A Practical Guide to the Nec4 Engineering and Construction Contract

Provides construction industry professionals with a practical and detailed guide to the NEC4 contract

The NEC contract takes a collaborative, project management based approach to construction projects, which is very different to the other standard forms of construction contract. This new edition of the book covers all changes in the 4th Edition of the Engineering and Construction Contract, issued in June 2017, and will provide practical guidance to help users transitioning from NEC3 to NEC4. 

Inside A Practical Guide to the NEC4 Engineering and Construction Contract, readers will find chapters on the background of the NECECC; contract data and other documents; the‘spirit of mutual trust’; all of the individuals involved in the process (eg: project managers, clients, supervisors, subcontractors, etc.); communication issues, early warnings and other matters; quality management; titles; dealing with timing; payment processes; cost components; compensation procedures and assessments; dealing with terminations; dispute resolution; completing the contract and more. 

• A practical guide to the application of the procedures contained in the newly issued NEC4 Engineering and Construction Contract
• Provides detailed guidance on the use of the agreement, which is claimed to offer  increased flexibility, improved clarity and greater ease of use
• Written specifically for people actually using and administering the NEC contracts
• Features 3 appendixes covering tables of clause numbers, case law and statutes; employer’s, project manager’s, supervisor’s, contractor’s and adjudicator’s actions; and communication forms and their uses.

First launched in 1993, the NEC has become one of the UK's leading standard forms of contract for major construction and civil engineering projects, making A Practical Guide to the NEC4 Engineering and Construction Contract a must-have resource for any contractor using the latest version of this contract.

MICHAEL ROWLINSON MSc, DipArb, MRICS, FCIOB, FCIArb, FCInstCES, is principal of Michael Rowlinson Associates Ltd. An experienced construction professional having qualified initially as a Chartered Quantity Surveyor and later as a Chartered Builder, Michael specialises in all aspects of contract drafting, contract management, contract administration, construction law, claims and dispute resolution. As part of his work Michael lectures extensively and has written many published articles and two books on the NEC3 family of contracts.

1 Introduction 1

1.1 General 1

1.2 Mechanics not law 2

1.3 A simple formula for understanding a contract 3

1.4 Mandatory or discretionary 4

1.5 Conditions precedent 4

1.6 Note on use of uppercase in keywords and phrases 5

2 Background to the NECECC 7

2.1 The background: First edition 7

2.2 The second edition 8

2.3 The third edition 9

2.4 The third edition (reprinted) 9

2.5 The fourth edition 9

2.6 Endorsement of NEC3 by the Office of Government Commerce 10

2.7 Endorsement by the Development Bureau, HKSAR Government 11

2.8 General philosophy: Aims and objectives 12

2.9 Flexibility 12

2.10 Clarity and simplicity 13

2.11 Stimulus to good management 14

2.12 Other characteristics 15

3 The Options: An Overview 17

3.1 General arrangement of the ECC 17

3.2 Other documents referred to 19

3.3 Contract Data 20

3.4 The published documents 20

3.5 Main Options: General outline 21

4 Spirit of Mutual Trust and Cooperation 25

4.1 Introduction 25

4.2 The clauses 25

4.3 What does it mean? 27

4.4 Practical issues 28

5 The Cast of Characters 33

5.1 Introduction 33

5.2 The Client 33

5.3 The Project Manager 35

5.4 The Supervisor 38

5.5 The Contractor 38

5.6 The Senior Representatives 39

5.7 The Adjudicator 40

5.8 The Tribunal 41

5.9 The Dispute Avoidance Board 41

5.10 Subcontractors 42

5.11 ‘Others’ 42

5.12 Named Suppliers 43

5.13 Designers 43

5.14 Principal Designer 44

5.15 Principal Contractor 45

5.16 Practical issues 45

6 Communications, Early Warnings and other General Matters 47

6.1 Introduction 47

6.2 Communications:The clause 47

6.3 Communications: Practical issues 49

6.4 Early warnings: The clause 51

6.5 Early warnings: Practical issues 53

6.6 Other matters:The clauses 55

6.7 Other matters: Practical issues 59

7 The Contractor’s Main Responsibilities 61

7.1 Introduction 61

7.2 Providing theWorks 61

7.3 Contractor’s design 62

7.4 Information modelling 66

7.5 Other matters 68

7.6 Practical issues 72

8 Subcontracting 75

8.1 Introduction 75

8.2 Definition of a Subcontractor 75

8.3 The core clauses 76

8.4 Provisions in the Main Options 76

8.5 Practical issues 77

8.6 Options for forms of subcontract in the NEC4 family 78

9 Quality Management 81

9.1 Introduction 81

9.2 Quality management system 81

9.3 Tests and inspections 82

9.4 What is a Defect? 84

9.5 The Defect procedure 84

9.6 The Defects Certificate 86

9.7 Uncorrected Defects 87

9.8 Practical issues 87

10 Title 91

10.1 Introduction 91

10.2 The core clauses 91

10.3 Practical issues 92

11 Liabilities and Insurance 95

11.1 Introduction 95

11.2 The core clauses 95

11.3 Secondary options 98

11.4 Practical issues 99

12 Time 101

12.1 Introduction 101

12.2 The programme: Contents 102

12.3 The programme: Submitting, accepting and revising 107

12.4 The programme: Practical issues 110

12.5 Starting and finishing 118

12.6 Other matters 121

12.7 Secondary Options related to Time 124

12.8 Practical issues 126

13 Payment 131

13.1 Introduction 131

13.2 The payment process 131

13.3 Payments in multiple currencies 134

13.4 Interim payments – The amount due and the Price for Work Done to Date 135

13.5 Supporting documents and records 145

13.6 Final assessment 148

13.7 The Contractor’s share 150

13.8 The Contractor’s share: Practical issues 152

13.9 Special provisions for the United Kingdom 153

13.10 Related Secondary Options 157

13.11 Practical issues 162

14 The Schedules of Cost Components 169

14.1 Introduction 169

14.2 The Schedule of Cost Components 169

14.3 The Short Schedule of Cost Components 174

14.4 Application to Subcontractors 175

14.5 Practical issues 176

15 Compensation Events:Theory and Events 179

15.1 Introduction 179

15.2 The theory 179

15.3 The events 181

15.4 Practical issues 196

16 Compensation Events: Procedures 199

16.1 Introduction 199

16.2 Notification by the Project Manager 200

16.3 Notification by the Contractor and the Project Manager’s reply 203

16.4 Other matters associated with notifying compensation events 206

16.5 Quotations: Substance 208

16.6 Quotations: Submission and reply 210

16.7 Assessments by the Project Manager 215

16.8 Proposed instructions 217

16.9 Implementing compensation events 218

16.10 Practical issues 219

17 Compensation Events: Assessment 227

17.1 Introduction 227

17.2 Changes to the Prices 228

17.3 Changes to the Completion Date and Any Key Dates 232

17.4 Project Manager’s assumptions 234

17.5 Other related matters 236

17.6 Practical issues 238

18 Termination 243

18.1 Introduction 243

18.2 Reasons for termination 243

18.3 Secondary Option X11 247

18.4 Implementing termination 248

18.5 Procedures after termination 248

18.6 Assessing the amount due after termination 250

18.7 Practical issues 252

19 Resolving and Avoiding Disputes 255

19.1 Introduction 255

19.2 Option W1 256

19.3 Option W2 261

19.4 Option W3 267

19.5 Practical issues 270

20 Secondary Options 273

20.1 Introduction 273

20.2 X2: Changes in the law 273

20.3 X4: Ultimate holding company guarantee 274

20.4 X12: Multiparty Collaboration 274

20.5 X13: Performance bond 279

20.6 X17: Low performance damages 280

20.7 X18: Limitation of liability 280

20.8 X20: Key Performance Indicators 281

20.9 X21:Whole Life Cost 282

20.10 X22: Early Contractor Involvement 283

20.11 Y(UK)3:The Contracts (Rights ofThird Parties) Act 1999 288

20.12 Z: Additional conditions of contract 288

20.13 Practical issues 289

21 Completing the Contract Data 291

21.1 Introduction 291

21.2 Purpose and form of the Contract Data 291

21.3 Contract Data Part One 292

21.4 Contract Data Part Two 304

21.5 Practical issues 309

22 The Supporting Documents: Need and Content 311

22.1 Introduction 311

22.2 Scope 312

22.3 Site Information 324

22.4 Practical issues 325

Bibliography 329

Appendix 1 Tables of Clause Numbers, Case Lawand Statutes 331

Appendix 2 Tables of Client’s, Project Manager’s, Supervisor’s, Contractor’s, Senior Representatives, Adjudicator’s, Dispute Avoidance Board and Tribunals Actions 341

Appendix 3 Tables of Communication Forms and Their Uses 379

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