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Vol 21 No 11 Nov/Dec 2016

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Practical Guide to the NEC3 Engineering and Construction Contract 2nd ed


ISBN13: 9781119032977
Previous Edition ISBN: 9781444336887
Published: November 2015
Publisher: John Wiley & Sons Ltd
Country of Publication: UK
Format: Hardback
Price: £75.00



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Launched in 1993, the NEC Engineering and Construction Contract has become one of the UK's leading standard forms of contract for major construction and civil engineering projects.

The third edition, popularly known as NEC3, is a process based contract embodying project and commercial management best practice, so its basic philosophy differs from the more adversarial approach of other standard construction contracts.

Since the first edition of this book, the third edition of the contract has seen the introduction of a new secondary option for use in the UK and amendments to a number of clauses. In addition, in September 2011, changes were introduced to cater for the amendments to the Housing Grants, Construction and Regeneration Act 1996 contained in the Local Democracy, Economic Development and Construction Act 2009, which became effective for all new contracts entered into from 1 October 2011. These amendments have been incorporated into the text.

A Practical Guide to the NEC3 Engineering and Construction Contract will be useful to everyone in the construction industry working on a project under this contract. It will be of interest to the complete construction supply chain, including employers, construction professions, contractors and sub-contractors, as well as consultants and lawyers advising any of these parties, either in the preparation of contract documentation or the day to day management or the resolution of problem situations which may arise.

Subjects:
Construction Law
Contents:
1. Introduction 1
1.1 General 1
1.2 Mechanics not law 2
1.3 A simple formula for understanding a contract 3
1.4 Mandatory or discretionary 4
1.5 Conditions precedent 4
1.6 Note on use of upper case in key words and phrases 5
2. Background to the NECECC 7
2.1 The background: First edition 7
2.2 The second edition 8
2.3 The third edition 9
2.4 The third edition (re ]printed) 9
2.5 Endorsement of NEC3 by the Office of Government Commerce 10
2.6 General philosophy: Aims and objectives 11
2.7 Flexibility 11
2.8 Clarity and simplicity 11
2.9 Stimulus to good management 12
2.10 Other characteristics 13
3. The Options: An Overview 15
3.1 General arrangement of the ECC 15
3.2 Other documents referred to 17
3.3 Contract Data 18
3.4 The published documents 18
3.5 Main Options: General outline 19
4. ‘Spirit of Mutual Trust and Cooperation’ 23
4.1 Introduction 23
4.2 Core clause 10.1 23
4.3 What does it mean? 25
4.4 Practical issues 26
5. The Cast of Characters 29
5.1 Introduction 29
5.2 The Employer 29
5.3 The Project Manager 31
5.4 The Supervisor 33
5.5 The Contractor 34
5.6 The Adjudicator 35
5.7 Subcontractors 36
5.8 ‘Others’ 36
5.9 Named Suppliers 37
5.10 Designers 37
5.11 Principal Designer 38
5.12 Principal Contractor 39
5.13 Practical issues 39
6. Communications, Early Warnings and other General Matters 41
6.1 Introduction 41
6.2 Communications: The clause 41
6.3 Communications: Practical issues 42
6.4 Early warnings: The clause 45
6.5 Early warnings: Practical issues 46
6.6 Other matters: The clauses 49
6.7 Other matters: Practical issues 52
7. The Contractor’s Main Responsibilities 55
7.1 Introduction 55
7.2 Providing the Works 55
7.3 Contractor’s design 57
7.4 Other matters 58
7.5 Practical issues 61
8. Subcontracting 65
8.1 Introduction 65
8.2 Definition of a Subcontractor 65
8.3 The core clauses 66
8.4 Provisions in the Main Options 67
8.5 Practical issues 67
8.6 Options for forms of subcontract in the NEC3 family 68
9. Testing and Defects 71
9.1 Introduction 71
9.2 Tests and inspections 71
9.3 What is a Defect? 73
9.4 The Defect procedure 73
9.5 The Defects Certificate 75
9.6 Uncorrected Defects 76
9.7 Practical issues 77
10. Title 81
10.1 Introduction 81
10.2 The core clauses 81
10.3 Practical issues 82
11. Risks and Insurance 85
11.1 Introduction 85
11.2 The core clauses 85
11.3 Practical issues 88
12. Time 91
12.1 Introduction 91
12.2 The programme: Contents 92
12.3 The programme: Submitting, accepting and revising 97
12.4 The programme: Practical issues 99
12.5 Starting and finishing 108
12.6 Other matters 111
12.7 Secondary Options related to Time 114
12.8 Practical issues 117
13. Payment 121
13.1 Introduction 121
13.2 The payment process 121
13.3 Payments in multiple currencies 124
13.4 The amount due and the PWDD 124
13.5 Supporting documents and records 134
13.6 The Contractor’s share 138
13.7 The Contractor’s share: Practical issues 139
13.8 Special provisions for the UK 141
13.9 Related Secondary Options 143
13.10 Practical issues 148
14. The Schedules of Cost Components 153
14.1 Introduction 153
14.2 The Schedule of Cost Components 153
14.3 The Shorter Schedule of Cost Components 158
14.4 Application to Subcontractors 159
14.5 Practical issues 160
15. Compensation Events: Theory and Events 165
15.1 Introduction 165
15.2 The theory 165
15.3 The events 167
15.4 Practical issues 182
16. Compensation Events: Procedures 187
16.1 Introduction 187
16.2 Notification by the Project Manager 189
16.3 Notification by the Contractor and the Project Manager’s reply 192
16.4 Other matters associated with notifying compensation events 195
16.5 Quotations: Substance 197
16.6 Quotations: Submission and reply 199
16.7 Assessments by the Project Manager 204
16.8 Implementing compensation events 206
16.9 Practical issues 207
17. Compensation Events: Assessment 215
17.1 Introduction 215
17.2 Changes to the Prices 216
17.3 Changes to the Completion Date and any Key Dates 220
17.4 Project Manager’s assumptions 223
17.5 Other related matters 224
17.6 Practical issues 226
18. Termination 229
18.1 Introduction 229
18.2 Reasons for termination 229
18.3 Implementing termination 233
18.4 Procedures after termination 234
18.5 Assessing the amount due after termination 235
18.6 Practical issues 237
19. Dispute Resolution 239
19.1 Introduction 239
19.2 Option W1 240
19.3 Option W2 243
19.4 Practical issues 248
20. Secondary Options 251
20.1 Introduction 251
20.2 X2: Changes in the law 251
20.3 X4: Parent company guarantee 252
20.4 X12: Partnering 252
20.5 X13: Performance bond 257
20.6 X17: Low performance damages 258
20.7 X18: Limitation of liability 258
20.8 X20: Key Performance Indicators 259
20.9 Y(UK)3: The Contracts (Rights of Third Parties) Act 1999 260
20.10 Z: Additional conditions of contract 260
20.11 Practical issues 262
21. Completing the Contract Data 263
21.1 Introduction 263
21.2 Purpose and form of the Contract Data 263
21.3 Part One: Data for the core clauses 264
21.4 Part One: Data for the Main Option clauses 268
21.5 Part One: Data for the Secondary Option clauses 269
21.6 Part Two: Data for the core clauses 273
21.7 Part Two: Data for the optional statements 274
21.8 Part Two: Data for Main Option A or B 275
21.9 Part Two: Data for Main Option C, D or E 276
21.10 Practical issues 278
22. The Supporting Documents: Need and Content 283
22.1 Introduction 283
22.2 Works Information 283
22.3 Site Information 293
22.4 Practical issues 294
Bibliography 297
Appendix 1 Tables of Clause Numbers, Case Law and Statutes 299
Appendix 2 Tables of Employer’s, Project Manager’s, Supervisor’s, Contractor’s and Adjudicator’s Actions 309
Appendix 3 Tables of Communication Forms and Their Uses 337