This Practice Note examines some of the key areas where the NEC3 and NEC4 standard form construction contracts take a different approach to the JCT 2016 and 2024 contracts. It also highlights some provisions omitted from the NEC contracts that are found in the JCT contracts. Except where otherwise indicated, this Practice Note focuses on the provisions of the NEC3/NEC4 Engineering and Construction Contract (ECC) and the JCT Standard Building Contract With Quantities (SBC) 2016/2024. Differences in approach NEC The NEC contracts are geared towards use within the engineering industry but are intended to be adaptable and suitable for use for both engineering and building works. The key NEC contract, the ECC, is intended to be suitable for traditional, design and build, or management forms of procurement (although there is a Design, Build and Operate Contract in the NEC4 suite). The NEC contracts differ from traditional contracts in that they are not intended to set out exhaustively the rights and obligations of the parties. The drafters’ aim was to produce contracts that would function more as practice

This Practice Note looks at Option X12 of the NEC3 and NEC4 contracts, entitled ‘Multiparty Collaboration’ in NEC4 and ‘Partnering’ in NEC3. It is one of the secondary Options in the NEC contracts, which can be selected by the Client (the ‘Employer’ in NEC3) to tailor the contract to its particular needs or the needs of the project (see Practice Note: NEC contracts—introduction). References to the Client include the Employer where NEC3 is used, unless the context requires otherwise. Option X12 was originally derived from the Construction Industry Council’s ‘Guide to Project Team Partnering’. It was first issued in June 2001 as a secondary Option (Option X12), for incorporation into the NEC2 Engineering and Construction Contract (ECC). Like the other secondary Options, Option X12 supplements the Core Clauses and selected main Option. In the case of Option X12, it is incorporated in order to introduce partnering concepts and mechanisms into an NEC contract (see Practice Note: Partnering). Option X12 is largely the same in NEC4 as it was in NEC3, in terms of substance. However,

This Practice Note considers compensation events in the NEC3 and NEC4 contracts. The occurrence of compensation events may entitle the Contractor to additional time and/or money. It looks specifically at the NEC3/NEC4 Engineering and Construction Contract (ECC), but similar provisions are found across the suite. Key features The compensation event regime in the NEC contracts is contained in section 6 of the core clauses. Key features include: • there is a single procedure dealing with the Contractor’s claims for additional time and money, with a single list of qualifying events. This can be contrasted with the JCT contracts, in which events entitling the Contractor to additional time (‘Relevant Events’) and money (‘Relevant Matters’) are dealt with separately. For an analysis of the compensation events themselves, see Practice Note: NEC contracts—interpreting the list of compensation events (clause 60) and for a comparison with the JCT Relevant Events/Relevant Matters and time/money claims under the FIDIC contracts, see Practice Note: Comparison between JCT, NEC and FIDIC time and money events • in NEC4, the list of compensation events can be supplemented

Some suites of construction contracts include separate forms of contract to be used where the contractor is to take responsibility for designing, as well as building, the works—the JCT suite, for example, contains the well-known JCT Design and Build form. The NEC3/NEC4 suites of contract take a different approach and do not include a separate design and build contract. The NEC4 suite introduced the Design Build and Operate (DBO) contract, but this form, as the name suggests, is intended for use where the employer wishes the contractor to design and build, but also operate/maintain, an asset for a period of time. The NEC Engineering and Construction Contract (ECC) is intended to be suitable for use whether the Contractor has no design responsibility, responsibility for the whole design, or for any part of the design of the works. NEC envisage that the requirements as to design will be set out in the Works Information (in NEC3 terminology)/Scope (under NEC4). This Practice Note looks at how design is addressed under the NEC ECC. For a more general discussion of design

This Practice Note considers the dispute resolution procedure under the NEC3 and NEC4 contracts, including discussions between Senior Representatives, adjudication, Dispute Avoidance Board (DAB) recommendations and final resolution by litigation or arbitration. It focuses specifically on the provisions of the Engineering and Construction Contract (ECC). The dispute resolution provisions are found in Options W1, W2 and (in the NEC4 ECC) W3, one of which must be selected by the parties when they enter into the contract. The parties are also required to provide important information in the Contract Data, for example, whether disputes are to be finally resolved by litigation (ie court proceedings) or arbitration. If the contract is subject to the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996), then Option W2 must be selected, as it is the only one which allows disputes to be referred to adjudication at any time. For guidance on when the HGCRA 1996 applies, see Practice Note: What is a construction contract under the HGCRA 1996? In the NEC4 ECC, the dispute resolution Options provide as follows:

NEC terminology Practitioners who are new to the NEC contracts may find the below explanations of terms used in the NEC ECC useful, as there are many terms used in these contracts that are unique to the NEC suite and/or which may require further explanation. It is important to remember when using the NEC ECC that both capitalised terms and those in italics are important to interpretation of the contract. Where a term is capitalised, the definition of the term can be found in clause 11.2. Where a term is in italics, refer to the details inserted in the Contract Data (where a term is italicised in the NEC ECC, it is shown in italics in this glossary). This list also includes terms that are used within NEC but which are not defined or included in the Contract Data (as such not all terms in this glossary are capitalised or in italics). The list below should always be read in conjunction with clause 11.2 and the Contract Data of the contract in question. This glossary covers both the NEC3 and

This Practice Note considers the allocation of risks and the insurance requirements in the NEC Engineering and Construction Contract (ECC). It considers the type of insurance to be maintained by both parties including Contractor’s All Risks insurance and public liability cover. For a more general background on the NEC3 and NEC4 suite of contracts, see Practice Note: NEC contracts—introduction. For details of how insurance is dealt with under other standard form contracts, see Practice Notes: JCT contracts—insurance, FIDIC contracts 2017—insurance and FIDIC contracts (pre-2017 editions)—insurance. This Practice Note covers both the NEC3 and NEC4 editions of the ECC. For consistency, the term ‘Client’ is used throughout as this is the term used for the developer/employer in the NEC4 contracts (the NEC3 ECC uses the term ‘Employer’). For a glossary of NEC terms, see Practice Note: NEC contracts—glossary. Where no distinction is made between clause numbers, the clause numbers throughout this Practice Note refer to both the NEC3 and NEC4 versions of the ECC. Regardless of whether the parties choose to amend the standard NEC ECC insurance terms (by

This Practice Note examines and provides commentary on the list of compensation events contained in clause 60 of the NEC3 and NEC4 engineering and construction contracts (NEC3 ECC and NEC4 ECC). It looks at how the different compensation events may be used in practice, provides references to case law on the topics and suggests ways in which the compensation event clauses may be amended by the parties. This Practice Note supplements Practice Note: NEC contracts—compensation event regime which sets out the process for claiming compensation events under the NEC3 ECC and NEC4 ECC. Note that the NEC3 suite refers to the ‘Employer’ but, in the NEC4 suite, the employer is re-named the ‘Client’. For ease of reference, this Practice Note uses ‘Client’ in relation to both contracts. For a glossary of NEC terms, see Practice Note: NEC contracts—glossary. Compensation events in clause 60 The list of compensation events in clause 60 is the same in both the NEC3 and NEC4 versions of the ECC with the exceptions of 60.1(20) and 60.1(21) which

This Practice Note examines the type of construction projects that the NEC contracts are intended to be used for and the key features of the NEC3 and NEC4 suites of contract. It looks at the style and structure of the NEC3/NEC4 contracts (including the main options, secondary options and Z clauses) and the principles adopted by the NEC in drafting them. It also considers some of the features which differentiate the NEC contracts from other industry standard forms (such as the Risk Register/Early Warning Register and early warning mechanism). Note that the NEC3 suite refers to the ‘Employer’ but, in the NEC4 suite, the employer is re-named the ‘Client’. For ease of reference, this Practice Note uses ‘Client’ in relation to both contracts. For a glossary of NEC terms, see Practice Note: NEC contracts—glossary. Introduction to NEC The NEC contracts are published by the Institution of Civil Engineers. The first contract published was the first edition of the New Engineering Contract in 1993. This was followed by a new suite of NEC contracts in 2005 (revised and re-published

This Practice Note identifies key considerations within the NEC3 and NEC4 contracts, looks at how the NEC suite differs from other standard forms and considers how users can address issues which may be of concern to the employer or contractor. It focuses on the provisions of the NEC4/NEC3 Engineering and Construction Contract (ECC), but similar provisions are found across the suite. This Practice Note covers both the NEC3 and NEC4 editions of the ECC. For consistency, the term ‘Client’ is used throughout this Practice Note as this is the term used for the developer/employer in the NEC4 ECC (the NEC3 ECC uses the term ‘Employer’). The term ‘Scope’ is used throughout this Practice Note as per the NEC4 ECC to describe the document that specifies and describes the works which the Contractor is to carry out (in the NEC3 ECC the term ‘Works Information’ is used). For a glossary of NEC terms, see Practice Note: NEC contracts—glossary. Where no distinction is made between clause numbers, the clause numbers throughout this Practice Note refer to both the NEC3 and NEC4

This Practice Note looks at how payments are made and how the contract price is calculated under the NEC Engineering and Construction Contract (ECC). It provides an overview of how each of the main pricing options operate, how the price for the works is calculated and how the risk of increased costs are shared between the parties. For information on payment under construction contracts more generally, see Practice Notes: Interim payments in construction contracts, Interim payments in construction contracts and The final account in construction and engineering contracts. This Practice Note covers both the NEC3 and NEC4 editions of the ECC. For consistency, the term ‘Client’ is used throughout this Practice Note as this is the term used for the developer/employer in the NEC4 contracts (the NEC3 ECC uses the term ‘Employer’). The term ‘Scope’ is used throughout this Practice Note as per the NEC4 ECC to describe the document which specifies and describes the works which the Contractor is to carry out (in the NEC3 ECC the term ‘Works Information’ is used). For a glossary of NEC

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