequacy or any discrepancies in the Employer's Requirements.
Where employers/developers prefer a streamlined procurement route with clear delivery obligations.
Where main contractors have an in-house or managed design capability or otherwise has experience working with consultants to develop the design of a scheme.
Where the employer, developer, or a funder/lender requires greater certainty around the contract price and the construction period. "Single point design responsibility" can help manage key requirements of interested parties and the employer only needs to provide outline designs, which the contractor will then develop.
Where a simple ‘one-stop approach’ for property development is desired. Commercial purchasers and tenants of units can benefit from collateral warranties or future rights from a contractor who will be liable for the whole of the design and construction of the scheme.
Design Responsibility - contractor assumes responsibility for completing the design based on the Employer’s Requirements. The obligation is usually to a reasonable skill and care standard; imposing fitness for purpose increases contractor risk and may require additional insurance.
Planning and Statutory Approvals - requiring the contractor to comply with all applicable laws, including building regulations and planning consents.
Price and Payment - usually based on a lump sum with staged interim payments. Adjustments can be made for variations, delay, or unforeseen conditions (amongst other matters). Includes retention provisions, typically 5%, with half of that percentage released at practical completion and the remainder at the end of the defects period.
Completion and Practical Completion - practical completion marks when the works are complete except for minor snags and defects and triggers the release of half of the retention and the start of the defects liability period (usually 6 or 12 months). Delays beyond the agreed date for completion of the works may attract liquidated damages (pre-agreed compensation).
Snagging and Defects - contractors must complete all works to a satisfactory standard and remedy any defects or snags identified during the defects period. A ‘snagging list’ may be issued near practical completion and the employer may include an associated amendment requiring prompt rectification of the same by the contractor.
Variations - employer may instruct changes; these may entitle the contractor to additional time or payment. It’s essential to follow formal variation procedures to avoid disputes over scope creep.
Extensions of Time - if a relevant event (e.g., weather, changes, delays by the employer) occurs, the contractor may claim more time. Entitlement to additional loss and expense may also arise from certain events.
Termination - whether for insolvency, breach of contract, or prolonged suspension of works (amongst other matters). Termination provisions deal with payment for completed works, recovery of materials, and post-termination liabilities.
Dispute Resolution - default mechanisms include adjudication, and arbitration or litigation. Parties may seek to amend this clause to include a multi-tiered procedure, perhaps referencing a mandatory mediation before the parties can commence a formal arbitration or court proceedings. In addition, they may add a reference to a specific adjudicator or adjudicator nominating body.
Design liability - if the contractor is to be liable for the whole of the design and construction of the project, standard clauses need to be amended and negotiated. This is usually appropriate where the Employer has been clear from the outset that it expects this type of approach.
Limiting or excluding liability - both generally and for specific heads (e.g. delay, consequential loss).
Adding a new clause obliging the Contractor to comply with key third party agreements or documents which are relevant to the Works - such as an agreement for lease, a loan or funding agreement and/or other requirements of an interested third party, say a landlord or tenant.
Liquidated damages - both the basis and level
Control of variations - including ’time bars’ designed to encourage prompt and early notification from the contractor of any associated claims for more time and/or money.
The definition of Relevant Events - employers will have their own view on what should, or should not, be a Relevant Event that awards the contractor an extension of time to complete the Works. Any such changes are likely to be heavily negotiated.
Collateral warranty obligations generally and the inclusion of a right to withhold sums otherwise due under the contract for the contractor failing to provide these warranties promptly.
Pre-conditions to practical completion, including a process to allow for a prior inspection of the site by the employer’s representative, consideration of any representations made following that site inspection, and the issue of specific documents before ‘PC’ may be certified.
Insurance obligations - inevitably these provisions are a key element of any construction contract and the parties should consider the appropriateness of the ‘standard’ provisions in the context of their project. Often heavily negotiated, especially where works are being carried out within an existing structure, which then necessitates negotiation with third parties (for example the building owner and its insurer).
Funders generally accept the JCT Design and Build Contract as a starting point, but they will likely require quite a number of additions and amendments, including matters such as :-
Appropriately drafted collateral warranties or third-party rights from the contractor, its sub-contractors with design responsibility, and key members of the contractor’s professional team. Funders will also expect appropriate step-in rights via some of these direct agreements.
A single point of design responsibility, meaning the contractor is liable for the whole of the design and construction of the project.
A third-party agreements clause, which cites their funding agreement, and potentially bespoke amendments which expressly ‘step down’ key construction obligations contained within the funding arrangement.
Appropriate terms in respect of key commercial and technical matters, such as the contract sum, the completion date, and insurances (both level and basis).
Funders will also likely want to approve key documents such as the Employer’s Requirements, the Contractor’s Proposals, and the schedule of amendments before funding is released.
Often required in addition to the contract:
Collateral Warranties or third-party rights schedules.
Parent Company Guarantees and/or Performance Bonds.
Professional Appointments for consultants engaged by the employer and Sub-Consultants of the contractor.
Novation Agreements.
Programme and milestone schedules.
Insurance documentation and responsibility matrix.
The JCT Design and Build Contract is a widely used UK standard form where the contractor takes responsibility for elements of both design and construction.
Legal advisers commonly assist with tailored amendments, often providing for a single point of design responsibility, which offers greater cost and programme certainty.
Key clauses cover design obligations, payment terms, completion, defects, and termination.
The contract is generally acceptable to funders, provided it is supplemented with appropriate protections like collateral warranties with step-in rights and other security documents.
Whether acting for employer or contractor, it is essential to scrutinise the documents, align expectations early, and consider tailored amendments where appropriate. With the increasing complexity of projects and evolving legal frameworks, specialist advice remains a critical safeguard. We support clients by :-
Offering advice on an appropriate procurement strategy and the contractual matrix that will follow.
Revising the terms of the JCT Design and Build Contract to create a "single point of responsibility" for the design.
Drafting, negotiating, and finalising other building contract amendments, collateral warranties, and professional appointments.
Advising on appropriate performance security and insurance arrangements.
Reviewing requirements and obligations contained in third party agreements and advising on how best to ‘step down’ key construction obligations into the building contract.
Managing risk allocation around design responsibility, delays, cost, and variations.
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