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06 Dec 2014

An employer should be aware, in seeking to ensure that the contractor is fully responsible for the design of the project, that the JCT Design and Build Contract 2011 without certain amendments will not necessarily guarantee that the contractor has acquired complete design responsibility. The JCT Design and Build Contract 2011 edition, a standard form contract, can provide the employer with the certainty of a fixed lump-sum price, a set date for practical completion of the construction works and to a certain extent, a single point of responsibility for the design. In seeking such certainties, the employer can expect to pay a premium as with single point responsibility and a fixedprice lump sum the contractor will be subject to greater exposure, the unknown quantity as to what potential risks lie in wait. At the outset of the project, it is usual practice for the employer to employ design consultants in order to provide outline designs and specifications with a view to obtaining the necessary building and planning permissions. On appointing a contractor under a design and build contract, the subsequent design as well as the construction is then the responsibility of the contractor. On appointment, it is quite usual for the employer’s design consultants’ contracts to be novated to the contractor. In doing so and with the contractor being responsible for both design and construction, any argument that a defect is a result of construction or design is attempted to be negated. However, the standard form without amendments will continue to provide that the design responsibility is apportioned between the employer and the contractor. The design contained in the employer’s requirements, the outline design and specifications, being the responsibility of the employer and with the contractor responsible for the subsequent design works which are then carried out to project completion. Should there be a defect in the design, the employer may in seeking recourse for any loss, be required to pursue either the contractor or its design consultants for any damage caused by the design defect. An un-amended standard form provides that the contents of the employer’s requirements are not the responsibility of a contractor and that it is also not the responsibility of the contractor for verifying the adequacy of any design contained within them. The employer is responsible for any discrepancy contained within the employer’s requirements. Should any inadequacy be found, which is not the responsibility of the contractor to verify, then, the employer’s requirements are to be amended accordingly and subject to certain provisions, the amendment shall be treated as a change to the contract. In such circumstances, the contractor may be entitled to an increase in the contract sum, an extension of time flowing from the change and with it a delay in the practical completion of the construction works. Notwithstanding the direct cost of the variation to the contract sum, any change to the contract can impact on works which are part of the critical path on the contract programme of works. Any variation and with it an extension of time will then ensure that the preliminaries element of the contract sum which will include for management costs, construction plant and rental costs etc., will also increase due to the increased time spent on site. Despite the impact any delay to the practical completion date will have on the project’s finance arrangements, this increase in costs can be quite substantial. The employer will be unable, where the contractor is not at default, to claim liquidated damages as provided for in the contract for the resulting increase in the contract programme. An agreed rate of damages inserted in the contract to compensate the employer if the contractor does not complete the works on time. In order to limit its exposure, the employer should ensure that the contractor has full responsibility for the design of the works and so amend the standard form and create a single point of responsibility. Any necessary amendments require careful consideration due to the interaction of the clauses contained within the standard form. Failure to do so and the contract will lose meaning. On amendment complete responsibility for all aspects of the design, which will include any design works carried out on behalf of the employer as part of the employer’s requirements will be passed to the contractor. In doing so, the contractor will be responsible for the design work carried out by the employer’s design consultants, whether this was carried out before or after the entering into of the contract.