SBCC D&B 2016 Is Here! - 4 Key Changes

SBCC have published the long awaited 2016 update of their Design and Build Contract. There are a number of key changes in the new edition. Here are some highlights:

• The default dispute resolution forum has changed from litigation to arbitration. This change marks a key difference between the SBCC and JCT versions of these contracts. The SBCC previously used arbitration as their default option but this was changed back to litigation in the 2005 editions of the contract. This change is an attempt to persuade users of the contract to think more carefully about the pros and cons of each final dispute resolution option.
• The payment provisions have been overhauled. Just when employer’s agents have got used to the payment process under the 2011 edition, SBCC give us a new process to get to grips with! The good news is that there are now 21 days from the interim valuation until the final date for payment, as opposed to the previous 14 days. The bad news is that there are still only 4 days between the payment certificate and the pay less notice – so it’s likely that we’ll still see these timescales being amended. While the 2011 edition allows for valuations every two months post practical completion, the 2016 edition provides for monthly valuations to continue, so there is now a consistent approach pre and post-practical completion.
• Loss and expense. If a contractor is making a loss and expense claim, it will now have to also inform the employer of any further amounts likely to be incurred. Not only that, the contractor will need to update that assessment and vouching at monthly intervals until all information required to assess the total amount of loss and expense has been supplied. This change is accompanied by a requirement on the employer to notify the contractor of the ascertained amount within 28 days of the initial assessment and every 14 days following an update - so a quick process if unamended.
• Performance bonds and guarantees. The 2016 edition contains provisions which allow for a performance bond or parent company guarantee (or both!) to be provided to the employer. The forms of the performance bond and parent company guarantee can now be identified in the contract particulars. The requirement is for delivery upon execution of the contract so the contractor will have to obtain these before the contract is entered into.

There are other changes throughout the contract, such as changes to the default options for fluctuation and the addition of a BIM protocol. However, it’s likely that the change which will have the most impact is the overhaul of the payment provisions. With the rise of ‘smash and grab’ adjudications, it’s something that employers, employer’s agents and contractors – as well as their lawyers – will have to get used to quickly in order to avoid any obvious pitfalls.

Much like the update to the JCT version of the same contract, which was released over a year ago, the changes mainly reflect best practice, changes in legislation and some streamlining. Updating standard forms is welcomed, but take care - the SBCC form is not a mirror image of the JCT as the default dispute resolution provisions amply demonstrate.