Your Guide to JCT Construction Contracts

November 9, 2021
Andrew Knowles

For decades, JCT construction contracts have been the preferred choice across the building industry. While they may be subject to amendments, to reflect the specific requirements of a project, these contracts provide the core of the legal agreement between clients, contractors and subcontractors.

The contracts are a set of standard documents, designed to make setting up and managing a project easier for all the parties involved. They are effectively templates for the final contract and because they have been in use for so long, most contractors and subcontractors are familiar with them. 

Using JCT construction contracts helps define the responsibilities of everyone involved in a project, making it clear what work needs to be done, by who and when, for how much, and when payments will be made.

Background to the JCT

The Joint Contracts Tribunal (JCT) was formed in 1931 by the Royal Institute of British Architects (RIBA). Its mission was to create standard building contracts that could be used across the industry. Today it's the leading provider of contract documentation, providing contracts, guidance documents, contracts of homeowners, and documents on partnering and collateral warranties.

Types of JCT contract

Today the JCT offers dozens of different variations of standard contracts and other agreements. These documents are organised into contract families, which include:

  • Standard building contracts
  • Minor works building contracts
  • Major project construction contracts
  • Design and build contracts
  • Construction management contracts
  • Repair and maintenance contracts

JCT has been publishing these documents since the 1930s and the current editions were issued in 2016. All the contracts are updated once every ten years.

Other JCT resources

The JCT produces a host of other resources that are useful to the construction industry. These include:

Guides to operation and administration of contracts

These guides include detailed explanations of the contracts, along with information on relevant changes in legislation and case law developments.

Weather planning

The JCT has partnered with the Met Office to provide location-based weather planning reports and downtime reports. These project management tools help you to plan for and minimise the impact of the weather on your project. More specific weather forecasting services are also available, covering weather warnings, monthly outlooks and tower crane forecasts. They also offer a traditional product giving long-term averages and one in ten-year values for certain weather events. 

JCT training

A range of online courses covering different aspects of standard contracts.

Building Information Modelling guides

A relatively new addition to the resources on the JCT website, the Building Information Modelling guides aim to demystify this digital process and make it relevant to construction clients and small businesses in the industry.

Benefits of using JCT contracts

There are many reasons why a contractor or subcontractor chooses to work with a JCT contract. These include:

  • Standardisation - most parties are familiar with them and have confidence that they cover most issues expected on a construction project.
  • Risk management - the contract structures ensure that risk is balanced between both sides.
  • Dispute resolution - where disputes arise, the contracts set out arbitration processes.
  • Protection from poor contractors - the contracts reduce the risk of engaging a contractor or subcontractor who doesn't work to professional standards.

A major benefit of all this is that the cost of a project is easier to control, as is the timescale. The standard contracts make a significant contribution to effective project management.

Possible limitations of JCT contracts

While they are hugely convenient, JCT contracts must be reviewed before being agreed to. Issues you need to consider when using JCT contracts include:

  • Accuracy of the requirements: a contract in its standard form may not be appropriate on a specific project, or it may give a contractor the ability to make decisions that their customer would prefer to have some input into.
  • How to make amendments: fortunately, you can access JCT Digital, an online tool that makes contract drafting easier.
  • Resolving differences: where disputes occur, they can push up project costs and extend timescales. It's important that the contract dispute resolution process helps minimise the risk of these occurring.

It's essential that the contract is thoroughly reviewed after any amendments have been made. If you sign it without checking all the details, even of the standard form, you could be agreeing to terms that are unfavourable to you.

Helping construction companies with cashflow

While JCT contracts help with managing the risks and responsibilities on a construction project, including payment terms, this doesn't always protect construction businesses from cashflow challenges.

These challenges could be a result of late payments from clients, covering the costs of hiring additional staff or paying for the procurement of extra material or equipment. Whatever the reason, a cashflow crisis can become a significant risk.

We help businesses overcome these challenges by sourcing additional finance, either short-term or over a longer period. We work with a panel of over 250 funders, many of whom have extensive experience of supporting businesses in the construction sector.

If you're facing a possible cashflow challenge, it's better to take action now. Don't leave it to the last minute, as that can make it more expensive to fix the problem.

Our specialist finance team talks to business owners in the construction sector every day. If you think you may need our help - get in touch today.

 

Jamie Davies
Managing Director

As a founder of multiple businesses, Jamie believes that mindset, discipline and ambition are key drivers for success, both for his businesses and for his clients. 

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