11 Jun How the right procurement route and construction contract can save your development project
Embarking on our most recent co-living project in Acton, London, has been both exhilarating and challenging. We have just awarded a contract for the construction of our latest co-living project, which includes ten units, each designed to cater to the lifestyle needs of young professionals. With a contract sum of around £850,000, we knew from the beginning that a solid, reliable procurement and contractual framework is essential to navigate the complexities of this venture.
Choosing the right path: the procurement route
In construction, the procurement route you select can dramatically impact your project’s outcome. For our Acton project, we opted for a traditional design procurement route. This choice is strategic, allowing us ample time to focus on high-quality interior and architectural design, which is crucial when creating appealing living spaces for young professionals.
A traditional procurement route, as opposed to the Design and Build route (where the contractor is responsible for the design and construction), involves a clear separation between the design and construction phases. Initially, an architect is engaged to develop comprehensive project designs and specifications. Once these are finalized, the project is put out to tender, and contractors bid for the construction work based on the completed design documents. This method allows for thorough design development and detailed planning before construction begins, ensuring the project meets high standards and specific requirements.
The traditional procurement route offers several advantages. It ensures thorough design quality and flexibility, allowing our design team to develop detailed specifications tailored to our market’s needs. Engaging in competitive design and tender processes means we can select the best professionals, enhancing the likelihood of a high-quality result. This approach also facilitates value engineering, helping us find cost-effective solutions without sacrificing quality. Additionally, the fair tendering process provides cost certainty, a crucial factor when managing a substantial budget.
Why the JCT Intermediate Contract is our best choice
After thorough consideration and based on our extensive experience with previous projects, we determined that the JCT Intermediate Building Contract with Contractor’s Design Portion is the perfect fit for our co-living project.
For those unfamiliar, JCT (Joint Contracts Tribunal) contracts are standard forms of construction contracts used extensively in the UK. They provide a balanced and structured framework for managing construction projects, clearly defining the roles, responsibilities, and obligations of all parties involved. The JCT Intermediate Building Contract with Contractor’s Design Portion specifically allows the contractor to take on certain design responsibilities, which can be highly beneficial for complex projects like ours.
This contract offers multiple specific benefits that align perfectly with our project goals. First and foremost, assigning the contractor responsibility for certain design aspects allows us to shift substantial risks to the contractor. This is crucial given the scope and budget of our project. Additionally, the contractor’s involvement in the design of specialist MEP (Mechanical, Electrical and Plumbing) areas significantly expedites the overall project schedule. To ensure that the contractor’s design meets our standards, our trusted consultant issues detailed Employer’s Requirements to guide their work.
The flexibility of the contract is another major advantage. It allows for necessary adjustments and refinements during the construction phase, which is crucial for maintaining the high standards we aim for. Despite delegating certain responsibilities, we always retain control over key design elements and quality standards, ensuring that the project aligns with our vision. The contract also ensures compliance with all relevant building codes and regulations, providing additional assurance that our project will meet the necessary legal and safety standards.
In summary, the JCT Intermediate Building Contract with Contractor’s Design Portion offers us cost efficiency, time savings, flexibility, effective risk allocation, high-quality control, professional involvement, competitive tendering, client control and regulatory compliance.
The reality of working with the JCT contract
With a professional team comprising Quantity Surveyors/Contract Administrators, architects and us as the development managers, we harness the full potential of the JCT Intermediate Contract. Although our project isn’t particularly large, it is highly complex due to the dense, fully serviced small units. The design portion of the contract allows us to delegate liability for the M&E design and construction to the contractor, based on the employer’s requirements developed by our M&E consultant. This strategic allocation of responsibilities ensures high standards while effectively managing risks.
Professionalism: the backbone of successful construction
Professional contracts and documentation are vital in construction. As a member of the Royal Institution of Chartered Surveyors (MRICS) with a legal background, I cannot overstate the importance of detailed and legally sound contracts. The JCT contract, with its thorough preliminary conditions and riders, provides the legal certainty we need. Here’s why professionalism in contract management is essential.
A comprehensive contract mitigates risks by clearly defining terms and conditions, reducing the likelihood of disputes over costs and responsibilities. It ensures clarity and effective communication, detailing the roles, responsibilities, and scope of the project for all parties involved. This clarity prevents misunderstandings and promotes smooth project execution. A robust legal framework offers a structured approach to managing changes, resolving disputes and ensuring regulatory compliance.
We have all heard horror stories of projects falling apart due to poor contract management or cutting corners on professional teams. By investing in a robust contract and a skilled team, we safeguard our project against such pitfalls.
Real benefits of the JCT contract
The JCT contract’s detailed terms and conditions provide a clear framework, eliminating ambiguities and ensuring everyone knows their roles and responsibilities. Balanced provisions protect the interests of both the employer and the contractor, fostering a cooperative environment. The contract’s flexibility allows us to adapt to changes and address unforeseen challenges without derailing the project. Payment provisions ensure regular cash flow, and dispute resolution mechanisms provide a structured approach to resolving conflicts.
Several key elements contribute to our success. Clearly defined tasks and responsibilities ensure everyone knows their duties. Regular interim payments and retention clauses help maintain financial stability and incentivise timely completion of tasks. The inclusion of adjudication (one of the Alternative Dispute Resolution mechanisms) clauses provides a structured approach to resolving conflicts.
Advice for fellow construction professionals
For those considering a JCT contract, my advice is straightforward. Take the time to thoroughly understand the terms and conditions. Engage legal advice if necessary. Ensure all parties have a clear understanding of their roles and responsibilities. Open communication is key to preventing misunderstandings and therefore conflict. Be prepared to adapt to changes and use the contract’s provisions to manage adjustments smoothly.
Bringing it all together
Our experience with the JCT contract has been overwhelmingly positive. It provides a robust framework that facilitates clear communication, fair dealings, and effective project management. In an industry where precision and professionalism are paramount, the JCT contract stands out as an essential tool for success. By embracing formal contracts and comprehensive documentation, we not only safeguard our projects but also pave the way for smoother, more efficient construction processes.
As a development manager, understanding and utilizing these contracts allows me to minimize risks and ensure successful project delivery. This knowledge and expertise highlight the importance of having a professional who understands the legal and practical aspects of construction management.
Francesco Fasanella MRICS
