A NEW APPROACH TO THE

JCT DESIGN AND BUILD

CONTRACT

By the same author

A New Approach to the Standard Form of Building Contract (MPT, 1972,

The Construction Press Ltd, 1974)
A New Approach to the ICE Conditions of Contract, Volume 1 (The Construction Press Ltd, 1975)
A New Approach to the ICE Conditions of Contract, Volume 2 (The Construction Press Ltd, 1976)
A New Approach to the (FIDIC) International Civil Engineering Contract
(The Construction Press Ltd, 1979)
A New Approach to the (JCT) 1980 Standard Form of Building Contract
(The Construction Press Ltd,
A New Approach to the (JCT) 1980 Standard Form of Nominated SubContract (Construction Press, 1982)
A New Approach to the (DOM/1) Standard Form of Building Sub-Contract
(Construction Press, 1983)

A NEW APPROACH TO THE

JCT DESIGN AND

CONTRACT
Glyn P Jones

mmm
mm*

MSc ARICS MCIOB

149749

CONSTRUCTION PRESS
LONDON AND NEW YORK

CONTENTS
Preface

vii

Chapter 1 The design and its life-cycle costs

Chapter 2 Choosing the right bid

Chapter 3

The risks involved

Chapter 4

A commentary on the clauses

13

Chapter 5

The reason for flowcharts

33

Chapter 6

Flowcharts

35

Construction Press
an imprint of: Longman
Group Limited
Longman House, Burnt Mill, Harlow,
Essex CM20 2JE, England .

Associated companies throughout the world

Published in the United States of America by
Longman Inc., New York
GlynP Jones, 1984
All rights reserved; no part of this publication may be
reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical,
photocopying, recording., or otherwise, without the
prior written permission of the Publishers.
First published 1984
British Library Cataloguing in Publication Data
Jones, Glyn
A new approach to the JCT Design and Build
Contract.
1. Joint Contracts Tribunal. JCT Design
and Buiid Contract 2. Building Contracts
and specifications Great Britain
I. Title
692'.8
TH425
ISBNO-86095-904-X
Set in 1MB Press Roman and Univers by
Lonsdale Typesetting Services, Lancaster

PREFACE

It was only a matter of time before 'design and build' grew and came of age
in the UK. Contractors knew markets existed for the direct selling of their
construction wares. They knew packages or bids containing inclusive design
services would appeal to many but no 'official' standard form of contract
existed for those who wished to offer, or accept, design/build deals.
Now, the construction industry has what it wants - a JCT Contract
with a pedigree near perfect. Standard in form, rock-anchored into a long
lineage of ways and words familiar to the industry's practitioners, it has the
flexibility needed to satisfy and protect most kinds of client - from the
one-off customer who knows not what he wants (exactly), to the Local
Authority that does know, or the commercial client who has his own team
of conceptual designers needing their outlines developed into drawings,
details and specifications.
Fusing design and building technique together into a full parcel of services
undoubtedly sharpens attitudes to riks, methods, time, cost, quality and
warranties. Furthermore, it forces design/build bidders to compete on three
fronts rather than one (price). Design and their design's life-cycle costs now
become part of the bid battle.
Contractors, to succeed on the second and third front, need to tune in to
social trends, the tax world, the land of lease-back, and learn to play the
discount tables until they are as adept with present values of future pounds
as they are with the future values of present ones; convincing clients their
design's package includes not only the most acceptable design/cost choice
but also the lowest life-cycle cost commitment.

Of course, the ogre of overall unending liability will hover low over
design/build contractors unless the client chooses to utilise the clause 2
facilities to grant certain reliefs where perhaps novel designs are invited.
Otherwise the general fear of major mistakes may slow down the emergence
of bright new British design/builders until the storm clouds surrounding
liability are driven away,
This form of contract should hasten the return of people's confidence in
buildings. It should encourage the marketing of buildings, offering clients
a choice of product, price, quality, longevity, pay-back terms, and life-cycles;
enabling the construction industry to take more and more risks with a
greater degree of certainty that profits will be gained rather than losses
suffered.
This book endeavours to clarify this Contract for practitioners, introducing also chapters on matters of design, bidding and risks. The manuscript
and charts were all converted into print by Margaret Smith, who managed
it all in her usual inimitable way and I extend to her my thanks for such
excellence.
Glyn P Jones
King Faisal University
Dammim
March 1984

THE DESIGN AND ITS LIFE-CYCLE COSTS

Introduction
The traditional procedure for clients wishing to buy new
buildings, or rehabilitate old ones, has been to select an
independent professional designer and to tell or discuss
with him what he wants, what he can afford, and what
aesthetic standards he has in mind. The chosen architect
in turn arranges for contractors to bid for the construction
of his design on the client's property.
Tills distinct two part process has disadvantages well
known to everyone concerned with the design production
and procurement of buildings.
The 'design-and-build' process provides differently for
a one step way of procuring construction work by those
who prefer the designer to be also the builder; they then
can speak to one person about design, time, and price in
a composite way and invite bids composed of these three
unified elements.
Construction work increasingly requires closer integration of specialisms whose designs and their execution must
interlock into ever tighter fits. This is generally acknowledged to be less easily achieved when a design team acts
independently from the construction team.
Fusing the designer's and builder's minds together
undoubtedly sharpens up attitudes to matters of risk,
technique, time, quality, cost and warranties. It forces the
designer to listen to the builder for they are one, acting and
thinking in unison, in their search for optimum solutions.
This frequently topples design choice from its usually
dominant and unassailable place. Design matters have to

This may worry traditionalists who see all delicate

designs being bludgeoned into oblivion by brash builders.
However, many would argue the relatively free rein enjoyed
by designers under the conventional two step rules has
produced no appreciable increase in beautiful buildings. In
any case there is no reason to prevent designers becoming
builders rather than builders becoming designers.
The design/build contract
In commercial fields the client may. to the designer's relief
or dismay, show no interest at all in aesthetic standards. His
sole concern may be to own a new factory or warehouse, fit
for a certain purpose, built anywhere within a certain area
in the fastest possible time at the lowest possible cost and
to last for twenty years. Furthermore, he may wish to have
little or nothing to do with it until it becomes ready for his
occupation.
On the other hand, the client may want a memorable
and monumental building. He may have very strong views
on aesthetics and the social amenities needed to partner his
proposed project. He may already own land upon which to
build; it may (at his cost) have been surveyed above and
below ground; an approved design in outline or even in detail by his own, or a consultant, architect may be available;
a budget price fixed; specialists lined up to do ancillary
work; a full specification may be to hand; an agent of the
client may be engaged and ready to oversee the whole

In both the above cases, and in an;/ permutation between the two, the JCT Standard Form of design/build
contract accommodates the client's contractual requirements and safeguards to a considerable extent his interests
which are to have, for a lump sum price, the kind of building he wants, built well, and completed when he wants i t .
The JCT contract does not prevent construction delays.
It does, however, reduce the chance of completion being
delayed. Damages, prefixed by the client, will in the usual
way arise unless certain stipulated events have caused the
delay. The contract could quite easily have dispensed with
these and other safeguards of the contractor by placing
these risks upon his shoulders, but a price would of course
be paid by the client whether or not those risks materialised. The JCT reckoned when putting together their
conditions that optimised risk-sharing would give the client
the safest set of terms for the lowest initial cosl bids by nongambling bidders. These conditions do not therefore offer
clients risk-free arrangements.
The risk-sharing to be found in all JCT contracts is
frequently attacked by contract commentators who have
different views on tiie share to be carried by the client.
They would prefer io see most risks borne by the contractor.
Such a policy ignores its inevitable effect; the higher the
risk the higher the bids from non-gambling bidders. Shrewd
clients want to take certain risks for they know there lies

a chance of gain as well as loss. A client may prefer the

opportunity to carry the risk of inflation for in so doing
lie will benefit from lower initial bids and in his estimation
bear a reasonable chance of low losses in honouring his
commitments to pay cost increases.
Loading the non-gambling contractor with 'speculative'
risks offers him exclusive rights .to the certainty of either
a profit or loss. In the former case the client will have paid
more for his building than it is worth and in the latter case
the contractor may at worst become insolvent or at least
become anxious to reduce his losses by cutting every corner
he encounters.
Competition
It is sometimes claimed that because design/build arrangements reduce the numbers competing they thereby reduce
competition. However, conventional tendering procedures
in the UK call for competition on one front only namely,
price, whereas design/build arrangements generate competition, to the client's advantage, on two if not three fronts:
(i) Price (ii) Design (iii) Life-cycle costs (the
future user's costs).
Contractors will readily accept defeat if their price is
too high but will not easily continue to accept rejection on
grounds of inferior designs; nor will they be pleased if their
lowest bids are ignored in favour of higher initial cost bids
which promise lower life-cycle costs. Losing bidders will
soon respond by improving their designs, making it harder
for inexperienced gambling cut-price contractors to enter
the arena or gain any foothold at the expense of unsuspecting clients. The poor designer will tend to stay in the field
of 'build' only where his lower-than-cost bids will entice
the unwary.
The design and its life-cycle costs
The contractor's bid is only part of the picture. The advantage of a low initial tender may be offset by a vision of
high frequent maintenance and repair costs. A more complex attractive design or layout may generate higher staff
running costs or may diminish the efficiency potential of
a building.

If the client, or his adviser, adds together the initial

building costs, future maintenance costs and running costs,
then takes account of interest charges with inflation on the
sums concerned, a much clearer picture emerges in which
he questions whether to accept a higher initial bid for a
design with lower future costs, or to take a lower initial bid
with higher future costs to be paid at some time other than
the present.

where it is for a second year the original 100 will have

grown to 121 and so on.

In commercial constructions these considerations

become even more important since differential taxes may
apply or tax concessions may be there for the taking.
Grants or low interest loans may beckon the client to
consider carefully what he builds and where he builds it.
These factors should influence budgets, designs and bids.
The design/build contractor must tune in carefully to the
tax world, the land of lease-back, and the range of ways to
reduce a client's financial commitment in a building he may
only wish to have for a fraction of its eventual life-span".
The marketing of building has hardly begun unless it can
offer clients a choice of product, price, pay-back terms and
warranties on quality, longevity and recurring costs.

Compounding puts a future value now on a present sum

of money. Discounting put a present value now on a future
sum of money.

The principles involved in life-cycle costing are tied

closely to time, interest payments or receipts, and inflation.
Interest and inflation
Money must either incur interest charges if it is borrowed
or gain interest if it is saved. The sums of clients' monies
involved in future maintenance, repairs or running costs
must therefore carry this burden of theirs from the moment
they are 'born'. From the day the designer conceives their
future those various cost sums must begin to accumulate
their interest. An account of every future pound to be
spent must be drawn up and converted (discounted) hack
into its present-day value after allowing for its interest and
the effects of inflation.

On the other hand, it can be seen from discount tables

that 100 in one year's time is future money whbh at 10%
interest has a present-day equivalent of 90.909 because
that is the sum needed at 10% interest to amount to 100
in one year's time. Similarly 100 discounted for two years
at 10% has a present value of 82.644 and so on.

Tables are also available to convert a known annual

future sum required at the end of every year of a building's
life into an equivalent present-day lump sum (Present Value
of per annum Tables).
The above principles are all involved in assessing design/
cost alternatives enabling the future expenditures of differing proposals to be compared upon an equal footing of
present values by discounting.
For example, if two design/build bids have widely
differing design proposals the bids will also differ widely.
Without closer examination of the submissions it is impossible to say at a glance which bid is best. The cheaper bid
'A' will lead to heavier maintenance costs sooner and will
have only half the life-span of bid 'B'. However, the first
cost comparison (below) still shows bid 'A' to be better
than bid 'B'.

This first cost comparison has obvious faults in that it

assumes present pounds are the same as future ones; it also
ignores the points made earlier that any saving in initial cost
or the time delay in spending money on maintenance etc
should be reflected in the interest saved if that money was
borrowed, or the interest earned if that money wis invested
elsewhere. Thus, the second cost comparison (Table 1)
using a 5% rate of discount shows bid 'A 1 to be by far the
There are, as every schoolboy knows, tables available best.
(Compound Interest Tables) to show the future worth of
This will not surprise entrepeneurs for they have known
present money. There are also tables available (Discount for years it pays to delay all sums payable for as long as
Tables) to show the present worth of future money.
possible when the money is being borrowed (as it often is)
It can be seen at a glance from compound interest tables and similarly so when the sums are owned since interest
that 100 of present-day money will amount to 110 in would be received or profits would be earned by the money
one year's time at 10% interest. If the sum of 110 remains concerned.

The question which discount rate should be used?

depends upon the client's store of money, source of borrowing and the uses he could otherwise put saved money to;
there is also the problem of inflation trends and taxation
rates in the future. These pose difficulties for those who
may wrongly think discounting presents absolute answers.
Discounting in principle and the rate chosen in practice are
simply an open declaration of several assumptions that
taking into account everything we know about the client's
borrowing power, or profit potential, together with the
erosion in value expected a figure of 5% compositely
represents a fair allowance to be made on the capital
concerned.

Table 1 shows that design/build bids must be carefully

composed and judiciously selected. The design/build
philosophy is reputed to give the client greater certainty
of receiving what he wants when he wants it but this will
not lead to long-term client satisfaction unless the life-cycle
costs resulting from the chosen design are also introduced
into the equation on a discounted basis.
Table 2 illustrates these points, showing also the strong
influence of regularly recurring (annual) sums cropping up
over a long life-span.
It can be seen from Table 2 that bidder 'X' has put
himself out of the running mainly because he proffered a

Table 1 Comparisons of proposals 'A' and 'B'

Proposal 'A ' Initial bid 10 000 Estimated maintenance costs

2000 every 15 years
Life-span 30 years
Proposal 'B' Initial bid 25 000
Estimated maintenance costs 1 000 every 20 years
Life-span 60 years
1st comparison (over 60 years)
Initial cost
maintenance cost

after 15 years

Bid
'A'

Bid
'B'

10000

25000

2000

nil

after 20 years

12000

after 40 years

nil

1 000

after 45 years

Bid
'A'

10000

2000

nil

26000

27000

,on
,
x 0.377 =
,an
,
OOyrs)

1000 (20yrs>

,,ft
,
<4yrs>

1000
x 0.142 =

,._
,
x 0.111 =

Bid
'B'
25000

962

The present value (PV) of ,. _ ,

2000 (15yrs>
x 0.481 =

1 000

remove and reconstruct after 30 years

maintenance cost

2nd comparison (over 60 years)

discounting monies @ 5%

12000
x 0.231 =

377

2772
142

2000 t 4 5 ^

222

13956

25 519

heating/cooling/lighting system 40% Less cost efficient in

running terms than bidder 'Y'. If bidder 'X' redesigned his
system to produce a per annum running cost of about
22 000 instead of 25 000 he would once again be the
lowest all-round bidder. The fact that 'X' had also an
inferior roof needing replacement after thirty years was far
less cost significant since the sum involved would not arise
for thirty years whereas his inferior heating scheme meant
annually paying more than the sum under bid 'Y'.
The net real interest rates (ie, net after tax, real allowing for inflation) used in cost comparing is important. Like
money values, rates are not static nor are they valid over
long-term periods. Where the pace of inflation overtakes the
rate of interest payable the client's real rate of interest will
become negative, meaning the investment of capital into
projects is more than worth while, particularly since the
actual recurring amounts of the future running costs are
likely (because of the high inflation) to increase sharply.
Clients may prefer to use a special rate or 'opportunity
cost' rate in bid comparisons, taking the cold view they
need not build at all if a comparison shows the proposed
project would unprofitably tie up monies that could be put
to better use in other activities. Thus the discount rate may
well be up to 5% higher than normal risk-free investment
rates.
The client's life-cycle costs will include not only his
operating staff costs but also operating services (cleaning,
security, etc) and operating charges (rates, insurances,
water, etc). In this respect each bidder's design should be
vetted for efficiency in savings achievable by each design.
For instance, the client may normally spend l-2!4%of his
user costs in the replacement or maintenance of furniture.
Now if a bidder can show designs incorporating built-in
furniture at costs lower than the client's per annum charges,
taking into account a net real rate, ie after tax allowances
etc, then the bidder's bid concerned will come to the fore.
Bidders who can convince clients their particular designs
contain lower per annum recurring costs will score even
more. For instance, interior cleaning costs will amount
generally to about 25-30% of all the user's future costs,
thus any design improvement in this area will show great
savings. A carpeted floor design has an initial cost equal to

Table 2 Comparison of proposals 'X' and 'Y'

Tender comparisons (over 60 years)
discounting rate = 5%
Initial bids
Design differences (user costs) (a)
Heating/cooling/lighting system
estimated costs per annum :
(b) Planned maintenance
-estimated costs per annum :

Bid 'X'
25000

Bid 'Y'
15 000

8 000

5 000

12000
x 0.231 =

Bid
'Y'

1 000 000

1 200 000

Difference
10000
3 000
13000

discounted per annum payments over 60 yrs @

5%
1 8,929 =
(c) Remove and reconstruct roof
covering after 30 years
discounted to present value @ 5%

Bid
'X'

246 077

nil
2772

only 40% of the total life-cycle cost, the remainder being

40% spent on cleaning it and 20% on replacement.
On a broader scale the initial cost of a building may also,
as in the case above, amount to only 40% of the total lifecycle cost, the remainder being taken up by fuel costs
(10%), maintenance and repairs (10%), insurances, rates,
water, etc (10%) and cleaning (30%).
Thus the capital cost committed to acquiring an asset,
though a smaller proportion of the whole life-cycle cost,
commits the client to further unavoidable future payments.
The design/build bidder who recognises this and regularly reminds himself to design accordingly and to present
his bid in a way that demonstrates this may succeed where
others fail.
Forecasting trends and life-cycle costs
The design/build bidder, to be successful, needs to observe
and acknowledge within his designs changes or trends in
social and economic fields.

1 248 849
1 200 000
1
The most obvious of these lies perhaps in production
charges which may affect fuel and power. Climatic changes
or trends towards colder winters/hotter summers would
influence his designs. Age distribution changes may also
require marginally higher or lower heating systems, average
temperature calculations, etc. Employment and income
levels need to be observed, so too do consumption and
expenditure rates; population changes; production and
distribution changes; political changes and marketing
techniques.
Forecasting and 'market research are closely related.
There are leading, coincidental, and lag indicators to
guide design/build bidders in the right directions. For
instance, birth rates and geographical distributions are
leading indicators for (design/build) school and home
bidders. Coincidental indicators include unemployment
rates, retail index rates and crime rates. The 'Bank Rate' is
an important lag indicator.
These all provide a blurred picture of what is happening.
If crime rates against property increase designers must

acknowledge these trends in their proposals. If the unemployment rate increases disproportionately in certain
areas the design/build bidder may incorporate propositions
including special governmental concessions and financial
inducements to clients. If the economy moves into higher
Bank Rates the bidder's design and life-cycle cost calculations will reflect these monetary trends.
If any factor relied upon in the bid changes the contractor and client should react and reappraise the design/
cost picture, making suitable changes bearing in mind total
life-cycle costs can amount to many times the initial cost
concerned.
There is generally an increasing tendency for labour
costs to rise faster than material costs. Labour also plays a
prominent and often irreducible part in the client's future
costs. If such trends continue and we continue to demand
higher standards of comfort and cleanliness then the initial
capital cost is likely to shrink as a proportion of the total
life-cycle cost. The amount of capital needed to be spent
to save future more expensive man-hours therefore calls
for close correlation but it is not worth spending capital
indiscriminately simply in the blind pursuit of saving
future running costs. The rate of interest must appear in
the picture when optimising designs, initial costs and future
costs.
Design factors which influence life-cycle costs
The design/build bidder is anxious to lower his 'free' design
costs and to raise his bid success rate; the client on the
other hand is anxious to receive lower bids for better
designs having lower life-cycle costs. Both have similar
objectives in keeping down initial costs. The bidder, to
succeed, must economically propose efficient cheap buildings, aesthetically pleasing, and likely to last 30-60 years.
He may also put forward alternatives to the Employer's
Requirements within his Proposals, or different designs
having different quality standards and different completion
dates. Furthermore, he must make certain he avoids design
errors and omissions since the ogre of design liability under
clause 2 hovers over all his proposals whatever he does or
the Employer requires him to do. The consequences of
design errors or omissions may amount to enormous sums
if, viewed over their long-term future, left unremedied to
affect adversely life-cycle costs.

These matters might weigh heavily to influence design

and in turn dictate life-cycle costs. The Employer's Requirements may however require bidders to innovatively
move away from 'safe' designs, raising the risks of failure.
In such cases the increased risks will increase bids unless
the increased risks are shared equally or carried altogether
by the Employer.
Rather than be heavily involved in dictating designs the
Employer may prefer to stay at arm's length, stipulating in
his 'Requirements' the barest bones of his needs in terms
of quantity, quality and economy (see also Practice Note
CD/1A).
Quantity
The statement of quantity would include:
(a)Area of accommodation, detailing the purpose/s
(b)Any particular heights (factory clearances etc)
(c)Floor loadings
(d)Particular insulations needed (sound/thermal etc)
(e)Air change rates (dust levels, air conditioning re
quirements etc)
(f)Heating/hot water loads
(g)Lighting needs

(h) Electrical loads/supplies (slngle/3 phase etc) (i)

External needs (car parks, loading facilities etc) (j)
'Green' areas, paved areas.
Quality
The statement of quality would include:

(a)External elevation/roof description and life expec

tancy
(b)Internal finishes
(c)Windows, doors etc.

Other elements (eg, stairs, lifts etc) may be included.

Economy
The statement concerning economy may even include a
budget sum, ie, a figure establishing the limit of expenditure set by the client. Clearly this will result in bids being
judged on the merits of their designs and quality standards
offered for the sum suggested or a figure below or close to
the budget set.

A statement concerning life-cycle costs may also be - (a) Gross Floor Area
made detailing:
This factor dictates both initial and recurring costs (cleaning, maintenance, etc). It includes circulation space. Lower
(a)maintenance cost limits (annual and intermittent)
circulation areas generally signify more economical designs
(b)operating cost limits:
but an ultimate 'open-plan' may prove unacceptable or
(i) cleaning
counter-productive.
(ii) caretaking/security
Commercial clients solely interested in net or usable
(iii) gardening
floor areas may be heavily influence^ in their choice or
(iv) rates, water
acceptance of bids if wide variations appear between gross
(v) insurances
and net areas. For instance, if the gross floor area (GFA)
(vi) energy, fuel
cost in the bid of bidder 'A1 equals SOO m2 and contains
(c) Repair and renewal cost limits:
25% circulation area the client's profitable space cost rises
(i) roof coverings
to (800 x 1/0.75) 1067 m 2. If the bid of bidder 'B'
(ii) external walls
equalled 850 m2 but contained only 20% circulation space
(iii) windows, doors
then the client would prefer bid B on the basis (850 x
(iv) interior floor finishes
1/0.80) of 1062 m2 being a lower sam for the rentable
(v) interior walls, partitions
area.
(vi) ceilings
(vii) heating/cooling equipment and hot water
(viii) light/power equipment
(ix) external works

The chosen Contractor could also be required to provide

details of anticipated cash flow to correspond with his programme for construction to completion.
The above listed parameters though reasonably comprehensive hardly touch upon the building's appearance, shape,
colour, character and form; they are virtually all functional
remarks collectively communicating the client's needs in
terms of size, purpose and general level of quality.
However, these initial and earliest remarks or decisions
concerning a building's size, purpose and general level of
quality have a pronounced effect upon the bid price for
they may well account for 8090% of the total concerned.

The initial cost per m2 wil! tend tc reduce as the GFA

increases; wall to floor ratios will reduce; lift/stair area to
floor area ratios will reduce and in general bids expressed
in terms of net floor area cost per m2 will fall as the floor
area increases.
In the case of housing bidders' comparative costs for
2, 3 and 4 bedroom units will show ittractive reductions
per m2 as the number of bedrooms increases and even
better cost savings if expressed per occupier.
Clients should therefore interpret figures given in
Contractor's Proposals or bids with care, checking the
bidder lias not gone too far in cutting down circulation
space or in proposing an unbalanced mix of 2, 3 and 4
bedroom units ignoring the social, functional and aesthetic
reasons for limiting cost savings.

The most influential statement in setting cost concerns

size, ie, Gross Floor Area. Other factors will of course
influence the total, such as shape, location, inflation,
market conditions and ground conditions, but none will
generally move the initial price to be paid quite as much
as 'area'.

(b) Storey heights

There follows a brief appraisal of the more influential

of cost indicators which may be written into an 'Employer's Requirements1 or 'Contractor's Proposals'.

Various storey heights within one building pose annoying problems to designers, who may tend to smooth things
out by choosing one all-purpose height less cost efficient

This factor mostly affects wall and partition costs with

their recurring maintenance costs but it also of course
affects energy expenditure. It may marginally influence
stair and lift costs, and, by increasing loadings, affect
foundation costs.

(c) Square Index

The most efficient plan shape of all lies in a circle but the
best practical plan shape begins of course with the square.
The Square Index is a number indicating the extent to
which the perimeter of a particular building exceeds that
of a building of the same area on plan which is a perfect
square.
Square Index =
where P= perimeter
a - area on plan (not the GFA).

s-

r = 1.00

4x 25.981

67.500B
(675 m3)

However, Plans B and C may lend themselves to more

economic division wall arrangements, circulation areas and
structural cost decreases due to decreased spans but these
gains must be weighed against the heavier expenditure in
enclosing the space concerned.

where p - perimeter length at each floor

L = length of partition walls A =
gross floor area.
Certain shapes lend themselves to more economical
division of areas:

25.981-

C
(675m1)

- 0.159

Optimising plan shapes and comparing their vertical

division density Indices can profitably lower bids and
lower future running costs to the satisfaction of both client
and contractor.

Density of Vertical Division =-------^------

o
o
d
.

155) + 30

Although Plan B economically achieves the division of

four areas by using only 30 metres of division wall the
'poor' Index gained of 0.159 shows it obtained its division
at the expense of using more external wall than Plan A.

The amount of enclosing walls, load-bearing walls and partitions within a building is cost significant. The 'density' of
such walls can be expressed in the form of an index which
takes account of the contribution made to the enclosure of
rooms by the perimeter walls:

0
,

1 68.75 m

'B'

675

Bidders may therefore be more inclined to 'square up'

buildings unless they can otherwise achieve cost savings
elsewhere by use of standard span components, etc.

(2x 67.500) +(2 x 10.000) _

4XV675
"

d =

(d) Density of vertical division

--------25.981---------.

67.500

In the case of housing 'squaring up' will however have

the opposite effect where terraces are concerned for it will
increase the external portion of the wall enclosing the plan.

(675m2)

Bidders know the cost of enclosing buildings may equal

25-30% of the bid total. Plans B and C are therefore 49%
less cost efficient than Plan A in respect of the external wall
element.

10.000

than a multiplicity of heights. Heights in factories, governed

by production needs, clearly command careful consideration to enable the client to flexibly change his production
plans without raising the roof yet not spending sums
initially upon unnecessary height.

\o
o
p
6
CM

c ...

1.49

10.000

04X103324)+ 51.962 =
O /D

CHOOSING THE RIGHT BID

Introduction

Having earlier emphasised the importance of life-cycle costs

and the less important role played by initial costs it is clear
the client should not necessarily accept the lowest bid. Nor
indeed should he accept any bid at all if the designs proferred commit him to irreducible and unavoidable excess
expenditure into the long-term future.
A rational way of judging both bidders and their bids is
needed.
Selecting bidders
Only if the client selects the right sort of bidders In the
right numbers will he receive the 'right' bid. There is no
advantage at all in the client receiving a low bid from a
contractor who has insufficient experience, skills, integrity
or competence to carry out the project.
Clients who regularly place construction contracts will
have lists of "approved1 companies and need no information
to enable a choice of right bidders to be made. However,
'one-off clients ought to select with great care their bidders
by requiring them to provide informative details of:
1, Technical experience
2. Managerial resources
3, Financial resources
4. Safety record and industrial relations
5, Punctuality record
6. Reputation for quality.
1. Technical experience
Questions here should seek to discover how well equipped

the contractor concerned is in terms of expertise and previous experience of projects similar to the one proposed.
2. Managerial resources
This enquiry will examine staff qualifications, their experience, organisational structure and spans of control.
Particular information should be sought on the persons
(and their calibre) who would be made directly responsible
for the proposed project.
3. Financial resources
Balance sheet information and the financial relationships
between a parent company and its subsidiaries may be
examined together with the rates of equity to loan capital
and amount of fixed interest loan capital assessed. Any
imposition or managerial restrictions in force by the company's Bank should be investigated in greater detail.
Performance bonds appear the answer to any financial
unease but the 'premium1 cost would of course be indirectly paid by the client.
4. Safety record and industrial relations
These matters may appear of no concern to the client,
however he does, in clause 25, take the risk that delays
caused by any "local combination of workmen, strike or
lock-out" may require an extension of time to be granted
by the client to the contractor. In any case no client
should accept the bid of any contractor having a known
bad safety record resulting from inefficient safety management.

5. Punctuality record
Completion on time may be crucial to the client. In such
cases great weight will be rightly given to a past record of
punctuality. In this connection details of the companies'
planning department, their use of CPM techniques, and
their use of time control systems will teach the client much
about the bidders' attitude to timely completion.
6. Reputation for quality
The right questions here should disclose the sort of reputation the contractor has, the work entrusted to him because
of liis high standards and any involvement in arbitration or
litigation in respect of alleged defects. The latter must be
viewed with great care particularly if the cases concerned
involve projects the contractor did not design, since the
line between faulty work and faulty design is frequently
blurred.
Having selected bidders he can rely upon the client must
finally choose no more than about six and no less than
about four of those to compete against one another. Efficient non-gambling bidders will in normal times decline to
participate in a design/build competition if more than six
bidders are invited. They know the higher the number of
bidders the lower will be the bid and if an 'open" competition is allowed the lowest bid is quite likely to be below cost\
On the other hand, the lower the number of bidders
below about 4-6, the higher the winning bid.
If a considerable amount of design work is involved in
bidding the client may find few bidders prepared to risk the

chance of failure unless the odds are considerably reduced

by a reduction in the number of bidders. When a low number is decided upon the client then exposes himself further
if one bidder withdraws his bid or fails to submit one. In
such cases a Bid Bond may be called for from those few
participating to protect the client if a withdrawal occurs.
However, the cost of such bonds gets added to each bid,
resulting in the client paying a fee for his own protection.
Ranking the bids

The many attributes required of the bidder must be combined with the attributes of each bid and ranked in a
systematic way before the client can choose the best bid.
Bid attributes
Bidder's attributes
\. Technical experience
1. Price Design
2.Managerial resources
2. Life-cycle costs Speed
3.Financial resources
3. of construction
4.Safety and industrial
4.
relations record
Payment arrangements
5.Punctuality record
5. Construction techniques
6.Reputation for quality
6.
Table 3 shows a way in which these attributes can be put
together and weighted by the client according to his needs.
The client may wish to encourage, or hope to receive, an

outstanding design or potentially low life-cycle costs, in

which case he can inform bidders of the particular weightings he proposes to employ in ranking their bids. Thus a
bidder such as 'C' in Table 3 knows he can still succeed in
landing the job even though his price may be 10% above
the lowest.
Unless the client stipulates in the Employer's Requirements the relative importance of price, design, punctuality,
etc, bidders will simply concentrate upon price, caring less
for aesthetic matters and the client's crucial commitment
to pay for running the building for the next 3060 years.
Assume the bids received in Table 3 amounted as follows:
Bidder A = 1 000000 Bidder B = 1
050 000 (ie, + 5%) Bidder C = 1 100
000 (ie, + 10%) Bidder D = 1 150
000 (ie, + 15%).
Bidder 'A' would be ranked at 100 because he has the
lowest bid; it follows bid 'B' would arithmetically be
ranked at 95,'C'at 90 and 'D'at85.
Rating the design cannot similarly be arithmetically set.
The client must subjectively select the 'best' design and
may rate this at 100, giving the others relative awards.

Table 3

Factors

Weigh ting

Bid 'A '

Rating Result

Bid 'B'
Rating Result

Bid 'C'
Rating Result

Bid'D' '
Rating Result

Price

20

100

20.00

95

19.00

90

18.00

85

17.00

Design
Life-cycle costs
Technical experience
Managerial resources
Financial resources
Safety record
Punctuality
Industrial relations
Quality record

15
25
3
10
5
3
9
3

90
85
80
95
95
100
85
80
95

13.50
21.25
2.40
9.50
4.75
3.00
7.65
2.40
6.65
91.10

100
95
90
85
90
75
75
80
85

15.00
23.75
2.70
8.50
4.50
2.25
6.75
2.40
5.95 .
90.80

85
100
85
90
95
100
95
90
100

12.75
25.00
2,55
9.00
4.75
3.00
8.55
2.70
7.00
93.30

95
90
90
100
95
100
100
95
100

14.25
22.50
2.70
10.00
4.75
3.00
9.00
2.85
7.00
93.05

Rating the life-cycle costs can be done arithmetically as

in the case of the initial price, awarding top marks to the
design showing the lowest potential user costs, then ranking
the others in a similar way.
The remaining factors, technical expertise, managerial
resources, etc, will be dealt with by awarding ratings out of
100 on each to the bidders concerned.
On reviewing the bids in Table 3 it can be seen bidder 'C'
has the best all-round bid so far as the client for this particular project is concerned since price was regarded as
secondary to future running costs and design (appearance)
ranked third. These could of course easily be reversed to
bring out a new winner.
The client may on reflection wonder why he cannot
have the lowest prices of bidder 'A', the best design of
bidder 'B', the lower life-cycle costs of bidder 'C' and the
management, safety record, punctuality and quality of
bidder 'D'. He may even go so far as to suggest bidder 'A'
uses the Proposals of bidder 'B'. Apart from breaches of
copyright such a move would incur the wrath of all concerned (except perhaps 'A') and might result in a joint
action to recover their substantial bid expenses from the
client.
The client should in any case bear in mind that, once the
Contract is entered into, clause 5.6 forbids him divulging
information to others and limits the use of the successful
bidder's documents to the project concerned.
Finally, it should be realised the bidder may have submitted the lowest price by error! A close examination of
each bidder's Contract Sum Analysis should therefore be
made before any acceptance or rejection of bids is made.
Ideally a procedure should be incorporated into the
invitations to bid dealing with the question of erroneous
bids. These are particularly important under the design/
build arrangements where the structure of the Contract
Sum Analysis is left to the parties and the application of
a formula to adjust cost fluctuations is based upon those
figures to be found in the Analysis.

THE RISKS INVOLVED

Introduction

Clients may wish to know what sort of risks they run under
the JCT design/build Contract and require their advisers
to inform them. There are four classes of risk identifiable
under the Contract:
1.Fundamental
2.Pure
3.Particular
4.Speculative
1. Fundamental risks

These include the risk of war, nuclear fall-out, and other

similar unlikely events. No insurances are required; the
government stands any reparation costs that might arise.
2. Pure risks
Damage to the Works by fire, lightning, storm, etc, is a
'pure risk'. Insurances are required under clause 22. The
premiums payable form part of the price to be paid by
the Employer (client).
3. Particular risks

These risks may arise from particular construction techniques to be employed in executing the Works, such as
piling., demolition or dewatering, which may unavoidably
cause damage to property other than the Works.
Insurances are to be "maintained" by the Contractor
under clause 21 for certain Particular Risks for an amount

of indemnity the Employer may specify in his Requirements to cover these risks. The client should seek expert
advice on these matters. The premiums (and any special
survey fees) will form part of the price to be paid by the
Employer (client).
4, Speculative risks

These risks are quite unlike the previous three categories

which if they occurred would cause loss only, no benefits
would accrue.
Speculative risks differently offer the certainty of either
profit (benefit) or loss.

statistically stands to benefit from lower bids every time

and sometimes to doubly gain if the risk he carries manifests itself only mildly, or not at all.
Risks of interest to the parties include:
(a)the risk of design faults
(b)the risk of bad ground conditions
(c)the risk of changes
(d)the risk of delay in completion and disruption to
regular progress
(e)the risk of defective work
(f)the risk of inflation.

Both parties are (or should be) therefore interested in

taking these risks. The Employer takes, for instance, the
risk of exceptionally adverse weather delaying completion.
His potential benefit lies in lower bids; his potential loss lies
in lost liquidated damages. The Contractor takes the risk
of ordinary adverse weather delaying him. His potential
benefit lies in the lap of the gods who may send down fair
weather; his potential loss arises if his allowance within his
bid for bad weather is more than consumed by the weather
actually encountered. It can be seen the JCT has shared the
risks of weather between the parties granting them both the
certainty of either profit or loss; the more likely event of
ordinary adverse weather being carried by the Contractor.

(a) The risk of design faults

Other examples of risk sharing exist in the Contract.

However, commentators sometimes see' the arrangements
as one-sided bias against the Employer. Somehow they see
only the certainty of loss for the Employer whereas he

(b) The risk of bad ground conditions

The JCT have, in clause 2.5, marginally lowered the Contractor's liability from the standard normally to be expected
of design/build contractors to a level expected of any architect or professional designer. The Employer may if he
wishes go even further and limit the Contractor's liability to
a fixed ceiling excepting where dwellings are concerned.
Obviously any lowering of liability must not be considered unless the potential risk can be accommodated and
the resulting lower bid benefits are substantial! The details
of clause 2 liabilities are discussed further in Chapter 4.

The state of the site and its sub-strata are crucial to the
Works and surroundings. The Employer must (clause 7)
define the boundaries but need do no more.

The Contractor must have satisfied himself on all aspects

of the site, including unforeseeable difficulties that may
exist in the sub-surface and hydrological conditions.

the regular rhythm and progress of the Contractor's work.

Changes also upset his arrangements to carry out his other
work not part of the Change Order itself.

Bidders will not normally investigate the sub-strata.

They expect the Employer to provide them with substrata surveys sufficient to base their bid upon, including
the design of foundations, drainage, etc. If no such details
are made available they will qualify their bid to exclude
underground work or will make assumptions concerning the
ground and base their bids accordingly.

The JCT recognised the possibility of ordered changes

coming at an inopportune time for the Contractor. It
arranged its Contract's terms (in clause 12) in such a way
as to allow the Contractor to review his rates and prices, to
charge the Employer accordingly, and to recover (under
clause 26) any loss and/or expense caused by the irregularity arising. Furthermore, the Contract allows the time loss
(under clause 25) to be added to the time for completion.

The Employer should therefore commission the necessary data and maybe a consultant Engineer's interpretation
and presentation of that information concerned.
Whether or not the data are sufficient and representative
of the ground between boreholes for their purposes must
be a matter for decision by the bidders. The bidders will
also decide the ground's condition and its suitability for
construction purposes. They will decide for themselves how
to deal with any groundwater, rock or sand, unless the
Employer's adviser particularly specifies otherwise.
The Employer's adviser will write into the subsoil survey
a disclaimer stating the information is not guaranteed to
match the conditions encountered nor is the information to
be taken as a warranty of the ground's suitability for any
particular purpose.
The Employer and his adviser or agent should also avoid
giving any further or unintended assurances, written or oral,
inside or outside the Employer's Requirements in respect
of the subsoil's condition or suitability for any particular
design.
Where factually correct data are provided the bidders
carry the risks of the ground's condition. However, if the
facts in a subsoil survey given to bidders are found to be
incorrect a question of negligence arises. The Contractor
misled would seek compensation from the Employer, who
would in turn seek recovery of the sum from the consultant
who produced the erroneous report. His professional indemnity policy would come into play in such circumstances.
(c) The risk of changes
Changes and provisional sum instructions tend to disrupt

10

The money involved is (under clause 3) to be paid over

to the Contractor as soon as it is in whole or in part ascertained.
The Employer can avoid the clause 26 payment of loss
and/or expense in an 'open-ended' way by negotiating and
agreeing in writing a sum in advance for a change to be
inclusive of any rate or price change together with the disruption that may be caused. However, if no such agreement
is possible then the Contract's terms must be adhered to.
Whenever a change or provisional sum instruction requires work not similar in character to, or significantly
changes the quantity of, work originally laid down, or if
the work must be executed under dissimilar conditions to
those prevailing prior to the change order or provisional
sum order, then a review of the rates and prices for the
changed or provisional sum work is called for.
The keywords "similar" and "significantly" in clause
12.5.1 are therefore crucial since they form the benchmarks from whence the Contractor's entitlement to a new
rate or price is judged and allowances made whenever a
change or provisional order brings about work of dissimilar
character to that originally envisaged or substantially
changes the conditions under which it is to be carried out
or varies the quantity of work to a substantial extent.
Clause 12.5.3 also provides for an allowance to be made
for any necessary additional sum for "site administration,
site facilities and temporary works". On the other hand, to
the Employer's advantage, any reduction of such facilities,
temporary works or administration, entitles the Employer
to an allowance for the savings that may be brought about
by certain changes.

None of the keywords, referred to above, have in the

Contract been defined. It has been left to the parties to
use the plain and literal meaning of the words "similar",
"significantly", "site administration" . . . etc to arrive at
agreeable rates etc or fair allowances. If they fail to agree
amongst themselves the Contract requires them to go to
arbitration on the matters.
(d) The risks of delay in completion and disruption to
regular progress
If the Employer wants completion 'at all costs' by a particular date, he will not wish to accept the operation of
clause 25 in its standard form. However, striking out the
clause, apart from putting up the price, might raise problems for the Employer if subsequently he was in some way
the cause of delay to the Contractor.
Clauses 25 and 26 recognise that both parties may benefit from their contents and thus an optimum balance of
risk and price should ensue. The Employer concedes that
certain events ("Relevant Events") will justify an extension
of time, also certain matters ("listed matters") are tojustify
reimbursement to the Contractor of any loss and/or expense
arising due to material disruption to regular progress.
Not every reader of contracts sees any fairness towards
the Employer in clauses 25 and 26. They appear not to
consider fully the implications of the alternatives; that nongarnbling contractors would raise their bids as their risks
rise regardless of the possibility that no delay or disruption
might ever occur.
A claimed loss might in its simplest, form occur directly
and clearly from a clause 26 listed matter. But more complicated circumstances may arise involving a chain of events
initiated perhaps by an Employer's breach involving events
at the Contractor's risk or breaches of the Contractor.
Multiples causes and effects of overlapping or concurrent
events might generate intertwined liabilities difficult to
unravel, or ascertain, for the Employer to verify.
Until the losses are "ascertained" the Contractor cannot
receive their addition to the Contract Sum (clause 26.3) nor
will he be entitled to their inclusion in "the next Interim
Payment" unless a divisible part of the claimed loss can be
ascertained (clause 3).

The word "ascertain" has the following plain meaning:

to make oneself certain
to establish as a certainty
to find out or learn for a certainty
to make sure of, get to know
to make certain, or definite; to decide, fix, limit.
Clearly, certainty is the keynote of the Contract's attitude to loss and/or expense. The Employer may however
be presented with uncertain claims in which case he is
under no obligation to pay anything until it is established
(at least in part, see clause 3) as a certainty. The onus of
convincing the Employer of the claim's validity rests with
the Contractor (clause 26.1.1 & .2).
An Employer's agent may be capable of vetting such
matters but where substantial sums and difficult matters
are involved a professional quantity surveyor experienced
in such claims may be required to advise on the questions
raised,
(e) The risks arising from defective work
The Employer runs the risk that defects, shrinkages or
other faults, which are the Contractor's liability, may entitle the Contractor to the Contract's (clause 16) rights to
enter and remain upon the Works to remedy them at a time
after Practical Completion when the Employer may have
expected to have his buildings to himself.
This risk can be curtailed if the Employer uses his rights
to have any work or materials not in accordance with the
Contract remedied straightaway rather than allow them to
accumulate at the project's end.
If) The risks of inflation
Tlie Employer may well seek the advice of a quantity
surveyor before deciding which clause of those available
(36, 37 or 38) should be utilised. The kind of project, its
time-scale, and future cost trends need to be considered
prior to adopting one or other of these clauses.

11

A COMMENTARY ON THE CLAUSES

Introduction

This chapter examines the contents of certain clauses and

comments upon their function and working in conjunction
with other clauses of the Contract.
Clause 2 Contractor's obligations

The heading is misleading. As can be seen from the subheadings the clause deals not only with the "Contractor's
obligations" but also with document status (2.2), discrepancies (2.4), and the treatment of errors within or
between documents (2.3). Furthermore, an Employer's
obligation is also referred to within the clause, ie to give
written notice of any discrepancy or divergences he may
find. The Employer must also make decisions in respect
of discrepancies and issue instructions to correct any
divergence concerning site boundaries,
However, the clause does principally set down two most
important matters:
1. The Contractor's obligation to carry out and complete the Works
and 2. The Contractor's obligation in respect of any defect
or insufficiency in the design.
The Contractor's dual obligation expressed firstly in
Article 1 and in more detail in this clause is to carry out
and complete the Works referred to in the Employer's
Requirements and Contractor's Proposals and for that purpose to complete the design for the Works. The clause
recognises the important word "design" used in Article 1 is

on its own not precise and that the parties may for instance
have agreed that the Contractor will be responsible for
gaining initial planning consents (Development Control
Requirements). This may therefore be said to be part of the
Contractor's "design" obligation. The Employer's Requirements or Contractor's Proposals may on the other hand
state the Contractor is not to do everything or decide everything nor to choose the kind, quality, texture and colour of
every conceivable material, nor all of the goods, nor to set
standards of the Works in every detail. There may therefore
be variable arrangements concerning matters of gaining
statutory consents or choosing things. Matters may be
further complicated where the Employer intends to partly
design in detail a particular element or to put forward his
outline design for the whole of the Works or if he provides
his own soil reports or has himself gained outline planning
consent. The Employer cannot under this Contract nominate sub-contractors or suppliers of his own choosing but
he may reserve the right to judge certain standards by way
of 'on-the-spot' inspections as and when the particular
work is carried out or when certain materials or goods are
delivered.
It is intended that any such diverse arrangements are
written into the Employer's Requirements or the Contractor's Proposals. Whatever then remains to be done, other
than described or stated in either of these two documents,
by way of design is by this clause 2 made the Contractor's
responsibility. The Contractor has a duty therefore to do
everything in the way of design necessary for the purpose
of carrying out and completing the Works so far as he is
not specifically relieved of that obligation by any particular

description or statement to be found in the Employer's

Requirements or Contractor's Proposals.
Delineating where one party's or the other's design
obligations begin and end may however still prove to be
blurred in practice. Obviously the simplest arrangement
will in this respect prove best, where tie Contractor does
absolutely everything, including gaining planning consents,
designing everything, deciding the suitability of the site
and its sub-strata.
Insofar as the design of the Works is the responsibility of
the Contractor he carries the same liability to the Employer
as would an architect or engineer or other professional designer working in the conventional independent way. This
requires the use of reasonable skill anc care by the Contractor in his design work but will not imply the resulting
Works will be fit for their intended purposes, In a conventional design-and-build Contract where the Employer does
not put forward his own choice of materials or goods or
design but just takes what he is offered by the Contractor
this would normally inipliedly promise aot only reasonable
skill and care in design but also the finished Works would
be fit for their purpose,
However, whenever the Employer in his Requirements
makes his intended purposes known to the Contractor
there will be grounds to claim a failure to use reasonable
skill and care if the design fails to enable these known
purposes to be achieved.
The Contractor's liability for any Joss of use of the
Works due to his design defects or for loss of the Employer's profits or other consequential losses may in this

13

Contract be expressly limited by agreement between the

parties to a particular amount to be named in the Appendix 1. If such an amount is written into the Appendix,
putting a ceiling upon the Contractor's liability (thus
indirectly lowering the Contract Sum), the arrangement
will not relieve the Contractor of his unavoidable clause
6 obligation to comply with all Acts and statutory rules,
nor his separate clause 24.2 liability to pay or allow to
the Employer liquidated damages (also to be stated in
Appendix 1) for any failure to complete the construction
by the Completion Date or any extended Date.
Where the Contract involves work for or in connection
with the provision of a dwelling or dwellings (new or rehab'
including flats) the parties cannot rely on any arrangement
at all to restrict or exclude the Contractor's design liabilities. There are unavoidable and more onerous requirements
statutorily imposed by law under the Defective Premises Act
(section 1(1)) which requires the Contractor additionally to
carry an absolute liability to see that any work of his for or
in connection with the dwelling/s results in places fit for
habitation when completed. Furthermore, the duty is owed
not only to the Employer but to every purchaser and subsequent purchasers of such dwellings.
If the Employer's Agent imposed Changes (see CD 42)
in design which resulted in defects, undetectable beforehand by a reasonably competent Contractor, it may be
possible for the Contractor to use part of the Act (section
1(2)) to seek relief from the responsibility imposed in this
way upon him.
The otherwise unavoidable Defective Premises Act's
section 1(1) can alternatively be replaced by an 'approved
scheme' of protection for the dweller, such as the NHBC
scheme which may be written into Appendix 1 whereby
(under section 1(2) of the Act) there is arranged a particular contract (eg, NHBC Agreement HB5) to be made
between the Employer or Contractor and each dwelling
purchaser providing for a written warranty to build in an
efficient and workmanlike manner, of proper materials, so
as to be fit for habitation. Where such a scheme is involved
the Employer's Requirements should include its application
thus bringing clause 2.5.2 into play adding an obligation
upon the parties to each do everything necessary for the
scheme's documents to be issued.

14

Although everything written above indicates how important the Employer's Requirements and Contractor's
Proposals are in setting out obligations, statement CD 16
clearly stipulates the contents of the Employer's Requirements or Contractor's Proposals or the Contract Sum
Analysis cannot override or modify any provisions in the
Articles, Conditions or Appendices.
Nothing contained in the Employer's
Requirements, Conlraclor's Proposals,
or the Contract Sum Analysis must
override or modify the application or
interpretation of the Articles of Agree
ment, Conditions, or the Appendices
CD 16
2.2

Thus, although the Employer's Requirements or Contractor's Proposals may be specially drawn up to express
the parties' intentions, if these intentions run against the
Conditions etc as they stand then statement CD 16 will
render the words within the Employer's Requirements or
Contractor's Proposals ineffective. If the Requirements and
Proposals are united in placing an obligation upon the Contractor, or granting him some special relief, in contradiction
to the Conditions, Articles, or Appendices then whatever is
contained in the Conditions, Articles or Appendices will
prevail. The parties must therefore ensure CD 16 does not
negate their real intentions. They must also ensure correct
completion of the standard Articles and Appendices takes
place. If they wish to enter into non-standard arrangements
CD 16 must be suitably altered.
For example, the parties may intend to limit the Contractor's liability for the consequences of his design errors
and may have written this into the Employer's Requirements and/or Contractor's Proposals with an amount stated
as a limit to the liability. However, failure to enter this
amount or the correct amount in the proper place in the
Appendix will result in CD 16 negating the non-standard
arrangement as written in the Requirements or Proposals
and in the absence of any sum written into the Appendix
will open the Contractor to a no-limit liability.
Clauses 3 and 15 Contract Sum Interim Payments

Clauses 3 and 15 when combined with clauses 12.6 and 30

are collectively concerned with prompt payment to the
Contractor of monies as he progresses. The Contract's

policy of prompt, and almost full, regular payment to the

Contractor by the Employer of absolutely everything stated
in the Conditions, on the dot, every month, can be avoided
to a limited extent by the use of "Alternative A" in clause
30 wherein predetermined stage payments of stipulated
amounts cumulatively recorded in Appendix 2 can be
written into the Requirements and/or Proposals after agreement by the parties, prior to entering into the Contract.
The objective of clauses 3, 15, 12.6 and 30 remains
however to ensure the Contract Sum, together with any
amounts to be added (or deducted) as laid down in the
Conditions, is to be doled out to the Contractor in a strictly
regular way under either Alternative 'A' or 'B' as he proceeds towards practical completion. Many of the amounts
to be added (eg, for clause 12 Changes or clause 26 losses)
are difficult to ascertain. It is this difficulty that clause 3
recognises. It permits partial ascertainments to be taken
into account by the Contractor in his computation of the
Interim Payment due to him from the Employer. This
partial ascertainment does not encompass guess-work or
approximations. It means the ascertainmen; (establishing
as a certainty) of parts of the whole concerned.
If the Contractor does not properly add or deduct part
or whole amounts in the computation of his Interim Payment Applications the Employer is entitled to utilise CD
601, issuing a notice to the Contractor giving his reasons
for stating the Contractor's version of the total amount
stated as due is not in accordance with the Contract.
Simultaneously the Employer must pay the amount he
himself reckons is due.
If the Employer does not recognise the Contractor's
right to take into account ascertained amounts in part or
in whole in his Interim Payment Applications the deprived
Contractor must wrestle not only with the precise meaning
of the word "ascertained" in clause 3 but also with the
words "properly due" found in his safety net remedial
clause 28.1.1.
It is never easy to be absolutely right about anything
other than the simplest of issues. Exactitude in making even
final valuations is difficult; in Interim valuations their ternporariness and limited life lead practitioners inevitably to
approximation. There are good reasons to do so for work is

in progress and incomplete, furthermore the words used in

the Conditions though superficially clear often raise doubts,
as for instance in the words "total value of the materials
and goods delivered". Do the words "total value" here include the Contractor's estimated costs of unloading, storage,
wastage, breakages, etc? It seems some inexactitude is
unavoidable and inevitable in any Interim sums chosen for
the purpose of setting a value at a particular moment during
the progress of a project. It is the claiming of sums improperly due rather than marginally inexact sums that CD 601
is aimed at.

Most instructions are likely to arise from the Employer's

desire to change his original Requirements or to change
something the Contractor would, according to his Proposals,
otherwise carry out. Clause 12 empowers the Employer
to make such changes and defines (very widely) the term
"Change" to include matters concerning imposed obligations or restrictions on access to or use of the parts of the
site, working space and hours, and the order of working.
However, clause 4 places a brake on the Employer freely
and unreasonably making such particular changes if the
Contractor makes reasonable objection.

The Contractor must of course comply with any stipulations written into the Requirements concerning any
accompanying details to be provided to the Employer
(see CD 642 or 683) with each Application for interim
payment.

If an issued instruction is empowered, is in writing, and

is not one the Contractor can object to under CD 6364 or
CD 190-192 then the Contractor must set to immediately
and comply. Questions concerning the time (extension)
needed and any money (extra) involved if the instruction
is a Change are all secondary to the obligation to comply,
although the Contractor is obliged to simultaneously give
written notice to the Employer under clause 25 if it is
immediately apparent his Works' progress will be delayed.
No financial deal is necessary before the obligation to
comply comes into force. Money matters in respect of
Changes are taken care of under clause 12.4 wherein
the parties may agree if they wish a 'lump sum' deal on
the Change, otherwise they are obliged to settle any differences using the detailed rules of valuation written into
clause 12.5.

Clause 4 Employer's instructions

Practice Note CD/IB gives a list of clauses under which the

Employer is empowered to issue instructions (see page 6).
This list is not comprehensive. Further rights are contained
in the Conditions and these are laid out in the Flowcharts
under CD 69.
Any instructions given by the Employer to the Contractor's person-in-charge are deemed to have been given to
the Contractor. The person-in-charge must therefore ensure
he immediately complies with instructions of the Employer
(or his Agent) provided the Conditions expressly empower
their issue.
This strict obligation to respond immediately to all such
issued instructions has four safety devices available to the
Contractor:

1.A right exists (in CD 69) to query the validity of any

instruction.
2.A fight exists (in CD 73) to treat all unwritten in
structions as invalid until they are put into writing.
3.A right exists (in CD 6364) to reasonably object to
a proposed Change in previously imposed obligations
or restrictions under clause 12.1.2.
4.A right exists (in CD 190192) to reasonably refuse
an instruction involving an unreasonable Change in
the design of the Works.

The word "forthwith", meaning immediately and without delay, should be read reasonably of course in each
particular circumstance. (Eg, How soon could the required
resources be assembled and put to work? What statutory
notices would have to be given or permits secured? What
reorganisation or reconsideration of the Contractor's
original plans, programme, designs and arrangements would
be needed?) A minor Change sought by the Employer may
have major repercussions on the Contractor's otherwise
regular progress. The Employer must make due allowance
for these things before turning to CD 65/66.
The Employer should also be wary of clauses 25 and 26.
The former pushes the completion date onwards and the
latter entitles the Contractor to recoup from the Employer
any direct loss and/or expense he may incur if his regular
progress becomes materially affected. However, clause 12.4

The Employer may emplov and pav

other persons to execute any work
whatsoever necessary to give effect to an
expressly empowered instruction
4-, 1.2

CD 65

if within 7 days aftef receipt of a

w
notice from the Employer requ
compliance, the Contractor doe
comply
CD 66

ritten
ring s
not
4.1.2

presents a possible safety net for the Employer if he can

persuade the Contractor to freely make an agreement over
the desired Change (before the work commences) in which
the sum agreed upon will be in full and final settlement,
including any sum that may arise under clause 26.1 to .3,
also to include the rights under clause 26.4.
Prior financial agreements over Change orders are unfortunately a rarity. There is a tradition in the construction
industry of getting on with the work first and arguing its
value later (sometimes years after). If the Employer wishes
to avoid this he should stipulate in the Requirements what
action is to follow the issuing of Change orders, bearing in
mind of course that CD 16 will not allow any overriding of
the standard rules where the Requirements conflict. In any
case the Employer may utilise his rights under clause 30.3.4
to refuse payment of anything "not in accordance with this
Contract", stating as his'reasons that the words of clause 3
(CD 5456) require the parties to establish the amount as
a certainty before it is to be taken into account in any
Interim Payment.
It is important to note that although under clause 12.1.1
the Employer may, subject to the four rights of the Contractor to resist (referred to above), make wide-ranging
changes in the design, quality or quantity of the Works,
there are restrictions under clause 12.L .2 concerning any
desired Changes in impositions previously entered in the
Requirements in respect of:
.1 access to the site or use of any specific parts
.2 limitations of working space -.3 limitations
of working hours
.4 the execution or completion of the work in any
specific order.

15

The Contractor must confirm in writing to

the Employer within 7 days if the
Employer purports to issue an instruction
otherwise than in writing
CD 77

4.3.2

Clause 4 endeavours under CD 77 and CD 79 to cope

with the difficult questions of purported, unwritten, unnoticeable, or unintended Changes. It does so by giving the
Contractor a right to question their validity and requiring
both parties to put unwritten matters into writing. It even
recognises that despite such rules instructions may still be
given and carried out without them having been beforehand
put through the proper paper work. In such cases CD 79
grants the Employer a discretionary right to confirm his
approval retrospectively. He can do so at any time prior to
the Final Account and Statement becoming conclusive.
I f neither Contractor nor Employer con
firm such an instruction in the manner
and time stipulated bul nevertheless the
Contractor complies with an instruction
otherwise than in writing then the Em
ployer may confirm the same in writing;
CD 79
4.3.2.2

Failure to respond "forthwith" to an Employer's instruction (which clears the four hurdles listed in the third
paragraph under this sub-heading) entitles the Employer
to employ others to carry out the particular ignored instruction. If the Contractor more seriously defaults in
ways described in clause 27 then the latter rights become
operable rather than those in clause 4.

Clause 5 Custody and supply of documents

The Contractor must comply with, and
give all notices required by. any Statutory Requirements

The Employer should consider carefully prior to making

the Contract whether upon completion the Contractor's
drawings, specifications and details used for the purposes
of the Works will be sufficient for the Employer's future
needs in connection with the maintenance, alterations or
repairs of the building concerned.
If the Employer considers other drawings and technical
information should be produced detailing the Works 'as
built' then such requirements should be specifically referred
to in the Employer's Requirements and/or Contractor's
Proposals.

with, the Building Regulation requirements, Construction

Regulation requirements, planning approvals, and any
other relevant statutory requirements.
Furthermore, the Contractor must do so without any
right to reimbursement of any unforeseen costs arising
unless a new or altered statutory regulation comes into
force after the Date of Tender or unless certain planning
requirements are involved in which case see CD 131 136.

This clause 5 makes no mention of any 'master' plan or

programme being supplied to the Employer even though he
is expected under clause 25 to operate complex provisions
for considering and in appropriate cases granting extensions
of time to the Contractor. Furthermore, under clause 26
the Employer is required to make judgements on matters
of loss and expense emanating from disruption to the Contractor's regular progress. A 'master' programme would at
least outline the intended regular progress.

Time, under clause 25, and money matters, under clause

26, are not necessarily unified but they do frequently go
together. It is difficult to see how an Employer is to dutifully make his judgements without (from the commencement) having in his hand the Contractor's bona fide master
programme. The annotation following CD 8488 refers
Difficulties for the Employer may arise especially further to this problem.
towards the end of a project, particularly one which for
the Contractor has turned out to be unprofitable. The Clause 6 Statutory obligations, notices, fees and charges
more Changes the Employer orders the less inclined the
Contractor will be to carry them out. The more work and The importance of the Contractor's overriding obligation, in
administration the more loss the Contractor may foresee CD 103 to comply with, and give all notices required by,
and the more vigorously therefore he will pursue under any Statutory Requirements is irreducible and cannot be
clause 12.5 an allowance for the "lateness" of Changes avoided. No matter what the Employer's Requirements
on grounds the conditions under which the work is to specify, including his designs or Change orders, the Conbe carried out have changed. He will under clause 12.5.3 tractor is to-ascertain for himself, and ensure compliance
seek an allowance for his extended administrative costs
that go with the extra work and under clause 12.5.6 may
seek a fair valuation of design work, insurance premiums All workmanship materials and goods
- specifically described in the Employer's
so far as procurable be of the
Requirements
and other costs not otherwise included for in the normal must
standards:
CD 139
8.1
CD 138
8.1
valuation of the Changes ordered.

Clause 8 Materials goods and workmanship etc

The Contractor should preconsider his promised standards,
or the Employer's Requirements, of workmanship and
choices of materials or goods. They must be technically
sound, commercially sensible, attainable, and at all times
procurable, otherwise the Contractor must gain the Employer's consent in writing before being allowed to make
any changes in standards of workmanship or choices of
materials or goods. The Contractor must also bear any
costlier procurement cost and workmanship costs resulting
from such changes.
The words "so far as procurable" are not defined. They
grant relief to the Contractor from endeavouring to obtain
the unobtainable. It is up to the Contractor to show the
Employer sound grounds for seeking the relief promised.
If satisfactory evidence shows certain materials or goods are
unobtainable the Employer may either sit back and await
the Contractor's suggested alternative or he may take the
initiative by ordering a Change. The first course of action
would be risk-free whereas in the latter he must accept
that a formal valuation of his order would follow with its
possible consequences of design changes and planning permissions with the possibility of delays and disruptions to
the Contractor's regular progress.
-

described in tbe Contractor's Proposals CD

140

16

8.1

described in the specifications referred to

in clause 5.3
CD 141
8.1

If the Employer promptly and reasonably refuses his

consent to any suggested substitution by the Contractor the
question of lost time will not arise under clause 25. The
Contractor, with requests for consent to make a substitution, may however give each time a notice under clause
2S.4.10.1 and/or .2. Any delay by the Employer in giving
his consent to a suggested substitution would give rise to
a further notice this time under clause 25.4.6, followed
perhaps by a written application under clause 26.2.7 stating
the Contractor was likely to incur loss and/or expense due
to Ms regular progress being affected materially by the
delay in receiving "consent".

to instruct the Contractor to open up work done and/or

to carry out tests upon that, or upon other work or any
materials or goods awaiting incorporation into the Works
or in situ in the Works. This right cannot be interpreted
as an obligation upon the Employer to detect any of the
Contractor's faults, errors or omissions. However, if the
Employer does order work etc to be opened up or tested
and the findings show the workmanship, materials and
goods to be faultless then the Employer will be required
to pay the Contractor his "cost" of opening up and/or
testing, together with the "cost" of making good.
Difficult questions arise if faults are found which are not
as extensive as the degree of or extent of opening up called
for; or if the extent or nature of tests subsequently proved.
The mere fact that fault was found will of course justify the
opening up but whether it can justify all of the opening up
or testing demanded is difficult to judge. The line between
proper precautionary examinations and the unnecessary
baring of construction may be blurred in certain cases but
the benefit of removing doubt must be granted to the
Employer whenever reasonable doubt exists.

The Employer may therefore be on a tight-rope. On the

one hand he has a clear right to a reasonable time to judge
whether a preferred substitution is acceptable. On the other
hand he is not obliged to accept or "consent" to an unreasonable substitution. If he promptly and reasonably
refuses his consent to a first suggested substitution the
clock must then be set to start again, granting the Employer
a new reasonable time in which to judge the second suggested substitution and so forth, Obviously the Contractor
may persist in putting forth the cheapest substitute he can
find until he gains the Employer's consent. However, provided the Employer reacts promptly to each and every
substitution preferred the time lost by the Contractor in
eventually gaining the Employer's consent will not qualify
for an extension to the completion date under the provisions of clause 25 since the clause's words exclude time
taken up by reasons within the Contractor's control.
This same principle would deny the Contractor's claim
for incurred loss under clause 26.2.7 since the "due time"
referred to there would be judged not from the first suggested substitution but from the moment when the first
reasonably acceptable substitution was preferred.
Arbitration is under Article 5.2.1 operable immediately
on questions concerning the refusal of "consent" by the
Employer.

Clause 10 Person-in-charge

The person-in-charge, as the authorised representative of

the Contractor, is obliged to receive any instructions of the
Employer. When any instruction has been delivered to the
"person" it is deemed to have been given to the Contractor.
This applies only in the case of an "instruction". A notice,
such as one under clause 23.2 formally informing the Contractor of a failure to complete in time, would have to be
delivered to the Contractor, not his "person". Similarly, a
notice under clause 27 specifying serious defaults or giving
notice of determination would, to be valid, have to be
served upon the Contractor himself, not his "person".
Clause 4 deals with the Employer's empowered notices,
the way in which they are to be issued, the Contractor's
rights to make reasonable objection, and so forth. The
person-in-charge must clearly understand his special posi-

Clause 8 also grants the Employer discretionary rights

nstructions
The Employer may issue
re quiring the Contractor to
CD 147

8.3

open up lor inspection any work

covered up
CD KB
8,3

arrange for any lest of any executed

work or of any materials or goods
(whether or not already incorporated In
the Works!
CD U9
8.3

carry out any test of any executed work

or of any materials or goods (whether
or not already incorporated in the Works)
CD 150
8.3

tion and know he is the official receiver of "instructions'",

not notices.
The Contractor may delegate to his "person" additional
and wider authority (subject to Head Office supervision
and control) than simply to receive instructions. The
"person" may be authorised to make agreements on the
values of Changes (under clause 12.4) and to agree with the
Employer the Final Account and Statement under clause
30.5. However, if the person is not authorised to make
agreements but nevertheless does so they may become
binding upon the Contractor if it appeared to the Employer
the person had authority to make such agreements.
If the Employer or his agent gives instructions in the
form of sketches or drawings they may well constitute an
instruction "in writing" if they clearly show in an instructive manner whatever the Employer wishes the Contractor
to do.
The Employer's power to instruct does not extend to
dictating the Contractor's speed, methods or sequence of
working, unless the Contractor's ways and means do not
correspond with matters laid 'down in the documents
referred to in CD 1, or if the Contractor is not constantly
using his best endeavours to prevent delay (see clause
25.3.4.1) in which case the Employer would be entitled to
require everything reasonably possible to enable the Works
to proceed, under CD 438.
Clause 11 Access for Employer's Agent etc to the Works
The right for the Agent and others to see the Works in
progress, and for the Agent (under clause 5.4) to see the
documents, and enter workshops etc where work is being
prepared does not reduce in any way the Contractor's
obligation to comply with all the requirements and standards of the Contract.
The nomination of an Agent or any replacement would
make that person an official receiver of any application,
notice, request or statement of the Contractor. It would
also make the person an official giver of consents, instructions and notices, unless the Employer specifically cut
down the person's authority by a written notice to the
Contractor. In the absence of any such written notice the
Contractor would be entitled to (and must) assume the

17

Agent has full authority as granted to him under Article 3,

to act for the Employer and to bind him.
However, the Contractor should realise where the Agent
is an architect or quantity surveyor that in their position as
Agent they are entitled to openly display their partiality.
This may lead the Contractor to wonder just how he is to
profitably settle clause 12 valuations!
Clause 12 Changes in the Employer's Requirements and
provisional sums

12.2

There are restrictions upon and limits to Changes the Employer may order. Firstly, the Employer is not allowed to
effect a Change which is, or makes necessary, an unreasonable alteration or modification in the design of the Works.
For example, an order to a Contractor, who specialises in
standardised reinforced concrete buildings, changing the
structural frame and cladding to steel may be reasonably
refused. Arbitration is in any case available, to start immediately, to decide whether such a refusal should stand.
Secondly, reasonable objections may be raised by the
Contractor if instructions are issued to change any obligation or restriction previously imposed by the Employer (in
the Requirements) in regard to access or use of parts of
the site, limitations on space and hours, or changes in the
previously specified order of working or completion.
Thirdly, the Employer may not by Change order fundamentally alter the character of the Contract to something
quite different from that which the Contractor had bargained over in the first place.
However, the clause is quite open on the question of
when the right to order Changes comes to an end. It is not
clear whether the Employer is entitled to issue instructions
for extra work or to omit work after the Contractor has
passed the Date of Completion or any extension to it.
There are no restrictions on late orders; in any case the
Contract would become unworkable if necessary orders had
to cease once a particular date had passed.

18

The Employer may issue all manner and any number of

empowered Change orders up to the Contractor achieving
Practical Completion, even if the Contractor has overrun
his time. The extra time that may be needed to execute
the work, causing the completion date as it then stands to
become unattainable, may be granted under clause 25.4.5.1
(CD 414) but any similar time spent merely awaiting any
Change instruction should be separately awarded under
clause 25.4.6 (CD 419) provided the Contractor has applied
in writing for the instruction in question.
Whether or not such extensions of time may rightly be
awarded or indeed need be accepted once the Contractor
is in breach by overrunning time is a debatable matter. A
great deal may depend upon whether the Contractor had,
in accordance with CD 399, used "constantly his best
endeavours" to prevent delay during the progress of the
Works. If, for example, there is clear evidence of earlier
dilatoriness causing summer work to run into winter-time
an extension for exceptionally adverse weather arising in
the overrun period may be prejudiced. On the other hand,
an earlier lack of best endeavours may later give the Employer the right to set a later Date under clause 25 due to
Relevant Events arising later than they might otherwise
have done if only the Contractor had earlier done his duty
under the Contract (CD 399) to prevent delays.
Certain Contractors may refuse proferred extensions on
grounds the instructions issued in the overrun period have
set time at large and the liquidated damages clause has
become inoperable. Resolving such contentions may require
expert legal advice. There may have been both necessary
and unnecessary Changes ordered. There may have been
instructions Issued at the same or different times as Change
orders. Provisional sum instructions issued may have been
ones which could not have been given earlier and some
provisional sum instructions may involve much more or
even less work than first envisaged when the sum was set.
If no agreement can be reached concerning extensions of
time and the deduction or payment of liquidated damages
then the Employer should set about proving the loss
actually suffered, due to any alleged late completion, rather
than rely upon getting predetermined clause 24 liquidated
damages from the date alleged by the Employer to be the
operative completion date through to Practical Completion.

Further difficulties may be encountered where lateness

has been caused by an interwoven set of circumstances involving faults or dilatoriness by the Employer, dilatoriness
on the Contractor's part, and factors outside either party's
control. In such involved circumstances the validity of
deductions made by the Employer for damages due to
delay is difficult to judge, particularly if any of the reasons
for delay does not fall clearly under any of the clause 25
Relevant Events.
When a Change is ordered the Contract Sum Analysis
will be referred to in order to reckon up the Change's value.
Valuing Changes is (as stated in the commentary to clause
4) rarely swiftly achieved. Clause 3 combined with clause
12.6 (CD 199) anticipates both delay and difficulty. They
permit partial payments and provide (in 12.5) a set of rules
for making detailed valuations, provided the Contract Sum
Analysis is comprehensive enough.
However, the simplified alternative clause 12.4 way is
open to the parties rather than the slavish rules of clause
12.5.
Whichever way is chosen, as soon as any part of the
amount involved has been "ascertained" then that sum,
when established as a certainty, shall be paid under clause
30.2A.1.2 or30.2E.l.l,less Retention.
The greatest difficulty may arise under statement CD
198, where an allowance must be included for the addition
or omission of the relevant design work.
The valuation of Changes must be made
in accordance with the provisions of
clause 12,5;
CD 196

12.4
I

otherwise agreed; and

CD 197

12,4
1

such valuation must include a

for the addition or omission
relevant design work
CD19B

lowance
of the
12.4

The above principles (and problems) apply equally to

the expenditure of provisional sums (if any) included in the
Employer's Requirements.
Clause 15 Unfixed materials and goods

Building materials, and to a lesser extent goods, are conventionally to be found deposited all around a building whilst
under construction. A minority will at any one time have
been paid for by the Contractor whilst the majority have
not; a minority of suppliers will have retained title to their
chattels whilst others have not; some of the chattels may
have complicated 'retention of title' clauses attached to
them whilst others have the simplest form possible.
Most of this commercial 'safety-netting' ceases to matter
once the materials or goods have become part of the Works
for then the title-holders are generally reckoned to have lost
their reserved rights since the chattels have lost their identity (as materials etc) and have become a permanent part of
the Works.
However, a few sellers may go a stage further by writing
into their supply contract clauses granting themselves rights,
when unpaid, to enter upon the site and to remove (sever)
their goods even if they have become part of the Works.
None of this need concern the Employer unless the Contractor becomes insolvent, and having no title or money has
unpaid sellers waving retention of title clauses over certain
materials or goods. Even then, a retention of title clause
would not matter unless the Employer had already paid the
Contractor earlier for those materials or goods; or, in the
rarer cases of rights to sever, had paid the Contractor for
incorporating the particular materials or goods into the
Works.
The element of risk for the Employer should be put into
perspective. Firstly, no risk at all arises where there is no risk
of the Contractor becoming insolvent. Any alleged right to
title or to repossess applies only to unfixed materials or
goods. A slight further risk of claims extending to materials
or goods incorporated into the Works may also arise. The
degree of risk for the Employer depends therefore upon the
financial strength of the Contractor.
Under clause 30.2A, where stage payments are arranged,
separately identified payment for materials and goods does

not arise. Under the alternative clause 30.2B "the total

value of materials and goods delivered to or adjacent the
Works" is to be separately summed up and virtually all paid
for as the Works progress, excepting for a percentage Retention held back by the Employer.
Under clause 30.2B the Employer may in view of the
remarks above concerning the risks of 'retention of title'
require prior proof of ownership by the Contractor of all
or maybe the most important materials and goods, to be
provided as part of the "details as may be stated in the
Employer's Requirements" (clause 30.3.2) to accompany
each Application for Interim Payment. However, the task
of scrutinising the variously worded small print clauses of
each supplier and deciding whether or not the Contractor
has the right to sell on or whether rights have been merely
reserved against the proceeds of re-sale without a right
to repossess, and so forth, may prove all too difficult,
uncertain and time-consuming.
The JCT have in any case considered the whole question of title retention and its risks. They appear to have
concluded the risks do not warrant the exclusion of the
Contractor's conventional rights to interim payments for
unfixed materials and goods. The JCT presumably see
Employers benefiting from lower bids where bidders are
promised a right to payments for on-site materials etc as
they proceed. Even 'better' bids may result if the Employer
promises interim payments for off-site materials or goods.
If this is done the conditions set out in the Appendix must
be strictly observed to safeguard the Employer's rights to
the paid for materials or goods in case of insolvency.
Clauses 16 and 17 Practical Completion, partial possession
and Defects Liability

breach. However, nowhere in the Contract, least of all in

the definition clause 1.3, is the Employer given any test to
apply in determining whether or not such completion has
been achieved. Annotation to assist the Employer is given
in the Flowcharts below statements CD 250/1The Employer in judging Practical Completion should
disregard the Date actually fixed and stated in the Appendix by the parties for Completion, since the Contractor is
entitled to complete before then and the Employer is
obliged to extend the Date onwards if any Relevant Event
occurs to delay the Works' completion beyond the Date.
The Employer should therefore look at the Works with
one question in mind. Is everything virtually finished in a
satisfactory way (apart from trifling matters) so that full
beneficial occupation can take place" If the answer is
"Yes", the Employer must promptly write to the Con
tractor stating "The Works reached Practical Completion
on................................(Date)".
Partial Possession

Statement CD 270 indicates the Employer may with the

Contractor's consent take earlier possession of any part or
parts of the Works. It is also thought possible (see Ref 2
para (2) p 330) a Contractor who is overrunning the Date
for completion may be entitled to a proportionate reduction in the damages payable for his delay if any divisible
part or parts of the Works could be beneficially occupied
by the Employer, thus mitigating the loss from the delay.
The Contractor must make good the
defects, shrinkages and other faults
specified in the Schedule of Defects,
within a reasonable time after recept;
CD 270

Practical Completion
The Employer Is given the task of declaring in writing the
Works have reached Practical Completion. If he fails to
do so at the right time, or refuses to do so at all, he is in
The Employer must, when the Works
have reached Practical Completion,give
the Contractor a written statement to
that effect;
CD 250

16.1

16.2 & 1M.2

If predetermined sectional completion is desired a special supplemental agreement (similar to the one published
in 1975 by the JCT for use with their 1963 Contract)
should be used setting out the various amounts of liquidated damages to be paid if the sections concerned are
delayed beyond their particular completion dates.
If under the standard provisions of clause 17 partial
possession of the Works occurs with the Contractor's consent the estimated value of the part taken is to be declared

19

within 7 days by the Contractor, since the Employer on

possession takes sole risk of Clause 22 Perils and the Contractor's insured risk is therefore reduced by the amount
concerned for the part possessed. Obviously prior arrangements by the Employer to insure Clause 22 Perils should
occur before possession of any "part" goes ahead.
Defects Liability
From possession onwards each relevant part is then treated
as if it was a miniature Works which has reached Practical
Completion. Defects (including design faults) arising from
the Contractor's failure under the Contract may appear,
in which case CD 261 enables the Employer, whenever
he considers it timely, to instruct the Contractor to put
things right during the period called the "Defects Liability
Period".
The phrase . misleading since it implies the Contractor's
liability extends only for the Period stated whereas his liability runs on for years. What the "Period" does do is to set a
time-scale during which the Contractor has the duty, right
and privilege to remedy any faults or defects appearing
during that Period. To formalise this the Employer must
issue as an instruction a schedule (list) of all faults and
defects etc, not later than 14 days after the Period expires.
Thus a list showing all defects etc which appeared in the
Period will be drawn up. This list of matters is then reserved
for the Contractor to remedy rather than the Employer
being allowed to instruct another party to do the work and
charge it to the Contractor.
However, the Employer may instead of having the faults
remedied instruct the Contractor to substitute other work
in its place as a better remedy and at the Employer's additional expense, or, in the case of irremediable defects, to
leave well alone.
The Employer does not have to await the latter stages to
gain rectification of unsatisfactory matters. Statement CD
146 enables him to instruct the Contractor at any time (the
earlier the better), during the progress of the Works, to
remove from the site or to rectify any work, materials or
goods not in accordance with the Contract.
The procedures outlined above apply equally when the
Works as a whole are complete. Statement CD 275 (and CD
277 in the case of a relevant part) is merely a milestone sig-

20

The Employer must when any defects,

shrinkages or other faults which he may
have required to be made good have been
made good, issue a notice to that effect:

CD 275

16.4

nifying amongst other things the retention money balance

remaining with the Employer is to be released to the Contractor. The notices do not put an end to the Contractor's
liability for any other defects etc which may subsequently
materialise.

damage which is
Employer under
applicable)- anc
CD 336

at the sole risk of the

clause 226 or 22C (if
21.2.1.4

damage arising from a nuclear risk or :

war risk or sonic booms;

Clause 20 Injury to persons and property and Employer's

indemnity
Obviously from clause 20 it can be seen there are areas
of risk to be carried by the Employer. These areas should
be covered by insurances arranged for the Employer by ex(i) for personal injuries to or the death of any person (n) perts in these matters in the field of construction insurance
damage to property when caused by negligence etc.
following an appraisal of the other areas of risk to be carried by the Employer under whichever of the alternatives
of clause 22 is to be in operation.

This clause declares the indemnities provided by the Contractor to the Employer to be:

Clauses 21 and 22 Insurance against injury to persons and

property, also insurance of the Works against Clause 22
Perils
unless

any expense liability loss claim or proceedings are due to any act or neglect of
the Employer or any person for whom the
Employer isfesponsible
CD 309

20,1

The first indemnity does not however (see CD 309)

cover injuries etc due to any act or neglect of the Employer
or any person for whom the Employer is responsible. These
exemptions would include injuries etc arising from activities
of the Employer under clauses 29 and 34 as well as injuries
etc due to the other persons referred to in clauses 29.3 and
34.2. The Employer's Agent in his activities would also fall
into the exempt category.
The second indemnity is confined to claims arising out
of negligence, omission or default on the part of the Contractor or any sub-contractor or any servant or agent of
either, Excluded from the indemnity is any loss or damage
as may be at the sole risk of the Employer if either clause
22B or 22C is operative,

Construction insurance is complex. Clause 21.1-2 requires

the Contractor to produce for inspection by the Employer
evidence of adequate insurances. The evidence produced
should therefore be examined by an expert in the field who
will predetermine for the Employer the insured minimum
cover sum to be stated in the Appendix 1 under statement
CD 328, also the most suitable of the alternatives under
clause 22, and the suitability of the insurances to be maintained by the Contractor in joint names under clause 21.2.1
(see the detailed annotation on this under CD 331).
The liability of the Contractor to indemnify the Employer runs on after Practical Completion for years (subject
to the Statute of Limitations Act 1980). Thus there is a
necessity to arrange insurance to cover this protracted
liability.
Clause 23 Date of Possession, completion and postponement
The Employer should never lightly commit himself to give
in the Contract possession of the site to the Contractor by
a particular date. He must be certain possession can be

The Contractor must be given possession of

the site on the Date of Possession

Clause 24 Damages for non-completion

The Contractor must pay or allow to the
Employer the whole or part of a sum
calculated at the rate stated in Appendix 1
as liquidated and ascertained damages;

given in sufficient time for the Contractor to complete the

Works by any governing date. He must also ensure possession of the entire site can be given from the date to be set
in the Appendix for possession through to the proposed
Date for Completion; if not, clause 12.1.2 describes restrictions the Employer may in his Requirements impose upon
the Contractor in respect of confined access or restricted
use of any specified parts of the site together with any
limitations on working space or any obligation flowing
from the restrictions requiring execution or completion
of the work in any particular order.
The importance of being doubly certain of being able
to hand over the site upon the Date of Posssession becomes
apparent if failure to comply occurs. The Employer may
then find:
1-. a claim by the Contractor is made for damages due
to the breach of the term for possession

2.a statement by the Contractor that the Date of Com

pletion has become inoperative; that no right to
liquidated damages remains for the Employer; that
a new obligation arises for the Contractor to com
plete in a reasonable time in the circumstances

3.an application by the Contractor to the Employer

under clause 26 to prepare the ground for the Con
tractor to recoup any direct loss and/or expense
he may incur due to his progress being materially
affected by an order to postpone work.

There have been doubts expressed over the effectiveness

in this situation of any order that may be given by the
Employer to the Contractor to suspend work as an antidote
to a failure to grant possession. There is however no reason
to prevent the Employer in this predicament endeavouring
to gain a formal binding agreement with the Contractor
to vary the Contract by the substitution of new start and
finish dates, keeping the liquidated damages clause effective, and settling any damages arising.

CD 392

24.2.1

for the period between the Completion

Date and the date of Practical Complet io n;

of the liquidated and ascertained sum provided he notifies

the Contractor in writing of his intentions before the issue
of the Final Account and Statement. If partial possession of
the Works has under clause 17 taken place prior to the due
Completion Date the Contractor may claim a reduction in
liquidated damages must follow. Problems may arise once
the Date for Completion has passed if the Employer issues
Change or provisional sum instructions involving extra work
to the Contractor. These and other difficulties are discussed
further on p 18 (clause 12 earlier).
Clause 25 Extension of time

The Employer is by this clause given a convenient procedure to collect a predetermined amount as soon as the
Contractor fails to finish the Works by the predetermined
Date for Completion or any extension of that Date.

This clause is based upon the premise (CD 399) the Contractor strives constantly to prevent delay and to prevent
any overrun of the Completion Date. If despite his best
endeavours the Contractor finds the progress of the Works
towards completion is being or is likely to be delayed
he must write to the Employer giving the cause. If any
causal event is one he reckons is a Relevant Event (listed
in clause 25.4) he must include this opinion in his written
notice to the Employer. All this must be done as soon as
it become reasonably apparent to the Contractor that
progress is, or is likely to be, delayed.

The damages will continue to be collected until Practical

Completion actually occurs. The predetermined amount
must not be an exorbitant sum plucked from the air. It
must be "ascertained" as the amount genuinely reckoned
beforehand as the sum likely to be suffered as damages if
delayed completion occurs. The Employer should therefore
calculate, liquidate, and ascertain his likely damages (preserving his calculations) before entering such sums in the
Thus we find the Contractor must be on his toes and
Appendix.
alert to every cause of delay, including his own faults. He
The Employer must in writing give notice to the Con- must tell the Employer exactly what is going on unless he is
tractor under CD 391 of any failure to complete by the either on time or ahead of it.
Completion Date (or extension to it), otherwise the EmIf the Contractor fails to constantly use his best endeaployer's right to start taking his liquidated damages from vours to prevent delay the granting of an extension of time
the Contractor cannot begin.
for a later Relevant Event causing delay may be prejudiced.
For example, if dilatoriness in getting on with 'summer
The Employer must issue a notice in
work' causes the Contractor to run into winter-time and
writing to the Contractor il the Contractor fails to complete the construction
into delay due to adverse weather then his earlier breach of
of the Works by the Completion Date
CD 399 would deny him the right to be awarded any exten24.1
CD 391
sion of time. Furthermore, under CD 438 the Employer
would be entitled to require a dilatory Contractor to do
Once the Employer under clause 16 (statement CD 250) something positive about it. The most reasonable thing to
issues (promptly) a written statement to say Practical do about it would be to accelerate or "proceed" at a pace
Completion has been achieved then the rights to the predetermined damages immediately close down.
Statement CD 394 grants the Employer discretion whether to claim payment or to deduct the whole or just part

The Contractor must use constantly his

best endeavours to prevent delay in the
progress of the Works, howsoever
caused

CD 399

25.3.4.1

21

Tfie Contractor must do all thai may

reasonably be required to the satisfaction of the Employer to proceed with
the Works
CD 438

25.3.4.2

sufficient to eliminate the effects of his lagging 'summer

work1, thus avoiding the onset of winter, although the
Employer should carefully ensure he clarifies that his requirements are not to be misconstrued as an order under
clause 12 or as a promise to pay any of the Contractor's
acceleration costs. All this may however prove difficult
without a programme of the Contractor having been made
available to the Employer under clause 5.
The Contractor is required by CD 403/4/5 to give in
writing full particulars and estimates of the extent (if any)
of delay beyond the due Completion Date, sorting out each
and every Relevant Event to give the Employer a clear
picture of what is happening, has happened, or is likely to
happen. The Contractor must also keep the picture up to
date.
The Contractor must, if practicable in
such notice, or otherwise as soon as possible after such notice give in writing
particulars ol the expected effects of
each and every Relevant Event; and
CD403

25.2.2.1

CO 405

Upon receipt of all this the Employer is obliged to give

the Contractor an extension of time which is fair and
reasonable if;
1. delay is attributable to a Relevant Event and 2. the
delay is likely to cause the completion of the Works to
overrun beyond the due Date.

22

The Employer does not have to make his decision there

and then upon receipt of the information described above
but (dependant upon the sufficiency of the details etc)
must do so not later than 12 weeks later, or, if there is less
than 12 weeks to go before the Completion Date, the
Employer must, if he is of the opinion that both 1 and 2
above are evident, fix a new Date for the Contractor to
work to and must do so no later than the Completion Date.
If the Employer is not of the opinion that the matters
under 1 and 2 above are evident he is not required by the
Contract to formally reject the case in any particular way
but obviously should inform the Contractor of his views as
soon as his opinion is formed.
Once one extension of time has been formally made it is
open to the Employer to take into account the omission of
work later causing savings in time, but only those occurring
after the last extension granted. Thus a shortening of the
time can occur but not so as to ever be unfair or unreasonable nor to shorten time to a date before the original Date
for Completion written into the Appndix 1.
A review of the whole question of time and Completion
must take place not later than 12 weeks after Practical
Completion (see CD 455-461).
Summarising, the Contractor is the watchman in charge
of time. He bears responsibility for raising the alarm as soon
as any time at all will be or has been lost, even if he himself
loses it. He must promptly provide the Employer with the
latest picture in clear form concerning the cause and effects
of the delay.
All the Employer has to do is to promptly, carefully and
fairly judge whether on the information given to him he is
obliged to shift the Date for Completion onwards because
of a Relevant Event to allow more time to elapse before the
right to recover liquidated and ascertained damages for any
overrun comes into play. If the Employer lacks the information or if the information lacks evidence of a Relevant
Event being the cause, or if an omission of work reduces
time rather than increases it, the Employer may (but is not
bound to) inform the Contractor accordingly- Such action
will confirm the Employer has not failed to considerthe
Contractor's notice and information which, if he did, would
be a breach.

Only when causes of delay are classed as Relevant Events

is the setting of a new Completion Date valid and only then
if delay actually pushes work beyond the otherwise due
Date. A Contractor who is well ahead of time may negate
the justification for any new Date.
Relevant Events are therefore the key to the clause:
Force majeure

force majeure

CD 408

25,4.1

This expression is terminology of the legal profession here

meant to cover delaying events unpredictable by the parties
and outside their contemplation when they made their
Agreement. It follows that if an extremely unusual event
occurs but that event is already contained in the clause it
cannot be classed as a "force majeure" sines it was predicted by the parties when they made their Contract. For
instance, if an earthquake (ie, a Clause 22 Peril) destroyed
part or the whole of the Works it would not be a "force
majeure" (as it might well be in other contracts), it would
be a Relevant Event (CD 410).
If a totally unexpected and extremely unusual delaying
event arises outside either party's control which cannot be
slotted into clause 25 with its listed Relevant Events then
legal advice should be sought if the effects are substantial,
particularly if clause 28.1.2.1 becomes applicable, and no
decision by the Employer under either clause should be
taken until such advice has been received.
Exceptionally adverse weather
The operative words here are "exceptionally" and "adverse". There is nothing to restrict the extraordinary
conditions to the site of the Works. There is no right to
grant any extension of time due to ordinary foul weather.

If the Contractor is due to his own dilatoriness or fault

already in delay causing an overrun into winter-time, with
its greater chance of or incidence of exceptionally adverse
weather, the Employer faces a difficult problem. The words
of CD 409 do not, as they well could, expressly debar the
Contractor from any award in such circumstances. However, it seems wrong to grant an extension of time where
earlier misdemeanours or lack of endeavour can be connected directly to the event. It would appear possible to
utilise CD 399 to disqualify the Contractor from any
award of time for exceptionally adverse weather which
could have been avoided but for earlier dilatoriness.
More complex circumstances may arise in which differing Relevant Events are intertwined with CD 409 and with
delay caused by the Employer himself. In such cases the
Employer should insist the Contractor, under CD 403/4/5,
openly lays out all the causes and their effects upon each
other taking into account the various Events and other
causes, their effects, the Contractor's own dilatoriness, his
breach of CD 399, the faults of the Employer and their
effects upon the matrix of matters. This "picture" to be
produced by the Contractor should enable the Employer
to form his own opinion in the way required of him under
the Contract in matters of delay to the Works.
Clause 22 Penis

clause 22B or 22C if operable would place the loss/damage

risk upon the Employer's shoulders but the question of
time would remain open. The words of CD 410 contain no
exception or proviso concerning negligence to disqualify
the Contractor from an extension. Such words do appear in
clause 28.1.2.2 (CD 559) and their omission therefore from
CD 410 must be deliberate and aimed at allowing extensions of time where "Perils" cause delay even if negligence
on the part of the Contractor (or Ms sub-contractor) is
evident.
Where loss or damage occurs to the Contractor's (or his
sub-contractor's) own or hired temporary buildings or plant
there are no words in CD 410 confining loss or damage to
the Works (or unfixed materials or goods) in the way clause
22 intended. Thus, if a Contractor's tower crane suffers
damage due to a Clause 22 "Peril" and delay ensues, it
would appear the Contractor is entitled to an extension of
time.
However, the separate obligation of the Contractor to
"use constantly his best endeavours to prevent delay in the
progress of the Works" stands as a limiting device for the
Employer faced with applications from a Contractor under
clause 25 for more time where delays are basically of his
own making.

CD 410

If a strike affects one particular maker 'A' of standard

goods but not another maker 'B' of the same goods the
Employer may under CD 399 and CD 438 be entitled to
require the Contractor to go to maker 'B' even if that
source is more expensive and not to grant any extension
unless the entire supply situation was affected by the strike.
However, the position under CD 413 is quite different
where a design team go on strike, nevertheless the words of
CD 428 are strong ones and difficult to ignore.
If a civil commotion affected trades under CD 411/2 or
persons engaged under CD 413, causing the whole or substantially the whole construction of the Works to be suspended for a continuous period likely to exceed the length
named in the Appendix 1, the Employer would be justified
in vigorously employing CD 438, particularly in the light
of clause 28.1.2.3.
Compliance with Employer's instructions

Civil commotion . . . strikes etc

Civil commotions are uncommon but strikes are not. A civil

loss or damage
or more of the

commotion which causes loss or damage may rank as a CD

410 Relevant Event.

occasioned by a V one
Clause 22 Perils
25.4 3

The "Perils" that rank as Relevant Events are those listed in

clause 1.3 that cause any loss or damage. CD 410 des not
restrict the loss or damage to work executed or to unfixed
materials or goods.
If loss or damage is caused to any work, temporary
buildings, plant, or unfixed materials etc by any reason
unlisted in the definition under clause 1.3 (eg, vandalism,
theft) then the cause is not a Relevant Event under CD 410.
Certain of the listed reasons which rank as a Relevant
Event could occur due to the Contractor's (or his subcontractor's) negligence (eg, fire, flood). In such cases

civil commotion, local combination of

workmen, strike or lock-out affecting
any of the trades employed upon the
Works; or
CD 411

25.4.4

civil commotion, local combination of

workmen, strike or lock-out affecting
any of the trades engaged in the prepa
ration, manufacture or transportation of
any of the goods or materials requited
for the Works
CD 412
25.4.4

civil commotion, local combination of

workmen, strike or lock-out affecting
any persons engaged in the preparation
oi the design of the Works
CD 413

25.4.4

The delays arising from instructions listed in CD 414 are to

be segregated by the Contractor from those (if any) arising
under CD 415/6 and 417/8. Furthermore, any delay arising
from simply awaiting such an instruction is to be segregated
and made under CD 419/20/21. Under provisional sum
claims care must be taken to make due allowance only for
the extra time, ie additional to that already envisaged by
the Contractor for the work provisionally included at the
bid stage.
If instructions cause any serious suspension clause
28.1.2.4 may loom before the Employer to give the Contractor a right to determine his own employment once the
period of suspension named in Appendix 1 is equalled.
Careful segregation of the causes of delay and tlieir
effects is essential in view of the Contractor's rights to
recoup loss and/or expense in certain cases, under clause

23

26, although it must be emphasised that time awards

granted under clause 25 do not automatically open the
door to clause 26.

However, the risks for the Contractor in embarking upon

such a course are extremely high where technical disagreement exists. The uncertainty generally renders the right
ineffectual.

to a breach of the Contractor's obligation to distantly

use his best endeavours to prevent delay in the progress
of the Works. This would also prejudice the Contractor's
position under clause 26, although he could pursue loss
etc at common law.

instructions, decisions etc from the

The Employer should, however, be wary if an application to recover loss etc is made promptly by the Contractor
under CD 463 but no formal notification of delay is made
under CD 400 quoting CD 419 as a Relevant Event. Any
serious breach of the Employer under clause 25.4.6 may
bring clause 28.1.2.5 into play.

The two clauses are quite capable of operating independently of one another but may on occasions be unified in Awaiting
matters of time and money. In the case of the discovery necessary
of antiquities clause 34 clearly operates quite separately
even from clause 26, dealing within its own walls with the
loss and/or expense arising from discoveries of objects of
interest etc, requiring the Employer to declare what extension he awards so clarifying the questions to be answered
in ascertaining the loss.

including a
decision unde

Compliance with instructions to open up or test

compliance with the Employer's instructions under statements CO 147/8 in
regard to the opening up for inspection of
any work covered up (including making
good in consequence of such opening up);
CD 415
25.4.5.2

compliance with the Employer's instructions under statements CD 147/9 and 150
in regard to the testing of any woik,
materials or goods (including making
good in consequence of such testing); CD
417
25.4.5.3

CD 420

statement CD 31;

25.4.6

work,
accor-

the test showed that the work, materials

or goods were not
n accordance with
this Contract

CD416

25.4.5.2

CD 418

25.4.5.2

Statement CD 415 does not apply to work wrongfully

covered up by the Contractor (eg, in contravention of
the Building Regulations). The provisos in CD 416 and
418 are crucial. The inspection or test may not really and
comprehensively show the work etc when exposed to view
is clearly to blame or at fault. Expert technical opinions
may be needed to determine whether or not, on balance,
the work is at fault and whether the extent of opening up
and/or testing was entirely necessary or justified.
The time taken in such tasks may need to be partly considered as qualifying for an extension of time. Furthermore,
under clause 26 the Contractor may qualify for reimbursement of loss and/or expense arising from unjustified exposing or testing.
If serious suspension of work occurs due to a 'false
alarm', inspection or test the Contractor may, under clause
28.1-2.7, claim entitlement to terminate his own employ.

24

delay in receipt of any necessary permission or approval of any statutory

body which the Contractor has taken
all practicable steps to avoid or reduce

CD 422

unless
the inspection showed that the
materials or goods were not in
dance with this Contract

Delayed permissions or approvals of any statutory body

The proviso in CD 421 is clearly crucial here. If delay is

evident, and the requirements of the proviso have been met
in full, the Contractor is clearly entitled not only to any
due time extension but also (if application is made) to recoup under clause 26.2.7 any suffered loss and/or expense.
If on the other hand a dilatory Contractor in delay was
further delayed by instructions, decisions, information etc
not being promptly issued by the Employer and the proviso
CD 421 had not been complied with, the position is not at
all clear.
If the Contractor inventively refuses an extension of
time preferred by the Employer, to cover the Employer's
own dilatoriness, the Contractor may (particularly where
heavy liquidated damages are payable and high inflation
is occurring) claim that time is "at large" due to the Employer's breach. The Contractor may also state clause 25
cannot be operated without the Contractor's CD 421
applications.
The words of CD 415 may rescue the Employer in that
a failure to apply for necessary instructions could.amount

25.4.7

The words in CD 422, requiring the Contractor to take all

practicable steps to avoid or reduce delay, link up with the
words of CD 399 and possibly those of CD 438. If the
Contractor does not "constantly" pursue the statutory
body he may lose his right to an extension of time. In any
case the Contractor bears the risk of any loss and/or expense
he may incur.
Work (not part of this Contract! by the Employer or others
employed or engaged by the Employer
This provision slots directly into clause 29 where the Employer, in his Requirements, either has reserved rights to
have work going on, or, with the Contractor's consent,
arranges for work not part of the Contract to go on.
Ihe execution of work, not forming part
of this Contract, by the Employer himself as referred to in statement CD 593.
or failure to execute such work; or
25.4.S.1
CD 423
the execution of work, not forming part
of this Contract, by persons employed
or otherwise engaged by the Employer as
referred to in statement CD 595, or
failure to execute such work
CD 424

25.4.3.1

Under CD 400 the Contractor is obliged to notify the

Employer of the likelihood of delay to the Works' progress
due to failures under clause 29. If the Employer engages
others who cause delay he should be able to pass the
damages down to the one causing the delay.
If a separate application under clause 26.2.3.1 is properly made the Contractor is entitled to recoup his loss
etc, and if a serious delaying breach occurs under clause
29 then clause 28.1.2.6 may be brought into play.
Failure or delay by the Employer in The supply of materials etc

The important words in this provision are:

"labour which is essential" (CD 426) and
"materials fuel or energy essential . . ." (CD 427)
The provision deals with the industrial difficulties
experienced in the recent past of fuel shortage, power
cuts and restrictions in the supplies of energy essential
to construction work. Any order imposed by the Government to affect the availability of essential labour, materials,
fuel or energy, will, if causing delay in progress, be classed
as a Relevant Event.
Inabilities to secure essential labour materials or goods
the Contractor's inability for reasons
beyond his control to secure labour
essential to the proper carrying out of
the Works, which leasons the Contrac
tor could not reasonably Have foreseen
at the Date of Tender; or
CD 428
25.4,10.1

The Employer may write into his Requirements, or there

may be written into the Contractor's Proposals, an arrangement whereby the Employer supplies certain materials or
goods for the Works.
The Employer should in these circumstances ensure if
he purchases special materials etc, unobtainable elsewhere,
that the contract of supply covers the risk he runs in this
Contract, of an extension of time being required and
liquidated damages lost, also loss and/or expense being
caused the Contractor due to his regular progress being
affected if the materials are awaited, and in serious cases
clause 28.1.2.6 might be invoked to raise enormous liabilities.
Government imposed restrictions

essentials arising during the progress of the Works. The Contractor is under CD 399 expected to be on his toes and
aware of shortages trends, and if necessary should buy in
materials etc ahead of time or reschedule tasks involving
essential labour to avoid or reduce delay. There is a difficult
line between the "best endeavours" of the Contractor
which would not cost him any direct increase in expense
and those endeavours which would cost more. Neither CD
399 nor CD 438 specifically mentions whether the Contractor is expected to stand any unforeseen costs incurred in
preventing delay or in ensuring his progress is maintained.
Where the Employer is not to blame the Employer certainly
cannot be required to stand any sums arising under CD 399
or 438 unless he expressly agrees to do so.
There is a link between this provision and clause 8 under
the words "so far as procurable". The Employer should be
wary where the Contractor states certain essential materials
have become unprocurable rather than difficult to obtain
(see commentary on this under clause 8 earlier).
Statutory obligations by local authorities or undertakings

The words "beyond his control" are crucial, so too are the
words "could not reasonably have foreseen". Both phrases
must apply. Not only must the inability to secure essential
labour, goods or materials be beyond the Contractor's
control but also it must be a state of affairs he could not
reasonably have foreseen at the Date of Tender, which Date
must be inserted in Appendix 1 by the parties.
This Date may be set before the day for handing in the
Tender. Any eventualities undeclared or not known of 10
days prior to the date for handing in the Tender may therefore qualify, since from footnote (v) in the Appendix it
seems intended an inability foreseeable from 10 days before
the Tender Date until the Date of Tender would rank as
being unforeseeable. Obviously in such cases the Employer
may require the Contractor to negotiate and settle the
financial effects with him before their signing of the Agreement.
CD 399 and CD 438 may be utilised by the Employer
if the Contractor complains of delay due to shortages of

Care should be taken in differentiating where a local authority or statutory undertaking is carrying out work "in
pursuance of its statutory obligations" or is otherwise
carrying out non-statutory activities under contract with
the Employer.
In the former case their dilatoriness or failure to carry
out such obligations is to be considered under CD 430/1.
In the latter case their dilatoriness or failure would fall
under CD 424 (clause 25.4.8.1) provided they were properly employed under clause 29; if not, the Employer
would "have no right to operate clause 25 at all and the

25