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https://en.wikipedia.org/wiki/NEC_Engineering_and_Construction_Co...
The New Engineering Contract (NEC), or NEC Engineering and Construction Contract, is a
formalised system created by the Institution of Civil Engineers that guides the drafting of documents on civil
engineering and construction projects for the purpose of obtaining tenders, awarding and administering
contracts.[1][2] As such they legally define the responsibilities and duties of Employers (who commission
work) and Contractors (who carry out work) in the Works Information. The contract consists of two key
parts the Contract Data part one (Data provided by the Employer) and Contract Data part two (Data
provided by the Contractor). Several approaches are included making it a family of options. It is used in the
UK and internationally in countries including New Zealand, Australia, Hong Kong and South Africa.[3]
There have been three editions, the first in 1993, the second in 1995, and the most recent in 2005.[4] The
June 2005 edition of the NEC3 was amended in June 2006, and again in April 2013.
Contents
1 Characteristics
2 Options
3 History
4 Comparison
5 Guidance Notes and Further Information
6 Footnotes
7 External links
Characteristics
The NEC is a family of standard contracts, each of which has these characteristics:
Its use stimulates good management of the relationship between the two parties to the contract and,
hence, of the work included in the contract.
It can be used in a wide variety of commercial situations, for a wide variety of types of work and in
any location.
It is a clear and simple document - using language and a structure which are straightforward and easily
understood.
The NEC3 complies fully with the Achieving Excellence in Construction (http://www.ogc.gov.uk
/guidance_achieving_excellence_in_construction.asp) (AEC) principles. The Efficiency & Reform Group of
The UK Cabinet Office recommends the use of NEC3 by public sector construction procurers on their
construction projects.
Options
The NEC contracts now form a suite of contracts, with NEC being the brand name for the "umbrella" of
contracts. When it was first launched in 1993, it was simply the "New Engineering Contract". This specific
contract has been renamed the "Engineering and Construction Contract" which is the main contract used for
any construction based project. It now sits alongside a number of other contracts that together should mean
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that the NEC suite is suitable for what ever stage of a lifecycle the project is at and for any party within a
project. The contracts available within the suite are:
Engineering and Construction Contract (ECC):
Suitable for any construction based contract between an Employer and a Contractor. It is intended to be
suitable for any sector of the industry, including civil, building, nuclear, oil & gas, etc. Within the ECC
contract there are six family level options of which the Employer will choose what he deems to be the most
suitable and give him the best option/value for money on that project:
Option A: Priced contract with activity schedule
Option B: Priced contract with bill of quantities
Option C: Target contract with activity schedule
Option D: Target contract with bill of quantities
Option E: Cost-reimbursable contract
Option F: Management contract
These options offer a framework for tender and contract clauses that differ primarily in regard to the
mechanisms by which the contractor is paid and how risk is allocated/motivated to control costs.
The core clauses (of the main option listed above) are used in conjunction with the secondary options and
the additional conditions of contract. The Efficiency and Reform group of The Cabinet Office in the UK
(formerly the OGC) has published generic public sector Z-clauses for the use with NEC3 contracts
(http://www.ogc.gov.uk/documents/PublicSectorZClausesForUseWithNEC3Contracts.pdf).
The clauses of these options have been be adapted for simpler less risky work (short contracts), for use as
subcontracts, and for professional services such as design as below.
The Engineering and Construction Subcontract Contract (ECS)
Very similar in detail and complexity of contractual requirements to the ECC contract above, but allows the
contractor to sub-let the project to a subcontractor imposing most of the clauses that he has within his
headline contract. There is very little difference between the ECC and the ECS, other than the names of the
parties are changed (contractor and subcontractor)and some of the timescales for contractual responses are
altered to take into account the timescales required in the ECC contract.
The Engineering and Construction Short Contract (ECSC)
This is an abbreviated version of the ECC contract and most suitable when the contract is considered "low
risk" (not necessarily low value) on a project with little change expected. This contract is still between the
employer and contractor but does not use all of the processes of the ECC making it simpler and easier to
manage and administer.
The Engineering and Construction Short Subcontract (ECSS)
Allows the contractor to sub-let a simpler lower risk contract down the line to a subcontractor. It is
back-to-back with the ECSC but is frequently used as subcontract when the main contract is under the ECS.
The Professional Services Contract (PSC)
This contract is for anyone providing a service, rather than doing any physical construction works.
Designers are the most obvious party that fit into this category. Whilst they are producing a design for an
employer or contractor, they would sign up and follow the clauses within the PSC. Most of the clauses
within this contract are the same or similar to those in the main ECC contract, so that all contractors,
designers and subcontractors have pretty much the same obligations and processes to follow as each other.
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History
Originally contracts in the civil engineering and construction industries were bespoke and drafted by
Chancery pleaders using their knowledge of leases rather than building processes. In 1879, Royal Institute of
British Architects for construction projects created RIBA forms which lead to the Joint Contracts Tribunal,
JCT forms. For civil engineering the need for a formalized approach to contracts led the Institution of Civil
Engineers to produce the ICE formalized set of conditions of contract. In 1986, the ICE commissioned the
development of a new form of contract as it was felt that there was a need for a form that had clearer
language, clearer allocation of responsibilities and reduced opportunities for contractual gamesmanship. In
1991, this resulted in a consultative form of the New Engineering Contract form of contract. The first edition
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was published in 1993.[5] Wider use of the NEC was recommended by the Latham Report in 1994.
Comparison
The following demonstrates the differing approaches to drafting in the NEC and ICE forms of contract using
the illustration of circumstances when the contractor is entitled to additional time and cost for physical
conditions.
NEC Engineering and Construction Contract Second Edition Clause 60.1 (12)
The Contractor encounters physical conditions which
are within the site.
are not weather conditions and
which an experienced contractor would have judged at the Contract Date to have such a small chance
of occurring that it would have been unreasonable for him to have allowed for them.
ICE Conditions of Contract Sixth Edition Clause 12(1)
If during the execution of the Works the Contractor shall encounter physical conditions (other
than weather conditions or conditions due to weather conditions) or artificial obstructions which
conditions or obstructions could not in his opinion reasonably have been foreseen by an
experienced contractor the Contractor shall as early as practicable give written notice thereof to
the Engineer.
Footnotes
1. R Gerard (2005). Relational contractsNEC in
perspective (http://www.leanconstruction.org
/lcj/V2_N1/LCJ_05_006.pdf). Lean Construction
Journal, 2, 80-86.
2. Brook M. (2004). Estimating and Tendering for
Construction Work Butterworth-Heinemann ISBN
978-0-7506-5864-5
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(https://dx.doi.org
/10.1016%2FS0263-7863%2896%2900078-6)
6. www.neccontract.com (http://www.neccontract.com
/FAQs/index.asp)
External links
NEC Engineering and Construction Contract website (http://www.neccontract.com/)
Free independent NEC helpdesk (http://www.reachback.builtintelligence.com/nec3)
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