Major projects, minor details

31 July 2015

After raising eyebrows when introduced in 2011, the JCT Major Project Construction Contract is now widely recognised. But confusion over some of its provisions has come to light.

When what is now JCT Major Project Construction Contract (MPCC) 2011 was first used by clients such as Heron on the Heron Tower and British Land on The Leadenhall Building, it raised eyebrows.  Bankers’ lawyers were not familiar with it and contractors had not worked with it before; quantity surveyors assumed it was the same as other JCT forms and it is fair to say there was some resistance.  But now it is widely used and accepted on a range of projects – mainly it is true, in London – and those who are familiar with it find it easy to read, easy to understand and clear as to responsibilities when problems arise.

But its use has thrown up some issues in practice – not mistakes in the form itself but confusion in implementation of certain provisions:

Payment / pricing document:  The biggest single issue is that all quantity surveyors assume that the MPCC, like other JCT forms, includes extensive drafting about how instalment payments will be calculated – will payment be made for offsite goods and materials?  If so, what conditions will apply?  What about on-site goods and materials?  Is there to be retention?  What about provisional sums?  But none of this is included in the MPCC which simply states that the proportion of the Contract Sum to be paid on each interim payment advice is calculated in the manner set out in the pricing document.  If they are not, there is no enforceable payment mechanism and the contract will fall foul of the Construction Act.  This is not a “defect” in the drafting – the JCT took the conscious decision not to produce voluminous drafting for clauses which may not apply. 

CDM Regulations:  The MPCC assumes that the contractor is appointed as both “principal designer” and “principal contractor”.  Many clients prefer to keep the “principal designer” separate from the contractor through construction of the Project.  To do this, the MPCC has to be amended – but only a couple of sub-clauses and only in minor way. 

Priority documents:  There is no priority of documents clause in the contract.  It is assumed that the parties will understand the MPCC and include provisions consistent with it in the technical documents.  If the MPCC states that the contractor is responsible for unforeseen ground conditions and the requirements say the reverse, there is no provision stating that the contract has priority.  The parties can obviously agree a priority of documents clause or, indeed, can agree that parts of a single document prevail over other parts of the same document but, because of the difficulties caused in other JCT forms by having a blanket rule that the terms of the contract prevail, a specific decision was taken in relation to the MPCC not to do this.

Ground conditions:  There is a simple option in the text of the MPCC and it turns on how the contract particulars are completed.  If the contract particulars are not properly completed, there is even a fall back option – which is that the contractor is responsible for unforeseen ground conditions.  Why does this cause so much difficulty for parties filling in the contract particulars? 

Employer’s Representative:  This can be anyone – it can be an employee of the employer or an independent company and whoever is appointed at the outset can be changed at any time.  The important thing, though, is that someone must be appointed at all times.

Changes:  Again, as a conscious way of improving the way in which projects are managed, MPCC assumes that the valuation of any change will include any loss and/or expense attributable to the change.  Unlike other JCT forms, the loss and/or expense arising from the change is not claimed under a separate provision.

Insurances:  Again unlike the many pages of drafting included in other JCT forms, the MPCC just assumes that relevant policies to be maintained by each party are appended to the contract particulars and the contract particulars simply refer to who maintains each policy.  What could be simpler?  The MPCC does not require the policy to be described in detail by extensive amendment to the conditions of contract. 

Third party rights:  Whilst it broke the mould at the time by using third party rights, other contracts have now caught up with the MPCC.  But if there is one amendment which does need to be made, it is to add third party rights from sub-contractors no provision for which is made in the form at all.  But this self-evidently does not require 70 pages of redrafting.

The MPCC is not difficult - just different.

This article was originally published on 31 July 2015 in Building's magazine.