Getting to grips with NEC3

Introduction to the NEC3

Broad Philosophy and background. Features of the form. Changes from Second Edition. Documentation. Options and core clauses. NEC Contracts available. Partnering Option X12. Options Y(UK)2 and Y(UK)3. Other Secondary Options. Option Z. Risk Register.

Administration - Personalities and Approach

The role of Employer, Project Manager, Supervisor, Adjudicator and Contractor. Contract Data and Site information. Communications and early warning. Ambiguities and inconsistencies. Rights of Third Parties ± Y(UK)3.

Duties and Responsibilities - Contractor

Providing the Works. Co-operation. Access. Contractor design - Standards and obligations. Instructions. Quality of work. Testing, defects and correction. Key Performance Indicators Option X20. Low Performance Damages.

Time for Performance

Access. Starting date. Commencement. Status of the programme. Acceptance of programme. Order and time of work. Key Dates. Programme revision. Taking over. Acceleration. Sectional completion. Completion Date. Completion delay damages. Bonus for early completion.

Insurance and Damage

Damage to the Works, people or properly. Indemnities. Insurances.

Payment

Defined cost. Fee percentage ± Subcontract and direct. Work done to date and interim payment. Interest. Retention, title, cost components. Construction Act and Y(UK)2. Security. Advance Payment.

Compensation events

The events including quantities, mistakes, physical conditions and breach. Extension of time and financial compensation. Notification. Quotations/assessment. Implementing compensation events. Schedule of Cost components. Early warning. Interest. Additional Compensation Events.

Disputes and Termination

Adjudication and Y(UK)2. Options W1 and W2. The adjudicator and the procedure. The tribunal. Termination.

INTRODUCTION TO THE E.C.C.

INTRODUCTION TO THE ENGINEERING AND CONSTRUCTION CONTRACT- THIRD EDITION

Background

The consultative document was published in 1991, the first edition in 1993, the Second Edition 1995 and the Third Edition in July 2005.

Many people believe the first edition was published in response to the Latham report. However the consultative document and first edition predated the report. The Latham report being published in 1994.

Latham identified the NEC (as it was then called) as being the contract which, more than any other in general circulation at the time, contained many of the provisions which Latham considered should be adopted in Construction Contracts. Out of the 13 key issues which Latham thought should be adopted, the NEC had 8. The full list of key issues from Latham is as follows:

1. A specific duty for all parties to deal fairly with each other, and with their sub-contractors, specialists and suppliers, in an atmosphere of mutual cooperation.
2. Firm duties of teamwork, with shared financial motivation to pursue those objectives. These should involve a general presumption to achieve "win-win" solutions to problems which may arise during the course of the project.
3. A wholly interrelated package of documents which clearly defines the roles and duties of all involved, and which is suitable for all types of project and for any procurement route.
4. Easily comprehensive language and with Guidance Notes attached.
5. Separation of the roles of contract administrator, project or lead manager and adjudicator. The Project or lead manager should be clearly defined as client’s representative.
6. A choice of allocation of risks , to be decided as appropriate to each project but then allocated to the party best able to manage, estimate and carry the risk.
7. Taking all reasonable steps to avoid changes to pre-planned works information. However, where variations do occur, they should be priced in advance, with provision for independent adjudication if agreement cannot be reached.
8. Express provision for assessing interim payments by methods other than monthly valuation i.e. mile stones, activity schedules or payment schedules. Such arrangements must also be reflected in the related subcontract documentation. The eventual aim should be to phase out the traditional system of monthly measurement or remeasurement but meanwhile provision should still be made for it.
9. Clearly setting out the period within which interim payments must be made to all participants in the process, failing which they will have an automatic right to compensation, involving payment of interest at a sufficiently heavy rate to deter slow payment.
10. Providing for secure trust fund routes of payment.
11. While taking all possible steps to avoid conflict on site, providing for speedy dispute resolution if any conflict arises, by a pre-determined impartial adjudicator/referee/expert.
12. Providing for incentives for exceptional performance.
13. Making provision where appropriate for advance mobilisation payments (if necessary, bonded) to contractors and subcontractors, including in respect of off-site prefabricated materials provided by part of the construction team.

The revision of the NEC and the publication of the Second Edition was in response to Latham and was intended to ensure that all 13 key issues were provided for.

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