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The New Draft ICC Conditions

16 April 2014. Published by Alex Badel, Senior Associate

A new and updated version of the Infrastructure Conditions of Contract (ICC Conditions) was issued in consultative draft form for comment in March 2014 by the ICC Development Forum.

Originally, the contract was known as the ICE Conditions of Contract but they were discontinued by the ICE in favour of NEC in 2010. Subsequently, ACE and CECA took them over and they issued the ICC Conditions.

The March 2014 update has so far been limited to the main contract conditions. However, the Forum will eventually turn its attention to other versions and related documents such as the CECA form of subcontract which currently exists in the 'Blue Form'. Ultimately, the entire suite of related contract forms will be reviewed.

What will be new?

The draft seeks to streamline, update and re-order the conditions whilst maintaining the balance of risk contained in the original ICC Conditions last republished in 2011. The Forum has successfully reduced the number of clauses from 70 to 20 (although there are a further 4 supplementary clauses). Notably, provisions dealing with the balance of risk, previously distributed throughout the 2011 Conditions, have been collected together in to a single clause (Clause 8). However, much of the wording of the original conditions is substantially intact.

Valuation

One of the main changes is that the quantities are no longer re-measurable (Clause 11). Rather, they are deemed to be fixed which essentially renders it a lump sum contract.  The rationale behind the change is that it should now be possible to provide adequately measured Bills of Quantities at tender stage and subsequent re-measurement should not be necessary. However, re-measurement remains an option if it is expressly invoked.

Subcontracting

The provisions dealing with nominated subcontracting have been replaced by a much shortened provision under which the main contractor will take full responsibility for subcontractors, subject to the main contractor's right of objection (Clause 7.1-7.2). Any nominated subcontractor to whom the contractor objects may be employed directly by the employer and his scope of work will be outside the contract works.

Risks

Risks are categorised in Clause 8 into those which are excepted (for which the contractor is not liable), the employer's or shared risk. All other risk is to be borne by the contractor. Provisions dealing with the contractor's entitlement to additional payment fall under the 'Employer's Risk', whilst provisions entitling the contractor to an extension of time (but without financial compensation) are designated as 'Shared Risks'. Provisions relating to care of the works are treated as 'Excepted Risks'.

Dispute Resolution

The dispute resolution procedure, which previously extended across 3 pages, has been simplified to provide for the use of mediation, adjudication and arbitration, whether sequentially or as alternatives (Clause 19). There is also a provision which allows either party to refer a dispute to the engineer which, if invoked, will lead to a decision which is binding on the parties unless revised by adjudication or arbitration if referred within 28 days.

Other key changes

  • The engineer's power to order variations 'necessary for the satisfactory completion of the Works', which was previously very wide and could be used to 'improve' the original design, has been curtailed (Clause 12.1).
  • Additional payments arising from variations are recoverable on the basis of the delay or disruption for which the employer was responsible, rather than the power of the engineer to re-fix rates. This now includes recovery of loss and expense (Clause 13.3).
  • A relatively simple provision has been included to deal with BIM up to Level 2 (Clause 20) together with a clause to deal with copyright and intellectual property rights (Clause 4.11).
  • The contractor's final account must be submitted within six months after the certificate of substantial completion, rather than within 3 months of completion of defects correction as was the case previously (Clause 13.5).

The retention of the original balance of risk should mean that parties who have used earlier versions of the ICC Conditions should not come across too many surprises. Although, the most noteworthy move is to abandon the re-measurement provision meaning that all quantities will need to be provided on a fixed basis at the outset of a tender and any revision will necessitate a Variation.

It is yet to be seen whether the changes, once published, will enable the ICC Conditions to compete with NEC contracts. For your chance to review and comment on the consultative draft form, copies have been made available to members of the Society of Construction Law and can also be requested from ACE or CECA.