Contracts on the catwalk: An in-depth look at who is using which documents

We revealed the headlines from the latest survey of contracts in use during 2004 in last week’s edition of QS News. This week online we are bringing you the RICS survey results in full. We’re starting today with the findings on JCT forms and we’ll be looking at other key forms over the rest of the week.

The JCT remains the industry’s favourite, with 78% of all contracts using a JCT standard form. However, there are signs that the JCT is falling from favour since this was the lowest level of usage since the RICS began the survey in 1985. Research in 1998 and 2001 uncovered the highest levels of use - of 91%.

If measured by the value of work, the proportion of contracts using the JCT family of contracts is lower - at just 70%, which is lower than the average number of the surveys together.

A glance at which type of jobs are using particular contracts is revealing. The most marked drop in use of JCT forms was recorded in the £5-20m project value range. The survey found that these jobs are opting for NEC contracts increasingly. The percentage going for JCT has fallen from over 85% in 2001 to 61.5% for jobs worth £5-10m and 57.7% for jobs worth £10-20m.

The survey also highlighted a drop in the use of superseded editions. In 2001 three key forms - With Contractor’s Design (1981), Agreement for Minor Works (1980) and IFC (1984) without quantities - were used often. In 2004 the RICS found no one had used either the 1984 IFC forms, with or without quantities, or the 1981 With Contractor’s Design form. There were still 18 instances recorded of the 1980 Agreement for Minor Works Edition, although this was only 3.3% of the total use of the JCT Minor Works forms.

The use of contracts with quantities appears to be making a something of a comeback, the survey found. While 2001 saw a decline in the use of these contracts, in 2004 there was more use of Approximate Quantities. The increase, though relatively small at just 2.5% of all contracts, was significant compared to previous trends, the RICS said.

Certain forms appear to be close to being ignored by the industry all together. The JCT Construction Management form, introduced in 2002, has been used just three times in the survey sample. It was used in only 16% of construction management jobs. The Major Project form, brought out in late 2003, was used just twice in 2004, the survey found.

The JCT With Contractor’s Design was by far the top contract in terms of the value of projects, accounting for 35% of all documents used. This was followed distantly by the second most popular contract, the JCT Standard Form of Building Contract Private Edition with Quantities, which accounted for 18% of the vale of contracts used.

The RICS found that the industry was keen on quantities in 2004. There was a significant increase in both the With Quantities and With Approximate Quantities forms compared to 2001. Meanwhile, the use of the Without Quantities had dropped. In number terms, Without Quantities accounted for 23% of JCT Standard Forms used, compared with 30% in 1998 and 34% in 2001.

The RICS noted that the Joint Contracts Tribunal reckons tenderers prefer certainty regarding quantities when the job is bigger than £250,000. For projects above this watermark, the With Quantities variant was used in 69% of instances.

The use of the With Approximate Quantities version of the JCT standard form is hotting up in particular. The RICS said: “There has been a distinct increase in the use of these forms, particularly on the private side. The survey... identified 55 uses of the Private Form with Approximate Quantities and six of the Local Authorities Form with Approximate Quantities. The previous two surveys had captured just 12 and 20 occasions.”

The survey also looked at the use of the Contractor’s Designed Portion Supplement. It found that 28% of JCT Standard Forms included the supplement, up from 25% in 2001.

The findings on the Intermediate Form showed that the IFC With Quantities was being used slightly more widely, but the Without Quantities version was in decline. The average contract value of the projects using both types of IFC was around £385,000.

There was a dramatic slump in the use of the Agreement for Minor Building Works, which fell 40% on 2001. Interestingly, while the JCT recommends the document from contracts up to the value of £125,000, some 14% of the recorded uses of the contract were for jobs valued at over £250,000. Of these ten were on schemes of over £500.

JCT With Contractor’s Design was found to have been used less in 2004 based on numbers. After peaking in 1998 with 18.1% of jobs using the form, the number fell to 13.3% in 2001 and was at 11.2% in 2004. However, With Contractor’s Design is still popular on big contracts, it seems. Looking at its use by value the document still accounts for more than a third of construction workload at 35.6%, down only slightly from 39.7% in 2001.

There was a further fall in the use of the JCT Standard Form of Management Contract. The number of uses has fallen progressively from 39 in 1995, 18 in 1998, 12 in 2001 to a mere 4 in 2004. All four projects were in the £2-10m range.

Log onto qsnews.co.uk all week for more details from the RICS survey.