The NEC Engineering and Construction Contract Flashcards
(30 cards)
What s the definition of a contract?
An agreement between two or more parties having the capacity to make it, in the form demanded by law, to perform, on one side or both, acts which are not trifling, indeterminate, impossible or illegal.
What does a contract form set out?
The terms and conditions of the contract
What are JCT, ICE, NEC all?
They are standard forms of contract which have been developed in the construction industry.
What does JCT stand for?
Joint Contracts Tribunal
What does ICE stand for?
Institute of Civil Engineers
What does NEC stand for?
New Engineering Contract
What are the main objectives of a NEC contract?
- Flexibility
- Clarity and simplicity
- Stimulus to good management
How is it more flexible?
- it is for building, civil engineering, electrical and mechanical work
- All procurement options are included such as traditional sequential, management and so on.
- Contractor design if required
- international application
- It offers alternative ways of doing things
- can also be used for design and build.
How does it succeed in having clarity and simplicity?
- Ordinary language in the present tenserather than legal drafting
- No cross-referencing – each clause is complete on its own
- Easily translated into other languages
- Use of bullet points
- Actions of the parties in various situationsprecisely defined
- Use of expressions such as fair, reasonable, etc. minimised
How is it a stimulus to good management?
- Procedures designed to improve the management of the project and stimulate cooperation
- intended to enable all parties to work collaboratively thereby reducing riskThe first clause in the contract is:
“Cl. 10.1 ‘The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation’”
The project manager is the equivelant of the architect and the engineer, and the Supervisior is someone he can delegate tasks to.
What is a main difference between JCT and NEC?
JCT uses legalistic language that makes it difficult to read, and NEC uses much shorter and simpler statements in present tense to describe the same requirement.
Court Interpretation
Courts restrict themselves to interpreting the terms of a contract in an objective way.
“the question to be answered always is ‘What is the meaning of what the parties have said?’ not ‘What did the parties mean to say?’”
What is the layout of a NEC contract?
- Core Clauses
- Main Option Clauses
- Secondary Option Clauses
- Schedule of Cost Components
- Contract Data
- Works Information
- Site Information
- In every procurement option detail the main obligations
What are the main option clauses of NEC?
There are 6 procurement options
A. Lump sum with activity schedule B. Remeasurement with bill of quantities C. Target cost with activity schedule D. Target cost with bill of quantities E. Cost reimbursable F. Managemet contract
What are the secondary option clauses in a NEC?
- performance bond
- parent company guarantee,
- sectional completion
- retention
- delay damages
what are liquidated damages?
Liquidated damages or delay damages – if you don’t finish on time, you may have to pay for every day or week you run overtime. The price is based on the loss value of the facility, so if a shop it may be loss of profit. A genuine pre-estimate. Whatever the damages would actually be, the client is
What are the schedule of components?
wages, bonuses, travelling, plant hire costs,plant depreciation costs etc; used to evaluate actual cost of changes to the works
What does the Contract Data include?
Specifies: the main and secondary options names of the contracting parties starting date completion date, etc.
What is the Works Information?
Drawings and specification etc
What is included in the site information?
Borehole reports, site access details etc.
What concepts did ECC pioneer?
ECC pioneered a variety of concepts e.g.
- adjudication (now statutory in all construction contracts)
- early warning
- quotations for changed or extra work
- no nomination of sub-contractors
- a definitive method of assessing exceptionally adverse weather conditions
- regular re-programming
Some of these concepts have now been adopted by traditional standard forms.
What is adjudication?
A quick method of dispute resolution wherebyan adjudicator gives an award within 28 days.of the dispute being referred to him.
The award is binding (i.e. the parties must comply with it) but not final (i.e. the partiescan open the dispute up in one of the more formal dispute resolution processes – arbitration or litigation.
This is now a statutory right available to the parties to constuction contracts.
What is statutory adjudication?
this means that it has to be resolved within the time set. It is now a statutory right to adjudiction.
What is the importance of early warnings? And how are they carried out?
The Contractor and Project Manager are required to notify each other if a situation is likely to arise which may cause delay or extra cost.
This is to prevent either party using unforeseensituations e.g. uncharted underground obstructions to their advantage.
The incentive for the Contractor is that he will only be paid as though he had given the early warning.
- You have to notify both contractor and project manager if there is something you think may occur which will incur costs. If you don’t give that early warning, you don’t get paid.
