{"id":872271,"date":"2025-09-11T21:12:21","date_gmt":"2025-09-12T02:12:21","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/09\/11\/jct-promotes-culture-shift-in-construction-risk-sharing\/"},"modified":"2025-09-11T21:12:21","modified_gmt":"2025-09-12T02:12:21","slug":"jct-promotes-culture-shift-in-construction-risk-sharing","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/09\/11\/jct-promotes-culture-shift-in-construction-risk-sharing\/","title":{"rendered":"JCT promotes culture shift in construction risk-sharing"},"content":{"rendered":"
\n

The new Target Cost Contract (TCC) 2024 from the Joint Contracts Tribunal is aiming to spread risk more evenly and encourage deeper collaboration between clients and contractors, its creator has said.<\/p>\n

At the event yesterday (10 September), JCT drafting subcommittee vice chair John Riches said TCC 2024 \u2013 first published in June \u2013 reflects growing concern over the unsustainable risk levels pushed onto contractors in a sector still grappling with insolvencies, inflationary pressures and supply chain fragility.<\/p>\n

\u201cThe level of risk in the industry is prevalent in terms of the number of bankruptcies, and some people are just taking too much risk,\u201d he said. \u201cWe thought we\u2019d try and find a way to balance the risk across the contract.\u201d<\/p>\n

TCC 2024 is designed for projects such as hospitals, offices or large housing schemes, typically worth above \u00a35m to \u00a36m.<\/p>\n

Drafted for design-and-build procurement, it is also adaptable to two-stage tendering and early contractor involvement, JCT said.<\/p>\n

Key subcontractors can be included via a new generic subcontract form offering target cost, lump sum or re-measurable options<\/p>\n

The new contract form draws on JCT\u2019s Design & Build and Prime Cost contracts, but replaces the traditional contract sum with a target cost against which allowable costs are measured.<\/p>\n

Allowable cost \u2013 the contractor\u2019s actual net expenditure \u2013 forms the basis for monthly payments, with a contract fee covering overheads and profit.<\/p>\n

The gap between target and allowable cost is then shared: if savings are made, both the contractor and the client benefit; if costs rise, both share the pain<\/a>.<\/p>\n

A step-by-step process is built in for adjusting the target cost. \u201cIf you don\u2019t follow it [the checklist], you are an idiot,\u201d Riches said.<\/p>\n

It would be hard to game the system with the target\/allowable cost balancing act, he added. TCC is \u201clike a jelly \u2013 if you squeeze it in one place, it\u2019ll pop out somewhere else. If anybody thinks they can fiddle this, they\u2019re going to find out it\u2019s difficult\u201d.<\/p>\n

To support adoption of TCC 2024, JCT has launched an online hub with worked examples, videos and, for the first time, a feedback facility.<\/p>\n

On its website yesterday, law firm Hill Dickinson described TCC as \u201ca way to incentivise the contractor\u201d, highlighting its pain\/gain share mechanism.<\/p>\n

Associate Sam Beer said the ethos of risk sharing is \u201capposite for the current difficult marketplace\u201d, but it requires discipline. \u201cGood project management is essential to allow for the increased visibility and oversight on costs,\u201d he said.<\/p>\n

He noted advantages such as efficiency, trust and collaboration, but warned of \u201cgreater risk and uncertainty for the employer than under a fixed-price contract because the final cost of the project is unknown\u201d, alongside the cost of administering increased oversight.<\/p>\n

Early adopters, Beer suggested, are likely to be clients and contractors already comfortable with target cost models but preferring JCT\u2019s structure to NEC\u2019s version.<\/p>\n

Anne-Marie Friel, collaborative contracting and construction expert at Pinsent Masons, warned in July that the new TCC form requires a change in mental attitude from contractors and clients.<\/p>\n

\u201cFor users who are ready to make the mindset shift needed to work in a different way, the JCT target cost contract has great potential to drive better project outcomes and to encourage collaborative working,\u201d she said.<\/p>\n

But merely introducing TCC 2024 \u201cwill not be a magic bullet and needs to be approached in full awareness of the other features of successful collaborative contracting\u201d.<\/p>\n

While retention provisions remain unchanged and amendments are inevitable, JCT believes the new form will drive better project management.<\/p>\n

Riches called it \u201ca heavily incentivised contract. There is a real outcome to be shared at the end of the day. It\u2019s reward for effort.\u201d<\/p>\n<\/div>\n

Read More<\/a>
\n Ben Vogel<\/p>\n","protected":false},"excerpt":{"rendered":"

The new Target Cost Contract (TCC) 2024 from the Joint Contracts Tribunal is aiming to spread risk more evenly and encourage deeper collaboration between clients and contractors, its creator has said. At the event yesterday (10 September), JCT drafting subcommittee vice chair John Riches said TCC 2024 \u2013 first published in June \u2013 reflects growing<\/p>\n","protected":false},"author":1,"featured_media":872272,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[693,27562],"tags":[],"class_list":{"0":"post-872271","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-culture","8":"category-promotes"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/872271","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=872271"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/872271\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/872272"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=872271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=872271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=872271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}