Launched in 1991, the New Engineering Contract (NEC) has become one of the UK's leading standard forms of contract for major construction and civil engineering projects. Currently in the third edition, popularly known as NEC 3, it is a process based construction contract embodying project management best practice, and thus the basic philosophy behind the contract is different to the more adversarial principles and approach of other standard construction contracts. Written as a practical guide to the application of the procedures contained in NEC 3, this book will aid users in the transition from their use and understanding of the other standard construction contracts to the collaborative project management based approach of the ECC.
Written for anyone working in the construction industry working on a project under the ECC, it will be of interest to the complete construction supply chain including employers, construction professions, contractors and sub-contractors. It will also be of interest to consultants and lawyers advising any of these parties, either in the preparation of contract documentation or the resolution of problem situations which may arise.
- A practical guide to the application of the procedures contained in the NEC Engineering and Construction Contracts
- Written specifically for people actually using and administering the NEC contracts – rather than lawyers
- Covers all the variations created by the Main and Secondary Options
Table of Contents:
1 Introduction 1
1.1 General 1
1.2 Mechanics not law 2
1.3 A simple formula for understanding a contract 2
1.4 Mandatory or discretionary 3
1.5 Conditions precedent 4
1.6 Note on use of upper case in key words and phrases 4
2 Background to the NECECC 5
2.1 The background: First edition 5
2.2 The second edition 6
2.3 The third edition 7
2.4 Endorsement of NEC3 by the Office of Government Commerce 7
2.5 General philosophy: Aims and objectives 8
2.6 Flexibility 8
2.7 Clarity and simplicity 9
2.8 Stimulus to good management 9
2.9 Other characteristics 10
3 The Options: An Overview 13
3.1 General arrangement of the ECC 13
3.2 Other documents referred to 15
3.3 Contract Data 16
3.4 The published documents 16
3.5 Main Options: General outline 17
4 ‘Spirit of Mutual Trust and Cooperation’ 19
4.1 Introduction 19
4.2 Core clause 10.1 19
4.3 What does it mean? 21
4.4 Practical issues 22
5 The Cast of Characters 25
5.1 Introduction 25
5.2 The Employer 25
5.3 The Project Manager 27
5.4 The Supervisor 29
5.5 The Contractor 30
5.6 The Adjudicator 31
5.7 Subcontractors 32
5.8 ‘Others’ 32
5.9 Designers 33
5.10 CDM Coordinator 34
5.11 Principal Contractor 34
5.12 Practical issues 35
6 Communications, Early Warnings and other General Matters 37
6.1 Introduction 37
6.2 Communications: The clause 37
6.3 Communications: Practical issues 38
6.4 Early warnings: The clause 40
6.5 Early warnings: Practical issues 42
6.6 Other matters: The clauses 44
6.7 Other matters: Practical issues 47
7 The Contractor’s Main Responsibilities 49
7.1 Introduction 49
7.2 Providing the Works 49
7.3 Contractor’s design 51
7.4 Other matters 52
7.5 Practical issues 55
8 Subcontracting 59
8.1 Introduction 59
8.2 Definition of a Subcontractor 59
8.3 The core clauses 60
8.4 Provisions in the Main Options 61
8.5 Practical issues 61
8.6 Options for forms of subcontract in the NEC3 family 62
9 Testing and Defects 65
9.1 Introduction 65
9.2 Tests and inspections 65
9.3 What is a Defect? 67
9.4 The Defect procedure 68
9.5 The Defects Certificate 70
9.6 Uncorrected Defects 70
9.7 Practical issues 71
10 Title 73
10.1 Introduction 73
10.2 The core clauses 73
10.3 Practical issues 74
11 Risks and Insurance 77
11.1 Introduction 77
11.2 The core clauses 77
11.3 Practical issues 80
12 Time 85
12.1 Introduction 85
12.2 The programme: Contents 86
12.3 The programme: Submitting, accepting and revising 91
12.4 The programme: Practical issues 93
12.5 Starting and finishing 102
12.6 Other matters 105
12.7 Secondary Options related to Time 108
12.8 Practical issues 110
13 Payment 113
13.1 Introduction 113
13.2 The payment process 113
13.3 Payments in multiple currencies 116
13.4 The amount due and the Price for Work Done to Date 116
13.5 Supporting documents and records 126
13.6 The Contractor’s share 129
13.7 The Contractor’s share: Practical issues 131
13.8 Special provisions for the UK 132
13.9 Related Secondary Options 134
13.10 Practical issues 136
14 The Schedules of Cost Components 139
14.1 Introduction 139
14.2 The Schedule of Cost Components 139
14.3 The Shorter Schedule of Cost Components 144
14.4 Application to Subcontractors 145
14.5 Practical issues 146
15 Compensation Events: Theory and Events 151
15.1 Introduction 151
15.2 The theory 151
15.3 The events 153
15.4 Practical issues 168
16 Compensation Events: Procedures 171
16.1 Introduction 171
16.2 Notification by the Project Manager 172
16.3 Notification by the Contractor and the Project Manager’s reply 175
16.4 Other matters associated with notifying compensation events 178
16.5 Quotations: Substance 180
16.6 Quotations: Submission and reply 182
16.7 Assessments by the Project Manager 186
16.8 Implementing compensation events 188
16.9 Practical issues 189
17 Compensation Events: Assessment 195
17.1 Introduction 195
17.2 Changes to the Prices 196
17.3 Changes to the Completion Date and any Key Dates 200
17.4 Project Manager’s assumptions 203
17.5 Other related matters 204
17.6 Practical issues 206
18 Termination 209
18.1 Introduction 209
18.2 Reasons for termination 209
18.3 Implementing termination 213
18.4 Procedures after termination 214
18.5 Assessing the amount due after termination 215
18.6 Practical issues 217
19 Dispute Resolution 219
19.1 Introduction 219
19.2 Option W1 220
19.3 Option W2 223
19.4 Practical issues 228
20 Secondary Options 231
20.1 Introduction 231
20.2 X2: Changes in the law 231
20.3 X4: Parent company guarantee 232
20.4 X12: Partnering 232
20.5 X13: Performance bond 237
20.6 X17: Low performance damages 238
20.7 X18: Limitation of liability 238
20.8 X20: Key Performance Indicators 239
20.9 Y(UK)3: The Contracts (Rights of Third Parties) Act 1999 240
20.10 Z: Additional conditions of contract 240
20.11 Practical issues 241
21 Completing the Contract Data 243
21.1 Introduction 243
21.2 Purpose and form of the Contract Data 243
21.3 Part One: Data for the core clauses 244
21.4 Part One: Data for the Main Option clauses 248
21.5 Part One: Data for the Secondary Option clauses 249
21.6 Part Two: Data for the core clauses 252
21.7 Part Two: Data for the optional statements 253
21.8 Part Two: Data for Main Options A or B 255
21.9 Part Two: Data for Main Options C, D or E 256
21.10 Practical issues 257
22 The Supporting Documents: Need and Content 261
22.1 Introduction 261
22.2 Works Information 261
22.3 Site Information 270
22.4 Practical issues 271
Bibliography 273
Appendix 1 Tables of Clause Numbers, Case Law and Statutes 275
Appendix 2 Tables of Employer’s, Project Manager’s, Supervisor’s, Contractor’s and Adjudicator’s Actions 285
