Contract Practice - NEC Flashcards
NEC Options
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.
Option G: Term contract
Key updates from NEC3 to NEC4
- Two new contracts - Design Build and Operate Contract - Alliance Contract
- Risk register now names Early warning register
- Employer becomes client
- Works information becomes scope
- Gender neutral
When would you recommend NEC to a client?
- Complex projects with clear objectives
- Collab approach (open communication, shared goals, early problem identification)
- Risk management and clarity
- Typically large building or infrastructure projects
Why did you choose to use an Option A on the DWP expansion programme?
- The government construction board recommends that public sector organisations use NEC
- Done off a framework, collab, very little time so didn’t want BoQ
- Client wants cost certainty so Option A
Which NEC ECC poses most and least risk for employer
Option E - contractor reimbursed for actual loss plus fee
Option A - fixed priced contract
How is risk managed in NEC
- Cost Risk Allowances
- Risk registers
- Early warnings meetings
- Early warnings register
What is a compensation event
Unforeseen or uncontrollable event that impacts the cost or time needed to complete
Does NEC have relevant events and matters?
No, CE deals with these issues
What happens if contractor notifies a CE 12 weeks after becming aware of the event
- Contractor not entitled to change in prices, completion date or key date.
- Must notify within 8 weeks of becoming aware
What is an Early Warning Notice and when would this be used?
- Mechanism for both parties to identify potential problems to the project.
- Both parties are obliged to notify the other as soon as they become aware of a matter that could affect time, cost or quality
What are the events for a CE
- Changes to WI
- No access and use of site
- Something not provided
- Stop or change key date
- Work by employer or others
- Late reply to communication
- Object found on site
- Previous decision change
- Acceptance witheld
- Search but no defect
- Test causes a delay
- Unexpected conditions
- Unexpected weather
- Breach of contract
Compensation event timeline
- C to notify PM within 8 weeks of becoming aware
- PM has one week to decide from this
- C has 3 weeks to submit quotation from PMs request
- PM 2 weeks to accept
Schedule of cost components in NEC
Costs that can be claimed by the contractor
- People
- Equipment
- Materials
- Charges
- Manufacutre and fabrication
- Design
- Insurance and Bonds
NEC payment timeline (under Y(UK) 2)
- Assessment date
- Due date for payment - 7 days after assessment date
- Final date for payment - 14 days after due date for payment
- Notice to withold payment - 7 days before final date for payment
NEC payment timeline (without Y(UK) 2)
- Assessment date
- PM certifies payment - 1 week after assessment date
- Certified payment is made - 3 weeks or other as stated in CD after assessment date
Clause Y(UK)2 - ensure compliance with UK Housing grants, construction and Regeneration Act 1996
Without Y(UK)2 means payment date is not fixed
How is retention dealt with under the NEC?
- Optional retention clause (Option X16)
