Summary: In this blog, Iain Suttie considers the NEC4 suite of contracts and whether the "hype" around the launch of NEC4 is justified.
As everyone who is anyone knows, the NEC4 suite was launched in London last month. The event on 22 June was quite a draw: I can’t recall our clients ever before attending in such numbers the official unveiling of a standard form contract. That is usually a niche pastime. It is testament to just how deeply the NEC forms have penetrated certain sectors, a success allied to NEC’s powerful marketing.
The whole thing feels like the launch of a new Apple product. The sense of anticipation. The buzz. Dare I say it – even just a little hype (though I rather admire anyone who can energise the marketing of standard forms). One understands that other, more analogue, contract forms are still available.
Time under NEC4 (or tick-tock)
And just as with Apple, the NEC’s development cycle can be seen as tick-tock. With hindsight, NEC3 is the edition that really made the NEC suite’s name. It was NEC3 that provided the basis of the contracts used for the London Olympics and Crossrail, to name but two of the most widely referenced programmes. The changes incorporated into NEC3, together with the feel and appearance of the contracts, gave NEC a tick moment.
By contrast, NEC4 is a bit of a tock. NEC has admitted as much. It’s all about evolution, not revolution, we were told (and now can see for ourselves). So while there are some significant changes, there really isn’t that much to grab the headlines. In that respect, it’s rather like – well, rather like JCT 2016. But that’s not necessarily a bad thing in the lifecycle of standard forms. Just don’t brand them strong and stable.
Still, if I were to fulfil my brief as an occasional, jobbing contract commentator, I would list out those developments in NEC4 that, in my view, are nevertheless the most significant. And I would leaven the narrative with some brief analysis of my own. But I’m not going to do that. Frankly, you can easily find very good summaries elsewhere, whether published by NEC itself, Practical Law or a host of others.
Standard form sociology
Instead, I will indulge in a little people-watching. Or standard form sociology, if you like. Here are some observations made in the field:
- Celebrity endorsements: Picking up where NEC3 left off, NEC4 garners endorsement from doyens of the construction and infrastructure sectors. The level and prominence of support – particularly among those charged with enabling or delivering publicly funded projects – is striking, even on the most neutral view. To take just one example, Dr David Hancock, head of construction at the Cabinet Office, has said that NEC4 is “central to strengthening the government’s capability as a construction client”. It is easy to find similar quotes (some on NEC's on website).
I wouldn’t suggest for one moment that such statements are other than genuinely made after due consideration. Nor that almost all the people making them don’t clearly distinguish between a contract that enables good project management, and the types of project culture that will more fundamentally determine success or failure, regardless of contract form. Any contract that is a stimulus to best-in-class project management only gets one so far. But there does seem to be a blurring of the distinction in some pronouncements.
- No invite to the party: Nonetheless, some people still clearly feel aggrieved by the heft of NEC and its marketing might. They may point to the commercial aspect of NEC – with its conferences and tools – and decry how celebrity endorsements are corralled in the service of what remains a private enterprise, charging a healthy going rate for its products and add-ons. One such critic, Professor John Uff, has even recently said that the use of cultic puffs by NEC in its marketing material “is surely not the approach to be expected from any so-called professional body”.
This is strong stuff. And Professor Uff does have a point. But the better target (if there is to be one) would be those industry leaders and senior government officials who endorse in overblown terms a standard form produced by a profit-making body. Claims that any contract by itself can deliver vastly improved results (as opposed to enabling and helping to instil the “right” project culture) deserve a pinch of salt. But one can hardly blame a marketing team for seizing upon them.
- Governing for the people: That leaves the broader question of whether government should really be in the business of endorsing any standard form suite as its preferred contract form. One can understand why NEC first won the accolade: it was a fresh contract devised and powerfully advocated by interesting and senior figures in the early 1990s. That was the right time and place: little wonder that Sir Michael Latham promoted its use in Constructing the Team (1994). Whether that decision warrants such prominent and continued official support nearly a quarter of a century later must be open to legitimate question. It’s one thing to support an approach to procurement and risk allocation; another to underwrite a drafting body to such a significant extent as a matter of policy, even if one does see merit in standardisation across the public sector.
But NEC’s critics won’t receive their invites any time soon. NEC will remain embedded in the public sector, largely because of the investment to date by clients in procurement and management systems that align with it. Also, could there possibly be the faintest element of groupthink and professional pride? The NEC emperor is clearly well dressed. But would any senior person within government or a major UK infrastructure project now be brave enough to suggest a change of clothes? That itself is worth a serious sociological study.
This blog post first appeared on PLC Construction Blog on 26 July 2017.