New CIOB contract: Testing terms

The Chartered Institute of Building (CIOB) has just released a draft contract for use with “Complex Projects” heralded in Keith Pickavance and Nick Lane’s article in Building on 21 May. This we are told is a contract for the digital world “written for the 21st century”. It is said that the contract can be used in the UK or internationally for traditional procurement, with or without a contractor’s design of part, as well as design-and-build or turnkey projects. The stated focus of the contract is the management of the causes and consequences of delay, as well as collaborative working and transparency in the management of risk. These are laudable aims. But as the authors note: “We are conscious that any new standard form is liable to attract criticism of style and content.” This is an attempt to respond constructively to the invitation from a UK developer perspective.

It is the first standard form building contract in the UK to include detailed provisions for a project adopting a BIM and this is a welcome development

At first sight, the contract appears to be a mixture of NEC-type terms (such as a requirement to co-operate in a “spirit of mutual trust and fairness”, an early warning system and risk register), more “standard” JCT-type provisions and the type of provisions more likely to be seen in an international turnkey project (there are fitness-for-purpose obligations and the final forum for resolution of disputes is arbitration).

Although some provisions (such as the definition of “Connected Agreements” which refers to agreements for lease, forward funding agreements and development agreements) would appear to be aimed at the UK development market, there are a number of “standard” provisions that are missing and will need to be added by special conditions, such as third party rights (there is a very short clause on collateral warranties), novation and step-in. The introduction acknowledges that. Some provisions, such as the fitness-for-purpose obligations, will probably end up being deleted, while others are amended (the contractor is to have possession of the site). It is, of course, difficult for one contract to suit all markets.

Clause 5.1 contains a provision very similar to that in clause 10.1 of NEC3, to the effect that the “parties shall work together in the manner set out under the Contract and shall co-operate in a spirit of mutual trust and fairness”. There has been no case law on clause 10.1 of NEC3. However, it is clear from the recent decision in the Compass case - concerning a duty to co-operate in good faith - that these provisions do have teeth and if a dispute were to arise, the courts will look at the parties’ behaviour and judge whether or not they have acted according to the manner in which they agreed they would do.

What is not clear is how a clause like this sits with the employer’s power to terminate for convenience (in clause 59 of this contract). It is easy to envisage that some reasons for terminating for convenience may fall foul of acting in a spirit of mutual trust and co-operation.

The contract incorporates provisions for computerised transmission of data and a Building Information Model (BIM). It is the first standard form building contract in the UK to include detailed provisions for a project adopting a BIM and this is a welcome development. Time will tell whether they end up being acceptable/negotiated/the norm.

The contract is designed to permit the CIOB’s Guide to Good Practice in the Management of Time in Complex Projects to be put into practice. There are very lengthy provisions in relation to the Working Schedule and Planning Method Statement (clause 24), Float and Time Contingencies (25), Update and Revision of Working Schedule and Planning Method Statement (31 and 32), and Calculation of the Effect of an Event on Time and Cost (36 and 37). If these provisions will help the parties manage time issues, then they are, of course, to be welcomed. They do appear to be over-complicated. It will be interesting to see whether construction clients and contractors understand how these provisions will work in practice and therefore the comments made by those in the industry will be revealing. A detailed users’ guide is promised, but after the consultation. It might have been helpful to see it now.

The contract is to be administrated by the contract administrator, but it also anticipates a number of other people being involved at various points, including the valuer, the design coordination manager and the project time manager. Is this jobs for the boys or a helpful innovation? If separate people are not identified as performing these roles, they will be performed by the contract administrator.

The contract is out for review and comments until 30 July. You should have your say - even if it is just that the last thing the industry needs is another form of contract …

Ann Minogue is a construction partner in solicitor Ashurst, she co-wrote this article with Kirstin Bardel, a professional development lawyer at Ashurst