Covid-proofing your partnering and alliancing contracts
The Construction Leadership Council (CLC) recently published its guidance to "future proof" JCT and NEC contracts in respect of risks of Covid-19 on construction projects.
The purpose of the guidance, which Helen Stuart from Trowers advised on as part of the CLC working group, is to drive fair and responsible behaviour in the performance and enforcement of construction contracts, and aims to allow parties to achieve collaborative settlement of disputes.
The CLC have provided template contractual clauses to amend the JCT 2016 Design and Build and the NEC 3 & 4 Engineering and Construction Contract forms. The drafting provides options for parties to agree extensions of time and/or additional payments for loss and expense incurred in dealing with Covid-19, or to terminate the contract following sustained delays. Contracting parties are encouraged to consider and apply the amendments on a project-by-project basis.
The CLC Guidance doesn't include express amendments to other forms of contract, including the ACA's suite of partnering contracts. Clients, contractors and consultants using the PPC2000 Project Partnering Contract (PPC2000), the TAC-1 Term Alliance Contract (TAC-1), the TPC2005 Term Partnering Contract (TPC2005) and related forms of sub-contract should also consider whether to amend their contract terms to provide more expressly for Covid-related issues.
The ACA partnering contracts already have the advantage of promoting a collaborative working approach, and feature a number of contractual processes for parties to identify and agree solutions to disputes and delays. However, as with any contract, parties should familiarise themselves with the rights and obligations provided in their contracts and consider amending their existing contract conditions where appropriate. Some of the specific issues that parties to the ACA contract suite should consider are:
- Parties must give Early Warning of any matter adversely affecting or threatening the project or programme or its own performance and submit proposals for avoiding or remedying such matter. In PPC2000, Early Warning is required as a pre-condition for extension of time claims for certain events.
- PPC2000 allows the Constructor to apply for an extension of time and additional payment for a defined list of events. Pandemics are not expressly included as delay events. Force majeure is included, though is not expressly defined. TPC2005 and TAC-1 allow claims for delays beyond the reasonable control of the Service Provider. Contracting parties would therefore need to consider whether a claim for delays caused by Covid-19 would be allowed under their contract, and consider amendments as appropriate.
- The ACA suite does not provide an automatic entitlement to additional time and/or payment in the event of delay. All applications for extensions of time and additional payment must be approved by the Client Representative on a fair and reasonable basis. Any additional payments are limited to Site-based overheads, and additional payments for Profit and Central Office Overheads are expressly excluded. Contracting parties therefore need to consider whether these mechanisms are appropriate for their project or programme.
- The ACA suit does not provide an automatic entitlement to terminate the contract for delay, though PPC2000 allows the parties to agree to suspend the project, subject to Core Group approval.
For assistance and assistance with your rights and obligations under the ACA suite and amending your existing contracts, please contact one of our construction specialists tagged.