The NEC 3 engineering and construction contract : a commentary

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There are various other aspects of the clause itself which add doubts as to the likely efficacy of its application. Perhaps a bigger problem is that there does not appear to be anything in NEC 3 empowering the project manager to concern himself with conditions precedent and time-bars. Powers of the project manager The intention of ECC 2 was probably that the project manager would act more as the employer s agent than as an independent contract administrator and supervisor.

This view of his role took something of a knock in the case of Corber v. But by entirely separate development NEC 3 seems to have moved towards a more restricted role for the project manager. Changes to works information The extent of the project manager s power to change the works information under ECC 2 was not expressly restricted in the conventional manner to changes necessary or desirable for the completion and functioning of the works. However, common sense dictated that there should be some restriction.

Under NEC 3 the proper approach to considering what changes to the works information are permissible may be to examine where the project manager derives his power from and how the contractor s obligations are defined rather than examining possible restrictions. Prevention The inclusion in NEC 3 of provisions putting the risk of what are called prevention matters on the employer will concern many employers and their.

The matters covered by the provisions include what might normally be called force majeure or beyond control of the parties matters, and the usual rule would be that loss lies where it falls. For that reason alone some employers will wish to see the provisions deleted. Another likely reason is that the provisions as drafted are capable of very wide interpretation and their scope could be argued to extend to all manner of problems encountered by the contractor. Quotations for compensation events Strengthening of the quotation system for compensation events by the inclusion in NEC 3 of provisions whereby default by the project manager in operating the contractual rules leads to quotations being treated as accepted will be welcomed by contractors.

However, it is something of a surprise that such quotations can be disputed by the employer and altered by an adjudicator. In this respect they are either not being treated as accepted or it is the case, which seems unlikely, that all quotations accepted by the project manager can be challenged by the employer and reviewed by an adjudicator.

Assessment of compensation events The changes for simplification of assessments of compensation events by greater use of the shorter schedule of cost components and possible use of rates and lump sums will be generally welcomed.

The NEC 3 Engineering and Construction Contract | Wiley Online Books

There will, however, be disappointment that the changes do not address the fundamental problem that the assessment rules are not suited to low value events or for contracts with frequent and multiple events. There may also be concern as to how the new provision in NEC 3 that assessments should divide actual and forecast costs according to when instructions for quotations were given or should have been given is intended to operate. Retrospective forecasting may be envisaged but it is difficult to see it applying in adjudication. Dispute resolution The inclusion in NEC 3 of alternative dispute resolution procedures for contracts which are subject to the Housing Grants, Construction and Regeneration Act , and contracts which are not, will not necessarily lead to the choice which might be expected.

The statutory right to adjudication under the Act still applies to qualifying contracts even if the non-compliant alternative is chosen. The big difference between the two alternatives can be simply expressed one imposes time limits and restrictions on the disputes which can be referred to adjudication, the other allows any dispute to be referred at any time. Subject to retention of any statutory rights it is a matter for the parties as to which of these they prefer. Most notably, they fail to include conciliation or mediation which, given the complexities of the contract and its requirement for the parties to act in a spirit of mutual trust and co-operation, might well be the best choice the parties could make for resolving their disputes.

Whereas ECC 2 grouped dispute resolution clauses with termination clauses in section 9 of Options A to F, NEC 3 separates the clauses leaving section 9 solely for termination and putting dispute resolution into two new alternative main options W1 and W2. However, as discussed later in this chapter, that will not always be the case. The main options The main options of NEC 3 are: 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 dispute resolution Option W1 dispute resolution Option W2 The main options provide, in descending order, a broad scale of distribution of price risk with Option A providing maximum certainty of price for the employer and Option F providing the least.

The employer is required to state in part one of the contract data which main option is to be used and which dispute resolution option is selected. In most cases the choice will be entirely that of the employer. However, sometimes potential tenderers are invited to propose which main option should apply as part of pre-qualification procedures. When partnering is intended prospective contractors may be allowed to have a say in which main option should be used. Users of NEC 3 should be alert to the fact that each main option has its own particular clauses which are additional to the core clauses in the main.

In particular a point to note is that although the definitions in the core clauses stop at number 19 in clause 11 of the base contract, there are other definitions particular to Options A to F which take the numbering through to Construction management There is no named main option in NEC 3 for construction management the system in which the contractor provides only management services to the employer with the works packages let as contracts directly between the works contractors and the employer.

The NEC 3 Engineering and Construction Contract : A Commentary

However, this need not be a barrier to the use of NEC 3 for construction management. For construction management the employer should appoint a construction management contractor as project manager under the NEC professional services contract. The duties of the construction manager would be to advise the employer on the placing of the works contracts under whichever main options of NEC 3 are most appropriate and then to project manage the works contracts.

For an interesting case on the duties of construction managers see Great Eastern Hotel Ltd v. John Laing Ltd There are some guiding principles but every employer is unique in his aspirations, his circumstances and his preferences. For some employers certainty of price is the dominant aspiration and then, given few restrictive circumstances and few particular preferences, the obvious strategic choice will be a lump sum contract with contractor s design. Which method of procurement, which type of contract, and which form of contract then become more complex questions.

Some employers, on the strength of past experiences or hopes for the future, develop preferences for certain methods of procurement and certain forms of contract. Rational analysis of selection criteria to determine contract strategy may then become secondary to selection of the most suitable contractor. One of the main strengths of NEC 3 is its flexibility. If an employer does develop a preference for its use he is nothing like as limited in his choice of procurement route as with other standard forms.

He has six main options to choose from and construction management available as a further option. As a checklist for matters to consider, however, the following may be helpful:. If professional design firms are to be employed, whether it be by the employer or by the contractor, the question of competence in this general sense does not arise.

But with contractor s design an obvious advantage for the employer is that a choice of designs may be put forward by the tenderers. A further potential advantage is that the contractor s expertise is more likely to be used to the full when the freedom to develop that expertise in the design is permitted.

If the employer already has his own in-house design resources it may be neither efficient nor economic to place design responsibility with the contractor. Or it may be that in-house design teams are more closely in tune with the employer s requirements than any contractor could be. Moreover, in some situations there are matters of confidentiality as to the purpose or operation of the works which are wholly decisive as to whether design briefs can be issued to tenderers and as to which party is responsible for design.

In other situations there may be a reliance on specialist know how or patented designs which is itself decisive as to design responsibility. But as a general rule if the employer is able to specify his requirements in terms of a performance specification or quality standards there is much to be said for contractor s design. Not only may the standard of liability of a contractor for his design fitness for purpose be higher than that of a professional designer skill and care but the scope for claims for extra payment from the contractor arising out of the designer s defaults and deficiencies is eliminated.

As to how the allocation of responsibility for design influences choice between the main options of NEC 3 the main points to note are:. Option B remeasurement contract Not suited to contractor s design because of the reliance on bills of quantities and the difficulties posed by the contractor producing his own bills of quantities.

Option C target contract lump sum base As Option A but allows the employer more flexibility in developing his own design. Option D target contract bill of quantities base Suffers from similar problems to Option B. Option E cost reimbursable contract Permits maximum flexibility in allocation of design responsibility and allows development of the design as the works proceed. Option F management contract Not suitable for allocation of the whole of design responsibility to the contractor unless placed as a design and manage contract but particularly suitable for contracts with a high reliance on specialist subcontractors who undertake their own design.

Account Options

Certainty of price For many employers certainty of price is the decisive factor in contract strategy. Commercial pressures may dictate that either a project can be completed within a set budget or it is not worth commencing. Option A the lump sum contract offers the best prospects for certainty of price particularly when used with contractor s design.

Option C the target contract based on lump sum fixes with some degree of certainty the maximum price but at tender it is less precise than Option A in fixing the likely contract price. Options B and D both bill of quantities based put the risk of accuracy of billed quantities and the consequences of re-measure on the employer and consequently both suffer from lack of price certainty. Option E the cost reimbursable contract relieves the contractor of any risk on price other than in his fee. Consequently not only is the employer at risk on the price, with the contract itself providing no certainty of price, but the contractor has little incentive by way of any target to minimise costs. Clearly Option E is not suitable if the employer is looking for certainty of price. Option F the management contract is a cost reimbursable contract in so far that the employer and not the contractor takes the risk on the costs of the works contracts. However, management contracts are frequently arranged on the basis of lump sum works contracts and this can introduce a good measure of cost control into the system.

If the quotations for the works contracts can all be obtained before the letting of the management contract there can also be a good measure of price certainty. Dip TP. Dip Arb. RIBA rob. The Contractor carries the greatest risk under options A and B, and. Property Investment Appraisal Baum-Prelims. Guidance Notes in yellow indicate. The first objective of the Risk Register is to identify the risks inherent in a project.

Some of these risks are generic, and will apply to whatever work is carried out. An example is the risk of errors. AS Incorporating Amendment No. Taking Action Dispute resolution, legal action and claims for negligence Taking Action Part 3: Dispute Resolution, taking legal action and claims for negligence Introduction If you believe an architect. Service Terms and Conditions Any individual or corporate body hereinafter referred to as the Client who submits text for translation, localization, revision, editing or any other professional language.

No terms or conditions put forward at any time by the. Heaphy turntown. Bills of Quantity D. Atkinson December Nature of Bills Bills of Quantities comprise a list of items of work which are briefly described. The Bills also provide a measure of the extent of work and. Page 6. The reason for the publication. Internet Services Terms and Conditions 1.

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The NEC 3 engineering and construction contract : a commentary The NEC 3 engineering and construction contract : a commentary
The NEC 3 engineering and construction contract : a commentary The NEC 3 engineering and construction contract : a commentary
The NEC 3 engineering and construction contract : a commentary The NEC 3 engineering and construction contract : a commentary
The NEC 3 engineering and construction contract : a commentary The NEC 3 engineering and construction contract : a commentary
The NEC 3 engineering and construction contract : a commentary The NEC 3 engineering and construction contract : a commentary
The NEC 3 engineering and construction contract : a commentary The NEC 3 engineering and construction contract : a commentary

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