Freeths Real Estate Law Blog: JCT Design and Build Procurement - Back to the start

In carrying out development works, there are a number of procurement methods you can use to assemble the professional team and contracts necessary to bring a development from conception, through design and construction and ultimately to completion.

Many of you will be familiar with the concept of design and build procurement as one such method and it is particularly common in the development of commercial premises. The perceived advantage is that a single party is responsible for both design and construction, thereby avoiding dispute about whether any defects are the responsibility of a designer or arise out of poor workmanship. This is attractive to both the developer and any purchasers or tenants of the completed property.

 

Particularly within private sector development, the dominant form of contract between developers and contractors in such procurement is the JCT Design and Build Contract 2016, but in its published form, this edition does not necessarily make the contractor responsible for all of the design of the works. It requires a set of Employer's Requirements and the contractor to then produce its Contractor's Proposals to meet the Employer's Requirements. The Contractor is only responsible for the designs contained within its Contractor's Proposals. The intention behind the original drafting is for the employer to provide a very simple set of Employer's Requirements. In such circumstances the absence of the contractor taking responsibility for any design in the Employer's Requirements is not critical, but it does allow a contractor a great deal of discretion in what it is to deliver.

It has become common practice for developers to seek to reduce the contractor's discretion, have a greater degree of control over the design of the development and to procure designs from its own team of professional designers to include in the Employer's Requirements. The designs produced may be sufficient for the purposes of obtaining planning or go further and contain an even greater level of detail. Most design and build contractors will accept an amended JCT Design and Build Contract which transfers responsibility for the Employer's Requirements to the contractor, provided that the parties responsible for the production of the designs are novated from the developer to the contractor. This provides a mechanism for the contractor to pursue the designers in the event of the contractor being liable to the employer for an error in the Employer's Requirements. The terms on which the developer's design team is appointed are a material issue. The protection the contractor will obtain, and its willingness to rely on the novation, will depend on the adequacy of the appointments between the developer and the designers.

In order to leave the option of design and build procurement open when appointing such designers at the outset, the developer should ensure that:

1. the appointment documents with the designers provide: a) a clear right to novate the designer to the contractor should the developer require; and b) the form of novation agreement which the design consultant will be required to deliver;
2. the terms of the appointment are sufficiently clear, robust and contain a liability period equal to that of the contractor under the building contract.

 

Without such appointments, a contractor may be unwilling to take responsibility for any designs provided by the developer's design team and result in the developer not being able to obtain the objective of a single point of design and workmanship responsibility.

If you would like more information on this topic, please contact our Construction & Engineering team. For all the latest Real Estate Law updates, subscribe to our mailing list.