Hanscomb Intercontinental CEO Sean Gibbs spoke alongside Katie Pickering (BPE Solicitors LLP) and Keith Blizzard HCR Hewitsons) at the recent Constructing Excellence Gloucestershire Club webinar on Material Shortages and Fluctuations clauses in standard from contracts. Contracts discussed included JCT/NEC/FIDIC & ICHEME If you need advice do get in touch info@hanscombintercontinental.co.uk

1. MATERIAL SHORTAGES AND FLUCTUATIONS
CLAUSES IN STANDARD FORM CONTRACTS

2. SEAN SULIVAN GIBBS
BSc, LLB (Hons) PG Dip Arb, Dip Adj, LLM, MICE, FRICS, FCIARB, FCIOB, FCICES
CEO - HANSCOMB INTERCONTINENTAL LTD
5 CHANCERY LANE, LONDON, UK
T: +44 (0)7722 643 816
Email: sean.gibbs@hanscombintercontinental.co.uk

3. KATIE PICKERING
SOLICITOR – BPE SOLICITORS LLP
ST JAMES HOUSE , CHELTENHAM
T: 01242 248271
Email: katie.pickering@bpe.co.uk

4. KEITH BLIZZARD
Partner (non-solicitor),
Head of Construction & Engineering Team
63 Church Street, Birmingham, B3 2DP
T: 0330 107 2967
Email: kblizzard@hcrlaw.com

5. Construction has officially recovered from the record 44%
plunge in activity seen at the height of the first Covid
lockdown.
Latest figures for output in March reveal construction grew
nearly 6%, lifting activity above the pre-pandemic watermark
recorded last February.

8. The latest bellwether IHS Markit/CIPS UK
Construction PMI Total Activity Index posted 61.6
in April, down only fractionally from March’s six-
and-a-half year peak of 61.7.
Any figure above 50.0 indicates an overall
expansion of construction output and the index
has posted in growth territory in ten of the past
eleven months, with January 2021 the exception.
But demand and supply imbalances meant that
the rate of input cost inflation picked up for the
seventh month in a row to its highest since the
survey began in April 1997.
Commercial work was the best performing sector
in April with civil engineering enjoying its fastest
speed of recovery since September 2014.
A rapid rise in demand for construction products
and materials continued to stretch supply chains
and the latest lengthening of suppliers’ delivery
times was the third-greatest since the survey
began in 1997, exceeded only by those seen
during the lockdown in April and May last year.

10. HEADLINES ON 19 MAY 2021

11. HEADLINES ON 19 MAY 2021

12. Be careful when tendering for
jobs.
Most tenders are in the form of
a binding offer capable of
acceptance.
You must submit a qualified bid
if the contract does not include
for fluctuations, labour material
shortages and you need to
negotiate these with the client.

14. • Products are available but lead times
have lengthened.
• Current demand is proving difficult
for manufacturers and supplier to
build up stock levels.
• Global demand continues to impact
prices and delivery times.
• Shortage of materials will lead to
price inflation

16. • Extension of time
• Loss and expense
• Fluctuation provisions
• Force Majeure
• Option B

17. Force Majeure
JCT Design and Build 2016
Relevant Event – clause2.26.14
JCT Intermediate Building Contract with Contractor’s Design 2016
Relevant Event – clause2.20.13
JCT Standard Building Contract Without Quants 2016
Relevant Event – clause2.29.14

18. Fluctuation Provisions
JCT Design and Build 2016
JCT Intermediate Building Contract with Contractor’s Design 2016
JCT Standard Building Contract Without Quants 2016
Clause 4.2.3
Default position – Option A – Contribution, levy
and tax fluctuations
Clause 4.3.2
Default position –Contribution, levy and tax
fluctuations
Clause 4.3.3
Default position – Option A – Contribution, levy
and tax fluctuations

19. How do we take account for shortage of materials and increased costs
going forward?
Letters of Intent
Provisional Sum
Negotiation
Allocation of Risk
Fluctuation Provisions