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Published July 1st 2025
Home > News & Insights > Article

Introduction of the new JCT Target Cost Contract 2024

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Authors
Maria Greener
Maria Greener
Sebastian Ombler
Sebastian Ombler

On 25 June 2025, in its final publication of the JCT 2024 Edition suite of documents, the Joint Contracts Tribunal (‘JCT’) released the 2024 Edition of its Target Cost family of contracts (‘TCC’), alongside an updated Tendering Practice Note reflecting the Procurement Act 2023.

The TCC is a brand-new contract family and is largely based on the JCT’s Design and Build Contract, 2024 Edition (‘D&B 2024’) but with revised payment provisions focused on a target cost arrangement.

The TCC contract family includes the following documents:

  • Target Cost Contract 2024;
  • Target Cost Sub-contract Agreement and Conditions 2024;
  • Target Cost Contract Guide 2024; and
  • Target Cost Contract Sub-contract Guide 2024.

Much like the D&B 2024, the TCC is mainly aimed at larger projects where the employer’s requirements are defined and the contractor is required to complete both the works and design of the project. The TCC can be used across both public and private sector projects.

Seasoned JCT users will therefore be familiar with the structure, clauses and general features of the TCC, which echoes that of the D&B 2024; many substantive provisions in the TCC are worded substantially the same as their D&B 2024 counterparts.

The TCC also incorporates the same features and modernisations introduced to most contracts in the JCT 2024 suite, including:

  • Contractor extensions of time with potential for additional payment in respect of delays caused by epidemics, changes in law and the publication of certain ‘guidance’;
  • Parties’ statutory building safety obligations;
  • Wording regarding implementation of the Procurement Act 2023;
  • Exclusion of ‘fitness for purpose’ obligations from the design provisions;
  • Collaborative working, ‘good faith negotiations’, and environmental considerations are expressly contained in the contract conditions and/or article; and
  • Gender-neutral language.

The main differences between the TCC and other standard forms in the JCT suite consist of its payment provisions. In summary, the key features of the target cost mechanism are:

  • Instead of the Contract Sum, which is used in other forms of JCT contract, payment under the TCC is built around the Target Cost.
  • The Target Cost may be adjusted over the course of the project, resulting in the Adjusted Target Cost.
  • The Contractor is paid:
    • The Allowable Cost, which is the cost to the Contractor of complying with its obligations.
    • The Contract Fee, which can be either fixed or a percentage of the Allowable Cost.
    • Any amount payable in respect of the Difference Share, i.e. the difference between the Adjusted Target Cost and the product of Allowable Cost and the Contract Fee. It will be distributed between the parties, based on pre-agreed percentages or sums.

Please contact a member of our Construction & Engineering team if you would like advice on the drafting and implementation of the TCC, or general advice in relation to what form of contract to use on your project.

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Authors
Maria Greener
Maria Greener
Sebastian Ombler
Sebastian Ombler

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