NEC have announced that the next generation of NEC contracts will be published in June 2017. Referred to as the NEC4 suite, the update is an evolution of the existing NEC3 suite rather than a revolution and, with traditional NEC values largely unchanged, will appear familiar to NEC3 users.
New Forms of Contract
Reflecting current market trends, two new contracts will be released:
- NEC4 Design Build Operate Contract (DBO)
- The DBO combines responsibility for usually disparate functions - design, construction, operation and/or maintenance, procured from a single supplier.
- It can include a range of different services to be provided before, during and after the construction works are completed; such as operation of the asset and more straightforward facilities management.
- The Alliance Contract (ALC) – consultation form
- The ALC will initially be published in consultation form. It has been created to support Clients wanting to fully integrate the delivery team for large complex projects.
- It is a single collaborative multi-party contract based on an integrated risk and reward model.
Key New Features
Revisions to the existing NEC3 suite include:
- The "Employer" will be the "Client" in all forms (save for the Supply Contract)
- The "Risk Register" will be the "Early Warning Register"
- "Works Information", "Service Information" and "Goods Information" all become the "Scope"
- The Contractor as well as the Project Manager can propose positive changes such as acceleration or a change to the Scope to improve the outcome of the project.
- A secondary option allows the Contractor to identify opportunities to change the Scope which would reduce the cost of the asset over its whole life. If accepted, the Contractor will share the cost savings.
Consensual Dispute Resolution
- New procedure of escalation and negotiation of a dispute over a 4 week period (mandatory where the HGCRA does not apply).
Finality of Assessments
- New procedures encourage checking and agreement of Defined Cost and Disallowed Cost progressively as the work proceeds.
- After certain timescales, a correctly issued final assessment becomes conclusive if not challenged by either party referring the issue to dispute resolution within 4 weeks of issue.
- Periodic assessments now require an application by the Contractor – if no application is made by the assessment date, the Contractor will not receive payment.
Perhaps most significantly, in an attempt to reduce the number of Z-clause amendments, there are new Core clauses and Secondary options:
- Bribery and Corruption
- Confidentiality and Publicity
- Transfer of Benefit (Assignment)
- Contractor's Design and Build Option (for ECC and ECS only)
- Dispute Avoidance Board
- Collateral Warranties, known as "Undertaking to Others"
- Early Contractor Involvement