The NEC4 Engineering and Construction Contract

A Commentary

Brian Eggleston

• Publisher: Wiley-Blackwell
• Year: 2019
• Print ISBN: 9781119478751
• eBook ISBN: 9781119478799
• Edition: 3
• Topic: Law
• Subtopic: Construction Law
• Index: Law

The authoritative guide to the NEC4 Engineering and Construction Contract

The New Engineering Contract (NEC) is one of the leading standard forms of contract for major construction and infrastructure projects. The latest edition of the contract (NEC4) is now a suite of contracts widely used in the UK, Australia, Hong Kong, South Africa, Ireland, and New Zealand. This timely and important book provides a detailed commentary on the latest edition of the main NEC4 Engineering and Construction Contract (NEC4 ECC) form. It explains how the contract is intended to operate and examines each clause to consider its application and legal interpretation. It also draws upon the author's highly successful third edition of the book covering the previous contract. It identifies and comments on the changes between the current and previous version of the form.

After a brief introduction to the new edition of the form, The NEC4 Engineering and Construction Contract offers in-depth chapters covering everything from main options and secondary option clauses to risk assurances and NEC 4 family contracts. In between, readers will learn about general core clauses, the obligations and responsibilities of the contractor, testing and defects, payments, compensation events, and much more.

• Covers the latest version of the NEC Engineering and Construction Contract, the leading standard form contract for major construction projects
• Examines the new contract clause by clause and compares it with the previous edition
• Previous editions were widely acknowledged as detailed and fair analyses of the NEC contracts
• Written by a highly regarded contracts commentator, experienced arbitrator, and adjudicator

The NEC4 Engineering and Construction Contract: A Commentary is an excellent book for construction industry professionals working for clients, employers, main contractors, project managers, subcontractors, and specialist contractors.

Chapter 1
Introduction

1.1 Overview

NEC4 is a generic name for a suite of contracts developed by the Institution of Civil Engineers, and published by its wholly owned subsidiary Thomas Telford Ltd. NEC stands for New Engineering Contract, a name originating from the publication in January 1991 of a consultative version of what was then a new approach to the drafting of construction contracts.

1.2 Background

The background to the development of the New Engineering Contract (NEC) does much to explain its style and content. In the 1980s there was ongoing debate within the Institution of Civil Engineers (ICE), the lead body for the production of the ICE Conditions of Contract – at that time the standard form used for most civil engineering works in the UK – as to the direction of future contract strategies. At issue were questions as to whether the then existing standard forms adequately served the best interests of the Parties by focusing on the obligations and responsibilities of the Parties rather than on good management, and whether an entirely new approach was needed to promote co-operation and to reduce confrontation. The prevailing view was that something new was needed, particularly for sizeable contracts where attention to good project management was the key to successful completion.

1.3 Objectives

The drafting team for the first version of the NEC was charged with three specific objectives for the new contract:

• that it should be more flexible in its scope than existing standard forms
• that it should provide greater stimulus to good project management than existing standard forms
• that it should be expressed more simply and clearly than existing forms.

Maintenance of those ambitions has been the bedrock of the 1993, 1995, 2005, 2013 and now 2017 editions of the NEC contracts.

For the 2017 edition, those ambitions have been expanded:

• to provide even greater stimulus to good management
• to support new approaches to procurement which improve contract management
• to inspire increased use of NEC in new markets and sectors.

1.4 Impacts of change

As evident from the above, it was a matter of policy from the outset that NEC contracts should be different in form and content from other standard forms of construction contracts. And they certainly are.

The early editions of the NEC were greeted with mixed reviews varying from effusive praise to shock and horror. But such a range of reactions was inevitable given the extent to which the NEC differed from traditional standard forms of construction contracts in its procedural and terminological changes, and the extent to which it required changes in attitudes and long-standing practices. Moreover, there were those who recognised that change, however well intended, can bring with it unintended consequences, and that effecting change in the construction industry has never been easy to achieve. For, as Rudyard Kipling wrote a century or so ago in his bricklayer's tale:

I tell this tale, which is strictly true,

Just by way of convincing you

How very little since things were made

Things have altered in the building trade.

Not surprisingly, therefore, ambitious expectations that improved contract management and reduction of conflict could be achieved with a contract that was deliberately different from previously used construction contracts have not all been achieved. In particular, moving the focus of the conditions of contract from detailing the obligations and liabilities of the Parties to detailing the particulars of project management seems to have overlooked some of the more obvious consequences of such a change.

It used to be said that a good contract was never taken out of the drawer until it was needed. That axiom, however, has no application to NEC contracts. Such contracts are not simply sets of conditions of contract, they are also manuals of project management and, as such, they should never be taken off the desk, less still put in a drawer.

And one clearly unintended impact of the NEC changes to project management is that the scope for disputes has been greatly increased. Thus, it is now commonplace for pleadings/submissions in respect of formalised disputes arising under NEC contracts to cover differences not only on substantive matters but also administrative/procedural matters. And, not infrequently, the latter types of disputes seem to be the ones that generate most animosity, conflict and lack of trust between the Parties. Some of this arises where the Parties are not equally matched in relation to dealing with the procedural burdens of their NEC contract, and that imbalance, of itself, generates not only hostility but also more disputes.

There is additionally another unintended factor ...

Table of contents

• Cover
• Title Page
• Copyright
• Preface
• Author's note
• Chapter 1 Introduction
• Chapter 2 Changes from ECC3
• Chapter 3 Main options
• Chapter 4 Secondary options
• Chapter 5 Contract documents
• Chapter 6 Key players
• Chapter 7 General core clauses
• Chapter 8 Obligations and responsibilities of the Contractor
• Chapter 9 Time (and related matters)
• Chapter 10 Quality management
• Chapter 11 Payments
• Chapter 12 ECC4 compensation event schemes
• Chapter 13 Listed compensation events
• Chapter 14 Notifying compensation events
• Chapter 15 Quotations for compensation events
• Chapter 16 Assessment of compensation events
• Chapter 17 Title
• Chapter 18 Liabilities and insurance
• Chapter 19 Termination
• Chapter 20 Dispute avoidance and dispute resolution
• Chapter 21 NEC4 Engineering and Construction Subcontract
• Chapter 22 Legal decisions on NEC-based contracts
• Table of cases
• Table of clause references
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