ISSUE No.129 JANUARY 2024 www.neccontract.

com

NEWSLETTER

The final £207 million section of line 1 links

Edinburgh’s city centre with the port areas of
Leith and Newhaven

NEWS

NEC4 contracts used to complete

line 1 of Edinburgh’s tram system
SIMON FULLALOVE EDITOR

NEC contracts have been used to complete line 1 Despite the challenges of working in a congested CONTENTS
of the Scottish capital’s tram system. The City of urban environment, Covid-19 and supply chain
Edinburgh Council let the £207 million project disruption, the completed line was fully opened for
‘Gold Standard’ verification scheme 2
for completing its 18.5 km long high-capacity light passenger services in June 2023, providing a direct
railway under two separate NEC4 Engineering and transport link between Edinburgh’s airport and NEC Asia Pacific conference report 3
Construction Contracts (ECC) in November 2019. seaport as well as improved cycling and walking
Morrison Utility Services (MUS) was engaged infrastructure. The remaining signage, street lighting British Construction Industry Awards 3
under an NEC4 ECC Option E (cost reimbursable and landscaping were completed to the agreed
Manchester major trauma hospital, UK 4
contract) to clear a ‘swept path’ of utilities, programme and budget by November 2023.
archaeology and below-ground obstructions on the New pier on Lamma Island, Hong Kong 4
4.7 km route from York Place in the city centre to the Close collaboration
port areas of Leith and Newhaven. Construction and Great Yarmouth flood defences, UK 5
The council’s senior responsible officer Hannah
implementation of the new twin tram tracks, eight Ross says the NEC requirement for the parties to act Fostering mutual trust and co-operation 7
stations and communications and control systems in a ‘spirit of mutual trust and co-operation’ was vital
was then carried out by Sacyr Farrans Neopul (SFN) to the success of the complex project. ‘The unique Extending time in service contracts 8
under an NEC4 ECC Option C (target contract with construction strategy, with two separately contracted
activity schedule). Assuring staff costs on Options C and E 9
main contractors working side by side, required close
Turner and Townsend (T&T) was engaged collaboration from the outset to ensure the behaviour
under an NEC4 Professional Service Contract How to start using NEC contracts 10
and mindset of each contractor were focused on the
(PSC) to provide programme, commercial and success of the project as a whole.’ FAQs 11
risk management, including acting as NEC project
manager and supervisor for both contracts. Continued on page 2 >> Diary 12

CONTRACTS • BOOKS • TRAINING • USERS’ GROUPS • AWARDS • EVENTS • WEBINARS • PROJECT SUPPORT & CONSULTANCY • CONTENT PARTNERS
 2 NEC NEWSLETTER• No.129• JANUARY 2024 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com

EDITORIAL

New ‘Gold Standard’ verification

for procurement frameworks
JOHN WELCH NEC USERS’ GROUP CHAIR

As I highlighted in Issue 117 (Welch, 2022), the

UK government’s Cabinet Office published an
‘NEC’s mission from the outset has been to,
independent review of over 2,000 public sector
construction procurement frameworks called
‘provide clarity, flexibility and stimulate good
Constructing the Gold Standard (Mosey, 2021). It set out
24 key recommendations to bring government and
management’ and, as I mentioned in 2022,
industry together to tackle waste, secure value for
money and drive innovation to achieve better, faster,
the NEC suite of contracts complement many
safer and greener outcomes.
The ‘Gold Standard’ was subsequently endorsed
of the Gold Standard recommendations.
in the 2022 update of The Construction Playbook (HM
Government, 2022). I am now pleased to report
that UK industry platform Constructing Excellence
and King’s College London have launched a verification and assessment on how they comply that can be used to support the successful integration
‘Constructing the Gold Standard Verification’ scheme or plan to adopt each of the 24 Gold Standard of offsite manufacturing into the creation and
in November 2023 (Construction Excellence, 2023). recommendations. Seven clients and framework maintenance of assets.
This aims to validate and verify claims made by providers are currently piloting the scheme: Ministry
framework providers and also provide a measure of of Justice, Environment Agency, Scape, CHIC, LHC, ‘Golden thread’
quality for both clients who use frameworks and for Places for People and Crown Commercial Service. Just as important is option X10 on information
suppliers who bid for frameworks. modelling, which can be selected to cover the
Framework providers wishing to obtain verification NEC alignment contractual matters related to the creation or updating
are required to submit applications via Constructing NEC’s mission from the outset has been to, of an information model supporting the Gold
Excellence, which will carry out an independent ‘provide clarity, flexibility and stimulate good Standard aim to create a whole-life ‘golden thread’ of
management’ and, as I mentioned in 2022, the NEC asset information.
suite of contracts complement many of the Gold Early supply chain involvement is another
Standard recommendations. key recommendation. NEC option X22 on early
At the heart of the recommendations is a drive to contractor involvement facilitates early appointment
ensure that all public sector construction frameworks of the supply chain to work with consultants
prioritise net zero greenhouse gas emissions. Through and others improve economic, social, safety and
NEC option X29 on climate change, NEC users can environmental outcomes.
support, incentivise and tangibly demonstrate carbon Incentivisation and innovation are critical elements
All NEC users, dioxide reduction initiatives on future builds across of any successful projects and I have previously
including those using the sector. spoken about the benefit of creating specifications
frameworks, should The Gold Standard recommendations recognise that focus on required client outcomes. NEC is
familiarise themselves the importance of improving supplier investments in well structured to support this element of the Gold
with the Gold
Standard’s modern methods of construction and other offsite Standard recommendations with option X12 on
recommendations technologies. NEC contracts provide several processes Continued on page 3 >>

>> Continued from page 1

She says a culture of teamwork was engendered SFN as traffic management designer and MUS as
from the start through use of ECC option X22 route clearance contractor, all brought together by
on early contractor involvement. ‘During the early T&T as programme manager.’
contractor involvement stage, time was set aside to He says other challenges included the Covid-19
help forge the relationships required to deliver the pandemic and widespread supply chain disruption.
project. The project team also established a project ‘To overcome these the team deployed creative and
charter at the outset, which was signed by all team joined-up thinking in short timescales to re-sequence
members and set out the high professional standards works but maintain a focus on the project’s critical
we were determined to achieve.’ path. Maintaining the overall programme throughout
Ross says the project team always strove to achieve this unprecedented period could only be achieved
best practice in applying NEC contract processes through the input of all members of the project team
to ensure a successful outcome. ‘Both contracts appreciating the issues and coming up with solutions.
were administered using Cemar software to enable As a result, the project remained on track to be The final 4.7 km of line 1 was successfully
proactive contract management. This included timely delivered on programme and budget.’ ● delivered by two NEC4 ECC main contracts and
completed in November 2023
early warnings, with all personnel encouraged to raise
them; correctly notified and assessed compensation
events; and regular programme submission and
acceptance.’ BENEFITS OF USING NEC
NEC suite provided appropriate procurement options, with ECC Option E (cost-reimbursable)
Overcoming challenges for route clearance and ECC Option C (target contract) for infrastructure and systems.
T&T director of project delivery Steve Jackson
NEC obligation to act in a ‘spirit of mutual trust and co-operation’ ensured both main
says the success of the NEC-inspired collaboration
was evidenced in how the project team overcame the contractors worked together for the good of the project and collaboratively overcame
project’s many and various challenges. ‘Delivering challenges.
a project of this nature through a historical city NEC contract processes such as early warnings, compensation events and programme
coupled with significant excavation and below-ground
submissions were efficiently managed and help to ensure the project was delivered on time
works was no easy task. We sought to limit impact on
traffic movement by combining the expert knowledge and budget.
of the council as the roads authority with input from
 CONTRACTS• BOOKS• TRAINING• USERS’ GROUPS• AWARDS• EVENTS• WEBINARS• PROJECT SUPPORT & CONSULTANCY• CONTENT PARTNERS 3

NEWS

More than 220 delegates attend

the NEC Asia Pacific Conference
IVAN CHEUNG NEC ASIA PACIFIC USERS’ GROUP SECRETARY

Over 220 delegates attended the annual NEC Asia The morning presentations focused on how
Pacific conference in December 2023 at the Cordis technology and innovative approaches on major NEC
Hotel in Hong Kong. The main theme of the one-day projects have helped to overcome challenges and
event was, ‘Beyond boundaries: embracing change in improve sustainability through collaborative working.
construction through collaboration and innovation’. Afternoon workshops included a review on how the
Following opening remarks by NEC Asia new NEC Engineering and Construction Contact
Pacific Users’ Group chair Ricky Lau, Permanent (ECC) Hong Kong Edition will work in practice, after
Secretary for Development (Works) at the Hong which there was a final panel discussion on the future
Kong government’s Development Bureau, the of collaborative contracting.
keynote speech was given by Helen Sturdy, Head The presentations will be made available in the
of Construction and the NEC-based ProCure23 NEC Community app. ● NEC Asia Pacific Users’ Group chair Ricky Lau
gave the opening address
framework at NHS England.

NEWS

NEC-procured projects again do well at

British Construction Industry Awards
SIMON FULLALOVE EDITOR

NEC projects again featured strongly in the 2023 Environmental prizes

British Construction Industry Awards, particularly Derby City Council’s £7 million Mill Fleam
those entered by UK local authorities. Pumping Station project won the Environmental
The event at London’s JW Marriott Grosvenor Project of the Year. The 4500 l/s flood defence
House Hotel on 11 October 2023 saw projects pumping station was delivered in just 15 months
delivered with NEC contracts winning or being highly using an NEC4 ECC Option A (priced contract
commended for five of the 10 project-related awards. with activity schedule). Bridgend County Borough
The others were delivered using JCT, Network Rail, Council’s £6 million Porthcawl Sandy Bay Coast
IChemE and bespoke forms. Scheme, procured using and NEC3 ECC Option
NEC-procured East Leeds Orbital Route won the
A, was highly commended in the environmental Transport Project of the Year
Transport winners category.
Leeds City Council’s £81 million East Leeds Also delivered under NEC3 ECC Option A
Orbital Route won the Transport Project of the was Milton Keynes City Council’s £32 million
Year and was highly commended for the National Glebe Farm School, which was highly commended
Infrastructure Commission (NIC) Design Principles for the Social Infrastructure Project of the Year.
Award. The 6.8 km dual carriageway complete Finally National Grid’s multi-million-pound NEC4
with cycleways, pocket parks and outdoor gyms ECC reconstruction of its fire-damaged French
was procured using an NEC3 Engineering and interconnector substation at Sellindge in Kent was
Construction Contract (ECC) Option C (target highly commended for the Utility Project of the
contract with activity schedule). Year.
Transport for London’s (TfL) £700 million Bank
Station Capacity Upgrade project, also delivered Shortlisted projects
under NEC3 ECC Option C, was highly commended Of the 45 project entries that were shortlisted
for the transport prize, while its £19 billion NEC- for this year’s awards, 18 were procured by NEC
procured Elizabeth line was also highly commended contracts, 13 by JCT, nine bespoke, two each for Mill Fleam Pumping Station won the
Environmental Project of the Year
for the NIC Design Principles Award. Network Rail and ICC, and one IChemE. ●

>> Continued from page 2

multiparty collaboration, X20 on key performance convert their value objectives into agreed contracts, Public Works Projects and Programmes, version 1.1.
indicators, X17 on low performance damages and including those procured through frameworks. The Cabinet Office, London, UK, https://www.gov.
X29 on climate change performance. result will be delivery of better, safer, faster, greener uk/government/publications/the-construction-
projects and programmes of work.● playbook
Risk management Mosey D (2021) Constructing the Gold Standard − An
Finally, NEC contracts provide an excellent basis References Independent Review of Public Sector Construction
to encourage and support risk management through Constructing Excellence (2023) Constructing the Frameworks, Cabinet Office, https://www.gov.uk/
all stages of any project or service provision, which Gold Standard Verification Scheme webpage, government/publications/an-independent-review-
complements the Gold Standard recommendation https://constructingexcellence.org.uk/ of-public-sector-construction-frameworks
that risk allocation is dealt with clearly and equitably. constructing-the-gold-standard-verification-scheme Welch J (2022) NEC users are vital to building ‘gold
I ask all NEC users to familiarise themselves with HM Government (2022) The Construction Playbook: standard’ construction frameworks, NEC Users’
the 24 recommendations and seek the opportunity to Government Guidance on Sourcing and Contracting Group Newsletter 117 (March 2022): 1.
4 NEC NEWSLETTER• No.129• JANUARY 2024 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com

CASE STUDY: Building

NEC-based ProCure 22 framework used

for Manchester’s major trauma hospital
SIMON FULLALOVE EDITOR

The NEC-procured major trauma hospital has a roof-

top helipad with direct lift access

NEC has been used to deliver a new state-of-the- Collaboration and early warnings
art major trauma hospital in Manchester, UK. Barry Cleminson, director of DAY Project
Client Northern Care Alliance NHS Foundation Management, says the NEC requirement for
Trust procured the new Greater Manchester Major
the parties to act in a ‘spirit of mutual trust and
Trauma Hospital through the NEC-based ProCure
co-operation’ was fully embraced by the project team.
22 framework under an NEC3 Engineering and
‘The NEC contract ensured collaborative working
Construction Contract (ECC) Option C (target
throughout the project. This included the need to
contract with activity schedule).
communicate clearly any issues regarding cost and
The £48 million building work was let in November
programme via early warnings and/or notification of
2020 to NEC Users’ Group gold member BAM
Construction, a principal supply chain partner on the compensation events’.
ProCure 22 framework, which is run by the NHS for He says the NEC early warning system worked Main entrance of the new BREEAM ‘excellent’
the NHS. DAY Project Management was the NEC particularly well on the project. ‘It provided a clear rated hospital
project manager with architect DAY Architectural, picture to the project team of all foreseeable issues
structural engineer Mott MacDonald, services and how best to action them. Early warnings with a
engineers DSSR and BAM Se, fire consultant OFR notable impact warranted their own risk-reduction BENEFITS OF USING NEC
and ProCure 22 supervisor Ross Quality. meeting to work out how best to mitigate the risk to
the project, and these were undertaken with the entire NEC requirement on the parties to
The contract involved designing and constructing
an eight-storey, 10,000 m2 reinforced concrete, rain- project team. Any changes to the works information act in a ‘spirit of mutual trust and
screen-clad building on piled foundations in a severely were then quickly and fairly agreed with the contractor co-operation’ helped to encourage
constrained site within the grounds of Salford Royal through the NEC compensation event process.’ collaborative working throughout the
Hospital. Its primary purpose is to provide urgent Cleminson says communication was also assured project.
treatment for people who have suffered major trauma, through use of the Sypro contract management
such as from a serious traffic accident or fall. system a wide range of regular meetings. ‘These NEC early warning process meant that
The BREEAM ‘excellent’ building has a roof- included monthly progress meetings, fortnightly issues were identified and mitigated
mounted helicopter landing pad which provides direct design team meetings, weekly site walkovers, and through risk-reduction meetings.
lift access to five emergency operating theatres, 12 monthly commercial and risk reviews. The NEC
NEC compensation events process
emergency resuscitation bays, seven inpatient beds and project manager also held quick “coffee catch ups”
a suite of MRI, CT and X-ray scanners with a view two to three times a week with project team members ensured that changes to the works
to reducing time to treatment. Work started on site in to discuss any issues, concerns or suggestions for information were quickly and fairly
February 2021 and the hospital was handed over in improving the programme or quality before rolling agreed with the contractor.
August 2023. these out to the wider project team.’ ●
 CONTRACTS• BOOKS• TRAINING• USERS’ GROUPS• AWARDS• EVENTS• WEBINARS• PROJECT SUPPORT & CONSULTANCY• CONTENT PARTNERS 5

CASE STUDY: Transport

New pier at Pak Kok on Lamma Island in

Hong Kong delivered with ECC Option B
SIMON FULLALOVE EDITOR

The new NEC-procured pier extends out from the

existing short reinforced concrete pier

NEC has been used successfully for the first of a CEDD ensured that high safety standards were The project team concludes that the close
series of contracts to improve public piers in Hong maintained throughout the construction work. ECC partnership between CEDD and the contractor,
Kong. The Civil Engineering and Development secondary option X20 on key performance indicators inspired by NEC, ensured the project was completed
Department of the Government of Hong Kong was used to incentivise the contractor to meet on time, within budget and with zero accidents. They
Special Administrative Region let the reconstruction CEDD’s safety objectives through a key performance say successful completion of the reconstruction of
of Pak Kok pier on Lamma Island to Yee Hop indicator for the project’s ‘Pay for Safety Performance Pak Kok pier on Lamma Island was a testament to the
Engineering Company Limited under a HK$56.59 Merit Scheme’. Through joint efforts of CEDD power of mutual trust and collaboration. ●
million (£5.7 million) NEC3 Engineering and and the contractor, a record of zero accidents was
Construction Contract (ECC) Option B (priced achieved during construction.
contract with bill of quantities). The work started in To minimise the impact of the Covid-19 pandemic
April 2020 and was completed on time and budget in on the contractor’s cash flow, secondary option X14
October 2022. on advanced payment to the contractor was also
Pak Kok pier was the first project completed under used. This enabled the contractor to request advance
the government’s pier improvement programme. payment from the employer, which was repaid in
It is a stop on the passenger ferry service between instalments. It further demonstrated the mutual trust
Aberdeen on Hong Kong Island and Yung Shue Wan relationship between the employer and the contractor
on Lamma Island, used by both locals and tourists. under NEC.
ECC Option X20 was used to incentivise the
The old pier, which was first built by villagers and At the outset of the project, a common office contractor to meet the client’s safety objectives
then reconstructed in the 1970s and 1990s, is a small was established in which CEDD and contractor’s
reinforced concrete structure with a single short set staff were seated next door to each other to facilitate
of landing steps that required ferries to berth head-on. effective communication. Working in the same space BENEFITS OF USING NEC
The new much larger pier extends sideways and allowed the project manager’s team and the contractor
outwards from the old pier and provides longer to collaborate more easily, share ideas, brainstorm NEC requirement to act in a ‘spirit of
landing steps on each side, allowing ferries to berth solutions and work together to overcome any mutual trust and co-operation’ ensured
side-on. A fixed ramp on the western berth enables challenges that arose.
a close collaboration and partnership
wheelchair users or passengers with shopping carts
to access the pier step-free. Wave-reduction panels Innovation and risk between all parties.
along the pier also help to improve the stability of Innovative engineering solutions, such as the ECC option X20 incentivised the
berthing vessels, improving passenger safety. Precast precast concrete pier structures, were extensively contractor to achieve a key performance
concrete elements were used extensively for the new used to minimise the impact of tides on work
pier structure, which is topped by a new steel, timber indicator on safety, which helped to
progress, enhance worker safety and ensure quality.
and glass roof with solar panels. The contract also achieve zero accidents.
Comprehensive planning of the construction
included provision of new lighting, seating, handrails, method and sequence was crucial. Weekly design ECC option X14 helped to ease
a drinking fountain, wi-fi hub, USB charging points meetings with the contractor were held to review the the contractor’s cashflow through
and electronic display panels. construction method and progress of precast element advance payments during the Covid-19
construction, share updates on any changes in design
Collaboration and partnership or scope, and resolve any issues or concerns that arose pandemic.
The NEC requirement on the parties to act in in a timely manner. NEC early warning processes led to
a ‘spirit of mutual trust and co-operation’ was a CEDD and the contractor prioritised early regular risk reduction meetings and
key to the project’s success. This requirement was identification of risks. In line with NEC early warning
maintenance of a risk register, helping
fully realised through the close collaboration and processes, regular risk reduction meetings were held
partnership between CEDD – which was acting as the and a risk register was maintained to anticipate and to keep the contract on programme and
employer, project manager and supervisor – and the prepare for risks by developing appropriate mitigation budget.
contractor. strategies.
6 NEC NEWSLETTER• No.129• JANUARY 2024 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com

CASE STUDY: Water

NEC used to reduce tidal flooding risk to

4,500 properties in Great Yarmouth, UK
SIMON FULLALOVE EDITOR

Plant used to improve 4 km of defences included

shore- and water-based crawler cranes and limpet
dams

NEC Users’ Group silver member the Environment sheet piles, repairing concrete capping beams and gave the client financial transparency.’
Agency has used NEC contracts to procure an award- constructing new set-back (retired line) flood walls. He continues, ‘PSC option E (cost reimbursable
winning five-year flood defence project in Great The contractor undertook both quayside and maritime contract) was used for the consultancy appointments.
Yarmouth on the east coast of England. activities using a wide variety of equipment, including This allowed each party to assess the time requirement
The Norfolk seaside town has a history of flooding multiple crawler cranes, one mounted on a jack-up on a rolling basis as the project dictated. While
caused by North Sea tidal surges overtopping the barge, and innovative limpet dam technology for this put most risk on the client, the defined cost
banks of the Rivers Yare and Bure, most recently underwater inspections and repairs. forecasting requirement gave the client sufficient
in December 2013. The project, known as Great Despite Covid-19 restrictions during the middle visibility and control to challenge forecast time when
Yarmouth Flood Defences Epoch 2, involved local part of the project, it remained on time and within necessary.’
improvements to 4 km of the town’s 10 km of steel- budget for completion in April 2023. The project
sheet-piled and concrete flood defences. These reduce won the Environment and Sustainability Initiative
the risk of tidal flooding to around 4,500 homes, prize in the 2021 British Construction Industry
Collaborative approach
business and critical infrastructure but have become Awards (BCIA), where a 65% reduction against the Walker says the NEC requirement for parties to act
badly corroded in places. carbon baseline demonstrated a saving of over 5,500 in a, ‘spirit of mutual trust and co-operation,’ helped
Following a phase of early contractor involvement, tCO2e. The project team was also shortlisted for the to ensure a highly collaborative approach from the
the Environment Agency awarded the £30 million Temporary Works Initiative award in the 2022 BCIA outset. ‘From the early contractor involvement phase
design-and-construction contract in February 2019 to and was voted runner-up in the 2022 NEC Martin through the highly uncertain times of the Covid-19
its water and environment management framework Barnes Contractor of the Year Award. lockdowns and on to completion, the project team
contractor JBA Bentley under an NEC3 Engineering followed the core NEC principles of “mutual trust
and Construction Contract (ECC) Option C (target and co-operation”.’
contract with activity schedule). NEC project manager Appropriate risk allocation He says his mantra as project manager was,
Turner & Townsend and NEC supervisor Jacobs were NEC project manager Guy Walker says, ‘The ‘contract management, not contract administration’.
both appointed under an NEC3 Professional Services Environment Agency has used NEC contracts ‘To this end we set up structured monthly meetings
Contract (PSC). for over a decade. As such the client has a strong above and beyond NEC’s administrative requirements.
The work involved enhancing, refurbishing or understanding of how to use the various NEC The project team met for the required NEC early
replacing quay walls at 40 locations to ensure they options to provide the most appropriate allocation of warning notification reviews and defined cost
would provide 1-in-200-year (0.5% annual exceedance risk. In this case ECC Option C was selected for the forecasts, but we also held design, compensation event
probability) flood protection over a 30−50 years main works contract as it enabled the parties to share and monthly progress meetings, where the accepted
design life. Solutions included raising existing wall risks and commercial success, encouraged both to programme review was a key agenda item.’
heights, installing cathodic protection, plating existing drive efficiencies during design and construction, and Walker says a key learning from a previous
project was to make the design development and
review process work for everyone. ‘The design was
split into 21 geographical work packages, allowing
BENEFITS OF USING NEC the contractor’s design team to focus on discrete
NEC requirement on the parties to act in a, ‘sprit of mutual trust and co-operation,’ helped deliverables. The works information was written
to ensure a fully collaborative approach within the project team. to afford 21 or 28 days for design acceptance, thus
stepping away from the two weeks period for reply,
NEC flexibility enabled the client to choose a risk-sharing ECC target contract for the main but providing sensible time for a thorough review.
design-and-build works and cost-reimbursable PSC contracts for its consultancy team. The works information also introduced the concept
of “accepted with comments”, which allowed the
NEC contract mechanisms of early warnings, defined cost forecasts and programme reviews contractor to continue within certain parameters.’
helped to ensure the complex and challenging works programme was completed ontime He says the contractor led all design workshops
and budget. and ad-hoc sessions and was a frequent and active
problem solver in advance. ‘Despite much of the
Continued on page 7 >>
 CONTRACTS• BOOKS• TRAINING• USERS’ GROUPS• AWARDS• EVENTS• WEBINARS• PROJECT SUPPORT & CONSULTANCY• CONTENT PARTNERS 7

>> Continued from page 6

works requiring similar solutions, a “one size does contributed to compensation event meetings when
not fit all” approach was adopted. This allowed the discussing the concepts and quotation requirements
achievement of several clause 63.11 implementations of each event. The project team also made frequent,
which incentivised the contractor to seek cost positive contributions to developing and agreeing my
reductions – and increase commercial gain share project manager assumptions, which allowed the team
− through value engineering and efficiencies, to make sensible decisions on less certain change
local supply-chain use benefits, environmental events and risk.’
enhancements and recycling.’ He adds that the contractor allowed the client’s
cost manager access to its procurement and
Positive behaviour time sheets systems to assess the amount due
Walker says the project team displayed positive independently. ‘The end result of this NEC-inspired
behaviour across all NEC contract processes. collaboration and positive behaviour was that this
‘For NEC early warning meetings, the contractor complex and challenging project remained on time
always prepared mitigations in advance to prompt and within budget for a completion date of April The £30 million NEC-procured coastal defence
discussions and ideas. Relevant parties actively 2023, a testament to the full project team’.● scheme included plating existing steel sheet piles

PRACTICE

How to foster ‘mutual trust and

co-operation’ in NEC contracts
MARK GRIFFIN GLEEDS DEL PERU

project or at home, communication is fundamental. The ‘pain/gain’ mechanism in ECC Option C

KEY POINTS Trust is earned with open and honest communication; (target cost with activity schedule) and Option D
it cannot be forced. Trust can be built through face- (priced contract with activity schedule).
NEC4 ECC requires the contractor, to-face meetings, with attendance limited to only the Early contractor involvement (option X22).
client, project manager and supervisor people really needed to contribute to the meeting. Multiparty collaboration (option X12) and key
to ‘act in a spirit of mutual trust and Short, daily face-to-face communication between performance indicators (option X20).
co-operation’. the project manager and the contractor’s project Whole-life cost (option X21) and climate change
director will allow a relationship to develop, whereby (option X29).
This is a contractual requirement, which urgent matters can be discussed and decisions taken. Contractor’s proposals (‘value engineering’,
establishes a collaborative working This kind of fluid and informal communication clauses 16.1 and 16.2).
relationship from the outset. should not be treated with suspicion by public
This article explains how it can
auditing bodies. Comply mutually and with the
Of course, some outcomes will require a formal contract
be achieved through effective written communication (clause 13.1), such as a change
communication, knowing each other’s to scope or a suspension to a part of the works. But Parties should agree realistic dates to deliver
objectives, compliance and leadership. information, design deliverables and instructions and
solutions can be discussed openly beforehand to
comply with these. Each party can then plan around
avoid surprises and ensure both sides can provide
the other party’s commitments and report to their
their point of view and expertise to solve a problem.
Clause 10.2 in the NEC4 Engineering and management, the client and external stakeholders
Daily, informal communication should extend
Construction Contract (ECC) (clause 10.1 in NEC3 (for example communities, ministries and the press),
to each specialism within the project teams. For
ECC) states: ‘The Parties [which means the contractor avoiding missed deadlines which can lead to a
example, there should be daily face-to-face or
and the client], the Project Manager and the Supervisor breakdown of trust.
telephone communication between the planners,
act in a spirit of mutual trust and co-operation.’ There Many timescales are already provided within
safety specialists and cost engineers of the project
are several things to observe within this short clause. the ECC, with sanctions for non-compliance, and
manager’s and contractor’s respective teams. bear in mind that all players have an obligation to
It is a requirement on all the four main players in
an NEC4 ECC, not just the contractor or client. comply with the contract (clause 10.1). However,
It is a contractual obligation – it does not say Know each other’s objectives commitments for day-to-day actions are also made
‘may’ or ‘should’ so is not optional. It is not a It is tempting to assume the other party’s frequently within meetings and these should be
‘nice-to-have’. objectives rather than talk to each other to really realistic and complied with.
It is the second clause of the contract, understand them. The client and project manager Succinctly recording actions, responsible persons
establishing a collaborative philosophy from the may assume that the contractor’s objective is solely and deadline dates in simple meeting minutes should
outset. to maximise its profit from the contract, while the be seen as a collaborative action because in this way
It is separate from the clause 10.1 obligation to contractor may assume that the client’s objective is to there can be no doubt about what the agreed action
‘act as stated in this contract’, emphasizing both obtain the lowest price for the works and to complete was and by when it should be taken. These actions
requirements. on time. However, individual objectives may include a should be ‘Smart’ – specific, measurable, achievable,
variety of other factors. relevant and timely.
There are numerous other published texts available
regarding the legal applicability of the clause 10.2 For example, the contractor may wish to increase
provision (such as Davis and Cooke, 2022 and its pool of reliable suppliers, assure its cash flow or Leading by example
Mante, 2023). This article examines practical ways to enhance its reputation for future projects of a similar It is easy for team members when entrenched on a
establish ‘a spirit of mutual trust and co-operation’. nature. And the client may wish to meet spend targets project to fall into a pattern of constant battling with
This is often not present in traditional public-sector within a fiscal cycle or have a minimal number of their counterparts. It is the job of the leaders on each
construction contracts outside the UK, which have a defects on opening day. side to rise above and set the collaborative tone and
strong tendency to culminate in lengthy suspensions Each party should have had a frank and open vision which their project teams can follow.
while disputes are arbitrated. conversation with their counterpart about all their In particular, the leaders of each party should
It can be no mean feat to embed new ways of goals for the project and what the priorities are. demonstrate the qualities of acting in good faith and
working, requiring fresh behaviours and mindsets in If both parties know each other’s goals, then they transparently. If leaders adopt an attitude of trying
all parties. The following four key areas can enable can take decisions that maximise the possibility of to make quick wins at the expense of the other party,
this to happen successfully. achieving those. then their team members will most likely repeat
There are many in-built mechanisms in the ECC, this behaviour, leading to a breakdown of trust and
depending on the options chosen, that help to align co-operation within every specialism and at every
Effective communication the client’s and contractor’s objectives, achieving a level of the organisation.
As in so many aspects of daily life, whether on a win-win outcome. Examples include the following.
Continued on page 8 >>
 8 NEC NEWSLETTER• No.129• JANUARY 2024 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com

>> Continued from page 7

Conclusions Resolution of disputes in short durations, such collaborate through in-built core and optional
Fortunately, acting in accordance with the NEC4 as via a dispute avoidance board. contractual mechanisms. However, the behaviour
ECC contract (as required by clause 10.1) should Maintaining an accepted programme that allows of the people involved is also key to generating this
naturally lead to the generation of ‘mutual trust planning, timely decision making, reliable spirit: they must communicate openly, understand
and co-operation’ through the contract’s many communication to external stakeholders and each other’s objectives, comply with commitments
collaborative mechanisms. Examples of these include measurement of impacts due to compensation they make and show leadership. ●
the following. events.
Progressive close-out of defined cost (clause
Project manager making decisions regarding 50.9), avoiding surprises at the end of a project. References
certificates and compensation events in an Limited and clear reasons for the project Davis T and Cooke H (2022) What ‘trust’ really
impartial manner from the client. manager not accepting the contractor’s means in NEC and how parties can achieve it,
Early warnings to notify risks opportunely and deliverables. NEC Users Group Newsletter 120 (September 2022):
deal with them together. 10.
Formal communications (such as instructions) Summary Mante J (2023) Exploring the essence and extent of
in writing, avoiding ambiguity and uncertainty. ‘mutual trust and co-operation’, NEC Newsletter
Resolution of changes in short durations, In summary, NEC is a radically different way
127 (September 2023): 10.
reducing the uncertainty of both parties. of contracting where the parties are required to

PRACTICE

Using X23 to extend the service

period of NEC4 service contracts
ANDREW WOOLDRIDGE-IRVING GVE COMMERCIAL SOLUTIONS

as a number of weeks or months. maximum service period.’ It is noted that this clause can
KEY POINTS Where a client is seeking to award a contract only be applied where there is agreement between
for services, the initial term of the contract is an the parties, which should be evidenced by formal
NEC4 service contracts usually specify a important consideration and may be determined by communication.
fixed service period. several factors. These include the type and range of Both the period for extension and maximum
services to be provided, cost of tendering, transfer service period are identified terms and require
Option X23 allows for the service of resources, level of associated risk and role of the information to be completed in the contract data
period for certain forms of contracts to service provider. under the entry for option X23. Note that the
be extended. The contract duration should provide sufficient maximum service period should be a sufficient period
time to achieve continuous improvement, leading of time to account for the total duration of the initial
It is important to define what services
to a value-for-money outcome for both parties. An service period and all possible extensions to this.
are carried out during the extended increased duration is commonly required to achieve The second part of X23.1 states: ‘The Client
service period along with any a sensible return for certain contracts, particularly notifies the Contractor and the Service Manager of each
requirements as to how the services are where the initial investment costs are high or there agreed period for extension before its notice date.’ Each
undertaken. is a transitional period for the transfer of resources. period for extension has a corresponding notice date,
However, if the contract term is too long, then one which is the latest date by which a notice may be given
or both parties may end up being bound to a contract to apply a period for extension. This date should
A common understanding among NEC users is that that no longer aligns with their planned expectations. provide a sufficient period of time for all associated
compensation events assess the effects of both time Service contracts can include mechanisms to required actions to be completed to facilitate a timely
and money. Although this principle applies to many regulate the contract duration, including termination notice to be given. As a reminder, a notice should
NEC forms, it is not generally the case with the for convenience, contract extension as a right, contract also comply with clause 13 in that it is communicated
following NEC4 service contracts: extension as a performance reward and a contract separately.
term services: Term Service Contract (TSC), break clause. Note that for the TSS form, the contractor was
Term Service Short Contract (TSSC) and Term previously required to notify itself, which appeared to
Service Subcontract (TSS) be a drafting anomaly, although this requirement was
facilities management: Facilities Management Extending the service period deleted with the October 2020 NEC amendments.
Contract (FMC), Facilities Management Short Option X23 is an optional contract procedure for The third part of X23.1 states: ‘Each period for
Contract (FMSC), Facilities Management extending the service period in an NEC4 TSC, TSS, extension is agreed and applied separately and in the
Subcontract (FMS) and Facilities Management FMC, FMS and DBOC. For ease of reference, option order set out in the Contract Data.’ This effectively
Short Subcontract (FMSS). X23 within the TSC is referred to below, although the creates an order of precedence which requires each
Design Build and Operate Contract (DBOC) options within the other contract forms are the same period for extension to be addressed sequentially.
except for the different parties and named roles. It is possible to combine two or more periods for
For all these contracts, quotations for a The first part of clause X23.1 states: ‘The Client extension, although notice must be given by the notice
compensation event comprise proposed changes may, with the agreement of the Contractor, extend date that relates to the earliest period.
to the prices, and to the performance table for the the Service Period by a period for extension up to the Continued on page 8 >>
facilities management and DBOC forms.
A compensation event is only assessed for time in
relation to task completion (term service contracts),
project completion (FMC and FMS) or works
completion (DBOC). These time assessments relate
‘Where a client is seeking to award
to particular work that has a corresponding date for a contract for services, the initial term
completion.
of the contract is an important consideration
Service period
The NEC4 term services, facilities management
and may be determined by several factors. These
and DBOC contracts are essentially designed to
manage a facility or asset. They are different to other
include the type and range of services to be
NEC forms, not least because the time required to
provide the service is stated in contract data as the
provided, cost of tendering, transfer of resources,
‘Service Period’ and is a set duration, usually identified level of associated risk and role of the service provider.’
 CONTRACTS• BOOKS• TRAINING• USERS’ GROUPS• AWARDS• EVENTS• WEBINARS• PROJECT SUPPORT & CONSULTANCY• CONTENT PARTNERS 9

>> Continued from page 8

Criteria for extension performance included within the performance table subcontracts should carefully consider what criteria
Clause X23.2 states: ‘If there are criteria for (FMC, FMS and DBOC). may be required for extending the service period
extension, the Service Period is not extended unless The criteria for extension could operate as a and how this is presented in the contract data. They
those criteria for extension are met on or before the performance reward mechanism. It may also be should seek agreement at an early stage to ensure that
notice date for the relevant period for extension.’ This is desirable to extend the service period for other any associated governance approvals are obtained in
an optional provision, with criteria for extension reasons, for example to complete certain services time.
being an identified term that requires information to where the occurrence of compensation events has Users should detail within the contract scope what
be detailed in the contract data under the entry for created inefficiencies with the service delivery. The services are to be undertaken during the extended
option X23. criteria for extension, where selected, should operate service period and what corresponding conditions or
It is important that any stated criteria for extension as an incentive although without applying unintended requirements may apply to the delivery of these. They
can be objectively assessed to avoid any possible limitations. should also consider how the contract procedures will
ambiguity. These may also be linked to specified operate during an extended service period, including
key performance indicators, either in conjunction Recommendations the assessment of the price for service provided to
with option X20 (TSC and TSS) or stated targets for Users of the TSC, FMC, DBOC and associated date. ●

PRACTICE

Assuring staff costs on NEC4

option C and E contracts
DARREN WARD ORANGE PARTNERSHIP

whether it is just basic support for the project or

KEY POINTS service manager in ongoing monthly application-for-
payment assessments, or a more generic audit, or to
NEC4 ECC and PSC option C and E contracts allow the project or service manager to check assist in a final assessment calculation.
the contractor’s or consultant’s records that ultimately support defined cost payments.
The cost of staff working on the contract should be included in the defined cost for people Understand environment
and set out in the schedule of cost components. An understanding of the environment in which
staff costs are prepared, controlled and reported in
This article provides guidance on what to look for when auditing people costs on NEC4 the project is critically important to the assurance
option C and E contracts, particularly if the contract has been amended. work as this influences risk. Less control equals more
risk, which in turn equals more inspection.
Start by obtaining a good background on the
The NEC4 Engineering and Construction Contract unamended version. It is important to understand project and the contractor or consultant. Consider
(ECC) Option C (target contract with activity the tweaks, which are common in pensions, bonuses, process reviews to understand preventative and
schedule) and E (cost reimbursable contract) are sick pay and expenses, and the reasons why. Also, detective controls to drive robust charging and
widely used for procuring high-risk infrastructure look to see if the wider rules specify certain roles that application-for-payment compilation. Also gain
projects in the UK, often alongside the simpler NEC4 cannot be charged and are therefore deemed to be an an understanding of what additional data can be
Professional Service Contract (PSC) for design and overhead, and so part of the fee. Key to this will be produced outside of the regular data. Assess the
other professional services. understanding definitions in and around the working maturity and stability of the contractor or consultant
Clauses 50.9 and 52.4 in option C and E contracts areas. operating open-book contracts and the supplier team
allow the project or service manager – usually Next, check for any specific mobilisation rules in in managing staff costs. Ideally good financial control
delegated to a cost manager – to inspect accounts the scope. These can be many and varied but look should be demonstrated with respect to the day-to-day
and records of the defined-cost items claimed, which out for pre-commencement rules which must be costs charged to the project.
includes the cost of staff working on the project. complied with. For example, check if résumés need Auditors also need to understand the physical site
These form part of ‘people’ costs detailed in the to be shared in advance with the client, approved and or office in which staff work. Things to check are
schedule of cost components. Actual cost is at the what happens if not. Check too what rules are given the proximity to the client’s team, integration of the
heart of these inspections, so the assurance work if a new role is being mobilised and how the rate gets
needs to focus on payroll departments and associated considered and calculated. Also see if there are rules Continued on page 10 >>
payslips, employment contracts, payroll reports and on handover periods that try to limit exposure on
timesheets. churn and duplicate costs.
When the work or service starts and staff start Figure 1.
This article sets outs a simple roadmap for effective Examples of visualising staff cost audit data
auditing of people costs on NEC4 option C and E being charged, the following questions should be
contracts. considered.
How detailed are the rules in the contract
Read contract around time charging?
The first step is to review the contract carefully Must a timesheet specify certain information
for staff variations, in particular in the detailed scope or format?
information and any additional Z clauses. Next, check How detailed is the activity narrative required?
the reimbursement method. Frequently defined cost Who (client and supplier side) has to approve
paid against the schedule of cost components gets the hours, and is it within a time limit?
substituted for pre-agreed rates. This is often done Are there specific rules regarding pre-
for simplicity or data protection, but it can lead to authorisation of overtime?
problems on long-term contracts if inflation, role Which roles or grades might overtime
churn, overtime, promotions and so on are not apply to?
properly considered. Or does the contract give minimal rules? If so,
Also, even though NEC4 PSC options C and E what potential problems might that bring with
now expect staff to be paid against the schedule it, for example a supplier which does not ask
of cost components, some clients amend them to its staff to do timesheets, they just do central
the former NEC3 PSC approach of time charging allocations.
at a pre-agreed rate. If there have been contract
amendments, start by comparing the staff ‘rules’ Also, auditors must be mindful themselves of the
within the schedule of cost components against an rules under which they have been engaged, such as
10 NEC NEWSLETTER• No.129• JANUARY 2024 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com

>> Continued from page 9

teams, nature of the work, expectation on charging, in time. This can be complex, but if pre-agreed rates cost component. This keeps sampling simple and
ratio of full-time workers to contract staff, and how are used, analysis is much easier as time-charge data is manageable. Remember, sampling must be relevant to
the account has progressed. that bit simpler to handle. the wider population, so it is important not to focus
Staff costs typically start early so expect a The other issue with staff data is that there is often on just a few people at a certain grade or those that
conversation with the client cost manager on a lot of it, perhaps best described as high volume and are a significant cost in one year.
cumulative staff costs, headcount, full-time low value when viewed at transaction level. However, Request the information required from the
employees and progress against the programme. once the data is sufficiently cleansed, analysis can contractor or consultant and mutually agree a data-
Check if the account has been heavily reviewed to quickly be undertaken. Ensure it is relevant to the protection-compliant review process. If things appear
date or if costs have been disallowed, and what risks rules of the contract and the project environment to wrong, always try to understand why and establish
or concerns emerge from these conversations. reveal relevant mischarging risks. the root cause of the issue, such as a control problem
It is also likely that the contract explains the cost or an isolated error. Check if the contractor’s or
management environment relating to staff, whether Design tests consultant’s responses hang together and whether it
this be requirements for organisation charts, resource A thorough understanding of the environment, is necessary to widen the sampling to understand the
plans, monthly budget versus actual analysis, and plus good data analysis should help shape where costs problem better.
forecasting reports. Again, understand what these key may be mischarged against the identified rules. It is
documents indicate. also important to consider or link all the rules back to Write report
specific tests. This should identify people or trends of All examinations should follow a robust and
Visualise data interest for further inspection. formal recording and reporting process. Make it clear
Intelligent data analysis and visualisation are key in the report what items have been in scope and
tools to understand how and where money has been Evaluate records what conclusions have been drawn. These should
spent (see examples in Figure 1). People data can be Beyond test design, a pragmatic sampling be evidence-based and not poorly thought-through
heavily protected by data protection rules, making strategy is also needed for risk-based and other core extrapolations. For internal purposes, make sure
analysis difficult. When contracts need proving back transactions to give the assurance coverage required. there is an audit trail of the work completed and
to actual cost, staff costs are usually anonymised, For pre-agreed rates, test individual people. For assurances obtained so they can be accessed again in
journaled or separately actualised at routine points actual staff costs, consider looking at auditing by future.●

LEGAL

How to start out with NEC contracts:

some advice for new NEC users
RICHARD PATTERSON MOTT MACDONALD

should get your proposed NEC contract reviewed by

KEY POINTS a local construction lawyer to see if any amendments
are required by your local laws (Patterson and
NEC4 ECC and PSC have detailed programme requirements which can be challenging for Higgins, 2021). Typically there may be minor tweaks
new users. required regarding payment timing and/or dispute
resolution.
The simpler ECSC and PSSC short contracts have similar NEC early warning and compensation NEC has already published clauses to make the
event processes as ECC and PSC but without the detailed programme requirements. contracts fit local laws in the UK, Ireland, New
New NEC users might consider starting out with low-risk, low-value construction or Zealand and for each state in Australia. No changes
are required in South Africa. NEC has also published
consultancy contracts using the ECSC or the PSSC.
a version of the ECC for Hong Kong and is working
with the Singapore government to ensure local
suitability.
So, you have heard all about NEC contracts: they are and lower-risk NEC consultancy contract. This might In all cases, get help from someone that has used
clear, super flexible and stimulate good management. be with a friendly firm that that might also be keen NEC before, and good luck. ●
In Issue 128, you may have also read the introduction to learn about and test the NEC. For this you can use
to NEC early warnings (Campbell, 2023). the NEC4 Professional Service Contract (PSC). Note
However, you have never used NEC before and that this has almost all of the same NEC processes
you are in a place or country where NEC has not and in most cases exactly the same clauses and words
been used before. As such you would be right to be as the ECC. References
a little concerned about going straight into a full- Like all NEC contracts, the PSC has NEC early
blown NEC4 Engineering and Construction Contract warnings and compensation events as well as all Campbell L (2023) Early warnings – an introduction
(ECC). the programme requirements that are in the ECC. for new NEC users, NEC Newsletter 128
Certainly you will need some serious training and These programme requirements may be a bit (November 2023): 10.
support to get your first ECC tender document ready. extreme for a relatively simple consultancy contract. NEC Contract Board, Patterson R and Parry N
But you are also not sure if your team and indeed if You could therefore make it easier for everyone (2023) Comparison of the NEC4 Engineering and
your supply chain are ready for it. So how can you get and start your NEC experience with the much Construction Short Contract (ECSC) with the NEC4
into NEC with a little less risk? simpler NEC4 Professional Service Short Contract Engineering and Construction Contract (ECC),
(PSSC). Like the ECSC, it does not have the detailed Guidance Note, June 2023, https://www.
programme requirements of its bigger sibling (see neccontract.com/news/comparison-of-the-nec4-
Low-risk contracts NEC Contract Board and Patterson 2023 for a ecsc-with-the-nec4-ecc/
A good way to start using NEC for construction comparison). NEC Contract Board and Patterson R (2023)
is to find a low-risk, relatively low value, fixed-priced Comparison of the Professional Service Short Contract
works scheme and use the NEC4 Engineering and (PSSC) with the Professional Service Contract (PSC),
Construction Short Contract (ECSC). This is much Getting help Guidance Note, October 2023, https://www.
simpler that the ECC but it still has the unique NEC runs one-day introduction courses on neccontract.com/news/comparison-of-the-
NEC benefits of early warnings and compensation the ECSC, PSSC and all other contracts, which professional-service-short-contract-pssc-with-the-
events. It does not have the detailed programme are particularly aimed at new users, along with the professional-service-contract
requirements of the ECC (see NEC Contract Board, recently launched series of ‘Getting it right’ one-day Patterson R and Higgins P (2021) Using NEC
Patterson and Parry 2023 for a comparison), making workshops (see the NEC website for more details at outside of the UK – an update, NEC Users’ Group
it easier for everyone to get used to NEC processes www.neccontract.com/products/training). Newsletter 111 (March 2021): 10-11. https://www.
and the NEC way of working. Also, if you are thinking of using NEC in a neccontract.com/About-NEC/News-and-Media/
Another option is to start with an even lower-cost country where NEC has never been used before, you Using-NEC-outside-of-the-UK-an-update
 CONTRACTS• BOOKS• TRAINING• USERS’ GROUPS• AWARDS• EVENTS• WEBINARS• PROJECT SUPPORT & CONSULTANCY• CONTENT PARTNERS 11

FAQs
PRACTICE

of quantities. Therefore, it is not a compensation

event if it is the cumulative effect of changes made
to several items in the bill of quantities. However, it
is not clear why your bill of quantities is not aligning
with the works information.
If it is because of the quantities, the first
paragraph of this answer deals with it. But if it is an
error, ambiguity or inconsistency, clause 60.6 requires
your project manager to correct the listed errors
in the bill of quantities. Each such correction will
be a compensation event and will be dealt with in
accordance with clauses 63.1 and 63.13. Note when
assessing this compensation event, the contractor
is assumed to have taken the bill of quantities as
correct, see clause 60.7.
ROBERT GERRARD
As for dealing with time, the contract is consistent
NEC USERS’ GROUP SECRETARY in that a compensation event can never result in the
completion date being set to an earlier date. That is
because of the wording of clause 63.3, which refers
only to delays to the planned completion.
All of this is confirmed in the NEC3 Engineering
This is a selection of recent questions to the events. Both those lump sums will have to be and Construction Contract Guidance Notes on clauses 60.4
NEC Users’ Group helpline and answers given. In priced considering the contractor’s additional risk to 60.6 and clause 63.3.
all cases it is assumed there are no amendments that of quantities changing, see clause 63.8. You and the
materially affect the standard NEC3 or NEC4 contract contractor may also opt to agree lump sums for any
referred to. compensation events, see clause 63.2. Staff costs over festive period
As for implementation, if the assessment for Question
Remeasuring implemented a compensation event is based upon rates and We are the project manager on an NEC4
quantities, those rates and quantities are used. That Engineering and Construction Contract (ECC)
compensation events does not change anything as far as assessment is Option A (priced contract with activity schedule).
Question concerned if those quantities change. The ‘Price The contractor is entitled to additional time as the
We are a project manager on an NEC4 for Work Done to Date’ of the work carried out is result of a compensation event, which has pushed
Engineering and Construction Contract (ECC) still based upon the rules in clause 11.2(30). What some activities into a planned 2 week holiday period.
Option B (priced contract with bill of quantities). implementation does do is prevent any change in the We think the contractor is entitled to overhead costs
The contractor considers that implemented way the compensation event is assessed, that is by for this period, while the contractor thinks it is also
compensation events are remeasurable if quantities lump sum, by quantities or by rates. due staff time even though the staff are on annual
and rates are used to change the bill of quantities, and All of the above is confirmed in page 65 of the leave. The contractor has included its employees’
that the client will remain at risk for the accuracy of NEC4 ECC User Guide Volume 4 Managing an home addresses as part of the working areas in the
the quantities. Is that right? Engineering and Construction Contract. With regard to contract data. Can staff time be included in the
Option B it states, ‘if quantities and rates are used to compensation event?
Answer change the bill of quantities, the client will remain at
Yes, the contractor is right. Clause 63.15 risk of the accuracy of quantities’. Answer
states how the bill of quantities is changed for The amount of time delay is assessed as the length
compensation events. Note the first bullet allows Errors in quantities in bill of of time that, due to the compensation event, planned
the use of changed rates, changed quantities or a
quantities completion is later than planned completion shown
changed lump sum. Any compensation event could on the accepted programme (clause 63.5). This is
use a mixture of all those if it sensible to do so, and Question
assessed using the logic on the accepted programme.
the rules in the second bullet can be changed if both We are a client using an NEC3 Engineering and
Construction Contract (ECC) Option B (priced If that shows the contractor taking the full 2 week
the project manager and contractor agree. If clause break, it still can do so. When it comes back after
contract with bill of quantities). We have found
63.15 requires the use of a lump sum or, in the case the break, you pay for the additional time it is in the
items in the bill of quantities being over- or under-
of the first bullet, if the parties agree to use a lump working areas. On the other hand, if you want the
measured when compared with the requirements
sum to assess the compensation event, that will not contractor to work through the break and it agrees,
of the works information. Further, remeasured
be remeasured. However, if clause 63.15 requires the it will have to pay staff and operatives overtime rates
quantities captured under clause 60.4 seem to have
use of quantities and rates or, in the case of the first which will further increase defined cost.
a time element to them. Also, if an under-measured
bullet, the parties agree to use quantities and rates to With regards to people, it is important to
item were to cause delay to completion, then a
assess the compensation event, those quantities will remember that those people whose normal place of
compensation event for prolongation would seem be
be remeasured. That is because the ‘Price for Work working is in the working areas get paid whether they
appropriate under clause 60.5, but for over-measured
Done to Date’ (see clause 11.2(30)) sets out how the are working in the working areas or not. See also the
items there seems to be no mechanism for us to bring
contractor will be paid. different wording between the first and second bullet
the completion date forwards. Could you clarify this
If there are rates and quantities in the changed bill please? of item 1 in the short schedule of cost components.
of quantities, those revised rates and/or quantities are You have not said what version of NEC4 ECC
still used to assess the ‘Price for Work Done to Date’. Answer you are using. Following the move to home working
If a lump sum is inserted in the bill of quantities, In Option B the employer takes the risk, or caused by Covid-19, the 2023 version changed the
that lump sum is paid based upon the proportion of reward, of the quantities in bill of quantities being wording of item 1 in the short schedule of cost
works but the final lump sum will not be changed. higher or lower. Clause 11.2(28) makes it clear that components, such that most people will be paid for
The principle of Option B is that the contractor the quantities in the bill of quantities are remeasured. at the people rates if the time is spent on work on
gets paid on a remeasurement basis for the work set However, remeasurement is not the case if the the contract. Compared to the 2017–2020 versions,
out in the bill of quantities which uses quantities and change of quantities was caused by a compensation there is no requirement that that work will be in the
rates. Therefore, the client is at risk (or reward) if event. In that case, the compensation event is working areas.
the quantities in the bill of quantities change when assessed based upon the effect it has, or is forecast to With regards to the ‘working areas’ in the contract
the work is remeasured. That principle does not have, on the defined cost plus the fee, see clause 63.1. data, that term is only used as part of the definition
change just because the rates and prices in the bill of Once assessed, the bill of quantities is changed in of the ‘Working Areas’, which is the defined term
quantities were added to or amended because of a accordance with the rules in clause 63.13. used, see clause 11.2(20). For the ‘Working Areas’ to
compensation event. As for clauses 60.4 and 60.5, these rely upon be part of the ‘working areas’, they have to be used
If you want to change that, you and the contractor the change to the total quantity of work done as only for work in the contract, see the second bullet
can agree to use lump sums for all compensation compared with the quantity for an item in the bill of clause 11.2(20).●
12 NEC NEWSLETTER• No.129• JANUARY 2024 TELEPHONE: +44 20 7665 2446 EMAIL: [email protected] WEB: neccontract.com

NEC Users’ Group corporate members

A warm welcome is extended to all new corporate members, highlighted in bold in the
corporate membership category lists below. Individual memberships are also available.
PLATINUM National Grid Plc Leicestershire County HLG Associates Limited
AWE Northumbrian Water Council Hogan Lovells
DAC Beachcroft LLP Limited M3 Surveying Limited
Indaver Ireland Limited
Dounreay Site Ove Arup & Partners MacKenzie
International Ltd Construction Limited John Papworth Limited
Restoration Ltd
09 Jan NEC4: ECC Project Manager Accreditation Virtual, UK High Speed Two (HS2) Oxfordshire County Mott MacDonald K&L Gates
Council Limited Leones Consulting
House of Commons
MTR Corporation
11 Jan NEC3: ECC Project Manager Accreditation Virtual, UK INOVYN ChlorVinyls Perth and Kinross
Council National Museum
Lilleker Bros Ltd
Ltd LM Services
Pick Everard Wales
Lantis Loughran Associates
NEC3 to NEC4 ECC Project Manager Port of Dover Nexus Rail
12 Jan Virtual, UK LLW Repository Limited
NG Bailey Group
Limited
Accreditation extension Magnox Limited Renew Group
Limited Mannings (Asia)
Moreton & Partners Ltd Rider Levett Bucknall Consultants Ltd
Norfolk County Council
MTR Corporation Ltd Rolls-Royce Submarines
15 Jan NEC4: ECC Project Manager Accreditation Hong Kong National Highways
Limited North Ayrshire Council McAdam Design
Northern Ireland MissionCX Limited
Network Rail RPS Group Plc
Housing Executive MP Infrastructure Ltd
22 Jan NEC4: ECC Project Manager Accreditation London Pinsent Masons LLP RWE Generation
Northern Ireland Water NBS Services
Rotherham Scottish Water
Northumberland NHS National Services
SKA Observatory
24 Jan NEC4: ECC Supervisor Accreditation Virtual, UK Metropolitan Borough
Council Stantec UK Ltd
County Council
Scotland
Osborne Clarke
RWE Renewables Strategic Estates UK NMCN PLC
Paul Y. Engineering
29 Jan NEC4: ECC Project Manager Accreditation Virtual, UK Management UK Parliament Group Limited Norman Rourke
Limited Tetra Tech Limited Pryme Ltd
R J McLeod Ltd
Southern Water
01 Feb NEC4: Introduction to the ECC Virtual, UK St Albans City &
The Coal Authority Ronez Novi Projects
District Council The Orange Partnership SAS Rope And Rail Ltd Orkney Islands Council
Tarmac Trading Ltd UK Atomic Energy Serimax pdConsult
02 Feb NEC4: TSC Service Manager Accreditation Virtual, HK Transport for Greater
Authority Shui On Construction Peak Gen Top Co
Manchester UK Power Networks Company Ltd Limited
(Operations) Ltd South East Water Ltd
Twoplustwo
05 Feb NEC4: ECC Project Manager Accreditation Manchester Commercial Services United Utilities Water South Gloucestershire
Peter Cousins &
Associates
Limited Plc Council
Vinci Construction Procom-IM Ltd
05 Feb NEC4 Getting it Right: Preparing an ECC Virtual, UK Vanderlande Industries
UK Ltd Management Ltd
South Lanarkshire
Council Quigg Golden Ltd
WSP UK Ltd voestalpine VAE GmbH Space Solutions Relay Engineering
NEC3 to NEC4: ECC Project Manager Volker Services Ltd Scotland Ltd Limited
09 Feb Virtual, HK GOLD
VSL Intrafor (HK) Sutton & East Surrey Reliance High Tech Ltd
Accreditation extension 1stCurve Limited
Warwickshire County
Water Plc
Restoration & Renewal
Advantage RSK Council The Contracts Group Delivery Authority
NEC4: ECC Project Manager Accreditation AECOM
West Kowloon Cultural
Ltd
SigTech Rail
12 Feb Virtual, UK Arcadis District Authority The Humber Bridge
(Blended) Arup West Yorkshire
Board Consultancy Ltd
Thinkproject UK SOCOTEC Advisory Ltd
Atkins UK Combined Authority
Limited Solomons Europe Ltd
12 Feb NEC4 Getting it Right: Managing an ECC Virtual, UK Balfour Beatty Major Wood Group UK Ltd
Translink Stephenson Harwood
Projects YGC
Bedfordshire Hospitals Turner & Townsend Summers-Inman
Yorkshire Water Infrastructure
NHS Foundation Trust
13 Feb NEC4: ECC Project Manager Accreditation Virtual, UK Bristol City Council
Services Ltd
TYPSA Limited
Construction &
Property Consultants
SILVER University of
Cadent Gas Limited Synergie Training
Airport Authority Wesminster
14 Feb NEC4: Introduction to the FMC Virtual, UK Canal & River Trust
Hong Kong Vasteam Construction Taziker Industrial
Construction & Limited Limited
Procurement Delivery Arbus Ltd
Architectural Services Veale Wasbrough Tenax Limited
19 Feb NEC4: ECC Project Manager Accreditation Hong Kong Costain Limited
Department, HKSAR Vizards LLP The Clarkson Alliance
Currie & Brown UK Ltd West Berkshire Council
Barhale Plc The Francis Crick
Defence Infrastructure West London NHS Trust
Beria Consultants Ltd Institute
19 Feb NEC4: ECC Supervisor Accreditation London Organisation (DIO)
Department For Boskalis Westminster Wilsons of Cambridge The Highland Council
Transport Ltd Worcestershire County The Rochester Bridge
Council
26 Feb NEC4: ECC Project Manager Accreditation London Department of Health Buckinghamshire Trust
Driver & Vehicle County Council BRONZE The Scottish
Standards Agency Burness Paull Aberdeen City Council
NEC3 to NEC4: ECC Supervisor Accreditation Government
28 Feb Virtual, UK East Dunbartonshire Cambridgeshire Allen Dadswell TLT LLP
extension Council County Council Construction
Venture Engineering
East Sussex County Capital Law Ltd Consultants
Council AstraZeneca Projects Ltd
China State
01 Mar NEC3: Introduction to the ECC Virtual, UK EGIS Construction BAE Systems Wallace Stone LLP
Esso Petroleum Co Ltd Engineering (Hong Belcan Advanced Water Supplies
04 Mar NEC4: ECC Project Manager Accreditation Virtual, UK Eurovia Group Ltd Kong) Ltd, Solutions Ltd Department, HKSAR
Farrans (Construction) Chun Wo Construction Bennetts Associates AFFILIATE
Ltd & Engineering Co Ltd Binnies UK Limited
04 Mar NEC4: ECC Project Manager Accreditation Virtual, HK FCDO Services Civil Engineering BK Surco Ltd
Association of
& Development Construction Quality
Freyssinet Ltd Department, HKSAR Black & Veatch (U.K.) Professionals
05 Mar NEC4: Introduction to the ECC Virtual, UK FSE Engineering Colas Ltd
Limited
Association of
Group Ltd Breheny Civil
Connect Plus Ltd Engineering Ltd. Consultant Quantity
Galliford Try
NEC3 to NEC4 ECC Project Manager Defence Science & Surveyors
07 Mar Virtual, UK Gardiner & Theobald
Technology Laboratory
Caledonian Maritime
British Consulate -
Accreditation extension LLP
Development Bureau,
Assets Limited
General
Gateshead Capital Consulting
Metropolitan Borough HKSAR International Ltd Chartered Institution
11 Mar NEC4: ECC Project Manager Accreditation London, Council Digital Beehive CappKind Limited of Civil Engineering
General Fusion Drainage Services Castle Hayes Pursey Surveyors Hong Kong
Department, HKSAR LLP
Sydney, GlaxoSmithKline Forestry Industry
11 Mar NEC4: ECC Project Manager Accreditation GNPower Kauswagan Electrical and CCJ Group Limited Contractors
Australia Ltd. Co. Mechanical Services Chandler KBS Association
Government Property Department, HKSAR
Ctori Construction Hong Kong Institute
Agency Environment Agency Consultants Limited
NEC3 to NEC4: TSC Service Manager of Construction
13 Mar Virtual, UK Heathrow Airport Faithful+Gould DAPS Project Adjudicators
Accreditation extension Limited Gammon Engineering Management Ltd Hong Kong Institute of
Herefordshire Council Construction Company Deane Public Works Construction Managers
Imperial College Limited Ltd
NEC4: ECC Project Manager Accreditation George Leslie Ltd
ICE (Canada)
18 Mar Virtual, UK London Dyer & Butler Ltd
Israel Contractors
(Blended) J. Murphy & Sons Ltd Gleeds UK Eastern Solent Coastal
Association
John Sisk & Son Hampshire County Partnership
Council First Choice Homes Northern Ireland
Kings College London
19 Mar NEC4: ECC Project Manager Accreditation London Laing O’Rourke Highways Department, Oldham Ambulance Service
HKSAR Foot Anstey LLP Health & Social Care
Leicestershire County Trust
25 Mar NEC4: ECC Project Manager Accreditation Virtual, UK Council HKCA Civil Engineering Fulkers
Pipeline Industries
Lincolnshire County Committee George Corderoy & Co
Council Holman Fenwick Glanville Projects Ltd Guild
Key: ECC − Engineering and Construction Contract, FMC – Facilities Management Contract, Mace Limited Willan LLP Gutteridge Haskins & Sustrans
TSC − Term Service Contract, Virtual – online event running between 9 am and 5 pm local Meinhardt Jacobs Davey Ltd The Hong Kong
Infrastructure & Kum Shing (KF) GVE Commercial Construction
time in Britain (UK) or Hong Kong (HK). Construction Co Ltd Association Ltd
Environment Ltd Solutions

All articles in this newsletter are the opinions of the authors and do not necessarily reflect the views of the NEC. Only NEC’s wholly owned products and services are
endorsed by NEC, so users need to satisfy themselves that any other products and services referred to are suitable for their needs. For ease of reading, all NEC contract
terms are set in lower-case, non-italic type and their meanings (unless stated otherwise) are intended to be as defined and/or identified in the relevant NEC contract.
Constructive contributions to the newsletter are always welcomed and should be emailed to the editor Simon Fullalove at [email protected]. Current and past issues
of the newsletter are also available in the MyNEC area of the NEC website at neccontract.com. All other enquires should be made to Lucy O’Connor, NEC marketing
manager, NEC, 1 Great George Street, London, SW1P 3AA, telephone +44 20 7665 2305, email [email protected].