The Contractor's NEC3 ECC Handbook

Steven C. Evans

• Publisher: Wiley-Blackwell
• Year: 2017
• ISBN:
  9781119137528
• Edition: 1
• Topic: Diritto
• Subtopic: Diritto edilizio

Addresses the daily challenges faced by contractors who use the NEC3 ECC with clear, practical and useable advice on how to solve them

Written in plain English for contractors and their staff, this book explains how the NEC3 contract works and provides answers to common questions. It presents complicated concepts in a simple, straightforward and understandable way, focusing mainly on day-to-day use. Steven Evans, an expert with thirty years of experience in construction, considers all the provisions of the contract and explains the procedures, obligations, and liabilities contained within it.

NEC3 ECC is a process-based contract based on project management best practices. The basic philosophy behind it differs radically from the more adversarial approaches embodied by traditional contracts. While the NEC3 ECC may appear quite simple on the surface, it is often misunderstood and mismanaged by its day-to-day users. Despite the clear and urgent need for expert guides for those who use the NEC3 ECC, or who are considering adopting this increasingly popular contract, available books on the subject are highly technical and written for lawyers and professional consultants—until now. Written specifically for contractors using the NEC3 ECC contract, this book is aimed specifically at a level consistent with the knowledge and experiences of contractors and their staff.

• A practical guide to the procedures in the NEC3 Engineering and Construction Contracts
• Written specifically for those using and administering the contracts—not for lawyers or professional consultants
• Considers all the provisions of the contract and explains the procedures, obligations and liabilities
• Covers all NEC3 ECC versions and variations created by the Main and Secondary Options
• Provides clear, concise, practical, and straightforward explanations of the NEC3 ECC form used by commercial and operational staff of main contractors

The Contractor's NEC3 EEC Handbook is a vital working resource for main contractors and their employees, including quantity surveyors, commercial managers, contracts managers, project managers, site managers, and estimators.

1
Introduction

Ten Things You Need to Know

On the first reading of any of the contracts in the NEC3 suite it is readily apparent that there are noticeable differences between them and the many other, standard and more traditional, forms of contract available to the construction supply chain. Possibly because of these differences, the contents of the NEC3 contracts tend to be the cause of misunderstanding, which in turn leads to problems in their use.

By way of an introduction, and as an aid to understanding, listed below are, in the Author’s opinion, the top ten things you need to know before using the NEC3 ECC, and before reading this book:

1. The NEC3 ECC is not a Partnering contract. It can be made into a Partnering contract by the inclusion of secondary Option X12; without X12, it is simply a contract that promotes and requires collaborative working.
2. Collaboration is not optional; there are real and effective sanctions in place to ensure the Parties work together to minimise risk and maximise efficient construction. The Parties, the Project Manager and the Supervisor must collaborate…or else.
3. Whilst collaboration will naturally reduce disputes, the NEC3 ECC recognises that they will occur and actively encourages early submission to adjudication any disagreement that may arise between the Parties. This effectively means that disputes will not perpetuate and the Parties can quickly resolve their issues and move on. Main Option W1, in particular, provides strict timescales within which disagreements must be referred to adjudication.
4. Adjudication is compulsory for dispute resolution in the first instance. The Parties are prevented from submitting a dispute to a tribunal (i.e. court or arbitration) unless and until it has first been referred to, and decided in, adjudication. Indeed, at least under main Option W1, it would seem a dispute does not exist until it is referred to adjudication.
5. As adjudication is compulsory in the first instance, very few NEC3 ECC disputes arrive in court and so very little court guidance exists as to how the various contractual provisions should be interpreted. When the courts have considered disputes under NEC3, one judge made the comment that the contract was “a triumph of form over substance”. This is not exactly a resounding endorsement.
6. The terms and conditions are not as clear or as simple as they claim to be. The short sentences and simple phraseology often lead to ambiguity, complexity and confusion where none should exist. It can be a difficult contract to understand and apply.
7. Changes and variations, or compensation events as they are called in NEC3 ECC, are assessed on the basis of the effect of the event on both the cost and the date the Contractor planned to complete the works. If there is a Bill of Quantities or an Activity Schedule, those documents are ignored when making an assessment. Terminal float is owned by the Contractor.
8. Compensation events can go down as well as up. Their name is a misnomer as it suggests there will always be a positive payment to the Contractor in compensation for a change or some other effect of an event. That is not the case; some compensation events will also result in a reduction in Prices.
9. There is no separate design and build form; if the Contractor is to design any of the works, the Works Information simply has to state that. If that is the case, then secondary Option X15 must be incorporated, otherwise the design by the Contractor must be fit for purpose.
10. It is a contract that is often misunderstood and misapplied, which is unfortunate as, despite some of the criticism above, it is a fundamentally worthy contract filled with provisions that focus on fairness, reasonableness and the effective and efficient completion of the project to the benefit of the Parties.

Author’s Note

Those familiar with the NEC3 suite of contracts will know that terms with a specific meaning either have Capitalised Initials or are in italics. Those with Capitalised Initials are defined terms and are generally (but not always) defined in clause 11.2. Those in italics are identified in the Contract Data (either part 1 or part 2).

Throughout this book I have continued that theme.

On occasion, I have directly quoted parts of the NEC3 ECC where it will aid comprehension, but generally I assume that readers will have a copy of the contract to hand for reference. When explaining a particular provision, I refer to the relevant clause number, sometimes in brackets, to aid that reference.

Generally, I devote an entire chapter to a Section of the NEC3 ECC; this makes some chapters much longer than others, but, I hope, will assist in easy reference for those readers who simply want to “dip in” to read about a particular part of the contract.

Throughout, I have referred to the Project Manager, the Employer, the Contractor, the Supervisor etc. as “he”. This follows the convention within the NEC3 suite of contracts and to quote the NEC3:

…words in the singular also mean in the plural and the other way around and words in the masculine also mean in the feminine and neuter.

2
The Contract

About the NEC Contract

Construction contracts are complex, adversarial and onerous. This has always been the case. But, in 1986 the Institute of Civil Engineers sought to change that by commissioning the development of a new form of contract that had clearer language, better allocation of risk and responsibility, an increase in collaboration and reduced opportunities for claims.

From that commission, in 1993 the New Engineering Contract was first issued and from the outset it was clearly different in style, content and risk allocation to other standard forms.

Its characteristics were claimed to be:

Clarity and Simplicity

The contracts are written using short sentences, with clear objectives. Typical construction terminology such as ‘extension of time’ is missing; vague notions such as ‘practical completion’ give way to a defined state of Completion. The contract is short and to the point.

But there is a downside to this; fewer words equate to greater ambiguity. Legal interpretation has been difficult because guidance from the courts is almost non‐existent, not least because adjudication is compulsory in the first instance, so very few disputes arrive at court. When they have arrived, the courts have tended to be critical.

There are extensive, officially produced Guidance Notes and Flow Charts, but these are expressly excluded from being used to assist in legal interpretation. Also, to a casual or first‐time user of the contracts, the Guidance Notes and Flow Charts are often as confusing as the contract itself, sometimes saying nothing more than the clause they seek to provide guidance on, but using more words.

Many say it is more a procedure manual than a contrac...