The NEC4 suite of contracts will be launched tomorrow. Here are the four essential things to know about NEC4, and the three things to know about the contract it replaces, NEC3.

4 things you need to know about the new NEC4

  1. There will be two new forms of contract: (i) Design, Build and Operate Contract; and (ii) Alliance Contracts.
  2. Terminology used in the Engineering and Construction Contract is different with NEC4.
  3. NEC4 contains core clauses that were not included in NEC3 covering things such as assignment, bribery, confidentiality, a new compensation event and (in main options C, D, E and F) procedures for agreeing final accounts which become conclusive unless challenged in time.
  4. NEC4 contains tiered dispute resolution procedures and secondary options which were not included in NEC3 including for BIM, change to scope for lifecycle cost reduction, collateral warranties, design and build options and Early Contractor Involvement.

For a summary of these changes, please see our earlier Law-Now here. We will provide more details once the documents are live.

3 things you need to know about the old NEC3

  1. The NEC3 suite of contracts will stop being updated from tomorrow, but can still be used on new projects. However, recent changes in law (eg. bribery and corruption) and government polices (eg. BIM) are and will be updated in NEC4 only. The equivalent positions could be reached in an NEC3 contract by including appropriate Z clauses.
  2. NEC3 contracts that have already been entered into will continue to be valid and enforceable for the remainder of their limitation periods.
  3. NEC3 experience will not have been wasted as the NEC4 suite is “an evolution, not a revolution”. The core principles of NEC3 remain the same in NEC4, but users will need training to understand the differences and the practical consequences of these.

CMS has been keeping you up to date on the introduction of the NEC4 (see our earlier Law-Nows here and here) and we will continue to do so as it comes into use.