appendix contract...

2/8/2016 RICS iConsult RICS draft guidance note Appropriate contract selection (1st edition)

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Appendix Contract comparisonThis Appendix compares the following contracts:

JCT Standard Building Contract 2011

NEC3 Engineering & Construction Contract (April 2013)

PPC2000 (2013 edition); and

Infrastructure Conditions of Contract (Measurement Version, 2011).

Topic JCT StandardBuildingContract2011

NEC3 Engineering &ConstructionContract (April 2013)

PPC2000(2013 edition)

InfrastructureConditions ofContract(MeasurementVersion, 2011)

1. Types of work/project usedon

The mainstreamconstruction sectorprocuring works suchas newbuild officeblocks, officeremodelling andrefurbishments,hotels, new apartmentblocks, fitout of shopsand office premises,accommodationprojects, educationprojects, sports stadiaand leisure facilities.

Theengineeringandinfrastructuresectorsprocuringworks such asnew roads andupgrades tothe existingroad network,new rail linesand assets,nuclearfacilities, theLondon 2012Olympics, andwater utilities

Can be used in themainstreamconstructionsector, but hasfound particularuse by localauthorities (e.g.term maintenancearrangements forhousing stocks),housingassociations andsome centralgovernmentdepartments (e.g.the Ministry ofJustice and theDepartment forWork & Pensions).

The engineeringand infrastructuresectors procuringworks such as newrail lines andassets, tunnelling,ports and docks,energy and waterutilities.

2. Documentscomprising thecontract

The contractdocuments for theJCT StandardBuilding Contract2011 'with Quantities'

The contractdocuments forthe NEC3 ECCare as follows:

the Contract

The contractdocuments for thePPC2000 are asfollows:

the

The contractdocuments for theICC MeasurementVersion are asfollows:

RICS draft guidance note Appropriate contract selection (1st edition)

http://www.rics.org/uk/



and 'with ApproximateQuantities' versions,are as follows:

the Articles ofAgreement(comprising theRecitals, Articles andContract Particulars)

the Conditions ofContract

the ContractDrawings

the Contract Bills;and

(where applicable)the Employer'sRequirements,Contractor'sProposals and CDPanalysis.

The contractdocuments for theJCT StandardBuilding Contract2011 'withoutQuantities' version,are as follows:

the Articles ofAgreement(comprising theRecitals, Articles andContract Particulars)


the ContractDrawings; and

where applicable,the Employer'sRequirements,Contractor'sProposals and CDPanalysis

(where PricingOption A applies) the

Agreement

the ContractData

theConditions ofContract

the Scheduleof CostComponentsand ShorterSchedule ofCostComponents

the WorksInformation

the SiteInformation;and

the ActivitySchedule orbill ofquantities.

CommencementAgreement

the ProjectPartneringAgreement

the PartneringTerms

the ProjectTimetable

the PartneringTimetable

the ConsultantServicesSchedules andConsultantPayment Terms

the Project Briefincorporating anyConstructor'sServicesSchedules

the ProjectProposals

the PriceFramework

the JoiningAgreement

the PreConstructionAgreement

the Risk Register

the KPIs andTargets; and

any otherPartneringDocument.

the Form ofAgreement (ifrequired)

the Form ofTender and thewritten acceptancethereof


the drawings

the specification;and

the bill ofquantities.



Priced Document or(where Pricing OptionB applies) theSpecification; and

(where FluctuationsOption C applies) theschedule referred toin 11b of the JCTFormula Rules.

An InformationRelease Schedulemay also be used,although this is notlisted within thedefinition of 'contractdocuments'.

3. Key partiesinvolved in thecontract

the employer

the contractor

the architect/contractadministrator

the quantity surveyor

employer

contractor

projectmanager

supervisor

client

constructor

clientrepresentative

partneringadviser

lead designer

consultants/designteam

specialists

employer

contractor

engineer

engineer'srepresentative

4. Projectmanagement

The architect/contractadministrator and thequantity surveyor bothhave roles inadministering thecontract. They are nota party to the contract,but are expected tomaintain impartialitywhile administeringthe contract.

The contractor mustcomply with thearchitect/contractadministrator'sinstructions.

Good projectmanagementis a key themeof the NEC3ECC.Examplesinclude:

key role forthe projectmanager in theadministrationof the contract

early warningprovisions(see Cl. 16.1)

Good projectmanagement is akey theme of thePPC2000.Examples include:

the establishmentof a core group(see Cl. 3.3)

the operation ofan early warningsystem (see Cl.3.5)

liaison withinterested parties(see Cl. 3.9)

The engineer isappointed by theemployer tosupervise thecontract. Thecontract conferscertain duties andobligations on theengineer (e.g.valuing variationsand formallydeciding on issueswhere either theemployer orcontractor isdissatisfied).

Matters which might



Other projectmanagement toolsthat are present inother contracts are notgenerally found withinthis contract.

risk reductionmeetings (seeCl. 16.3); and

the use of arisk register.

the use ofobjectives andtargets (see Cl. 4)

the use ofdetailed partneringand projecttimetables; and

the use of a riskregister.

become disputesare notified anddiscussed under Cl.66.

5. Who hasresponsibilityfor design ofthe works?

The employer retainsprimary responsibilityfor the design of theworks.

The contractor can beasked to designdiscrete parts of theworks by using theContractor's DesignedPortion.

Responsibilityfor the designof the worksshould bedetailed in theWorksInformation.

The NEC3ECC isflexible. Thecontractor mayhave little ornoresponsibilityfor design, orfullresponsibilityfor design.

The design of theproject isdeveloped by thelead designer andthe other designteam members(see Cl. 8.1).

Optional wordingin the ProjectPartneringAgreement can beused to place fullresponsibility onthe constructor forthe design, supply,construction andcompletion of theproject.

The employerretains primaryresponsibility fordesign.

Apart from anydiscrete part of thepermanent workswhich the contractrequires thecontractor todesign; thecontractor is notresponsible for thedesign orspecification of thepermanent works,or any part thereof,or of any temporaryworks designsupplied by theengineer (see Cl.8(2)).

6. The standardof designresponsibility(e.g. fitness forpurpose orreasonableskill and care)

Where there is aContractor's DesignedPortion, the requiredstandard of designresponsibility isintended to be thesame as that of anyindependent architector other professionaldesign directlyemployed by theemployer andclaiming to becompetent toundertake work of this

A fitness forpurposeobligation willbe impliedunlesssecondaryOption X15(limitation ofthe contractor'sliability for hisdesign toreasonableskill and care)is selected foruse.

Each of thepartnering teammembers isrequired to use thereasonable skilland careappropriate to theirrespective roles,expertise andresponsibilities asstated in thepartneringdocuments, asmay be amendedby the Project

If the contractor is tobe responsible fordesigning any partof the permanentworks, thecontractor shallexercise allreasonable skill,care and diligencein carrying out suchdesign (see Cl.8(2)).



type (see Cl. 2.19.1).This is akin to anobligation toreasonable skill andcare.

PartneringAgreement (seeCl. 22.1).

If the constructor isacting in a designand build capacity,this wording couldimport a fitness forpurposerequirement.

Optional wordingin the ProjectPartneringAgreement canalso be used toimport an expressfitness for purposerequirement.

7. Programmingrequirements

Programmingrequirements arelighter than in othercontracts (see Cl. 2.9).

The contractor isobliged to provide thearchitect/contractadministrator with twocopies of the masterprogramme. Thecontractor shallprovide a revisedprogramme if anextension of time isgranted.

Theprogramme isa keydocument inthe NEC3ECC.

Extensiveprogrammingobligations arecontained inCl. 31, 32 and50.3.

The partneringtimetable governsthe activities of thepartnering teamprior to the date oftheCommencementAgreement

The projecttimetable isagreed inaccordance withCl. 6 and governstheimplementation ofthe project afterthe date of theCommencementAgreement.

Programmerequirements aredetailed in Cl. 14.

The contractor isrequired to submit aprogramme andgeneral methods ofconstruction to theengineer. Theseare intended to bemanagement tools.

8. Sectionalcompletion

Sectional completionwill apply if therelevant parts of thecontract documents(including theContract Particulars)state that sectionalcompletion is to applyand detail the relevantsections (see the

Sectionalcompletion willapply ifsecondaryOption X5 isselected foruse.

Sectionalcompletion willapply if theCommencementAgreement andthe partneringtimetable or theproject timetablestates that theproject is to be

Sectionalcompletion willapply if the relevantparts of theAppendix to theForm of Tender arecompletedidentifying therelevant sectionsand the time for



Sixth Recital and theContract Particulars)

divided intosections (see Cl.6.3).

completion of eachsection.

9. Remedies fordelayedcompletion

Cl. 2.30 2.32 providefor liquidateddamages in the eventof delay in achievingpractical completionof the whole of theworks or, if applicable,sections of the works.

The rate of liquidateddamages is to bespecified in theContract Particulars.

If secondaryOption X7(delaydamages) isnot selectedfor use, in theevent ofdelayedcompletion,the employerwould have tobring an actionfor breach ofcontract andseek recoveryof the actuallosses it hassuffered.

If secondaryOption X7 isselected foruse, theparties canpreagree theamount ofdamages thecontractor willbe liable for inthe event ofdelayedcompletion.

The PPC2000does not containany expressprovision for a prefixed amount to belevied in the eventof late completion.The client wouldbe required tobring a claim forbreach of contractand claim itsactual lossesinstead.

However, otherprovisions, e.g.those dealing withrisk sharing, KPIsand incentives,may apply in theevent of latecompletion,depending onwhether selectedfor use and howdrafted.

Cl. 47 provides forliquidated damagesin the event of delayin achievingsubstantialcompletion of thewhole of the worksor, if applicable,sections of theworks.

The rate ofliquidated damagesis to be specified inthe Appendix to theForm of Tender. Acap on liability forliquidated damagescan also beexpressed in theAppendix to theForm of Tender.

10. Eventsentitlingextensions oftime

These are known as'relevant events'. Theyare detailed in Cl.2.29.

These areknown as'CompensationEvents'. Theyare detailed inCl. 60.1.

These arecontained in Cl.18.3, plus anyadditional eventsstated in theCommencementAgreement.

These arecontained in Cl.44(1).

Apart from the fivespecific groundsreferred to in subclauses 44(1)(a),(b), (d), (e) and (f),the followingcauses of delay arealso referred to inthe contract (whichlink to subclause44(1)(c)):



Cl. 7(4), 12(2),13(3), 14(8), 26(4),31(2), 40(1), 42(3);and 59(4)(f).

11. Eventsentitlingpayment ofadditional cost

These are known as'Relevant Matters'.They are detailed inCl. 4.24.

These areknown as'CompensationEvents'. Theyare detailed inCl. 60.1.

These arecontained in Cl.18.3 plus anyadditional eventsstated in theCommencementAgreement(although certainevents will notlead to payment ofadditional siteoverheads and anincrease in theagreed maximumprice, see Cl. 18.5and 18.6).

Numerous events inthe contract entitlethe contractor toclaim payment ofadditional cost.These events arespread around thecontract and are notall gathered underone clause.

For example, seeCl. 7(4), 12(3),12(6), 13(3), 14(8),17(2), 26(4), 31(2),36(2), 36(4), 38(2),40(1), 42(3), 50,and 52(3).

12. Use of timebarspreventingclaims forextensions oftime and/orpayment ofadditional cost

There are no expresstimebars in thecontract, althoughcontractors should beaware of thetimescales forsubmitting claimsunder Cl. 2.27 and4.23.

Timebars areused in theNEC3 ECC.For example,see Cl. 61.3and 61.4.

Timebars are notused in thePPC2000 toprevent claims forextensions of timeand/or payment ofadditional cost.

Timebars are notused in the ICCMeasurementVersion to preventclaims forextensions of timeand/or payment ofadditional cost.

13. Adverseweatherconditions

Exceptionally adverseweather conditionsare a relevant event,entitling the contractorto claim an extensionof time (see Cl.2.29.9).

Adverseweather is acompensationevent underCl. 60.1(13).The weathermeasurementsto compareagainst shouldbe detailed inthe ContractData.

The constructorwill be able toclaim an extensionof time in respectof weatherconditions, whichthe meteorologicaloffice records forthe area nearest tothe site, indicateare exceptionallyadverse for thetime of year.

Exceptionaladverse weatherconditions entitlethe contractor toclaim an extensionof time (see Cl.44(1)(d)).

14. Site/groundcondition risk

The risk of adversesite/ground conditionsis not mentioned inthe contract. In the

A risk for theemployer.Adversephysical

Subject to anyexceptions statedin theCommencement

This is dealt with inCl. 12.

The contractor is



absence of anyexpress provisions tothe contrary, the riskwould ordinarily bewith the contractor.

conditions areaCompensationEvent (see Cl.60.1(12)).

Agreement andthe discovery ofany antiquities(see Cl. 18.3(ii)),the constructorbears the risk ofthe state andcondition of thesite (see Cl. 18.9).

expected to takeresponsibility forphysical conditionsor artificialobstructions thatcould reasonablyhave been foreseenby an experiencedcontractor.

The contractor willbe able to claim foran extension of timeand/or payment ofadditional cost if heencounters physicalconditions (otherthan weatherconditions orconditions due toweather conditions)or artificialobstructions whichcould not havebeen foreseen byan experiencedcontractor.

15. Partnering/collaborativeprovisions

Paragraph 1(CollaborativeWorking) of Schedule8 (SupplementalProvisions) requiresthe parties to workwith each other andother project teammembers in acooperative andcollaborative manner,in good faith and in aspirit of trust andrespect.

Whether or notParagraph 1 ofSchedule 8 applies toa particular contractwill be determined bythe ContractParticulars.

The parties can also

There is ageneralobligation forthe parties toact as stated inthe contractand 'in a spiritof mutual trustand cooperation'.

SecondaryOption X12(Partnering)can beselected foruse.

The PPC2000 isdrafted as apartneringcontract.Partnering is at theheart of thiscontract.

Cl. 4 details thepartneringobjectives andtargets for eachpartnering teammember. Theseinclude achieving'trust, fairness,mutual cooperation,dedication toagreed commongoals and anunderstanding ofeach other'sexpectations and

The ICCMeasurementVersion is drafted ina 'traditional' styleand does notcontain anypartneringprovisions or otherexpresslycollaborativerequirements.



use the JCT'sPartnering Charter(nonbinding) wherethey do not wish toenter into a legallybinding agreementbut do wish to createa collaborativeworking environment.

values'.

Cl. 3 also detailshow the partneringteam membersshouldcommunicate andorganisethemselves.

16. KeyPerformanceIndicators(KPIs)

Paragraph 5(PerformanceIndicators andMonitoring) ofSchedule 8(SupplementalProvisions) allows theemployer to monitorthe contractor'sperformance byreference toperformanceindicators stated oridentified in thecontract documents.

Whether or notParagraph 5 ofSchedule 8 applies toa particular contractwill be determined bythe ContractParticulars.

SecondaryOption X20(KeyPerformanceIndicators) canbe selected foruse, but not ifsecondaryOption X12has also beenselected foruse.

Cl. 23 deals withKPIs and targets.These are detailedin Appendix 8 ofthe contract.

Shared savings,shared addedvalue andpain/gainincentives canalso be agreed(see Cl. 13).

The ICCMeasurementVersion does notcontain anyprovision for KPIs.

17. Control overthecontractor'skey personnel

There are no expressprovisions regardingcontrol of keypersonnel employedby the contractor.

Dealt with inCl. 24. Theidentity of anykey personnel,their role andqualificationscan bedetailed in theContract Data.Theemployer'sconsent isrequired toreplace anykey personnel.

There are noexpress provisionsregarding controlof key personnelemployed by theconstructor.

There are noexpress provisionsregarding control ofkey personnelemployed by thecontractor.

18. Controls on This is addressed in The contractor The PPC2000 The contractor shall



subcontracting(includingnominatedsubcontractors)

Cl. 3.7 3.9.

The architect/contractadministrator'sconsent is required tosubcontract thewhole or any part ofthe works. Theemployer's consent isrequired tosubcontract thedesign of anyContractor's DesignedPortion.

The contract does notcontain anyprovisions relating tonominated subcontractors, but Cl. 3.8retains provision for alist of three or moreapproved subcontractors that thecontractor can choosefrom.

Cl. 3.9 sets out theminimum conditionsrequired for any subcontract.

The JCT's NamedSpecialist Update(issued February2012) can also beused to nameindividual specialistsas domestic subcontractors foridentified parts of theworks.

is required tosubmit thename of eachproposed subcontractor tothe projectmanager foracceptance(see Cl. 26.2).

The contractormay also berequired tosubmit theproposedconditions ofcontract foreach subcontract to theprojectmanager (seeCl. 26.3).

The NEC3ECC does notcontain anyprovisionsrelating tonominatedsubcontractors.

does not containany provisionsrelating tonominated subcontractors, but Cl.10 of the contractgives the client ahigh degree ofinvolvement in theselection andapproval of subcontractors (knownas 'specialists').

not subcontract thewhole of the workswithout the priorwritten consent ofthe employer (seeCl. 4(1)).

The subcontractingpart of the worksmay require theengineer's approval(see Cl. 4(2)).Although theemployment oflabouronly subcontractors doesnot requirenotification to theengineer (see Cl.4(3)).

Cl. 59 of the ICCMeasurementVersion deals withnominated subcontractors. Thecontractor is given aright of objection(see Cl. 59(1)). Theemployer isexpected to bearsome of the risk fordefaults bynominated subcontractors.

19. Coordinationwith othercontractors

This is addressed inCl. 2.7, although thisprovision is frequentlyamended to providemore extensiveobligations on thecontractor tocoordinate with othercontractors.

This isaddressed inCl. 25 (workingwith theemployer andothers). Thelevel ofcooperationshould bedetailed in the

Coordination withother contractors isnot expresslymentioned, butcould come underthe obligation toliaise withinterested parties(see Cl. 3.9).

This is addressed inCl. 31(1).

The contractor willbe entitled to claiman extension of timeand/or payment ofadditional cost if heincurs delay or costbeyond that



WorksInformation.

reasonably to havebeen foreseen byan experiencedcontractor (see Cl.31(2)).

20. Payment basis(e.g. lumpsum, remeasurement,target cost)

The 'with Quantities'and 'withoutQuantities' versionsare both fixed pricelumpsum contracts.The only differencebetween the twobeing whether bills ofquantities are used todefine the quantityand quality of work.

The 'with ApproximateQuantities' version isa remeasurementcontract. Anapproximate bill ofquantities is used todefine the quantityand quality of workwhich is then remeasured.

The basis ofpaying thecontractor willdepend onwhich paymentoption isselected foruse:

(i) Option A priced contractwith activityschedule (alump sumcontract)

(ii) Option B priced contractwith bills ofquantities (aremeasurementcontract)

(iii) Option C target contractwith activityschedule (atarget costcontract)

(iv) Option D target contractwith bills ofquantities (atarget costcontract)

(v) Option E costreimbursablecontract (a costreimbursablecontract)

(vi) Option F management

For any of theconstructor'sservicesperformed prior tothe date of theCommencementAgreement, theconstructor is paidin accordance withthe priceframework (see Cl.12.1).

Any preconstructionactivities are paidfor in accordancewith the PreConstructionAgreement (seeCl. 12.2).

Otherwise, pricesfor all aspects ofthe project aredeveloped byreference to theprice framework toestablish anagreed maximumprice (see Cl.12.3). This is akinto a target costarrangement. Anypain/gainincentives can bedetailed in theProject PartneringAgreement (seeCl. 13.2).

Payment to thecontractor is on thebasis of remeasurement.

The contract refersto a 'tender total'(the total of the billof quantities or theagreed estimatedtotal value of theworks) and a'contract price' (thesums to beascertained andpaid in accordancewith the contract).

The quantities inthe bill of quantitiesare estimated only.Remeasurementwill determine theactual quantities.



contract (a costreimbursablecontract)

21. Retention The employer maywithhold retentionmonies (see Cl.4.9.2.1 and 4.18 4.20). The rate ofretention is specifiedin the ContractParticulars.

The employermay withholdretentionmonies ifsecondaryOption X16(Retention) isselected foruse.

The employer maywithhold retentionmonies from theagreed maximumprice at the ratespecified in theprice framework(see Cl. 20.15).

The employer maywithhold retentionmonies (see Cl.60(5) and 60(6)).The rate and limit ofretention arespecified in theAppendix to theForm of Tender.

22. Compliancewith ThirdPartyAgreements

Not addressed in thecontract. A bespokeamendment would beneeded to deal withthis.

Not addressedin the contract.A bespokeamendment inthe 'Z' clauseswould beneeded to dealwith this.

Not addressed inthe contract. Abespoke specialterm would beneeded to dealwith this.

Not addressed inthe contract. Abespokeamendment wouldbe needed to dealwith this.

23. Insurancerequirements

Insurancerequirements aredetailed in Section 6of the Conditions ofContract, the ContractParticulars andSchedule 3(Insurance Options).

The contractor will berequired to provideemployer's liabilityinsurance and thirdparty liabilityinsurance (see Cl.6.4.1.). Professionalindemnity insuranceand insurance underCl. 6.5.1 may also berequired if so stated inthe ContractParticulars.

Responsibility forinsurance of theworks will be detailedin the ContractParticulars.

The contractorprovides thoseinsurancesstated in theinsurancetable in Cl.84.2 and anyotherinsurancesdetailed in theContract Data.

The employerprovides anyinsurancesthat may bestated in theContract Data.

The ProjectPartneringAgreement andCommencementAgreement areused to detailwhich party/partiesare required toprocure thefollowinginsurances:

insurance of theproject and site

insurance (if any)of third partyproperty damage

third party liabilityinsurance

professionalindemnity orproduct liabilityinsurance

environmentalrisk insurance

latent defects

The contractorprocures jointnames insurancefor the workstogether withmaterials, plant andequipment forincorporationtherein to the fullreplacement costplus 10% to coveradditional costs(includingprofessional fees)(see Cl. 21(1)). Thecontractor alsoprocures third partyliability insurance injoint names (see Cl.23(1)).

If the contractor isrequired to designany part of theworks, the employermay also requirethe contractor toprocure andmaintain



insurance; and

whole projectinsurance.

professionalindemnityinsurance. Abespokeamendment wouldbe needed toachieve this.

24. Assignment Neither the employernor the contractorshall be entitled toassign the contractoror their rightsthereunder withoutthe consent of theother party (see Cl.7.1).

This provision isfrequently amendedin practice.

The NEC3ECC does notcontain anyrestrictions ona party's rightto assign thebenefit of thecontract.

Except as stated inthe ProjectPartneringAgreement orotherwise inaccordance withthe partneringterms, none of thepartnering teammembers mayassign their rightswithout the priorconsent of all otherpartnering teammembers (see Cl.25.2).

Neither theemployer nor thecontract shallassign without theprior writtenconsent of the otherparty, whichconsent shall not beunreasonablywithheld (see Cl.3(1)).

25. Performancesecurity

The contract containsprovisions for andtemplate forms ofadvance paymentbond, a bond inrespect of offsitematerials and/orgoods, and aretention bond.

The contract does notinclude provision for aparent companyguarantee orperformance bond.Bespokeamendments to thecontract would beneeded to incorporaterequirements toprovide thesedocuments.

SecondaryOptions X4(ParentCompanyGuarantee)and X13(PerformanceBond) areavailable forselection.

If the employerrequires thecontractor orsubcontractors toprovide otherforms ofperformancesecurity,bespokeamendmentsin the 'Z'clauses arerequired.

Under Cl. 19.9, theproject brief isused to statewhether theconstructor is toprovide:

an advancepayment bond

a performancebond

a parentcompanyguarantee; and/or

a retention bond.

Details of therequiredperformancesecurity are to beincluded in theCommencementAgreement.

Cl. 10(1) governsprovision of aperformance bond.The maximumvalue of the bond is10% of the tendertotal. The form ofbond is annexed tothe conditions ofcontract.

If the employerrequires thecontractor toprovide other formsof performancesecurity (e.g. aparent companyguarantee),bespokeamendments to thecontract will berequired.



26. Collateralwarranties

Part 2 of the ContractParticulars is used tospecify whether thecontractor and anyspecified subcontractors arerequired to providecollateral warranties.

The required forms ofcollateral warranty arethose drafted by theJCT.

The contractdoes notcontain anyobligations forthe contractorand subcontractors toprovidecollateralwarranties.

If the employerrequires thecontractor orsubcontractors toprovidecollateralwarranties,bespokeamendmentsin the 'Z'clauses arerequired.

Partnering teammembers can berequired to providecollateralwarranties underCl. 22.2.

The constructorcan be required toprocure collateralwarranties fromspecialists underCl. 22.3.

The contract doesnot contain anyobligations for thecontractor and subcontractors toprovide collateralwarranties.

If the employerrequires thecontractor or subcontractors toprovide collateralwarranties,bespokeamendments will berequired.

27. Copyright A licence to use thecontractor's designdocuments iscontained in Cl. 2.41.It will not take effectunless all sums dueand payable to thecontractor have beenpaid.

A copyrightlicence fromthe contractorto theemployer iscontained inCl. 22.1. Thisis oftenamended as itis not as wideas othercopyrightprovisionstypically seenin the market.

A copyright licencefrom eachpartnering teammember to theclient is containedin Cl. 9.2.

Copyright licencesfrom each of theemployer andcontractor arecontained in Cl.6(3).

28. Ability toinstruct/requestvariations

The architect/contractadministrator mayissue instructionsrequiring a 'variation'(see Cl. 3.14). Theterm variation isdefined in Cl. 5.1.

The contractor doesnot have to complywith variations of the

The projectmanager mayinstruct achange to theWorksInformation. Ifso, this willconstitute aCompensationEvent.

Any partneringteam member maypropose a changeto the client at anytime if it isdemonstrably inthe best interestsof the project (seeCl. 17.1).

The client may

Under Cl. 51(1), theengineer shallorder any variationto any part of theworks that is in hisopinion necessaryfor the completionof the works, andmay order anyvariation that forany other reason



type under Cl. 5.1.2provided he notifies areasonable objectionto thearchitect/contractadministrator (see Cl.3.10.1).

propose a changeat any time (seeCl. 17.2).

shall in his opinionbe desirable for thecompletion and/orimprovedfunctioning of theworks.

Under Cl. 51(3), thecontractor maysubmit proposals tothe engineer to varythe drawings andspecification.

29. Valuingvariations

The valuation ofvariations isaddressed in Cl. 5.2.

If the value of avariation is not agreedbetween thecontractor andemployer, the quantitysurveyor shall valuethe variation inaccordance with theValuation Rules (seeCl. 5.6 5.10).

An instructionby the projectmanager thatchanges theWorksInformationwill, apart fromin certaincircumstances,constitute aCompensationEvent (see Cl.60.1(1)).

The valuationofCompensationEvents willdepend onwhich paymentoption (A F) isselected foruse. Thevaluation ofCompensationEvents isdifferent foreach paymentoption.

The client andmembers of thepartnering teamhave the ability topropose a change(see Cl. 17.1 and17.2).

Changes arevalued byreference to thePrice Framework(see Cl. 17.2 and17.3).

In the event of adispute, the clientrepresentativemay value achange on a fairand reasonablebasis utilisingprices for similarwork in the PriceFramework (seeCl. 17.4).

If requested by theengineer, thecontractor submits aquotation for anyproposed variationand the partiesseek to agree thevaluation of anyvariation (see Cl.52(1)).

If the contractor isnot asked to submita quotation oragreement is notreached, thecontractor maysubmit a quotationto the engineerhaving due regardto any rates orprices included inthe contract (see Cl.52(3)).

Failing agreementbetween theengineer andcontractor, thevaluation of thevariation willdepend on whetheror not the work is ofsimilar characterand carried outunder similarconditions to work



priced in the bill ofquantities (see Cl.52(4)).

The engineer hasthe right to fix therate or price for anyitem of work that isaffected by avariation (see Cl.52(5)).

The engineer mayalso orderadditional orsubstituted work tobe carried out on adaywork basis (seeCl. 52(6)).

30. Change in law This is addressed inCl. 2.17.2.

A change in law maybe dealt with by aninstruction requiring avariation dependingon when the changein law occurs andwhich contractdocuments areaffected.

SecondaryOption X2(Changes inthe Law) maybe selected foruse. If so, achange in lawthat occursafter thecontract datewill be treatedas aCompensationEvent.

This is a client risk.Under Cl. 18.3(iv),the constructor willbe able to claim anextension of timeand payment ofaddition cost for achange in any lawor regulation of thecountry in whichthe site is locatedafter the date oftheCommencementAgreement andwhich was notreasonablyforeseen by theconstructor.

The contractor isobliged to ascertainand conform in allrespects with anygeneral or local Actof Parliament andthe regulations andbyelaws of anylocal or statutoryauthority (see Cl.26(3)).

The contractor maybe entitled to anextension of timeand/or payment ofadditional cost if thecontract orinstructions of theengineer are not inconformity with Actsof Parliament,regulations andbyelaws (see Cl.26(3)(b) and 26(4)).

31. Force majeure Force majeure is aRelevant Evententitling the contractorto claim an extensionof time (see Cl.2.29.14). Note that

Forcemajeuretypeevents arecovered as aCompensationEvent under

Force majeure isnot expresslymentioned in thecontract.

Cl. 18.3(xvi) andthe

Force majeure isnot expresslymentioned in thecontract.

However, forcemajeuretype



'force majeure' is notdefined in thecontract.

The occurrence offorce majeure alsoentitles either party toterminate thecontractor'semployment underthe contract.

Cl. 60.1(19).They are alsoevents thatwould entitlethe employerto terminate(see Cl. 91.7).

CommencementAgreement couldbe used to includeforce majeure as aclient risk event,but the client maynot wish to beliable for thefinancialconsequences ofan event of forcemajeure.

The occurrence offorce majeuretypeevents could leadto terminationunder Cl. 26.6 and26.7.

events couldconstitute a groundfor an extension oftime under Cl. 44(1)(f) or grounds forabandonment of theworks under Cl.63(1) or 63(2).

32. Defectsrectification

Defects rectification isaddressed in Cl. 2.38and 2.39. The lengthof the rectificationperiod is specified inthe ContractParticulars.

The architect/contractadministrator issuesthe Certificate ofMaking Good when inhis opinion thedefects, shrinkagesand other faults whichhe has required tohave been madegood, have beenmade good.

Defectsrectification isaddressed inCl. 40 45.The supervisorplays a keyrole innotifying thecontractor ofdefects andissuing theDefectsCertificate.

Defectsrectification isaddressed in Cl.21.4. The DefectsLiability Periodand period forrectifying defectsare specified in theProject PartneringAgreement.

Defects arerectified at theconstructor's cost.

Defects rectificationis addressed in Cl.49, 50 and 61.There is no cleardefinition of 'defect'.

To become entitledto the DefectsCorrectionCertificate, thecontractor isrequired to haverectified alloutstanding defectsand completed alloutstanding work tothe engineer'ssatisfaction.

33. Employertermination 'atwill' andconsequences

The employer doesnot have the right toterminate at will underthis contract.

The employermay terminatefor any reason(see Cl. 90.2).If so, thecontractor ispaid more onsuchterminationthan he wouldhave beenentitled to if the

The client cannotterminate at will,but can terminatefor nonachievement ofany of the preconditions set outin Cl. 14.1, or forany other reasonnot reasonablyforeseeable by theclient arising at

The employer doesnot have the right toterminate at willunder this contract.



employer hadterminated forother reasons(see theTerminationTable in Cl.90.2).

any time prior tothe date of theCommencementAgreement (seeCl. 26.1).

The client pays avaluation inaccordance withCl. 20 but no otheramounts (see Cl.26.1)

34. Disputeresolutionprocedures

Various disputeresolutionmechanisms areincluded in Section 9of the contract:

mediation

adjudication; and

litigation orarbitration.

Option W1 Used unlessthe UK'sHousingGrants,ConstructionandRegenerationAct 1996applies (inwhich caseOption W2 isused) adjudicationfollowed bylitigation orarbitration.

Option W2 Used in the UKwhen theHousingGrants,ConstructionandRegenerationAct 1996applies adjudicationfollowed bylitigation orarbitration.

Various disputeresolutionmechanisms areincluded in Cl. 26of the contract:

a problemsolving hierarchy

a meeting of thecore group

conciliation,mediation or otherform of alternativedispute resolutionrecommended bythe partneringadviser

adjudication; and


Various disputeresolutionmechanisms areincluded in Cl. 66A 66D of thecontract:

amicable disputeresolution (whetherby negotiationbetween the partiesor by other meansincludingconciliation ormediation)

adjudication; and

arbitration.

35. Limitations onliability

Cl. 2.19.3 contains anoptional provision foran overall cap onliability for loss of use,loss of profits andother consequential

SecondaryOption X18can beselected foruse:

The ProjectPartneringAgreementprovides optionalwording for netcontribution clause

The Appendix to theForm of Tenderallows the parties toagree a limit on thecontractor'spotential exposure



loss arising from anyinadequacy in thecontractor's designwork.

Otherwise, thecontract does notcontain any limitationson liability. If required,these would need tobe expresslyintroduced via abespoke amendmentto the contract.

X18.1 Limitation ofliability forindirect orconsequentialloss.

X18.2 Limitation ofliability for lossof or damageto theemployer'sproperty.

X18.3 Limitation ofliability fordefects in thecontractor'sdesign, whichare not listedin the DefectsCertificate.

X18.4 Overalllimitation onliability, apartfrom certainexcludedmatters.

X18.5 End ofliability date.

or the ability tospecify the exactproportions thatthe partneringteam memberswould be liable for.

Any otherlimitations onliability wouldneed to beexpresslyintroduced via theSpecial Terms.

to liquidateddamages for delay.

Otherwise, the ICCMeasurementVersion does notcontain anylimitations onliability.

adjudication;and


Option W1 Usedunless the UK'sHousing Grants,Construction andRegeneration Act1996 applies (inwhich case OptionW2 is used) adjudicationfollowed bylitigation orarbitration.

Option W2 Usedin the UK whenthe HousingGrants,Construction and

Various disputeresolutionmechanisms areincluded in Cl. 26of the contract:

a problemsolvinghierarchy

a meeting of thecore group

conciliation,mediation or otherform of alternativedispute resolutionrecommended bythe partnering

Variousdisputeresolutionmechanismsare includedin Cl. 66A 66D of thecontract:

amicabledisputeresolution(whether bynegotiationbetween theparties or byother meansincluding

35.



Regeneration Act1996 applies adjudicationfollowed bylitigation orarbitration.

adviser

adjudication; and


conciliation ormediation)

adjudication;and

arbitration.

35. Limitations onliability

Cl. 2.19.3 containsan optionalprovision for anoverall cap onliability for loss ofuse, loss of profitsand otherconsequential lossarising from anyinadequacy in thecontractor's designwork.

Otherwise, thecontract does notcontain anylimitations onliability. If required,these would needto be expresslyintroduced via abespokeamendment to thecontract.

SecondaryOption X18can beselected foruse:

X18.1 Limitation ofliability forindirect orconsequentialloss.

X18.2 Limitation ofliability forloss of ordamage totheemployer'sproperty.

X18.3 Limitation ofliability fordefects in thecontractor'sdesign, whichare not listedin the DefectsCertificate.

X18.4 Overalllimitation onliability, apartfrom certainexcludedmatters.

X18.5 End ofliability date.

The ProjectPartneringAgreementprovides optionalwording for netcontributionclause or theability to specifythe exactproportions thatthe partneringteam memberswould be liablefor.

Any otherlimitations onliability wouldneed to beexpresslyintroduced via theSpecial Terms.

TheAppendix tothe Form ofTenderallows theparties toagree a limiton thecontractor'spotentialexposure toliquidateddamages fordelay.

Otherwise,the ICCMeasurementVersion doesnot containanylimitations onliability.



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