NEC - New Engineering Contract

Question 1

Name 3 facts of NEC

Answer 1

• first published 1993
• a suite of contracts designed to promote partnering and collaboration between contractor and Client
• recommended in Latham Report 1994 (constructing the team)

Question 2

Name 3 intentions of NECs

Answer 2

• stimulate good management
• be clear and simple - in plain English, no legal terminology
• be useable in a wide variety of situations from minor to major projects

Question 3

NEC 3 published in 2005 suite of contracts include: (12)

Answer 3

• the engineering and construction contract
• the engineering and construction subcontract
• the engineering and construction short contract
• the engineering and construction short subcontract
• the professional services contract
• the professional services short contract
• term services contract
• term services short contract
• supply contract
• supply short contract
• framework contract
• the adjudicator’s contract

Question 4

Clause 10.1 states:

Answer 4

• ‘the employer, the contractor, the project manager and the supervisor shall act as stated in the contact and in a spirit of mutual trust and cooperation.’

Question 5

Name the core clauses (9)

Answer 5

• general
• the contractor’s main responsibilities
• time / programme
• testing and defects
• payment
• compensation events
• title
• risks and insurance
• termination

Question 6

Name the main contract options (6)

Answer 6

• priced contract with activity schedule (closest to fixed term lump sum price)
• priced contract with bill of quantities (contractor paid for amount of work done)
• target contract with activity schedule
• target contract with Bill of quantities
• cost reimbursable contract (favours contractor)
• management contract

Question 7

Contract administration facts (4)

Answer 7

• project manager carries out 90% of contract administration
• supervisor ensures quality complies with works information
• no QS or Architect identified
• certificates eg. Completion, defects, payment

Question 8

Communications - name 6 facts

Answer 8

• all communications take effect when received
• contractor and project manager to act within contract timescales - COMPENSATION EVENT if period runs over
• a notification is a separate communication - for defects, each has to be notified separately.
  This potentially creates a huge amount of work
• early warning by contractor for increase in total prices, delay in completion / key date and performance is key
• PM to enter early warning matters on risk register
• risk can be reduced through meetings with contractor

Question 9

Programme - an accepted programme is key to this contract type set out in Clause 31.2

Name contractor and PM duties (1 each)

Answer 9

• contractor submits programme to PM for acceptance

- PM has 2 weeks to accept or notify reason for non-acceptance

Question 10

What is a defect and when is the defects date?

Answer 10

• defect: anything which is not in line with works information
• defects date: end of notification period

Question 11

Defects certificate - time driven NOT work driven.

What are the contractors responsibilities? (2)

What are the Supervisor’s responsibilities? (2)

Answer 11

• contractor: prior to completion contractor to correct notified defects if it would prevent others doing there work (cl. 11.2C2)
• after completion: contractor to correct notified defects before the end of the defects correction period (cl.43.2) JCT CONTRACTS SHOULD INCLUDE THIS
• supervisor: May notify defect any time before defects date
• supervisor issues defects certificate at last correction period.

Question 12

Payment- name 1 supervisor duty and 1 Project Manager duty

Answer 12

• assess amount due at each assessment date and certify within 1 week of assessment date
• first assessment date decided by PM then in accordance with contract until 4 weeks after issue of defects certificate and full completion of works

Question 13

What does payment include? (3)

Amount due

Answer 13

• price of works done to date
• plus other amounts to be paid to contractor
• less amounts to be paid / retained from contractor eg. Delay damages

(Including any tax, VAT 20%)