JCT for major projects: I Love you just the way you are

Peter Hibbard, the chairman of the JCT, recently told me that take up of the the Major Project Construction Contract (MPCC) – first published in 2005, but since revised with the other JCT forms – has been low. I was surprised. We have been using it extensively and successfully on a range of projects, from City towers to small extensions and fit-out projects. It is the favoured form of many large developers and, indeed, the only JCT form used by a couple of them.

The reasons for this have been well rehearsed: it was drafted with significant private sector client representation, it incorporates most of the banking and property provisions required on development projects; it aims to ensure that both risk and the ability to manage that risk are effectively transferred to the contractor with limited opportunity for the exploitation of the contractual loopholes that characterise the traditional claims culture. It also avoids antiquated JCT terminology and its drafting style and approach is simple and easy to read. What’s more, it is suitable for more than just “major” projects.

So, to avoid its clean reputation being tarnished by use, here are some things to bear in mind when using it:

• It does not need shedloads of amendments, whatever the lawyers may say. Most of the amendments we have seen are either superfluous (definition of “snagging items”, amendments to the list of uses to which the design documents may be put, even though it is a non-definitive list anyway, and so on), or they are intended to incorporate provisions that have no place in MPCC (see below).

Alternatively, amendments address things that were covered anyway, but the lawyer had not appreciated – for example, novation is dealt with through the mechanism of pre-appointed consultants in clause 24.

So resist schedules of amendments

• The MPCC assumes that the employer’s consultants have completed all the design that they intend to carry out when the building contract is executed. There is no mechanism to issue further design information. To introduce such provisions raises the spectre of claims for the late issue of information, which has dogged traditional JCT forms. If there is a gap in the design, fill it before the contract is executed
• Do not pick up preliminaries and pricing documents from other projects and assume they can be used in conjunction with the MPCC. It is not helpful if the preliminaries contain, for example, design submission procedures that are inconsistent with clause 12 of the MPCC or ignore the fact that the contract specifically deals with ground conditions in clause 14. The documents incorporated as part of the building contract must be consistent with the MPCC itself
• Do not cloud the simplicity and the certainty of the lump sum price by introducing endless provisional sums and provisional quantities. The philosophy of the MPCC is that there is a lump sum price for the project and the contractor must complete the design of the project and build the project shown and described in the contract documents for the lump sum price. If any item is not shown, then self-evidently it cannot be priced. If necessary, a “change” instruction can be issued to include it. A provisional sum simply introduces uncertainty as to the price, but also the risk of claims for late issue of instructions, extensions of time, loss and expense and so on. This is not the way to go Traditional pricing documents must not be used with the MPCC either. A simple contract sum analysis used with JCT Design and Build will not do. The payment provisions in MPCC provide a framework for payment procedures only – they do not deal with calculation of amounts due on interim payment advices, whether or not retention is withheld, whether fluctuations apply, whether payment will be made for offsite goods and materials and if so, under what conditions and so on. If a proper pricing document is not put together, the form will not be Construction Act compliant
• Finally, do read the form. The procedures for granting extensions of time and valuing loss and expense are more prescriptive than other JCT forms. There are strict time limits to observe. An employer’s representative who thinks they do not need to bother because they have managed endless JCT design-and-build projects will end up in hot water.

So do try MPCC. But do not try and turn it into something it is not.