The published layout is familiar, with the nine core clauses still at the forefront of the document, with dispute clauses, secondary clauses and so on. The third edition was first published in 2005, so this refresh comes with some welcomed modern amendments, as follows:
- Terminology - The new NEC4 ECC has incorporated some amended terms; the ‘Employer’ becomes ‘Client’, and ‘Works Information’ becomes ‘Scope’. This falls in line with common construction industry language and it makes it clear to everyone, even people that have not necessarily used the NEC suite of contracts before.
- Programme -There are some programming changes (as can be seen in clause 31.3), which are similar to those used in compensation events, that solves the impasse that can sometimes occur when assessing programme submissions. These new requirements provide for ‘treated acceptance’ of the contractor’s programme in situations where the project manager does not respond to a programme issued by the contractor for acceptance, or to a reminder. This means we will have accepted programmes throughout the duration of the scheme, giving a clearer picture when it comes to assessing change, delay and or understanding completion dates.
- Early Warnings - With regards to early warnings, in NEC4 the ‘Risk Register’ has been renamed the ‘Early Warning Register’ to help separate it from the project risk register, often used as a wider project management tool. There are now default periods for early warning meetings; this will hopefully allow the project manager and project team to mitigate a risk quickly and efficiently.
- Payments - Contractors must submit applications for payments, rather than the project manager being obliged to assess if they don’t. This will lead to less arguments and hopefully a more collaborative approach to payment.
The NEC is all about collaboration and mutual trust, and these new items included within NEC4 are aimed at encouraging exactly that:
- Language - All contracts are written gender neutral (no more “he/his”). A simple yet significant step-change for the construction industry.
- Dispute negotiation - There is now an option for a four-week period for escalation and negotiation of a potential dispute, which takes place prior to any formal proceedings. This requires a nominated senior representative of each party (named in the Contract Data) to meet and try to reach a negotiated solution; this has obvious time and cost benefits, as we all know how expensive and time-consuming any formal proceedings can be. This is an improvement, as often problems and issues can be resolved once escalated; the NEC introducing this encourages a collaborative approach before costly dispute resolution procedures.
- Identifying opportunities – This additional procedure allows for the identification of opportunities by either party (client or contractor). These will be discussed jointly, and the contractor can share in the cost savings of opportunities that it introduces (programme efficiencies, for example).
Additional provisions in ECC NEC4 include the following:
- Collaboration – In secondary option X12, ‘Partnering’ has been amended to ‘Collaboration’ to better reflect the intent i.e. that collaboration is a key provision within the suite of contracts.
- Retention – The secondary option X16 for retention now includes the optional provision of a retention bond instead of having money retained.
- Fee percentage – There is now only one fee percentage, with no separate fee percentage for subcontracted works. This reduces confusion when adding fee percentages for those putting together tenders and quotations/compensation events, and those assessing said submissions.
- Schedule of cost components – These changes have been made to simplify this section, and under options C, D and E the Short Schedule has been removed in its entirety and is only used for option A and B.
- Core Clause 4 Quality Management – A requirement has been introduced for the contractor to prepare and issue a quality management system and plan. This will be seen as good practice across the industry, and will assist the project manager and client throughout the duration of a project. This replaces the testing and defects core clause.
This version of NEC will allow us as practitioners to resolve ambiguities quickly and efficiently - in NEC3 there were some contentious areas (accepted programmes being one) – as the suite of contracts has evolved and new provisions have been included, this will hopefully solve previous common problems and will only ultimately benefit the projects we are working on.
As a number of our clients are now looking at the NEC4 ECC as their preferred contract, when it comes to procurement within the built environment, these amendments will aid in the effective administration for the contract, and have been included as a result of industry feedback and changing times in terms of technological advances.
Over the next few months/years it will be interesting to see how NEC4 will work and how the amendments within the contract will improve projects; but, I already foresee a better and brighter future.