One year on: Observations and insights into the JCT Design and Build 2024 contract

Following on from our April publication, this article provides a commentary on two other notable changes of the JCT D&B 2024 that have seen Employer amendments and Contractor negotiation.

Relevant events

The market has had to become familiar with seeing bespoke clauses in JCT contracts since 2020 to deal with the Covid pandemic, with different approaches being taken by different stakeholders. In order to apply some uniformity to extension of time claims in the event that the construction industry is further impacted by any other epidemic event in the future, the JCT has introduced a new Relevant Event at clause 2.26.7 to deal specifically with epidemics. Whilst narrowing this to an event which actually "affects the execution of the Works" and applies only in relation to a restriction on labour or materials, we have seen many Employers seek to remove similar provisions from their post 2020 schedules of amendments to the 2016 form contract. Therefore, it is not uncommon to see this clause deleted. However, given the JCT itself has made it part of the standard form contract, Contractors are pushing back and, ultimately, this may come down to how much price the parties truly consider this risk to be worth in closing out negotiations on its inclusion.

New clause 2.26.8 grants the Contractor additional time if there is a change in law, exercise of a statutory power or publication of guidance after the Base Date which affects the Works. Along with the collaborative type wording and the early warning principle, this is another provision that will be familiar to those that use the NEC suite as it is similar to the optional X2 clause. Noting that even NEC makes this an optional provision, we are noticing the majority of Employers seeking to delete this provision. However, the recent Building Safety Act changes (which pre-dated the 2024 suite) remain at the forefront of Contractors' thoughts when negotiating. Once the increases to minimum wage and national industry are added that are impacting all businesses at present, particularly SMEs, Contractors are increasingly pushing for the unamended version of this clause to remain.

Interestingly, the JCT did not decide to include provisions around other "reactive" changes we have seen in the market. For example, the war in Ukraine and other conflicts, energy prices and fuel shortages. We assume this is because the JCT considered its force majeure provision broad enough to cover any significant impacts. However, given the media coverage around such topics, we anticipate the "foreseeability" of these events being something Contractors are aware of and, without specific drafting around these issues, are likely to be risks borne by the supply chain.

Antiquities, asbestos and contaminated land

Clause 3.15 of the JCT DB 2024 has been updated to cover the Contractor's responsibilities if asbestos, contaminated material or unexploded ordnance are found during the Works. Given the UK government's plans to unlock brownfield sites for development, this is of pertinence. We have seen several Employers delete the additional provisions from the contract or mark the entire clause "not used". Employers taking this approach should exercise caution if using a standard template schedule of amendments and issuing it to Contractors for tender or pre-contract review without first considering how likely the site is to be affected by such issues or project specific drafting.

Further, clauses 2.26.4 and 4.21.3 of the standard form JCT DB 2024 categorise the operation of clause 3.15 as a Relevant Event and Relevant Matter respectively, which grants the Contractor time and money should such materials be discovered on site. Unsurprisingly, Employers often seek to delete these sub-clauses and remove such entitlements. However, we are seeing greater push back from Contractors in this regard, particularly in relation to asbestos where the Contractor often has a PI exclusion because the Contractor is exposed not just in terms of contractual claims but also in relation to uninsured losses. We are frequently seeing Contractors insist on obtaining letters of reliance from the site survey providers before contemplating any amendments to the standard form in relation to site condition risks.

Given the increasing delays and costs both sides of the market are experiencing as a result of Contractor insolvency, our more tailored compromise is likely to produce the collaborative approach the JCT envisaged when making these updates to the standard form.

One compromise we have seen is to allow time but not money. Another more nuanced example is to create an expressly carved out LAD free period for a particular risk and, if pre-construction surveys indicate a risk of such materials being on site, this may be a way to commercially unlock negotiations and proceed with commencing and completing the works to a price and programme both parties are content with.