Practical Guide to the NEC4 Engineering and Construction Contract

MICHAEL ROWLINSON MSc, DipArb, MRICS, FCIOB, FCIArb, FCInstCES, is principal of Michael Rowlinson Associates Ltd. An experienced construction professional having qualified initially as a Chartered Quantity Surveyor and later as a Chartered Builder, Michael specialises in all aspects of contract drafting, contract management, contract administration, construction law, claims and dispute resolution. As part of his work Michael lectures extensively and has written many published articles and two books on the NEC3 family of contracts.

• 1 Introduction 11.1 General 11.2 Mechanics not law 21.3 A simple formula for understanding a contract 31.4 Mandatory or discretionary 41.5 Conditions precedent 41.6 Note on use of uppercase in keywords and phrases 52 Background to the NECECC 72.1 The background: First edition 72.2 The second edition 82.3 The third edition 92.4 The third edition (reprinted) 92.5 The fourth edition 92.6 Endorsement of NEC3 by the Office of Government Commerce 102.7 Endorsement by the Development Bureau, HKSAR Government 112.8 General philosophy: Aims and objectives 122.9 Flexibility 122.10 Clarity and simplicity 132.11 Stimulus to good management 142.12 Other characteristics 153 The Options: An Overview 173.1 General arrangement of the ECC 173.2 Other documents referred to 193.3 Contract Data 203.4 The published documents 203.5 Main Options: General outline 214 Spirit of Mutual Trust and Cooperation 254.1 Introduction 254.2 The clauses 254.3 What does it mean? 274.4 Practical issues 285 The Cast of Characters 335.1 Introduction 335.2 The Client 335.3 The Project Manager 355.4 The Supervisor 385.5 The Contractor 385.6 The Senior Representatives 395.7 The Adjudicator 405.8 The Tribunal 415.9 The Dispute Avoidance Board 415.10 Subcontractors 425.11 ‘Others’ 425.12 Named Suppliers 435.13 Designers 435.14 Principal Designer 445.15 Principal Contractor 455.16 Practical issues 456 Communications, Early Warnings and other General Matters 476.1 Introduction 476.2 Communications:The clause 476.3 Communications: Practical issues 496.4 Early warnings: The clause 516.5 Early warnings: Practical issues 536.6 Other matters:The clauses 556.7 Other matters: Practical issues 597 The Contractor’s Main Responsibilities 617.1 Introduction 617.2 Providing theWorks 617.3 Contractor’s design 627.4 Information modelling 667.5 Other matters 687.6 Practical issues 728 Subcontracting 758.1 Introduction 758.2 Definition of a Subcontractor 758.3 The core clauses 768.4 Provisions in the Main Options 768.5 Practical issues 778.6 Options for forms of subcontract in the NEC4 family 789 Quality Management 819.1 Introduction 819.2 Quality management system 819.3 Tests and inspections 829.4 What is a Defect? 849.5 The Defect procedure 849.6 The Defects Certificate 869.7 Uncorrected Defects 879.8 Practical issues 8710 Title 9110.1 Introduction 9110.2 The core clauses 9110.3 Practical issues 9211 Liabilities and Insurance 9511.1 Introduction 9511.2 The core clauses 9511.3 Secondary options 9811.4 Practical issues 9912 Time 10112.1 Introduction 10112.2 The programme: Contents 10212.3 The programme: Submitting, accepting and revising 10712.4 The programme: Practical issues 11012.5 Starting and finishing 11812.6 Other matters 12112.7 Secondary Options related to Time 12412.8 Practical issues 12613 Payment 13113.1 Introduction 13113.2 The payment process 13113.3 Payments in multiple currencies 13413.4 Interim payments – The amount due and the Price for Work Done to Date 13513.5 Supporting documents and records 14513.6 Final assessment 14813.7 The Contractor’s share 15013.8 The Contractor’s share: Practical issues 15213.9 Special provisions for the United Kingdom 15313.10 Related Secondary Options 15713.11 Practical issues 16214 The Schedules of Cost Components 16914.1 Introduction 16914.2 The Schedule of Cost Components 16914.3 The Short Schedule of Cost Components 17414.4 Application to Subcontractors 17514.5 Practical issues 17615 Compensation Events:Theory and Events 17915.1 Introduction 17915.2 The theory 17915.3 The events 18115.4 Practical issues 19616 Compensation Events: Procedures 19916.1 Introduction 19916.2 Notification by the Project Manager 20016.3 Notification by the Contractor and the Project Manager’s reply 20316.4 Other matters associated with notifying compensation events 20616.5 Quotations: Substance 20816.6 Quotations: Submission and reply 21016.7 Assessments by the Project Manager 21516.8 Proposed instructions 21716.9 Implementing compensation events 21816.10 Practical issues 21917 Compensation Events: Assessment 22717.1 Introduction 22717.2 Changes to the Prices 22817.3 Changes to the Completion Date and Any Key Dates 23217.4 Project Manager’s assumptions 23417.5 Other related matters 23617.6 Practical issues 23818 Termination 24318.1 Introduction 24318.2 Reasons for termination 24318.3 Secondary Option X11 24718.4 Implementing termination 24818.5 Procedures after termination 24818.6 Assessing the amount due after termination 25018.7 Practical issues 25219 Resolving and Avoiding Disputes 25519.1 Introduction 25519.2 Option W1 25619.3 Option W2 26119.4 Option W3 26719.5 Practical issues 27020 Secondary Options 27320.1 Introduction 27320.2 X2: Changes in the law 27320.3 X4: Ultimate holding company guarantee 27420.4 X12: Multiparty Collaboration 27420.5 X13: Performance bond 27920.6 X17: Low performance damages 28020.7 X18: Limitation of liability 28020.8 X20: Key Performance Indicators 28120.9 X21:Whole Life Cost 28220.10 X22: Early Contractor Involvement 28320.11 Y(UK)3:The Contracts (Rights ofThird Parties) Act 1999 28820.12 Z: Additional conditions of contract 28820.13 Practical issues 28921 Completing the Contract Data 29121.1 Introduction 29121.2 Purpose and form of the Contract Data 29121.3 Contract Data Part One 29221.4 Contract Data Part Two 30421.5 Practical issues 30922 The Supporting Documents: Need and Content 31122.1 Introduction 31122.2 Scope 31222.3 Site Information 32422.4 Practical issues 325Bibliography 329Appendix 1 Tables of Clause Numbers, Case Lawand Statutes 331Appendix 2 Tables of Client’s, Project Manager’s, Supervisor’s, Contractor’s, Senior Representatives, Adjudicator’s, Dispute Avoidance Board and Tribunals Actions 341Appendix 3 Tables of Communication Forms and Their Uses 379