NEC contracts—risk management
NEC contracts—risk management

The following Construction practice note provides comprehensive and up to date legal information covering:

  • NEC contracts—risk management
  • Risk allocation
  • The Early Warning Register
  • Initial Early Warning Register
  • Updating the Early Warning Register
  • The early warning procedure
  • Early warning meetings
  • Compensation events
  • The programme
  • Initial programme
  • More...

The NEC3 and NEC4 contracts encourage an ongoing, proactive approach to the monitoring and management of risks, and anyone administering or working under these contracts needs to pay close attention to the risk management processes. This Practice Note looks specifically at the risk management provisions in the NEC3/NEC4 Engineering and Construction Contract (ECC), but similar provisions are found across the suite.

Risk allocation

First, a distinction must be drawn between risk management and risk allocation in the NEC contracts.

The contracts take the opposite approach to risk allocation to some of the other standard forms, and specifically set out which risks are borne by the Client (known as the ‘Employer’ in NEC3). All others, by implication, are then the Contractor’s risks. The risks taken on by the Client, described as the ‘Client’s liabilities’ in NEC4 and the ‘Employer’s risks’ in NEC3, are listed in clause 80.1 and this list can be supplemented by noting additional risks to be assumed by the Client in part one of the Contract Data.

The distinction between risk allocation and risk management under the NEC3 contracts was sometimes blurred. This was in part due to the wording of the last bullet of clause 80.1, which referred to additional risks to be adopted by the Employer being 'stated in the Contract Data’ but did not specify that they should be inserted, by the Employer,

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