The use of NEC®3 or NEC®4 form of contract has increased, and mostly notably in the UK Public Sector. The role of the Project Manager and Supervisor require nominated persons to have undertaken, and successfully passed, the ICE accredited courses; however, no accreditation is available or required to be the Contractor or Subcontractor. There is, however, the presumption that the Contractor or Subcontractor is competent and experienced in NEC®3 or NEC®4 contract administration.
The NEC®3 or NEC®4 Engineering and Construction Contract (ECC) and Engineering and Construction Subcontract (ECS) are designed for back-to-back clauses between the Contractor and his Subcontractors, which also means passing risks and liabilities, to the extent defined in the contract.
In general, there can be no substitute for knowledgeable, competent, and experienced personnel in drafting, negotiating, and administrating contracts. The same can be applied to NEC®3 or NEC®4 and FIDIC® forms of contract.
The Global Construction Disputes Report 2018 stated the three prominent causes for disputes in 2017 were (1) Inadequate or improper contract administration, (2) Inadequately drafted or unsubstantiated claims, and (3) Inadequate understanding of contracting Party’s obligations or non-compliance with contractual obligations. Source
So, how to be more effective in the pre-contract phase?
- Use knowledgeable, competent, and experienced personnel in the drafting, negotiation, and administration of the form of contract.
- Avoid ambiguous and onerous terms and strive for clear, concise and specific wording.
- Always be conscious of the project variables: scope, cost, time quality, risk, benefits, and resources, and more importantly, what processes and procedures you will implement to manage and control these variables.
- Undertake a contract risk assessment and understand how to deal with identified risks and have an effective process for risk and issue management.
- Engage appropriate and adequately qualified resources.