The construction world is changing. Projects are getting larger and more risk-filled, and contracts are no longer optional when you are thinking of starting your works. In an increasingly litigious society, having the protections from these contracts is vital to ensuring your business success. In the construction industry, there are two main standardised contracts which are more commonly used than others. They are the JCT and NEC contracts.
Contracts are often best to be bespoke. However, when so many companies in the same industry are taking on similar projects, some thought it may be prudent to simplify the process by creating standard contracts that can be used within construction. Although these have been created as contracts to be completed with your specifics, many businesses also choose to include a schedule of amendments to these which allow their preferred ways of working to be included within such.
JCTs vs NECs
The JCT contracts were created by the Joint Contracts Tribunal. There are a whole host of types within these: domestic works, commercial installations and maintenance contracts. There should always be a type of contract which suits you and your project. We have written a blog on choosing the right kind of JCT here.
On the other hand, the NEC contracts were created by the Institute of Civil Engineers, who produced this as the ‘New Engineering Contract’ and gradually increased their offering to create a whole suite of documents. This was created with engineering in mind, and is still more commonly used in this kind of industry more than construction widely. However, it has been known to be extended to electrical and other types of works from time to time.
How JCTs and NECs are completed
The way these contracts are completed are different. A JCT is completed by completing the recitals, the articles and the contract particulars, which link to the conditions at the end of the contract. The conditions are a lot more fixed. There are some options within the contract, but without having any additional amendments, it really is a standardised contract.
In comparison, NEC contracts are created with a lot more flexibility. There are five main option clauses which are listed as A-F and they determine what kind of contract you are going to be working under. They detail how the contract itself is priced, too. Further, there are different clauses which you can insert or exclude. These are the W,X,Y and Z clauses.
There are 29 X clauses and they are fairly typical clauses that you would expect to have considered when thinking about your project. You just need to decide whether you wish for them to apply. The Z clause part of the contract is the most customisable part of the agreement. It is an area designed for you to include any additional conditions of contract that are bespoke to you.
Some contractors and subcontractors are comforted to see typical standard contracts come across their desk, knowing that it will be similar to what they are used to, whereas some are put off by their length and complexity. There is definitely still a market for bespoke contracts and terms and conditions within the construction industry, especially where you don’t want to conform to the processes included within these standard documents. It may be helpful to know your audience when producing these and decide which is most appropriate for your situation and other party.
Ultimately, both JCT and NEC contracts can be utilised well within your construction projects. They simply need to be completed correctly and accurately for your work. These documents can be purchased from their respective websites, both in electronic versions and paper copies.
As both contracts use some specialist terminology and jargon, it is important to ensure you are happy to deal in such before completing and agreeing to something onerous mistakenly. If you are not sure, you can always get in touch with us at BEB. We have packages to help with the completion of your JCTs and NECs.