New Engineering Contract (NEC)
The New Engineering Contract (NEC) 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. 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.es.
Contents
Synonyms
Construction Contracts, NEC Engineering and Construction Contract, NEC1, NEC2, NEC3, NEC4.
Definition
There have been four editions, the first in 1993, the second in 1995, the third in 2005 and the most recent in 2017. The NEC3 was launched in 2005 and it was amended in April 2013.
NEC4 was announced in March 2017 and has been available since June 2017. This new edition reflects procurement and project management developments and emerging best practice, with improvements in flexibility, clarity and the ease of administration. It also introduces two new contracts: NEC4 Design, Build and Operate (DBO) and NEC4 Alliance Contract (ALC).
Motivation & Background
The theoretical framework, reasoning, Intellectual background. Includes detailed Characteristics and Theory.
Structures
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(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.
Principle
Generality of the method or theory.
Precision
Generality of the method or theory.
Generality & Comparisons
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 her/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 her/his opinion reasonably have been foreseen by an experienced contractor the Contractor shall as early as practicable give written notice thereof to the Engineer.
Application
Guidance Notes and Further Information
Guidance Notes and Flow Charts are published by the ICE. These notes are supplemented by the Frequently Asked Questions sections of the NEC website.[1] Prospective users of the NEC3 contract are encouraged to study the FAQ's in order to avoid unintended contract provisions. The often unintended Option C scenario where a Contractor is paid monies in excess of the Target Cost plus maximum share provisions is specifically not addressed in the guidance notes / Frequently Asked Questions. Other common misinterpretations are minutes of meetings as communications, deleted work and paying for correcting defects. Employers often use the additional conditions of contract (Z-clauses) to amend or delete contract provisions relating to these items.
Examples
Future Directions
The NEC contract would benefit from a digital and computational upgrade.
Cross-References
- JCT
- CM/MC
Recommended Reading
