Contracts in Use Survey 2010 - RICS

CONTRACTS IN USE
A Survey of Building Contracts in Use during 2010

Introduction
This is the twelfth in a series of surveys to determine trends in the use of standard forms of
contract and procurement methods. This report has been prepared by Davis Langdon on behalf of
the RICS Built Environment.
As with previous surveys, a questionnaire was sent to all private practices and public authorities
listed by RICS as employing chartered quantity surveyor members. Contracting organisations
employing surveyor members were not sampled to avoid the possibility of double counting of
contracts.
The scope of the survey encompassed projects for which work on site started during the calendar
year, 1 January to 31 December 2010. The survey has attempted to sample all building work
carried out in the United Kingdom, both new build and refurbishment. Survey respondents were
asked to exclude specifically all overseas work, civil engineering work and heavy engineering
projects. In addition, term contracts, routine maintenance and repair work and sub-contracts
forming part of larger contracts were also asked to be excluded.
Page 2

Contracts in use
2010 Survey
Introduction 2
List of Tables 5
List of Charts 5
Executive Summary 6
General procurement methods 2010 7
Response 9
Analysis of returns 10
Standard forms of contract 11
JCT Forms 13
ICE Forms 18
NEC Family of Contracts 18
GC/Works Contracts 21
PC/Works Forms 21
Association of Consultant Architects 22
Other Standard Forms of Contract 23
Non Standard Forms 23
Partnering Arrangements 23
Additional contract provisions 24
Negotiated Contracts 24
Fluctuating Price Contracts 25
Guaranteed Maximum Price 25
Two Stage Procurement 26
Incentivisation 28
Electronic Tendering 28
Framework Agreements 28
Private Finance Initiative / 29
Public Private Partnership
Page 3

Analysis of Contracts Used by Contract Value 30
Procurement Methods 35
Bills of Quantities 35
Specification and Drawings / Activity Schedules 35
Design and build procurement 36
Target Contracts 37
Prime Cost Contracts 38
Management Contracts 38
Construction Management 38
Partnering 39
Appendix 1 – Survey questionnaire 41
Appendix 2 – The distribution of contracts in use 42
Page 4

List of tables
Table 1: Trends in Methods of Procurement – by number of contracts 8
Table 2: Trends in Methods of Procurement – by value of contracts 8
Table 3: Response to the Survey 9
Table 4: Use of Standard Forms of Contract 11
Table 5: Long Term Trends in the use of JCT Standard Forms 13
Table 6: Use of JCT Standard Forms 14
List of charts
Chart 1: Distribution of methods of procurement – by number of contracts 7
Chart 2: Distribution of methods of procurement – by value of contracts 7
Chart 3: Distribution of contracts by value bands (number of contracts) 10
Chart 4: Use of Standard Forms of Contract (by number of contracts) 11
Chart 5: Use of Standard Forms of Contract (by value of contracts) 12
Chart 6: The 2005 Intermediate Building Contract 15
Chart 7: JCT Design and Build Contracts 16
Chart 8: The proportion of contracts employing an NEC Contract 19
Chart 9: Use of NEC Options (by number) 20
Chart 10: Occurrences of GC/Works Contracts 21
Chart 11: Use of ACA Standard Form of Project Partnering (PPC2000) 22
Chart 12: The rise and fall of negotiation 24
Chart 13: The use of negotiation by contract size 25
Chart 14: The rise and fall of Guaranteed Maximum Price provisions 26
Chart 15: The use of two stage procurement (by contract number) 26
Chart 16: The use of two stage procurement (by contract value) 27
Chart 17: The use of two stage procurement by size of contract 27
Chart 18: Framework agreements 29
Chart 19: Use of Bills of Quantities 35
Chart 20: Specification and Drawings / Activity Schedules by project value 36
Chart 21: Use of Design and Build procurement 37
Chart 22: Target contracts 38
Chart 23: Partnering Agreements and Arrangements by contract value 40
Page 5

Executive Summary
The survey captured contract details representing only a disappointing 3.9% of the value of new
orders in 2010. The conclusions should be read with this in mind.
• Over 97% of construction projects use a standard form of contract
• 88% of projects used one of the JCT family of contracts, up from 79% in 2007 and 78% in
2004
• All other forms of contract showed a reduction in usage
• The JCT Intermediate Form with Quantities and the Minor Works Form showed the greatest
increase in use; the IFC was most commonly used on contracts of £250,000 to £1m value
but the form was used on significant numbers of contracts up to £5m in value
• The JCT Minor Works Building Contract is the most commonly used form of contract in
Great Britain
• The JCT Design and Build Contract is the most commonly used contract for projects in the
ranges of £500,000 to £10m and £20m to £50m
• Some increase has been captured in the use of the Major Project Construction Contract but
only with projects in the £5-10m value range
• The use of ICE forms of contract has been in decline over the last three surveys
• Numerically the use of NEC contracts is largely unchanged but NEC now accounts for a
larger value of projects with its greater use on projects over £5m in value
• The use of GC/Works contracts has declined sharply
• The use of the ACA Standard Form of Project Partnering has fallen away, particularly in
conjunction with higher value projects
• The use of negotiated contracts has declined from its peak in 2007
• Two stage procurement has fallen back from the peak of its popularity in 2007
• Little use continues to be made of electronic tendering arrangements
• The number of projects secured under a framework arrangement has fallen compared to
2007 but, in 2010, frameworks were used on a higher value of projects and in conjunction
with a wider spread of project sizes
• The use of Bills of Quantities increased in 2010 compared to 2007 and BQs are used in
almost 25% of building contracts
• NEC Target contracts are now used in over 25% of contracts over £10m in value
• Only three instances have been recorded of the use of construction management (all on
small projects) and no instances recorded of management contracting for the first time in
the survey’s history
• Partnering with the use of formal agreements and arrangements has declined. Only 2% by
number and value of recorded projects involved any form of partnering agreement or
arrangement
Page 6

General procurement methods 2010
Chart 1:
Distribution of methods of procurement - by number of contracts
Chart 2:
Distribution of methods of procurement - by value of contracts
Page 7

General procurement methods 2010
Table 1:
Trends in Methods of Procurement - by numbers of contracts
1987
%
1989
%
1991
%
1993
%
Lump Sum – Firm BQ 35.6 39.7 29.0 34.5 39.2 30.8 19.6 30.0 20.0 24.5
Lump Sum – Spec &
Drawings
Lump Sum – Design &
Build
1995
%
1998
%
2001
%
2004
%
Page 8
2007
%
2010
%
55.4 49.7 59.2 45.6 43.7 43.9 62.9 42.7 47.2 52.1
3.6 5.2 9.1 16.0 11.8 20.7 13.9 13.3 21.8 17.5
Target contracts - - - - - - - 6.0 4.5 3.7
Remeasurement – Approx.
BQ
1.9 2.9 1.5 2.3 2.1 1.9 1.7 4.0 1.7 0.3
Prime Cost Plus Fixed Fee 2.3 0.9 0.2 0.3 0.7 0.3 0.2 0.2 0.5 0.6
Management Contract 1.2 1.4 0.8 0.9 1.2 1.5 0.6 0.2 0.7 0.0
Construction Management - 0.2 0.2 0.4 1.3 0.8 0.4 0.9 1.1 0.3
Partnering Agreements - - - - - - 0.6 2.7 2.3 1.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Table 2:
Trends in Methods of Procurement - by value of contracts
1987
%
1989
%
1991
%
1993
%
Lump Sum – Firm BQ 52.1 52.3 48.3 41.6 43.7 28.4 20.3 23.2 13.2 18.8
Lump Sum – Spec &
Drawings
Lump Sum – Design &
Build
1995
%
1998
%
2001
%
2004
%
2007
%
2010
%
17.7 10.2 7.0 8.3 12.2 10.0 20.2 10.7 18.2 22.6
12.2 10.9 14.8 35.7 30.1 41.4 42.7 43.2 32.6 39.2
Target contracts - - - - - - - 11.6 7.6 17.1
Remeasurement – Approx.
BQ
3.4 3.6 2.5 4.1 2.4 1.7 2.8 2.9 2.0 0.7
Prime Cost Plus Fixed Fee 5.2 1.1 0.1 0.2 0.5 0.3 0.3

Response
The response to the survey is set out in Table 3 alongside the equivalent figures from the
most recent surveys for comparison.
Table 3:
Response to the survey
1995 1998 2001 2004 2007 2010
Number of surveys returned 194 151 230 143 83 86
Number of projects captured 4652 2457 2955 2330 1370 1018
Value of projects captured £3224m £4767m £3337m £3035m £7813m £1673m
Average value of project £0.69m £1.94m £1.13m £1.30m £5.05m £1.64m
Average value (2010 prices) £1.15m £2.88m £1.41m £1.32m £5.70m £1.64m
Proportion of total value of new orders 11.6% 13.3% 8.7% 5.6% 11.3% 3.9%
The number of survey returns was similar to the 2007 survey but the number of projects
captured was lower and was by far the lowest in the survey’s history. This is also
reflected in the value of projects captured which, again, was far lower than in any
previous surveys. However the average value of project captured was more in line with
most previous surveys (the 2007 survey was the odd one out with a much higher average
project value).
The proportion of the total value of new orders has been reduced for all previous surveys
following revision by the Office for National Statistics of its ‘Value of orders for new
construction’ statistics. Revised methodology has suggested that previously published
data under-estimated the value of work in the industry. Using the revised figures
suggests that these surveys have sampled a smaller proportion of work than previously
believed. The figure for 2010 is perhaps the most disappointing of all, suggesting that the
survey has captured only 3.9% of new work in Great Britain. It is possible that some work
for which orders were placed in 2010 failed to start on site but this proportion would be
only small.
The unique characteristics of the 2007 survey may mean that the 2010 results may be
more comparable with earlier surveys and this should be borne in mind when comparing
results. The relatively small percentage of the total market represented by the survey
should also be borne in mind when applying the results to the industry as a whole.
The current survey has recorded only a single instance of a project over £50m in value,
compared to 28 in the 2007 survey and 4 in the 2004 survey. In some respects this is
representative of the smaller value projects that characterise the industry since the onset
of the recession but also suggests an under-representation of larger schemes in the
survey. Not a single PPP/PFI project is included in the survey.
Page 9

Analysis of returns
Distribution of Contracts
Appendix 2 shows the cumulative results of the survey and the distribution of contracts in
use in 2010. As in previous surveys, contracts are arranged in value bands. Chart 3
shows the distribution of contracts by value in this survey.
Chart 3:
Distribution of contracts by value bands (number of contracts)
Contracts of less than £250,000 in value accounted for 36% of the sample. This is
slightly more than in 2007 (29%) but less than in 2004 (50%) and 2001 (58%).
Page 10

Contract Family
Standard forms of contract
The vast majority of construction contracts still use one of the standard forms of contract,
albeit sometimes with client or consultant amendments. Only 2.6% by number and 1.9%
by value have used a non-standard form of contract, almost exactly the same as in the
2007 survey.
Table 4:
Use of Standard Forms of Contract
% used by
number
Compared
to 2007
% used by
value
Page 11
Compared
to 2007
JCT 88.0 ↑ 67.2 ↑
ICE 0.4 ↓ 1.6 ↓
NEC 7.4 ↓ 26.4 ↑
GC/Works 0.8 ↓ 2.2 ↓
ACA 0.9 ↓ 0.8 ↓
Prime Contracting Agreement 0.0 ↓ 0.0 ↓
Other standard forms 0.0 ↓ 0.0 ↓
Other contracts 2.5 ↑ 1.9 ↑
Chart 4:
Use of Standard Forms of Contract (by number of contracts)
ICE
0.4%
GC/Works
0.8%
ACA
0.9%
NEC
7.4%
JCT
88.0%
Other contracts
2.5%
JCT
ICE
NEC
GC/Works
ACA
Other contracts

Chart 5:
Use of Standard Forms of Contract (by value of contracts)
ICE
1.5%
GC/Works
2.2%
NEC
26.4%
ACA
0.8%
Other contracts
1.9%
JCT
67.2%
JCT
ICE
NEC
GC/Works
ACA
Other contracts
Page 12

JCT forms
The JCT standard forms continue to dominate the construction contracts market: within
the survey sample, 88% of all contracts by number employed a JCT standard form, up
from 79% in 2007 and close to the 91% in 1998 and 2001. By value, the proportion of
contracts employing one of the JCT family of contracts rose from 62% in 2007, the
second lowest figure recorded in the 25 years survey history, to 67% in 2010 but still
lower than the long term average.
Table 5:
Long Term Trends in the use of JCT Standard Forms
Percentage of total number
1985 1987 1989 1991 1993 1995 1998 2001 2004 2007 2010
% % % % % % % % % % %
81 86 81 78 82 85 91 91 78 79 88
Percentage of total value 70 74 81 61 80 76 68 79 70 62 67
By value the proportion has always recorded a slightly lower percentage than by number.
This is because higher value schemes have had a greater tendency to employ some
alternative form of contract such as construction management, NEC or PPC 2000. In
2010, only 54% of contracts over £10m employed a JCT contract with NEC closing the
gap with 39% of such contracts.
The 2007 survey identified that 1998 versions of the JCT contracts were still in regular
use. However less than 2% of JCT contracts used in 2010 were of 1998 (or earlier)
vintage. Of these, the 1998 Minor Works edition was the most commonly still
encountered
Table 6 plots the breakdown by type of JCT form, showing a comparison with previous
surveys.
Page 13

Table 6:
Use of JCT Standard Forms (irrespective of edition)
JCT Standard Contract
Form Percentage by Number Percentage by Value
2001 2004 2007 2010 2001 2004 2007 2010
with quantities 8.5 14.9 11.7 12.5 12.7 18.4 10.2 11.2
without quantities 4.6 5.3 6.2 4.8 10.4 3.6 7.8 5.0
with approximate quantities 0.4 2.6 0.9 0.2 0.9 2.5 1.5 0.2
Design and Build 13.3 11.2 19.4 15.7 39.7 35.6 25.3 33.4
Intermediate Form with quantities 9.4 11.8 6.7 10.7 5.2 3.5 1.1 6.2
Intermediate Form without quants 14.0 8.1 8.5 9.3 4.8 2.4 1.4 3.8
Minor Works 40.0 23.5 23.5 33.0 2.9 2.4 0.9 4.9
Prime Cost Contract 0.2 0.1 0.4 0.1 0.3

Standard Building Contract
with quantities
The vast majority (85%) of the JCT Standard Building Contract with Quantities involved
contractor’s design. Only 18 of the 122 uses of the Standard Building Contract used the
‘without contractor’s design’ variant, slightly more than in 2007 (6%).
with approximate quantities
Only 2 cases of the ‘with approximate quantities’ variant were recorded in this survey.
without quantities
Use of the ‘without quantities’ variant declined slightly compared to 2007 but only a single
example was recorded of the ‘without contractor’s design’ sub-variant. 87% of usage was
in connection with projects below £2m in value.
Intermediate Building Contract
The use of the Intermediate Building Contract, both with and without quantities, has
increased compared to 2007 in both number and value terms. No instances were
recorded of use on contracts over £5m in value but the original intention was that this
form was to be used on contracts up to around £500,000. 56% of uses of the
Intermediate Form were in connection with contracts over £500,000.
45% of Intermediate forms used the ‘with contractor’s design’ variant, compared to 88%
of the Standard Form. 53% were ‘with quantities’ compared to 47% ‘without’.
5 instances (2%) were recorded of pre-2005 editions being used.
The following chart shows the proportion of projects using the various alternative options,
with and without quantities, with and without contractor’s design, of the 2005 Intermediate
Building Contract.
Chart 6:
The 2005 Intermediate Building Contract
Page 15

Minor Works Building Contract
The use of the Minor Works Form increased in 2010 by both number and value compared
to both 2007 and 2004.
The ‘with contractor’s design’ variant was used in 35% of instances, up from 14% in 2007.
The Minor Works form was originally recommended for use on contracts up to about
£150,000 (at 2010 prices). The Form was used on projects up to £2m in value but 76%
of usage was in connection with contracts up to £250,000 (the lowest value band
surveyed).
8 instances (2%) used a pre-2005 version of the form.
Design and Build Contract
Of the JCT family of contracts, the use of the Design and Build Contract in 2010
proportionally declined by number overall but increased by value compared to 2007. The
latter is illustrated in Chart 8 with the increased use of the contract with projects in the
£20-50m value range. However its use appears to have fallen in the £10-20m project
value range.
Chart 7:
JCT Design and Build Contracts
No instances were recorded of use of pre-2005 editions of the Design and Build Form.
Major Project Construction Contract
10 instances were recorded of use of the Major Project Construction Contract, a 100%
increase on 2007 even though far fewer large projects were captured in this survey. All
10 instances were in connection with projects in the £5-10m range. Projects above this
value mostly used the Design and Build Contract.
Page 16

Construction Management
Only 3 instances were recorded of the use of the JCT Construction Management forms,
all on projects under £1m value.
Management Building Contract
No instances were recorded of use of the JCT Management Building Contract.
Prime Cost Building Contract
Only a single use was recorded of the Prime Cost Building Contract, on a project in the
£1-2m value range.
Constructing Excellence Contract
A single use was identified of the use of the Constructing Excellence Contract (on a
project in the £1-2m value range) following no recorded instances in 2007.
Framework Agreement
The JCT Framework Agreement 2007 superseded Framework Agreement 2005 but only
a single use was identified in the 2010 survey. This was in conjunction with a £250,000 -
£500,000 value project.
Partnering Charter (Non-binding)
The JCT Partnering Charter (Non-binding) 2005 is intended for use with most standard
forms of construction where the parties do not wish to enter into a legally binding
agreement but wish to create a collaborative working environment. The current survey
identified four instances of use of the charter, an improvement on the two instances
recorded in the 2007 survey but still well down on the use of the charter’s predecessor in
the 2004 survey (11 instances). Three of the current uses were in connection with
contracts in the £500,000 to £1m range with one with a contract in the £2-5m range.
Page 17

ICE Forms
Although the ICE family of forms were designed largely for use in connection with works
of civil engineering construction, they are sometimes used for building works, particularly
where large amounts of earthworks are involved, and for this reason the forms continue
to be included in this survey.
However, on this occasion, only 4 instances of use of ICE forms were recorded. This
compares with 16 instances in 2007 and 31 instances in 2004. In the two previous
surveys, use of ICE forms accounted for only 1% of contracts used but in 2010, the
percentage dropped to 0.4%. In 2007 ICE forms accounted for 2% by value of all
contracts, driven by two instances of use of the Target Cost Version on contracts over
£50m value. In 2010 the four instances accounted for 1.6% of the contracts by value. On
this occasion there were three uses of the Design & Construct form at varying project
sizes (£250-500k, £2-5m and £10-20m) and one of the Measurement Version (£5-10m).
There were no recorded instances of use of the Target Cost Version in 2010. Similarly
no instances were noted of use of the Minor Works form.
For the third consecutive survey, no instances were recorded of use of the ICE Partnering
Addendum.
NEC Family of Contracts
NEC contracts accounted for 7.4% of all contracts in the survey by number and 26.4% by
value. By number the percentage remains similar to the previous two surveys (7.7% in
2007 and 6.7% in 2004). However, by value the proportion of contracts in 2010 using
NEC contracts rose considerably (14.0% in 2007 and 12.8% in 2004).
This is a reflection of that fact that NEC contracts appear to have become more widely
used on projects at the larger end of the spectrum. 44% of contracts over £5m used an
NEC contract compared to 17% in 2007.
The following chart shows the proportion of each value band in which an NEC contract
was used, comparing the 2007 and 2010 surveys.
Page 18

Chart 8:
The proportion of contracts employing an NEC Contract
This clearly demonstrates the increased frequency of use on projects over £5m in value.
(Only one contract was recorded over £50m value, hence the 100% reading)
Option C Target Contract with Activity Schedule continues to be the favourite NEC
contract, used on 47% of occasions (though down from 55% in 2007 and 77% in 2004).
The use of Option A Priced Contract with Activity Schedule has risen, up to 39% of
usages from 33% in 2007.
Chart 10 shows the comparative use of the various NEC options, whether NEC2 or
NEC3, irrespective of value band.
Page 19

Chart 9:
Use of NEC Options (by number)
Neither Option E Cost Reimbursable Contract nor Option F Management Contract
recorded any usage in this survey.
Option C Target Contract with Activity Schedule was used throughout the value bands,
largely between £500,000 and £50m though its predominant use was in the £500,000 to
£1m range.
Option A Priced Contract with Activity Schedule was largely used on projects in the range
of £250,000 to £10m value but single examples were recorded at opposite ends of the
value ranges i.e. less than £250,000 and over £50m.
The three recorded usages of the Short Contract (ECSC) were all with projects under
£250,000 value.
NEC2 1995 edition was still used on 10 occasions (or 13% of NEC usage). The majority
of these used the NEC2 Option A Priced Contract with Activity Schedule and only on
projects up to £5m in value.
Option X12 is the NEC’s Partnering Option, intended for use as a secondary option as
part of the NEC family of contracts. In the 2004 survey, 11% of all the NEC contracts
were combined with Option X12, slipping to 9% in the 2007 survey. In the 2010 survey,
not a single example of the use of Option X12 was identified, indicating, in conjunction
with similar trends with other contract forms, the reduction in the formal use of partnering
or collaborative tools.
Four instances were identified of the use of NEC contracts in conjunction with ProCure 21
or ProCure 21+, the NHS Estates’ preferred means of procuring construction. This
probably suggests that this item in the survey questionnaire was not fully taken note of.
Page 20

GC/Works Contracts
If the 2010 survey sample is representative of the industry as a whole, it indicates a sharp
fall off in the use of GC/Works contracts. Only 8 instances were recorded of the use of
one or other of the GC/Works variants, representing just 0.8% of the sample by number
and 2.2% by value. However the 2007 survey was abnormal in the number of instances
recorded (6% by number) while previous surveys had recorded 1.0 to 1.6% usage.
Chart 10:
Occurrences of GC/Works Contracts
All of the contracts (bar one) were in conjunction with small projects below £500,000 in
value.
The single example of use of Part 3 Single Stage Design & Build contract was in
conjunction with a £20-50m project.
No examples were recorded of use of Part 5 Two Stage Design & Build, Part 6
Construction Management nor GC/Works/4 Small works. The 2007 survey found 20
instances of use of the latter contract. The Construction Management form had not
recorded any usage in the 2004 or 2007 surveys either.
Maintaining the trends observed with other forms of contract, no use of GC/Works1
Amendment 1 (Achieving Excellence) was identified. This follows a similar lack of
identified use in 2004 and 2007.
PC/Works Forms
The PC/Works (1998) suite of contracts was introduced as an adapted form of GC/Works
for use by private sector, local authority, NHS trust and all non-Central Government
employers.
Page 21

It has never achieved much use since its introduction and not a single occurrence has
been recorded in either of the last two surveys.
Association of Consultant Architects
The ACA Standard Form of Project Partnering (PPC2000) was promoted as the first
Standard Form Project Partnering Contract and was published in September 2000.
The last two surveys saw the form account for 1.9% and 2.2% of contracts used by
number and 6.0% and 5.5% by value. This usage declined in 2010: only 9 instances
were recorded, representing 0.9% by number and 0.8% by value of contracts in the
sample.
The sharp drop in the percentage of contracts used by value indicates that there was no
use in 2010 of its use in connection with higher value projects. No instances were
recorded of its use on projects over £5m in value as shown in Chart 12.
Chart 11:
Use of ACA Standard Form of Project Partnering (PPC2000)
There was no recorded use of the ACA Form of Building Agreement (1982) for the fourth
consecutive Contracts in Use Survey.
Page 22

Other Standard Forms of Contract
A single example of use of the JCT Building Contract for a Home Owner / Occupier was
the only ‘Other Standard Form’ recorded in this year’s survey.
Non Standard Forms
2.6% of contracts in the survey were non-standard, almost the same percentage as in
2007. By value, these accounted for 1.9% of the total value of schemes sampled, again
almost identical to the 2007 survey. However, unlike in 2007, the majority (62%) of the
schemes were local authorities’ own forms and, of these, 88% were in conjunction with
projects under £250,000 in value.
Only five contracts were identified in this survey as Private Clients’ own forms compared
with 25 in 2007.
Five of the contracts were described as Prime Cost with a Fixed Management Fee and
used on projects in the £500,000 to £5m value range.
Partnering Arrangements
Only five contracts were identified as incorporating binding Partnering Agreements (other
than those specifically associated with families of contracts). This compared to ten in
2007. Three of the instances in the current survey were in conjunction with small
projects of less than £250,000 value.
No instances were noted of contracts incorporating non-binding ‘Partnership’ or ‘Alliance’
provisions (other than those specifically associated with families of contracts and
commented on previously).
No instances of use of Prime Contracting agreements were captured by this survey nor
any other Agreement/Contract specifically drafted for use in partnering.
Page 23

Additional contract provisions
As usual, the questionnaire requested survey respondents to provide additional data
relative to procurement trends. Once again, it seems likely from the survey forms that
some respondents failed to complete this section of the forms and for this reason the data
results may under-record the true level of usage in this section of the report.
Negotiated contracts
67 of the total of 1018 contracts were listed as negotiated i.e. 6.6% of the sample. This
was down on the 10% that had been recorded in 2007 at the height of building activity in
the U.K. Chart 13 records the growth in negotiation during the early 2000’s and then the
drop back to more competitive tendering by 2010.
Chart 12:
The rise and fall of negotiation
Chart 14 shows how negotiation was favoured for projects in the £2-5m range and for
projects between £20 and £50m (although the latter was based on a relatively small
sample). In 2007 projects in the £1-2m range had the greatest incidence of negotiation
(21%).
Page 24

Chart 13:
The use of negotiation by contract size
Fluctuating Price Contracts
Only a single example was identified of the use of fluctuating or variation of price
provision, on a project of £2-5m value. This lack of VOP contracts is to be expected
while inflation is absent.
Guaranteed Maximum Price
The use of Guaranteed Maximum Price provisions has continued to diminish. Only four
instances were recorded in the current survey, representing just 0.4% of the sample.
Chart 15 shows how 2004 was the golden age of GMP.
The projects using GMP provision varied from £250,000 to £30m in value. By value
GMP noted contracts accounted for 1.0% of the sample, compared to 0.9% in 2007 and
2.8% in 2004.
Page 25

Chart 14:
The rise and fall of Guaranteed Maximum Price provisions
Two stage procurement
In 2010, 2.8% of the sample was identified as using two stage procurement, only a little
down on the 3.4% recorded in the 2007 survey and still almost twice as frequent as
experienced in 2004 (1.5%). Chart 16 shows the growth of two stage procurement
during the 2000’s as the industry grew and its peak in 2007.
Chart 15:
The use of two stage procurement (by contract number)
By value, the pattern of the use of stage procurement is similar if less pronounced:
Page 26

Chart 16:
The use of two stage procurement (by contract value)
In 2010 two stage procurement strategies accounted for 5.9% of contracts by value, down
marginally from 6.1% in 2007.
The number of recorded occurrences of two stage tendering declined as size of project
grew but, as a percentage of the sample, the most frequent use was in conjunction with
higher value projects:
Chart 17:
The use of two stage procurement by size of contract
Page 27

The survey did not identify which types of contracts were most likely to be used with a two
stage procurement strategy.
Incentivisation
For the third consecutive survey, the survey enquired about the use of additional
incentivisation provisions in building contracts. In 2004, the survey identified 77
occurrences (although these were mainly in connection with small contracts up to
£250,000 value). In 2007 8 instances were recorded (on a range of higher value
projects). In 2010, just 2 uses of additional incentivisation provisions were noted (on mid
range contracts of £2-10m value).
Details of the type of incentivisation or the methodology employed were not requested.
Electronic tendering
A question on the use of electronic tendering has now also been asked for the third
consecutive survey. Following a recording of 54 projects (2.3% of the sample) in 2004,
use of electronic tendering apparently collapsed in 2007 when only 6 occurrences were
recorded (0.4% of the sample). In 2010, 13 instances have been reported, representing
1.3% of the survey sample, a small increase on 2007.
Actual use of electronic tendering is likely to be higher than indicated by this survey result
due to likely under-recording in the survey questionnaire but the figures do not suggest a
revolution in tendering procedure.
Framework agreements
The 2010 survey was the second survey to ask about projects procured under framework
agreements. In 2007, 61 contracts, representing 4.5% of the sample, were noted as
being procured under a framework agreement and representing 2.9% of the sample by
value. In 2010, 31 contracts were recorded as procured under a framework agreement.
This represented 3.0% of the sample by number and 4.4% of the sample by value,
therefore down on number but up on value.
In 2007, the majority (70%) of contracts secured under framework agreements fell into
the £1-5m project value range. In 2010, this project value was still strongly represented
but there was a broader spread of project values using such agreements.
Page 28

Chart 18:
Framework agreements
Private Finance Initiative/Public Private Partnership
Although the survey questionnaire enabled respondents to identify where schemes had
been procured under PFI/PPP arrangements, whether industry standard or bespoke, no
such schemes were picked up in the survey or identified as such for the second survey
running.
Page 29

Analysis of contracts used by contract value
The following charts show the contracts used in each value band. The legends show the
principal contracts used in descending order of frequency.
Not exceeding £250,000
£250,000 - £500,000
Page 30

£500,000 - £1m
£1 – 2m
Page 31

£2-5m
£5-10m
Page 32

£10-20m
£20-50m
Page 33

Over £50m
Page 34

Procurement methods
See Tables 1 and 2 for the survey history statistics of procurement methods.
Bills of Quantities
In 2007, the use of Bills of Quantities dropped to its lowest level in the survey’s history,
firm B.Q.’s representing just 20% of contracts in the sample. In the 2010 survey, the
proportion increased a little up to 24.5% of the total sample.
By value, the proportion of contracts using firm B.Q.’s also rebounded, up from 13.2% in
2007 to 18.8% in 2010. This is still the second lowest proportion in the survey’s history.
The use of Approximate Bills of Quantities, however, has fallen completely away,
registering just 0.3% of contracts in number and 0.7% by value.
Chart 19:
Use of Bills of Quantities
Specification and Drawings / Activity Schedules
The use of lump sum contracts based on specification and drawings or activity schedules
rose in 2010. Except for 2001, when the sample was characterised by a high proportion
of very small value contracts, the proportion of contracts using specification and drawings
or activity schedules passed 50% for the first time since the early 1990’s.
More tellingly, the proportion of contracts by total project value using specification and
drawings or activity schedules rose to its highest level in the survey’s history – 22.6%.
Chart 21 shows the proportion of contracts in each value band that were let on the basis
of specification and drawings or activity schedules.
Page 35

Chart 20:
Specification and Drawings / Activity Schedules by project value
Note: The over £50m category shows as 100% based on a single contract which used
NEC Option A Priced contract with activity schedule
Design and build procurement
Table 1 shows that, in terms of the number of building contracts undertaken in the U.K.,
the design and build route suffered a slight dip to 17.5% compared to the 21.8% peak that
was achieved in 2007. Conversely, by value, the proportion of projects employing design
and build increased compared to 2007 to 39.2%, close to but a little less than the figures
recorded in 1998, 2001 and 2004.
The following chart shows the percentage of each contract value band using a D&B
procurement route.
Page 36

Chart 21:
Use of Design and Build procurement
Over 60% of contracts in the £20-50m value range used a Design & Build contract in
2010, up from 53% in 2007. A noticeable increase is also observed in the £2-5m value
range, up from just below 40% in 2007 to 45.5% in 2010. However percentages fell
slightly in the £5-10m and £10-20m value ranges.
92% of projects using design and build procurement used the JCT Design and Build
Contract.
Target Contracts
Numerically, the number of target contracts has fallen since their introduction into the
survey in 2004, from 6.0% down to 3.7% in 2010. However, as a proportion of the total
contract value of the sample, that accounted for by target contracts rose in 2010 to
17.1%, indicating their use on higher value schemes in this survey.
All of the target contracts used one of the NEC family of contracts. There were no
recorded instances of use of the ICE Target Cost Version. 35 of the 37 target contracts
recorded in the survey used a Target contract with activity schedule with only 2 using a
Target contract with bill of quantities.
The highest number of target contracts were identified in the £500,000 to £1m value
range but, as a proportion of the sample, the most frequent occurrences of the use of
target contracts was with higher value projects, over £5m value (see Chart 23).
Page 37

Chart 22:
Target contracts
Prime Cost contracts
Only a single example was recorded of the use of the JCT Prime Cost Building Contract
(on a £1-2m project). No instances were recorded of use of the NEC Cost reimbursable
contract. However the survey noted 5 projects using an alternative ‘Prime Cost Fixed
Management Fee’ contract with projects in the £500,000 to £5m value range. Prime cost
contracts were used on just 0.6% of the survey sample by both number and value.
Management Contracts
The survey recorded no examples of use of either the JCT Management Building
Contract or the NEC Management Contract for the first time in the history of the survey.
Construction Management
The survey recorded just 3 projects procured under the JCT Construction Management
Agreement. No examples were recorded of use of the GC/Works/1 Construction
Management form of contract.
All three contracts were of low project value, below £1m.
This was the lowest recorded usage of construction management since 1991 and, in
terms of total sample value, the lowest in the history of the survey.
Page 38

Partnering
Agreements and Arrangements
The sample comprising the RICS Contracts in Use Survey 2010 suggests that the
principal of partnering has gone into decline. This may be a reflection of changed market
conditions since the start of the recession and the trend for building clients to revert to
competitive tendering as a means of obtaining the lowest price for their building works.
Numerically, partnering agreements accounted for just 1.0% of projects in the survey
compared with 2.3% in 2007 and 2.7% in 2004. By value, partnering agreements were
involved in 15.6% of the survey sample in 2007 (boosted by a single very large Prime
Contracting project) and 6.6% in 2004. In the latest survey the total value of projects
using a partnering agreement fell to just 0.9%.
9 instances were recorded of the use of the ACA PPC 2000 Project Partnering form
compared to 30 in the 2007 survey and 45 in 2004, representing a sharp drop in usage in
both numerical and value terms (see page xx). The decline in its use in connection with
higher value projects is particularly noted.
A single use was reported of use of the JCT Constructing Excellence Contract (on a £1-
2m value project).
No instances were recorded of use of any Prime Contracting agreements.
The principle of partnering can be incorporated into most contractual arrangements and
each of the contract families now has an additional document that parties to a contract
can sign up to formalize the introduction of a partnering philosophy into the contractual
arrangement.
The JCT introduced its Non-Binding Partnering Charter for Single Projects in 2001,
supplanted by the Partnering Charter (Non-binding) 2005. This has not achieved great
take-up: 11 instances were recorded of its use in 2004 (0.6% of JCT contracts), only 2 in
the 2007 survey (0.8% of JCT contracts) and 4 in the 2010 survey (0.4% of JCT
contracts).
The ICE introduced its ICE Partnering Addendum in 2003 but it has not registered any
use in any of the RICS Contracts in Use surveys since. However it should be
remembered that the ICE contracts are primarily intended for use in connection with civil
engineering works which are specifically excluded from these surveys.
The NEC family of contracts has NEC Option X12: Partnering Option, introduced in
2001. In 2004, this option was used in 11% of cases where an NEC form of contract had
been used. In 2007 the Partnering Option was used 10 times, representing 9% of the
cases where an NEC form had been used. In the 2010 survey not a single use of the
Partnering option was recorded.
The GC/Works/1 Amendment 1 (2000) (Achieving Excellence) has not recorded any
usage in the 2004, 2007 or 2010 surveys.
However, the survey questionnaire also sought to identify the use of other partnering
arrangements, other than those specifically noted above that may have been used in
conjunction with standard forms of contract. In this respect 5 examples were noted of
contracts incorporating binding Partnering Agreements (other than those specifically
noted), 3 on small contracts of less than £250,000 value and 2 on contracts of £5-10m in
Page 39

value. But no examples were noted of contracts incorporating non-binding ‘Partnership’
or ‘Alliance’ provisions, as in the 2007 survey.
The survey questionnaire also sought to identify any ‘Other Partnering
Agreements/Contracts specifically drafted for use in Partnering’. Although, in 2004 this
question had solicited a further 11 project responses, no further instances were noted in
either the 2007 or 2010 surveys.
The survey suggests that partnering arrangements peaked in 2004. 116 projects (5.0%
of the total) worth a total of £316m (10.4% of the total) were recorded as using some form
of partnering.
In 2007 only 53 projects (3.9% of the sample) employed a partnering contract or used
some subsidiary partnering agreement, accounting for 7.1% of the sample value
(excluding one very high value Prime Contracting project). In 2010 the number of
projects involving partnering dropped to 19 (just 1.9% of the sample), adding up to £37m
(just 2.2% of the total sample value).
Chart 23 shows the percentage of each contract value range using a Partnering
Agreement or Arrangement. Contracts in the range of £5-10m are the most likely to have
used some partnering arrangement as was the case in 2007.
Chart 23:
Partnering Agreements and Arrangements by contract value
Page 40

Appendix 1
Survey questionnaire
Notes on completion of Questionnaire
In order to ensure that the information provided in the survey is valid, please ensure
that the following rules are followed:
1 Include all projects for which work on site commenced during the year 1 January
to 31 December 2010
2 Include all building work carried out in the United Kingdom (new-build and
refurbishment) but exclude term contracts, routine maintenance or repair work and
individual sub-contracts
3 Exclude all overseas work, civil engineering works and heavy engineering projects
4 In the case of Management Contracts and Construction Management
Agreements, base your returns on the total project value and ignore the number
and value of individual trade contracts
5 If you are completing this return on behalf of a public body, to avoid possible
duplication, exclude all work handled by private Quantity Surveyors
6 Insert the number of contracts in each value band and, for projects over £50m
value, also state the value of those projects
7 On page 5 of the survey form, you are requested to state the total number of
projects and the approximate total value of those projects listed previously
8 Also on page 5, you are requested to identify additional procurement options such
as two stage tendering etc. which may be applicable to any of the preceding
contract forms. Please do not overlook these additional questions, which are
important to identify industry trends
9 PFI/PPP contracts – the value should be the capital (construction)) cost only. In
order to prevent possible double counting, it would be helpful if you would note the
names of PFI/PPP projects in the additional data section of the form
10 Scotland - Separate contracts have not been identified in the Questionnaire for
Scottish Building Contracts. Where JCT forms have been used with Scottish
Supplements, please just mark the appropriate JCT form. Where forms such as
the Scottish Minor Works Contract have been used, please mark its JCT
equivalent e.g. Agreement for Minor Works
11 On the final page you are invited to include any general remarks you have about
procurement trends and current contract usage
12 Please note that all information will be treated as confidential and will not be used
for any other purpose.
Page 41

Appendix 2
The distribution of contracts in use
JCT CONTRACTS
JCT 2005 SUITE OF CONTRACTS
Standard Building Contract 2005
Form of Contract
up to
£250k
£250-
500k
Contract value
£500k-
1m £1-2m £2-5m £5-10m £10-20m £20-50m
Page 42
over
£50m
(Nr) (Nr) (Nr) (Nr) (Nr) (Nr) (Nr) (Nr) (Nr)
With Quantities (SBC/Q) 19 28 19 17 15 4 2 0 0
With Quantities without contractor's design (SBC/Q/XD) 5 3 3 6 1 0 0 0 0
With Approximate Quantities (SBC/AQ) 0 0 0 0 1 0 0 0 0
With Approximate Quantities without contractor's design (SBC/AQ/XD) 1 0 0 0 0 0 0 0 0
Without Quantities (SBC/XQ) 7 15 10 8 4 1 0 1 0
Without Quantities without contractor's design (SBC/XQ/XD) 1 0 0 0 0 0 0 0 0
Intermediate Building Contract
Intermediate Building Contract (IC) with quantities 9 24 20 12 9 0 0 0 0
Intermediate Building Contract (IC) without quantities 10 12 14 1 1 0 0 0 0
Intermediate Building Contract with contractor's design (ICD) with quantities 11 4 10 7 3 0 0 0 0
Intermediate Building Contract with contractor's design (ICD) without quantities 8 12 29 6 2 0 0 0 0
Minor Works Building Contract
Minor Works Building Contract (MW) 172 24 15 2 0 0 0 0 0
Minor Works Building Contract with contractor's design (MWD) 76 12 24 3 0 0 0 0 0

Design and Build Contract
Design and Build Contract (DB) 17 12 40 41 29 9 6 6 0
Major Project Construction Contract
Major Project Construction Contract (MP) 0 0 0 0 10 0 0 0 0
Construction Management
Construction Management Agreement/Trade Contracts 1 1 1 0 0 0 0 0 0
Management Building Contract
Management Building Contract (MC) 0 0 0 0 0 0 0 0 0
Prime Cost Building Contract
Prime Cost Building Contract (PCC) 0 0 0 1 0 0 0 0 0
EARLIER JCT FORMS
Intermediate Building Contract 1998 Edition 0 1 0 1 1 0 0 0 0
Minor Works 1998 Edition 4 1 0 0 0 0 0 0 0
Measured Term Contract 1998 0 0 1 0 0 0 0 0 0
Intermediate Building Contract 1984 Edition 0 2 0 0 0 0 0 0 0
SFC 1980 Edition Local Authorities with Quantities 0 0 1 0 1 0 0 0 0
Minor Works 1980 Edition 2 1 0 0 0 0 0 0 0
Page 43

OTHER JCT FORMS
Constructing Excellence Contract
Constructing Excellence Contract (CE) 2006 0 0 0 1 0 0 0 0 0
Framework Agreement
Framework Agreement (FA) 2007 0 1 0 0 0 0 0 0 0
PARTNERING JCT
Contracts above incorporating JCT Partnering Charter (Non-binding) (PC/N) 2005 0 0 3 0 1 0 0 0 0
ICE / NEC CONTRACTS
ICE FORMS OF CONTRACT
ICE 6th edition (1991) 0 0 0 0 0 0 0 0 0
ICE Measurement Version 7th edition (1999) 0 0 0 0 0 1 0 0 0
ICE Design & Construct 2nd edition (2001) 0 1 0 0 1 0 1 0 0
ICE Minor Works 3rd edition (2001) 0 0 0 0 0 0 0 0 0
ICE Target Cost Version (2006) 0 0 0 0 0 0 0 0 0
Partnering with ICE
Contracts above incorporating ICE Partnering Addendum 0 0 0 0 0 0 0 0 0
Page 44

NEC FAMILY OF CONTRACTS
NEC3 Engineering and Construction (ECC) (2005)
Form of Contract
up to
£250k
£250-
500k
Contract value
£500k-
1m £1-2m £2-5m £5-10m £10-20m £20-50m
Page 45
over
£50m
(Nr) (Nr) (Nr) (Nr) (Nr) (Nr) (Nr) (Nr) (Nr)
Option A: Priced contract with activity schedule 0 7 1 3 1 8 0 0 1
Option B: Priced contract with bill of quantities 0 1 1 0 2 1 0 0 0
Option C: Target contract with activity schedule 0 1 13 2 3 6 7 3 0
Option D: Target contract with bill of quantities 0 1 0 0 0 0 0 0 0
Option E: Cost reimbursable contract 0 0 0 0 0 0 0 0 0
Option F: Management contract 0 0 0 0 0 0 0 0 0
Short Contract (ECSC) 3 0 0 0 0 0 0 0 0
NEC2 Engineering and Construction (ECC) (1995)
Option A: Priced contract with activity schedule 1 2 3 1 1 0 0 0 0
Option B: Priced contract with bill of quantities 0 1 0 0 0 0 0 0 0
Option C: Target contract with activity schedule 0 0 0 0 0 0 0 0 0
Option D: Target contract with bill of quantities 0 0 0 0 0 1 0 0 0
Option E: Cost reimbursable contract 0 0 0 0 0 0 0 0 0
Option F: Management contract 0 0 0 0 0 0 0 0 0
Short Contract (ECSC) (1999) 0 0 0 0 0 0 0 0 0

Partnering with NEC
Contracts above incorporating NEC Option X12: Partnering Option 0 0 0 0 0 0 0 0 0
Contracts above used in conjunction with ProCure 21 / ProCure 21+ 0 0 2 2 0 0 0 0 0
GC/WORKS CONTRACTS
GC/Works (1998/1999 editions)
GC/Works/1 Part 1 - With Quantities (1998) 1 1 0 0 0 0 0 0 0
GC/Works/1 Part 2 - Without Quantities (1998) 2 1 0 0 0 0 0 0 0
GC/Works/1 Part 3 - Single Stage Design & Build (1998) 0 0 0 0 0 0 0 1 0
GC/Works/1 Part 5 - Two Stage Design & Build (1999) 0 0 0 0 0 0 0 0 0
GC/Works/1 Part 6 - Construction Management (1999) 0 0 0 0 0 0 0 0 0
GC/Works/2 Minor Works (1998) 1 1 0 0 0 0 0 0 0
GC/Works/4 Small Works (1998) 0 0 0 0 0 0 0 0 0
PC/Works (1998 editions)
PC/Works/1-4 State version 0 0 0 0 0 0 0 0 0
GC/Works/1 Amendments
Amendment 1 (2000) (Achieving Excellence) 0 0 0 0 0 0 0 0 0
ASSOCIATION OF CONSULTANT ARCHITECTS
Association of Consultant Architects
ACA Form of Building Agreement (1982) 0 0 0 0 0 0 0 0 0
ACA PPC 2000 Project Partnering (2000/2008) 1 2 0 4 2 0 0 0 0
Page 46

OTHER CONTRACTS
Other Standard Forms
JCT Building Contract for a home owner/occupier (who has not appointed a consultant to oversee the work) 0 1 0 0 0 0 0 0 0
Other Contracts
Local Authority's own forms 14 0 1 1 0 0 0 0 0
Private client's own forms 0 0 1 2 0 2 0 0 0
Prime Cost Fixed Management Fee (not JCT) 0 0 1 3 1 0 0 0 0
PARTNERING ARRANGEMENTS
Partnering arrangements in conjunction with standard forms
Contracts above incorporating binding Partnering Agreements (other than those specifically noted) 3 0 0 0 0 2 0 0 0
Contracts above incorporating non-binding 'Partnership' or 'Alliance' provisions (other than those specifically
noted) 0 0 0 0 0 0 0 0 0
Other Partnering Agreements
Prime Contracting agreement 0 0 0 0 0 0 0 0 0
Other Agreement / Contract specifically drafted for use in Partnering 0 0 0 0 0 0 0 0 0
TOTAL NUMBER OF PROJECTS 1018 nr APPROXIMATE TOTAL VALUE OF PROJECTS £1673m
Page 47

ADDITIONAL PROCUREMENT QUESTIONS
Numbers in addition to the principal contracts above
Negotiated rather than tendered 16 10 9 10 18 2 0 2 0
Fluctuations or Variation of Price provision 0 0 0 0 1 0 0 0 0
Guaranteed Maximum Price (GMP) provision 0 1 1 1 0 0 1 0 0
Two stage procurement strategy 7 7 4 4 2 2 2 1 0
Additional incentivisation provision 0 0 0 0 1 1 0 0 0
Employing electronic tendering 4 5 2 2 0 0 0 0 0
Procured under framework agreement 4 3 6 7 6 5 0 0 0
PFI/PPP
Contracts above let under PFI/PPP arrangements
Industry standard 0 0 0 0 0 0 0 0 0
Bespoke 0 0 0 0 0 0 0 0 0
Page 48