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CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE
ISSUE No.72 MAY 2015 www.neccontract.com
NEwslEttEr
More than 240 NEC users attended the annual
NEC Users’ Group seminar at the Institution of
Civil Engineers headquarters in central London last
month. The sell-out event attracted delegates from
around the world and culminated with the first-
ever NEC awards ceremony.
The keynote speaker was David Hancock, head
of construction at the UK Cabinet Office, who
endorsed the collaborative nature of NEC contracts
in his presentation on the UK government’s
construction strategy for the next 10 years.
Outlining his vision for delivering the targets
set by Construction 2025 he said, ‘having survived
the recession and with a full development pipeline
ahead, it’s time to collaborate as an industry, to
future-proof construction and change it for the
better.’
BIM, FM and NEC
Simon Rawlinson, member of the UK
government’s BIM Task Group and partner at EC
Harris, then described NEC’s role in delivering the
benefits of building information modelling − a
requirement for all UK government contracts from
next year.
Tim Cummins, president of the International
Association for Contract and Commercial
Management, discussed the latest ideas and
models of collaboration and what these mean
for NEC users, after which John Kenny, head
of facilities management at Crown Commercial
Services, explained how the NEC3 Term Service
Contract (TSC) is delivering up to £4 billion of
public sector facilities management frameworks.
Railways and highways
Next up was Phil Bennett, finance and
commercial director for Network Rail’s southern
region infrastructure projects, who described its
decision to start using NEC a year ago as, ‘a new
chapter for Network Rail, based on a spirit of
mutual trust and co-operation.’
In April 2014 Network Rail let four 5-year NEC
Framework Contracts worth £1.2 billion. ‘We are
now one year into the new frameworks and have
already seen reduced management and transaction
costs, increased opportunities to innovate, and
improvements in both the quality of work and the
safety of the workforce,’ he said.
Maththew Lugg, director of public services
at Mouchel Infrastructure Services, and Peter
Higgins, member of the NEC board, concluded the
morning session with a review of how a standard
TSC is helping to deliver the UK Highways
Maintenance Efficiency Programme.
Workshops and awards
The afternoon session involved workshops
on setting and managing target cost contracts;
collaboration, early warning and disputes; and
working with the TSC. An expert panel session on
benefits and challenges to collaborative partnering
concluded the formal sessions, after which NEC
Users’ Group president Rudi Klein presented the
inaugural NEC awards (see page 2).
According to Rekha Thawrani, NEC general
manager, ‘We were thrilled with the overwhelming
success of this year’s seminar and the first ever
NEC awards. Once again, this sell-out event
was a wonderful engaging mix of insightful
presentations, interactive workshops, panel
discussion and excellent networking opportunities
for attending delegates.
‘The event is a standout opportunity to
recognise and celebrate the world’s finest examples
of NEC3 contract collaborations. I congratulate our
sterling and inspirational award winners, and thank
our key speakers, presenters and all the users who
joined us.’ ●
For further information including a detailed seminar
report and copies of presentations visit the NEC website
at neccontract.com/seminar15.
over 240 NEC users attend
annual seminar in london
SIMON FULLALOVE EDitor
CONTENTS
Inaugural NEC award winners include major 2
Dutch project
South African university delivers 35 3
NEC projects
New NEC3 solutions guide published 3
New training course on ECC commercial 3
aspects
NEC contracts and CDM 2015 4
Virtual observations provide NEC users 5
with location-specific weather reports
NEC early warnings – the need for a more 6
positive perception
FAQs 7
ICE Register of Accredited NEC3 ECC 8
Project Managers
Diary 8
The new £136 million permanent premises for the
International Criminal Court in The Hague,
Netherlands, will be delivered on time and budget
in September this year under an NEC3 Engineering
and Construction Contract (ECC) option C (target
cost with activity schedule). Currently the biggest-
ever use of ECC in mainland Europe, the project
won the NEC Large Project of the Year award at
the inaugural NEC awards in London last month
(see page 2)
Winners of the inaugural NEC awards last month
included the £136 million International Criminal
Court (ICC) in The Hague, Netherlands, which
won the first NEC Large Project of the Year
award. Prizes were also presented to the best
small project, client, contractor and project
manager.
NEC Users’ Group president Rudi Klein
presented awards to the winners and runners-up
in each category at the NEC Users’ Group annual
seminar in London on 20 April 2015. The judges
were NEC Users’ Group chairman Steve Rowsell,
NEC Users’ Group secretary Rob Gerrard, NEC
board member Matthew Symes and Costain
commercial director Matthew Garratt.
According to Rowsell, ‘We were very impressed
with the high number and standard of the
entries. While it was no real surprise, given the
vast increase in the use of NEC contracts for
delivering high quality projects both in the UK
and internationally, it bodes well − both for
future awards events and for the future of the
construction industry as a whole.’
Largest in mainland Europe
ICC is the largest use of NEC in mainland
Europe to date. According to the judges,
the client ‘took an important leap of faith’
in choosing the NEC3 Engineering and
Construction Contract (ECC) option C (target
contract with activity schedule) to support its
desired collaboration strategy.
NEC was selected over the Dutch UAV-GC
and international Fidic forms on the basis that it
was best for promoting a collaborative approach
as well as delivering best value for money.
Contractor Courtys, a joint venture of Visser &
Smit Bouw and Boele & van Eesteren, started
work on the 54,600 m2
building in 2012 and is
due to hand over on schedule in September this
year.
ICC’s project manager Paul Fondse of Brink
Groep said around 150 early warnings have
been issued and resolved to date, including the
unexpected discovery of buried fuel tanks and
ground pollution, and changing the planned
fibre-reinforced-composite facade to aluminium.
He estimates a final shared saving of around £5
million.
The Hong Kong Drainage Services
Department’s £89 million Happy Valley
underground stormwater storage scheme and
RWE Innogy UK’s £44 million Goole wind farm in
Yorkshire, UK were both highly commended in
the large project category.
Councils dominate small category
The winner of the NEC Small Project of the
Year was an 8 week, £250,000 refurbishment
at Rushden Pool in Northamptonshire, UK.
The work was carried out for client East
Northamptonshire Council under an NEC3
Engineering and Construction Short Contract via
the Scape local authority framework.
Together with project manager Pick Everard
and contractor Jeakins Weir, the council
faced a £12,000 weekly penalty if the pool did
not re-open on time. The judges said, ‘Full
application of the contract led to all sorts of
issues being resolved openly, transparently and
with evident collaboration.’
Two other UK local authority projects −
Hadleigh Park in Essex and Kennington Park
One O’clock Club and Adventure Playground in
Lambeth − were both highly commended in the
small project category.
Network Rail wins best client
UK rail infrastructure owner and operator
Network Rail won the NEC Client of the Year
award in recognition of its decision to let four 5
year NEC3 Framework Contracts last year worth
£1.2 billion.
The so-called ‘Control period 5 multi-
functional framework contracts’ cover a portfolio
of over 500 building and civil engineering
enhancement projects on the Anglian, Kent,
Sussex and Wessex routes in south-east England.
The individual projects are being undertaken
using ECC options A (priced contract with activity
schedule, C and E (cost reimbursable), the NEC3
Professional Services Contract option E and the
NEC3 Engineering and Construction Subcontract.
The switch to NEC was a major step for
Network Rail, which has traditionally used
the former ICE Conditions of Contract for
infrastructure projects. According to southern
region finance and commercial director Phil
Bennett, ‘We identified NEC as the optimum
industry contract form which aligns and facilitates
the corporate objective to transition into a more
collaborative client working in a transparent and
trusting manner with our suppliers.’
The judges said the frameworks, ‘demonstrate
how collaboration starts with the selection of
the right suppliers with the right culture and
capability to deliver innovation at an early stage
in a project, based on BS11000 collaboration
principles and supported by the NEC3.’
Britain’s M25 motorway operator Connect
Plus and the ICC were highly commended in the
client category.
VolkerFitzpatrick wins best contractor
VolkerFitzpatrick won the NEC Contractor of
the Year for its role in Network Rail’s £500 million
NEC-based framework for the Anglian route in
south-east England.
The judges said, ‘The project demonstrates a
strong integration of roles, incorporating early
contractor involvement and BS 11000 principles,
to achieve collaboration supported by the use of
the NEC3 to focus on delivering excellence.’
BAM Nuttall and Costain, which are jointly
delivering Network Rail’s £300 million NEC-based
frameworks for the Kent and Sussex routes,
and Graham Construction, currently upgrading
Monklands Hospital in Airdrie, Scotland under
the NEC-based Health Facilities Scotland 2
framework, were highly commended in the
contractor category.
Project manager of the year
Last but not least, the NEC Project Manager
of the Year award went to David Hunter for
achieving the highest marks in the NEC3 ECC
project manager accreditation programme in
2014.
Hunter is a commercial manager with Urban
Vision Partnership, a joint venture between
Capita, Galliford Try and Salford City Council. An
experienced NEC advisor, he nevertheless felt it
important to gain a recognised NEC qualification
and says he also significantly benefited from
attending the programme. ●
For further information on each winning and
highly commended project, visit the NEC website
neccontract.com/awards.
2 NEC usErs’ group NEwslEttEr•No.72•May 2015 tElEphoNE: +44 20 7665 2446 EMail: info@neccontract.com wEB: neccontract.com
SIMON FULLALOVE EDitor
inaugural NEC award winners
include major Dutch project
NEC awards winners (left to right) Phil Bennett
of Network Rail, Paul Fondse of Brink Groep,
David Hunter of Urban Vision Partnership and
Paul Gibbs of Pick Everard, together with NEC
Users’ Group president Rudi Klein
Last month NEC launched a new one-day training
programme entitled Commercial Management
using the NEC3 ECC. It is specifically designed
for people looking to develop into a more senior
role as a project or contract manager on an NEC3
Engineering and Construction Contract (ECC)
project.
The programme aims to equip delegates with
the skills necessary to manage commercial aspects
and relationships successfully when using the
ECC. It condenses key aspects from the popular
ECC project manager accreditation programme to
offer a consolidated one-day syllabus focusing on
the commercial elements of ECC projects.
Those who enrol in the programme will gain
an appreciation of what commercial management
means under the ECC, understand how ECC
clauses affect commercial management and be
clear on how to develop their own commercial
management plan in practice.
The training is available in a choice of
delivery formats depending on the professional
development objectives and learning preferences
of individuals and organisations. The next
available training day will be on 11 June in
Birmingham. The programme can also be
delivered by NEC tutors directly to organisations,
in-house.●
For further information visit neccontract.com/
commercialmanagement.
The University of the Witwatersrand in
Johannesburg, South Africa has recently
successfully completed a 4 year development
programme involving 35 separate NEC contracts.
In 2008 the university’s campus development
and planning team initiated a 6 year capital
projects programme to improve existing
infrastructure and construct new buildings. A
total of over 1.5 billion rand (£80 million) was
invested across 45 projects, 35 of which were
procured using NEC.
The main framework contractors were
Murray and Dickson Construction, Tyris
Construction and a joint venture of Tri-Star and
Enza Construction. NEC3 contracts included
the Engineering and Construction Contract
(ECC) options A, B and C; the Engineering and
Construction Short Contract (ECSC); the Supply
Contract (SC); and the Short Supply Contract
(SSC).
Promoting collaboration
According to Spencer Hodgson, director of the
capital projects programme, ‘NEC contracts were
adopted as the main standard forms to promote
a culture change from the traditional ‘them and
us’ approach to collaboration. The decision to
adopt NEC has clearly resulted in several tangible
benefits, particularly value for money.
‘An important part of mobilising the projects
has been to ensure that we adopt best practices.
Introducing NEC to the Wits projects put us
on a learning curve with our consultants and
contractors, but it is paying off. We have been
able to activate projects quickly, as well as involve
contractors in design and value engineering and
complete projects within budget.’
The main people in the Wits procurement
team in addition to Hodgson were Emmanuel
Prinsloo, Ron Watermeyer and Dean Barnes.
Successful delivery
A study published last year (Laryea and
Watermeyer, 2014) indicates that overall the
portfolio of projects was delivered within 6% of
the control budget over a period of 6 years.
‘The main factors that have contributed
to the achievement of projects on time and
budget include the cultural change from
master−servant to collaboration, discipline of
the control budget, competitive negotiation
tendering procedure, framework agreements,
early contractor involvement and management
of building projects by project managers rather
than principal agents. All of this has been made
possible by using NEC contracts,’ says Hodgson.
The success of NEC at Wits has led to its
adoption on construction projects at South
Africa’s two newest universities: University
of Mpumalanga in Mbombela and Sol Plaatje
University in Kimberley. Both opened to students
in 2014. ●
Reference
Laryea S and Watermeyer R (2014) Innovative
construction procurement at
Wits University. Proceedings of the Institution of
Civil Engineers − Management, Procurement
and Law 167(5): 220 –231.
3CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE
south african university
delivers 35 NEC projects
SAMUEL LARYEA wits uNiVErsity
ELIZABETH BROOKFIELD NEC
New training course on
ECC commercial aspects
ELIZABETH BROOKFIELD NEC
New NEC3 solutions guide published
A new practical solutions guide has been
published on contractual issues faced by users
of the NEC3 suite of contracts.
Based on 245 real queries posed to the
NEC Users’ Group Helpdesk over the past
10 years, NEC3 Practical Solutions is intended
to be a helpful problem-solving tool, providing
hints, tips and answers to common questions.
The 296-page guide has been written by
NEC Users’ Group secretary Rob Gerrard and
NEC trainer Stuart Kings.
It focuses on implementing
good practice and guides
readers through common
project pitfalls.
The relevant NEC3
contract clause number
is given for each query,
and tips for the successful
use of NEC3 contracts are
provided at the end of each chapter. Priced
£37.50, the guide is aimed at anyone wishing to
work successfully with the NEC3 suite.●
For further information and to purchase a
copy please visit neccontract.com/practicalsolutions.
Wits University’s new Undergraduate Science
Centre in South Africa was delivered under a £10
million NEC3 Engineering and Construction
Contract option C
The next one-day Commercial Management
using the NEC3 ECC programme is on 11 June
The new book provides answers to 245
common ECC questions
4 NEC usErs’ group NEwslEttEr•No.72•May 2015 tElEphoNE: +44 20 7665 2446 EMail: info@neccontract.com wEB: neccontract.com
The Construction (Design and Management)
Regulations 2015 (CDM 2015) came into force on
6 April 2015, replacing the 2007 regulations. CDM
2015 creates a new role of principal designer and
does away with the former CDM coordinator role,
which has implications for NEC3 Engineering and
Construction Contracts (ECC) in the UK. Other
CDM roles, including the principal contractor,
remain unchanged.
Responsibility for co-ordination of work in
(or ‘safety during’) the pre-construction phase
– which is crucial to the management of any
successful ECC project – now rests with the CDM
principal designer. The role will typically be taken
by the lead designer for the project. The role is
complimentary to but distinct from the physical
and technical co-ordination of design elements
produced by various teams and specialists on a
project.
Pre-construction information
CDM requires the client (ECC employer) to
pass on to bidders ‘pre-construction information’,
which includes residual risks known to those
preparing the bid documents. Under CDM 2015
the principal designer has to ‘assist’ the employer
with preparing the pre-construction information.
At this stage it is likely that the principal designer
will be the employer’s lead designer.
The pre-construction information will contain
some information that should be in the ECC
works information and some that should be
in the ECC site information. Good practice is
to put the information that should be works
information or site information in the relevant
ECC documents and refer them from the pre-
construction information document.
Selecting the principal designer
As soon as design work is being carried out,
the employer is required by CDM to appoint
the principal designer. The appointment must
be in writing. The principal designer could be
a standalone role or could be part of a wider
appointment for design. If the employer has to
appoint an external organisation it could use the
NEC3 Professional Services Contract or the NEC3
Professional Services Short Contract.
The ECC works information should name
the CDM principal designer. In a contract with
significant design by the contractor it is likely
to be appropriate, but not essential, for the
contractor to take over the role of principal
designer.
Where there is significant design to be
done after award by both the contractor and
employer (e.g. for different parts of the works),
the principal designer role might be given to the
employer’s designer. Split design responsibilities
after award of contract may make the CDM
principal designer role particularly difficult, not
least as the contractor and employer remain
responsible for their own designs while the
principal designer has responsibilities regarding
the health and safety of both designs.
The same applies to temporary works design
where the principal designer must ensure the
contractor’s designer has access to all relevant
health and safety information to inform
their design, and receives health and safety
information back from them to ensure it is made
available to other designers and contractors.
There would also need to be technical interaction
between the temporary works designer and the
designer of any permanent works that could be
affected by it.
Bidders for a contract involving contractor
design where design is carried out as part of
the bid have to act as coordinators of designers,
effectively carrying out the role of the CDM
principal designer in respect of their bid design.
This is so even if the employer’s designer has
retained the formal principal designer role, as
will normally be the case.
If a bidder’s designer wants more information
about health and safety issues during the bid
stage they should be asking the incumbent
principal designer. This will normally be via
the process for requesting information set out
in the instructions to bidders. However, direct
involvement of the principal designer may be
difficult in the bid stage because of the need for
commercial confidentiality. It should be noted
CDM 2015 gives no ‘concession’ to the role of the
principal designer in the bid period.
Selecting the principal contractor
The appointment of the principal contractor
must be in writing. The works information should
include either the name and contact details of the
principal contractor (if that is not the contractor),
or a statement that the contractor is to be the
principal contractor.
Design submission after award of
contract
In ECC design and building contracts, the
project manager has to accept stated ‘particulars
of the contractor’s design’ to be submitted after
award of contract. This is for the project manager
to have a chance to reject the design if it does
not comply with the requirements of the works
information or the law. Any such ‘particulars of
the contractor’s design’ to be submitted must be
set out in the works information (clause 21.2).
If the CDM principal designer is the same
organisation as the ECC project manager, then
the project manager will logically carry out the
principal designer duties in parallel with their
ECC obligations to accept or not accept designs
under the contract. The organisation which is
both project manager and principal designer
should be very clear who it appoints to carry out
each role. It is recommended that the roles are
not carried out by the same individual, except
perhaps on a very small project.
If the CDM principal designer is the ECC
contractor, then the ECC works information
should state that the contractor’s designs should
be reviewed by the principal designer prior to
submission to the project manager. The works
information should require evidence of such a
review to be included with the submission of
designs for project manager acceptance.
If the CDM principal designer is neither the
ECC contractor nor from the same organisation
as the project manager, and is also responsible
for reviewing design for compliance with the
employer’s requirements, then the employer
would normally have the project manager pass
the designs received from the contractor to the
principal designer for comment prior to the
project manager accepting or not accepting those
designs.
However, the employer may set out in the
works information that the contractor’s designs
should be reviewed by the principal designer
prior to submission to the project manager. This
is more likely if the principal designer has no
other design role in relation to the contract. The
works information should require evidence of
such a review to be included with the submission
of designs for project manager acceptance.
Construction phase plan
CDM 2015 requires the construction phase
plan to be ‘sufficient to ensure that construction
work is carried out, so far as is reasonably
practicable, without risks to health or safety’
before the contractor starts construction. The
principal designer is required to liaise with the
principal contractor regarding a ‘construction
phase plan’.
In the 2007 version, the CDM coordinator was
required to confirm that the plan was adequate
prior to construction being allowed to start.
This is no longer the case – CDM 2015 puts
responsibility for the construction phase plan’s
adequacy squarely on the contractor, with the
client now only having a duty to ensure there is
one before construction works commence.
In an ideal world it would be sufficient for
a competent contractor to assess and manage
risks themselves without external checks, but
experience with CDM 2007 suggests otherwise.
Some employers may still wish to have the
principal contractor’s construction phase plan
independently reviewed prior to a start on site.
The ECC works information could usefully
reinforce the importance of the construction
phase plan by stating that construction can
not start until the principal contractor has
formally confirmed to the project manager that
the construction phase plan is adequate. An
alternative is to make the ‘access date’ (stated in
contract data part one) conditional on the formal
confirmation from the CDM principal contractor
that its construction phase plan is adequate.
Health and safety file
CDM requires a ‘health and safety’ file to
be prepared to help the employer safely use,
maintain and alter the assets delivered by
the contract. To comply with the Heath and
Safety at Work Act, the employer must be able
to make available relevant health and safety
information, including the health and safety file,
to anyone − including its own staff − who is
using or maintaining the asset. Under CDM 2015
the principal designer is required to prepare
and update the file as design and construction
proceeds.
The ECC works information will normally
require the contractor to submit for project-
manager acceptance the as-built drawings and
operation and maintenance manuals (if there is
NEC contracts and
CDM 2015
RICHARD PATTERSON, MARK DAVIES aND BARRY TREBES Mott MaCDoNalD
Continuted on page 5 >>
5CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE
Virtual observations provide
NEC users with location-specific
weather reports
JOHN FARAGHER MEt oFFiCE
A particular challenge for NEC users is ensuring
that the weather information contractors
incorporate into planning and post-project
phases reflects as closely as possible the actual
conditions expected or experienced on site.
In the UK weather information is generally
provided by observation stations. The Met Office
runs a network of more than 300 stations around
the UK, over 100 of which produce 1-in-10
year weather data for NEC users (see issue 70).
However, the Met Office has recently developed a
system of ‘virtual observations’ which means this
weather information can now come from over
3600 UK locations.
Producing virtual observations
Physical land surface weather observation
stations provide automatic, frequent and accurate
readings for weather elements such as wind,
rainfall and temperature. It is now possible to
interpolate this data into a gridded dataset of
virtual observations. Sophisticated statistical and
modelling techniques take into account local
topography, exposure, altitude and any coastal
effects to ensure accurate representation at fine
resolution.
A second method of producing virtual
observations is to use a wider combination of
data sources, including weather radar, satellite
images, radiosonde and observations from
aircraft and ships. These are assimilated and
interpolated to provide a detailed view of the
current state of the atmosphere, which can then
be used to generate observations for any location.
The Met Office has used the first method to
produce the 1-in-10 year weather values and
long-term averages for NEC users on a 1 km grid.
These statistics are less sensitive to changes in
the data collection frequency or methodology
– something that often occurs in longer-term
historic data sets. Both are available in the Met
Office’s planning average reports.
For monthly downtime summary reports, the
Met Office uses the latter method, incorporating
a wider range of data sources. This methodology
was chosen as the required underlying data
can be produced routinely and is available
immediately at the end of the month, rather than
some time later.
Benefits of virtual weather reports
Virtual observations can be used by NEC users
in the same way as station-based observations,
and can also be used to address a number
of issues that are sometimes associated with
station-based observations. For example, they are
typically closer to a contractor’s site, and datasets
are always complete with no missing values.
The Met Office’s systematic verification process
has ensured that the new virtual observation
reports offer data comparable to actual station-
recorded data. While it is not possible to say they
are always 100% correct, they provide a more
representative view for sites not close to physical
observation sites.
The new location-based reports can provide
more flexibility to contractors, as the previous
system sometimes left them finding reports that
were not representative of actual on-site weather
conditions. In addition, where the station-based
reports have just temperature, rain and snow
information, the new reports summarise up to 16
different weather elements, 10 of these including
long-term averages and 1-in-10 year values. The
system has been rigorously tested over a year to
verify its robustness.
In summary, virtual observations provide NEC
users with a greater density of coverage of the
UK. The weather information they provide can
more accurately reflect on-site conditions for
locations that may be a long distance from an
observation station or in an area with a different
weather profile due to local topography. ●
For further information see the NEC and the
Weather webinar at neccontract.com/weather.
The Met Office
now provides
virtual weather
observations at
over 3600 sites
in the UK
contractor design). Under CDM 2015 the principal
contractor is only required to provide ‘other
information’ required by principal designer to
prepare health and safety file.
It is essential therefore to make the
contractor’s provision of information required
for the health and safety file a requirement
for completion under ECC. If the design is
complete and the employer chooses to end the
appointment of the principal designer prior to
completion, the employer can pass on to the
contractor the direct obligation to complete the
health and safety file. If this is foreseen at the
tender it should, of course, be included in the
ECC works information.
Conclusion
NEC users in the UK all need to be aware
of CDM. The changes in CDM 2015 may take a
little time to get used to. Those preparing and
managing ECC contracts need to be aware of and
properly manage the interactions between CDM
and the contract. ●
This is summary of a briefing article by the
authors to be published in the ICE journal
Management, Procurement and Law, www.
managementprocurementandlaw.com.
>> Continuted from page 4
6 NEC usErs’ group NEwslEttEr•No.72•May 2015 tElEphoNE: +44 20 7665 2446 EMail: info@neccontract.com wEB: neccontract.com
At a recent seminar a colleague and I were
discussing the merits of the NEC early warning
mechanism. He noted the changes made 10
years ago to clause 16 in the NEC3 Engineering
and Construction Contract (ECC), especially
those altering the phrase ‘early warning’ to ‘risk
reduction’. Certainly it seems odd that the clause
title remained as ‘Early warning’ whereas I have
always considered (and lectured others) that the
emphasis is more on reducing risk.
If you type ‘early warning’ into Google
expecting to find pages of information and
informed discussion relating to NEC and more
specifically the ECC early warning clause 16,
you will be disappointed. The first two pages
of results read like a list of disaster movie
catchphrases: tsunami, disaster reduction, fraud,
severe weather, dementia, production collapse,
exam marking fiasco, diabetes, global meltdown,
swine flu and so on.
For the past 15 years or so of my professional
career I have come across so many companies
and individuals who have had difficulty with
the NEC early warning and compensation event
mechanisms, in particular the use of early
warnings. Some of the comments I have heard
over the years, and I am sure all readers will
recognise some of these, make me shudder.
■ ‘Your early warning is rejected’ − from a
project manager.
■ ‘Every time you sneeze you send in an early
warning’ − from a project manager.
■ ‘Let’s not send in this early warning, it will
upset the client’ − from a commercial
director.
■ ‘I thought this contract was about partnering
and keeping it friendly, why are you
submitting claims all the time?’ − from an
employer.
Word association
Potentially the problem lies in word
association. Word association, in this context, is
basically the unreflective and immediate human
response to a given word or set of words. Type
‘warning’ into online dictionary Wordnik.com
and you get the following definitions.
■ ‘An intimation, a threat or sign of impending
danger or evil.’
■ ‘Advise to beware, counsel to desist from a
specified and undesirable course of action.’
■ ‘A cautionary or deterrent example.’
■ ‘Something, such as a signal, that warns.’
So which of these descriptions best
emphasises the intent of NEC contracts? More
importantly, which do NEC users think best
describes the intent?
Time for some analogous thinking. An air-raid
siren is a type of early warning; it is a sign of
impending danger or threat so falls into the first
and fourth definitions above. A guardian angel
could be said to be another type of early warning,
guiding and guarding whomsoever is lucky
enough to have one, giving warning to those
who believe in them. They perhaps fall into the
second and third definitions above.
So which of the options do NEC users
normally associate with the word ‘warning’? We
are bombarded daily with negative associations
of the word, such as veiled warnings, profit
warnings and warnings about global warming.
As such I believe it is the air-raid siren analogy
which more readily addresses our initial and
basic instincts.
It may be therefore that our basic human
instincts and unreflective thoughts are actually
counter-intuitive to NEC contracts; a prejudice
to bad news demonstrably causing individuals
to react negatively to NEC’s ‘jewel in the crown’
early warning procedure. I am sure the NEC
drafters would prefer users to consider words
such as ‘opportunity’, ‘mitigation’, ‘facilitation’
or ‘prevention’ when using the early warning
mechanisms.
So yes, I think word association has a part to
play in understanding why, for some reason, it
occasionally goes wrong.
Buddha and ’bergs
Let me turn your attention to Buddha just
for a moment. According to a report in the
New Scientist, committed Buddhists have been
found to have an unusually active left prefrontal
lobe in their brains; the lobe that is associated
with positive emotions, good morals, foresight,
planning and self-control.
Buddhist meditation apparently brings about
a radical change in perception; the Buddhist
literally sees a different world from the ‘bad
or mediocre man’. Is it too much for us to
heed Buddha’s warning that greed, hatred and
delusion drive most human beings and are the
sources of all suffering?
I mentioned disaster movies earlier on so
let us also consider the lesson learned from
James Cameron’s Titanic. Course corrections
are far easier when you have time to make small
adjustments; it is too late when you are close to
the iceberg.
The purpose of this article is to give NEC
users a little more insight into what is possibly
happening on a fundamental and human level.
When we attend the annual NEC seminar and
hear how NEC delivers on its promises, how
project after project succeeds where others fail
because it has mechanisms in place that deal
specifically with risk, it is easy to assume that
every project is like this. This is not the case.
Fundamentally what NEC contracts encourage
most (in this context) is the concept that
contracting parties warn one another about
impending bad news. This is not necessarily
contentious bad news, but information about
events which could increase the prices or delay
completion, which delay meeting a key date or
impair the performance of the works. The parties
can then do something about it, setting in motion
a course of action that will prevent, or at least
diminish, the risks and the resultants costs or
delays that inevitably follow the event.
Duty to warn
The concept of openness, of warning one
another, is relatively new to the construction
industry, especially as a contractual obligation.
The duty to warn was always a concept that
arose in the law of torts in limited circumstances,
indicating that a party will be held liable for
injuries caused to another, where one party had
the opportunity to warn the other of a hazard
but failed to do so. But, from a practical and day-
to-day perspective, this duty had limited impact
upon construction professionals.
NEC elevated the obligation to warn to one of
fundamental importance, recognising this by the
introduction of a specific clause in the contracts
and making that obligation considerably broader
in scope than other contracts may have done in
the past.
The NEC basis is one of foresight; the
word ‘could’ in ECC clause 16.1 recognises
the requirement to look out for ‘potential’
problems, directly contrasting with provisions
in other standard form contracts which appear
reactionary in nature; to events that have already
happened.
In a future revision of NEC, I would like to
suggest the following changes in the light of the
above.
■ Change the title ECC clause 16 to ‘Risk
reduction’.
■ Call an early warning a ‘risk reduction notice’
and remove all reference to early warnings.
■ Consider making provisions to incentivise
the process, for instance a contractor’s early
warning that saves the project financially
could be shared; specifically in non-target cost
contracts or target cost contracts that have
limited pain-share provisions.
■ Remove any linkage between early warnings
(risk reduction notices) and compensation
events, so that users do not confuse the two.
I think these measures will improve NEC
contracts, helping to diminish if not entirely
remove the negative attitude of some parties.
All too often NEC users are confusing the vital
and genuine need for project risk reduction with
the commercial needs of the contractor to make
money, though it is rarely done with devious
intent and purpose.
Perhaps we need to insist as an industry that
only Buddhists are allowed to be NEC project
managers! ●
NEC early warnings −
the need for a more positive
perception
STEVE GOODWIN gVE CoMMErCial solutioNs
7CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE
This is a selection of recent questions to the NEC
Users’ Group helpline and answers given. In all
cases it is assumed there are no amendments
that materially affect the standard NEC3 contract
referred to.
What is an experienced contractor?
Question
In the NEC3 Engineering and Construction
Contract (ECC) clause 60.1(19), bullet point four,
the phrase ‘an experienced’ is being subjectively
applied by some project managers. Are there any
suggestions on dealing with this?
Answer
This particular clause would only generally
apply for rare events. All of the preceding parts
have to be positively answered before addressing
the issue of ‘an experienced’. This term is used
to make sure it is not the particular contractor’s
experience that is used to judge this part of the
clause but that of an experienced contractor.
Otherwise, you may have skewed outcomes
where a contractor is inexperienced or new to
this type of work.
Ambiguities and the project manager
Question
If there is an ambiguity and the project
manager has to make a decision to correct it,
how can the project manager decide whether it
constitutes a compensation event under the ECC?
Does the project manager automatically have to
take the position that the contractor had made
the lowest cost assumption during the bid?
Answer
If the ambiguity exists in the works
information, the project manager corrects this
ambiguity via a change to the works information,
(clauses 14.3 and 17) which is a compensation
event. It is then assessed as if the prices, the
completion date and key dates were for the
interpretation most favourable to the party which
did not provide the works information, see clause
63.8. Therefore if the works information prepared
by the employer is changed then your assertion
is correct.
Replacing sentences
Question
Instead of Z clauses, can you remove and
replace core clause sentences?
Answer
You can indeed, but what would you call this
and how would you make sure such changes
were properly incorporated into the contract? By
pointing to the Z clauses in contract data part one
and making sure all such clauses sit clearly under
the heading ‘Option Z: Additional conditions of
contract’, then there should be no doubt of their
inclusion.
In addition you need to be aware that, if you
are using an electronic licence to print your own
contracts, the terms of that licence requires that
if you make any changes from the standard text
they have to be clearly annotated as such.
Amending a core clause
Question
Would it be correct to say that an amendment
of a core clause is actually a Z clause?
Answer
That would be correct. Any amendment,
addition or deletion of any core clause should be
contained in a Z clause.
Examples of bad drafting
Question
Is there a forum we can use to share examples
of bad drafting of Z clauses for the benefit of
good practice?
Answer
We could definitely develop such a forum
which might be best via social media but, to be
clear, we do not have a right to publish Z clauses
we come across as they are the property of
others.
Common Z clauses
Question
Why not look into developing a guidance
document or FAQs covering various situations
where Z clauses are widely or commonly used?
Answer
We consider that we have already covered the
common amendments and additions needed in
the contract through the use of the secondary
options that we publish. Many of the Z clauses we
see have very little practical use and are poorly
drafted. However, this has been mentioned a few
times and perhaps there may be some merit in
trying it.
We have yet though to come across an
organisation wishing to provide their Z clauses
for open scrutiny. If there are any Z clause donor
organisations willing to try this, we would be
pleased to hear from them.
Using other main option clauses?
Question
Can you write a Z clause to amalgamate
certain provisions from one NEC3 contract main
option into another, for example using progress-
payment provisions from ECC option B (priced
contract with bill of quantities) in ECC option
A (priced contract with activity schedule)? The
reason would be to change the usual option A
requirement of requiring completion of a whole
activity prior to payment.
Answer
Yes, it would be possible to do this. However
it will lead to sterile arguments about just how
much of each activity has been carried out or not
carried out each month.
The whole point of developing option A was
to develop a clear and simple method that would
eliminate these monthly arguments that often
engender so much ill-will and distrust between
the parties.
If you are concerned that the activities cover
several months of work then you should use
smaller activities that cover shorter durations. So,
for example, instead of having one activity for all
of the piling, break it down into piling in each
area, defined by building or grid lines.
Valid Z clauses?
Question
We regularly use Z clauses to deal with issues
such as professional indemnity insurance
requirements, assignment and collateral
warranties. Are these valid uses for Z clauses or
should we remove them?
Answer
It is important to determine what the
perceived inadequacy is within say the ECC to
decide if indeed a Z clause is required. On the
face of it, these are the sorts of matters that could
well be appropriate Z clauses.
There is though provision in the contract
data part one to add in additional insurance
requirements to that contained in the core
clauses − professional indemnity insurance
requirements should therefore be added here
instead.
If you consider that assignment is an essential
provision between the two parties then this
should be added as a Z clause – but is it essential
and what would happen (where a party needed
to assign) if such a clause was not included?
A similar comment exists for collateral
warranties: are these absolutely necessary and
could the provisions of Y(UK)3 be used here
instead saving on drafting fees?
Mixing contract clauses
Question
We are currently working under an NEC3
Term Service Contract (TSC) option C with some
additions from the ECC via Z clauses. However,
although the contract refers to defects and how
they are to be dealt with, the defect liability
period is excluded. How is this to be dealt with?
Answer
We are not sure what a defect liability period
is as this is not a phrase used in either the TSC
or the ECC. Under the TSC, defects are to be
notified until the end of the service period and
in turn corrected by the contractor within a
time which minimises the adverse effect on the
employer and others. ●
FAQsROBERT GERRARD
NEC usErs’
group sECrEtary
8 NEC users’ group Newsletter•No.72•May 2015	 telephone: +44 20 7665 2446 email: info@neccontract.com wEB: neccontract.com
04 May ECC project manager accreditation Hong Kong
07 May TSC pre- and post-contract workshop West Midlands
11 May ECC project manager accreditation Scotland
11 May ECC project manager accreditation Hong Kong
12 May Preparing and managing the ECC South West
14 May Introduction to the SC West Midlands
18 May ECC project manager accreditation West Midlands
21 May Introduction to the ECC West Midlands
28 May Introduction to the TSC London
02 June ECC compensation events workshop Scotland
02 June Producing better works information West Midlands
04 June ECC project managers workshop South West
04 June Introduction to the PSC West Midlands
09 June NEC Users' Group workshop Nottingham
11 June Commercial management using ECC West Midlands
15 June NEC Users' Group workshop London
17 June Introduction to the ECC Scotland
17 June Managing risk under the ECC West Midlands
24 June ECC programming workshop Scotland
01 July NEC golf day London
Shazad Akram
Daniel Barnett
Kevin Bell
Paul Bell
Christopher Benford
Jason Bibby
Kenneth Birch
Demawu Bng
Anthony Brady
Oliver Brewster
Stuart Brown
Gary Buick
Hei Cheung
Robert Corbyn
Alan Doherty
Alex Dovey
Simon Dow
Barry Drewett
Ian Drummond
Jeff Dutton
Neil Farmery
Rebecca Fleming
Nicola Gemmell
Paul Gibbs
Paul Gorge
Andrew Griffiths
Philip Harrison
Ian Hedley
Nicholas Hilder
Joel Jackson
Julie-Ann Janko
Patrick Johnston
Mark Kitchingman
Tim Knee-Robinson
Edward Lax
Timothy Lewis
Alasdair Macniven
Kerry Martin
Helen Matheson
Richard McLellan
Mark McLinden
Charles Morris
Allen Murray
Teresa O’Sullivan
Rhodi Owen
Tina Parmar
Richard Patterson
George Reid
Jeremy Robinson
Paul Romanko
Matthew Rowton
Ian Shaw
Andrew Stephenson
Barry Trebes
Peter Wilkinson
Gerallt Williams
Simone Wyatt
Martin Young
The following individuals are listed on the
Institution of Civil Engineers (ICE) Register
of Accredited NEC3 ECC Project Managers at
nec3eccprojectmanagers.ice.org.uk. The register
has been set up to recognise the technical and
practical skills required of a project manager
using the NEC3 Engineering and Construction
Contract (ECC). The individuals on the register
have completed the ECC Project Manager
Accreditation programme and have successfully
passed the stage 1 and stage 2 assessments.
PLATINUM
Amey Inter Urban
AWE Plc
Dounreay Site Restoration Ltd
High Speed Two (HS2)
Highways Agency
Lafarge Tarmac
Magnox Limited
Milton Keynes Service
Partnership LLP
Pinsent Masons LLP
RWE Innogy UK Ltd
RWE Technology UK Limited
Sellafield Ltd
Southend Borough Council
Transport for London
West Yorkshire Councils
GOLD
AECOM Professional Services LLP
Aggregate Industries UK
AMEC Power & Process UK
& Europe
Amey Local Government
Areva S.A
Atkins UK
Babcock International Group
Balfour Beatty Major Civil
Engineering
Balfour Beatty Regional
Balfour Beatty Utility Solutions
BAM Nuttall Ltd
Barnsley Metropolitan Borough
Council
Belfast City Council
Bolton Metropolitan Borough
Council
Bracknell Forest Borough Council
Bristol City Council
Carillion Plc
CCS Group PLC
Central Procurement Directorate
City of Edinburgh Council
CNS Planning Ltd
Colas Ltd
Construction Efficiency & Reform
Group, Cabinet Office
Costain Limited
Cumbria County Council
Defence Infrastructure
Organisation
Department of Health ProCure21
Doncaster Metropolitan Borough
Council
Dover Harbour Board
Driving Standards Agency
Dundee City Council
EDF Energy Nuclear Generation
Limited
Eurovia Group Ltd
Farrans (Construction) Ltd
Fife Council
Foreign and Commonwealth
Office
FTI Consulting
Galliford Try
Government Procurement
Services
Government Property Unit
Guys and St Thomas NHS Trust
Hanson Contracting
Horizon Nuclear Power
Services Ltd
Hugh LS McConnell Ltd
Interserve (Facilities Management)
Ltd
Interserve Construction Ltd
J Murphy & Sons Ltd
Jackson Civil Engineering
Group Ltd
Kelda Water Services (Defence)
Limited
Kier Infrastructure and
Overseas Ltd
Lagan Construction Ltd
Laing O’Rourke
Lend Lease Consulting (EMEA)
Limited
Lincolnshire County Council
LLW Repository Ltd
Ministry of Justice
Moreton Hayward Limited
Morgan Sindall Group Plc
National Grid Plc
Natural History Museum
Network Rail
NG Bailey
Norfolk County Council
Northumbrian Water Limited
NWSSP Specialist Estates Services
Osborne Clarke
Ove Arup & Partners Ltd
Perth & Kinross Council
QinetiQ Ltd
Rider Levett Bucknall
RPS Consulting Engineers
Siemens
Skanska Construction Group
SLR Consulting Ltd
South London & Maudsley
NHS Trust
Springfields Fuels Ltd
SSE Plc
Surrey County Council
The British Museum
The Capita Group PLC
The Coal Authority
UK Power Networks Ltd
United Utilities Water Ltd
University Of Cambridge
Vinci Construction UK Limited
Volker Wessels UK Ltd
VPI Immingham
Warwickshire County Council
Worcestershire County Council
WSP UK Ltd
WYG Management Services
YGC
SILVER
Aberdeenshire Council
Alan Auld Group Ltd
Anglian Water Services Ltd
Aquila Nuclear Engineering Ltd
Balfour Beatty
BAM Construct UK Ltd
Bezzant Ltd
Borough of Poole
Boskalis Westminster Ltd
Bournemouth Borough Council
Brink Management & Advies
Cambridge City Council
Canal and River Trust
CH2M Hill
Connect Plus (M25) Ltd
Cornwall Council
Currie & Brown UK Ltd
DarkStar Surveying Ltd
Deane Public Works Ltd
Dee Valley Water Plc
Defence Science & Technology
Laboratory
DLA Piper UK LLP
Dyer & Butler Ltd
East Ayrshire Council
East Dunbartonshire Council
East Riding of Yorkshire Council
East Sussex County Council
Eastern Solent Coastal
Partnership
Environment Agency
Eskom
Faithful & Gould
Flagship Housing
Franklin & Andrews
Gleeds
Gve Commercial Solutions
Health Facilities Scotland
Heathrow Airport Holdings Ltd
Hill & Smith Ltd T/A Techspan
Systems
Imtech Traffic & Infra UK Ltd
IPP Contracting Ltd
J N Bentley Ltd
Jacobs UK Ltd
John Sisk & Son Ltd
John X Birchall
Knowles Ltd
Land Engineering (Scotland)
Liverpool Mutual Homes
London Borough Of Hillingdon
London Borough Of Merton
Management Process
Systems Ltd
Mott MacDonald Limited
Mouchel Group Plc
MWH UK Ltd
Natural Resources Wales
NBS Services
Nexus Rail
North Ayrshire Council
Northern Ireland Housing
Executive
Northern Ireland Water
Northumberland County Council
PD Group Management
Pick Everard
Playle & Partners
Prysmian Cables & Systems Ltd
R J McLeod (Contractors) Ltd
Ramboll UK
Renfrewshire Council
Resolute Project Services Ltd
Salvation Army
Scottish Water
South East Water Ltd.
South Lanarkshire Council
South West Water Ltd
States of Jersey
Thames Tideway Tunnel
The Orange Partnership
The Royal Parks
Thorntask Limited
Turner & Townsend
URS Infrastructure & Environment
UK Limited
Volker Rail Ltd
Walter Thompson (Contractors)
Ltd
Wardell Armstrong LLP
Wheeler Group Consultancy
Yorkshire Water Services Ltd
BRONZE
4Projects
Allied Infrastructure Management
Ltd
AMEC Foster Wheeler
Environment & Infrastructure
Anthony Collins Solicitors LLP
Ardent Consulting Ltd
Argyll and Bute Council
Beattie Communications
Bennetts Associates
Bilfinger Industrial Services Uk Ltd
Black & Veatch Ltd
Blake Newport Associates
Bowdon Consulting Limited
Brachers LLP
Brodies LLP
C&V Consulting
Caledonian Maritime Assets
Limited (CMAL)
Castle Hayes Pursey LLP
Chandler KBS
Client Managers Toolkit
Conject
Construction Dispute Resolution
Crummock (Scotland) Limited
Ctori Construction Consultants
Limited
Diamond Light Source Ltd
DKB Project Controls Ltd
Docté Consulting
Doig & Co
Doig & Smith Ltd
Dumfries & Galloway Council
East Lothian Council
Engineering Contract Strategies
Fladgate LLP
FP McCann Ltd
Gearing Consulting Services Ltd
George Corderoy & Co
GHA Livigunn Ltd
Glasgow City Council
H A Goddard & Sons
Hannah Reed & Associates Ltd
Hanover Housing Association
HLG Associates Limited
Hydro International (Wastewater)
Limited
Ironside Farrar Ltd
J Breheny Contractors Ltd
JJL Consultancy Ltd
John F Hunt Demolition
Keegans Ltd
Lancaster City Council
Land & Water Group
Leicestershire County Council
Lindford Consulting Ltd
MacKenzie Construction Limited
McAdam Design
Met Office
Mon-Arch
Navigant Consulting (Europe) Ltd
Newcastle City Council
North Yorkshire County Council
Nottinghamshire County Council
Novi Projects
Nuclear Decommissioning
Authority
Nuvia Limited
Orkney Islands Council
Oxand Limited
Pat Munro (Alness) Ltd
Patronus Consulting Ltd
pdConsult
Pellings LLP
Peter Brett Associates
Peter Cousins & Associates
Portsmouth City Council
Procom-IM Ltd
Project Enquirer Ltd
Pyments Ltd
Qatari Diar
Quest Interiors Ltd
Quigg Golden Ltd
R A Gerrard Ltd
Ramsden Enterprises Ltd
Ramskill Martin
Rex Procter & Partners
Ridge & Partners
Royal Haskoning DHV Ltd
Royal Holloway, University of
London
RSK Environment Ltd
Selwood Limited
Sheffield City Council
Shropshire County Council
Solomons Europe Ltd
Specialist Engineering
Contractor’s Group
States Property Services
Suffolk County Council
Synergie Training
Sypro Management Ltd
T & N Gilmartin
Taylor Wessing LLP
Telford & Wrekin Council
The Big Red Apple Company Ltd
The Clarkson Alliance
The Highland Council
The Sheffield College
Trowers & Hamlins
Veale Wasbrough Vizards LLP
VHE Construction Plc
Viridor Waste Management Ltd
Wallace Stone LLP
WDR & RT Taggart
Weir Power & Industrial
Wiltshire County Council
ASIA-PACIFIC
Advisian Limited
Airport Authority Hong Kong
APM (HK)
Atkins (China)
Beria Consultants Ltd
BK Surco Ltd
Chinese University of Hong Kong
Chun Wo Construction &
Engineering Co Ltd
Civil Engineering & Development
Department HKSAR Government
CLP Power Hong Kong Ltd
Construction Industry Council
Continental Engineering
Corporation
Development Bureau, the
Government of the Hong Kong
Special Adminstrative Region
Drainage Services Department
Driver Trett (Hong Kong) Ltd
EC Harris (Hong Kong) Ltd
Fugro (Hong Kong) Ltd
Gammon Construction Ltd
Highways Department HKSARG
Hogan Lovells (Hong Kong)
Hsin Chong Construction
Group Ltd
Institution of Civil Engineers
(Hong Kong)
Kum Shing (KF) Construction
Co Ltd
Langdon & Seah Hong Kong
Limited.
Leighton Contractors (asia) Ltd
M.Y. Cheng & Co
(Engineering) Ltd
Mace Limited (Hong Kong)
Maka Consulting Company Ltd
Mayer Brown JSM
Meinhardt Infrastructure &
Environment Ltd
Mott MacDonald Hong Kong Ltd
Navigant Consulting (Hong
Kong) Ltd
Paul Y. Construction Company,
Limited
Pinsent Masons
Shun Yuen Construction Co. Ltd
Sum Kee Construction Ltd
The Contracts Group Ltd
The Hong Kong Construction
Association Ltd
Turner & Townsend (HK)
URS Hong Kong Ltd
VSL Intrafor (HK)
AUSTRALASIA
Arrow Strategy Ltd
Christchurch City Council
City Care Limited
Coffey Projects Ltd
Donald Cant Watts Corke
Dow Airen
Evans & Peck Pty Ltd
InfraSol Group Pty Ltd
Meridian Energy Limited
PBA Ltd
RICS Oceania
Watercare Services Limited
REST OF WORLD
Aquaterra Consultants Ltd
Cementation Canada Inc
Contract Communicator
Fulton Hogan Limited
Nuclear Consultants International
Simpson Grierson
Thurlow Associates
Transfield Services (New
Zealand) Ltd
VGI Consulting Inc
WorleyParsons RSA
ACADEMIA
Anglia Ruskin University
Glasgow Caledonian University
Loughborough University
University of Birmingham
University of Central Lancashire
University of Greenwich
University Of Northumbria
University Of Portsmouth
University Of Salford
University Of The West Of
England
University Of Ulster
University Of Wolverhampton
ICE Register
of Accredited
NEC3 ECC
Project
Managers
NEC Users’ Group members
A warm welcome is extended to all new
members, highlighted in bold in the
membership category lists below.
All articles in this newsletter are the opinions of the authors and do not necessarily reflect the views of the NEC. For ease of reading, all NEC contract terms are set in
lower-case, non-italic type and their meanings (unless stated otherwise) are intended to be as defined and/or identified in the relevant NEC3 contract. Constructive
contributions to the newsletter are always welcomed and should be emailed to the editor Simon Fullalove at simon@fullalove.com (telephone +44 20 8744 2028).
Current and past issues of the newsletter are also available in the MyNEC area of the NEC website at www.neccontract.com. All other enquires should be made to
the NEC Users’ Group manager Joseph Barry, NEC, 1 Great George Street, London, SW1P 3AA, telephone +44 20 7665 2305, email info@neccontract.com.
Key: Bold - NEC Users’ Group events, ECC – Engineering and Construction Contract, ECSC − Engineering and Construction Short Contract,
PSC – Professional Services Contract, SC − Supply Contract, TSC − Term Service Contract

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Inaugural NEC award winners recognised at annual seminar

  • 1. CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE ISSUE No.72 MAY 2015 www.neccontract.com NEwslEttEr More than 240 NEC users attended the annual NEC Users’ Group seminar at the Institution of Civil Engineers headquarters in central London last month. The sell-out event attracted delegates from around the world and culminated with the first- ever NEC awards ceremony. The keynote speaker was David Hancock, head of construction at the UK Cabinet Office, who endorsed the collaborative nature of NEC contracts in his presentation on the UK government’s construction strategy for the next 10 years. Outlining his vision for delivering the targets set by Construction 2025 he said, ‘having survived the recession and with a full development pipeline ahead, it’s time to collaborate as an industry, to future-proof construction and change it for the better.’ BIM, FM and NEC Simon Rawlinson, member of the UK government’s BIM Task Group and partner at EC Harris, then described NEC’s role in delivering the benefits of building information modelling − a requirement for all UK government contracts from next year. Tim Cummins, president of the International Association for Contract and Commercial Management, discussed the latest ideas and models of collaboration and what these mean for NEC users, after which John Kenny, head of facilities management at Crown Commercial Services, explained how the NEC3 Term Service Contract (TSC) is delivering up to £4 billion of public sector facilities management frameworks. Railways and highways Next up was Phil Bennett, finance and commercial director for Network Rail’s southern region infrastructure projects, who described its decision to start using NEC a year ago as, ‘a new chapter for Network Rail, based on a spirit of mutual trust and co-operation.’ In April 2014 Network Rail let four 5-year NEC Framework Contracts worth £1.2 billion. ‘We are now one year into the new frameworks and have already seen reduced management and transaction costs, increased opportunities to innovate, and improvements in both the quality of work and the safety of the workforce,’ he said. Maththew Lugg, director of public services at Mouchel Infrastructure Services, and Peter Higgins, member of the NEC board, concluded the morning session with a review of how a standard TSC is helping to deliver the UK Highways Maintenance Efficiency Programme. Workshops and awards The afternoon session involved workshops on setting and managing target cost contracts; collaboration, early warning and disputes; and working with the TSC. An expert panel session on benefits and challenges to collaborative partnering concluded the formal sessions, after which NEC Users’ Group president Rudi Klein presented the inaugural NEC awards (see page 2). According to Rekha Thawrani, NEC general manager, ‘We were thrilled with the overwhelming success of this year’s seminar and the first ever NEC awards. Once again, this sell-out event was a wonderful engaging mix of insightful presentations, interactive workshops, panel discussion and excellent networking opportunities for attending delegates. ‘The event is a standout opportunity to recognise and celebrate the world’s finest examples of NEC3 contract collaborations. I congratulate our sterling and inspirational award winners, and thank our key speakers, presenters and all the users who joined us.’ ● For further information including a detailed seminar report and copies of presentations visit the NEC website at neccontract.com/seminar15. over 240 NEC users attend annual seminar in london SIMON FULLALOVE EDitor CONTENTS Inaugural NEC award winners include major 2 Dutch project South African university delivers 35 3 NEC projects New NEC3 solutions guide published 3 New training course on ECC commercial 3 aspects NEC contracts and CDM 2015 4 Virtual observations provide NEC users 5 with location-specific weather reports NEC early warnings – the need for a more 6 positive perception FAQs 7 ICE Register of Accredited NEC3 ECC 8 Project Managers Diary 8 The new £136 million permanent premises for the International Criminal Court in The Hague, Netherlands, will be delivered on time and budget in September this year under an NEC3 Engineering and Construction Contract (ECC) option C (target cost with activity schedule). Currently the biggest- ever use of ECC in mainland Europe, the project won the NEC Large Project of the Year award at the inaugural NEC awards in London last month (see page 2)
  • 2. Winners of the inaugural NEC awards last month included the £136 million International Criminal Court (ICC) in The Hague, Netherlands, which won the first NEC Large Project of the Year award. Prizes were also presented to the best small project, client, contractor and project manager. NEC Users’ Group president Rudi Klein presented awards to the winners and runners-up in each category at the NEC Users’ Group annual seminar in London on 20 April 2015. The judges were NEC Users’ Group chairman Steve Rowsell, NEC Users’ Group secretary Rob Gerrard, NEC board member Matthew Symes and Costain commercial director Matthew Garratt. According to Rowsell, ‘We were very impressed with the high number and standard of the entries. While it was no real surprise, given the vast increase in the use of NEC contracts for delivering high quality projects both in the UK and internationally, it bodes well − both for future awards events and for the future of the construction industry as a whole.’ Largest in mainland Europe ICC is the largest use of NEC in mainland Europe to date. According to the judges, the client ‘took an important leap of faith’ in choosing the NEC3 Engineering and Construction Contract (ECC) option C (target contract with activity schedule) to support its desired collaboration strategy. NEC was selected over the Dutch UAV-GC and international Fidic forms on the basis that it was best for promoting a collaborative approach as well as delivering best value for money. Contractor Courtys, a joint venture of Visser & Smit Bouw and Boele & van Eesteren, started work on the 54,600 m2 building in 2012 and is due to hand over on schedule in September this year. ICC’s project manager Paul Fondse of Brink Groep said around 150 early warnings have been issued and resolved to date, including the unexpected discovery of buried fuel tanks and ground pollution, and changing the planned fibre-reinforced-composite facade to aluminium. He estimates a final shared saving of around £5 million. The Hong Kong Drainage Services Department’s £89 million Happy Valley underground stormwater storage scheme and RWE Innogy UK’s £44 million Goole wind farm in Yorkshire, UK were both highly commended in the large project category. Councils dominate small category The winner of the NEC Small Project of the Year was an 8 week, £250,000 refurbishment at Rushden Pool in Northamptonshire, UK. The work was carried out for client East Northamptonshire Council under an NEC3 Engineering and Construction Short Contract via the Scape local authority framework. Together with project manager Pick Everard and contractor Jeakins Weir, the council faced a £12,000 weekly penalty if the pool did not re-open on time. The judges said, ‘Full application of the contract led to all sorts of issues being resolved openly, transparently and with evident collaboration.’ Two other UK local authority projects − Hadleigh Park in Essex and Kennington Park One O’clock Club and Adventure Playground in Lambeth − were both highly commended in the small project category. Network Rail wins best client UK rail infrastructure owner and operator Network Rail won the NEC Client of the Year award in recognition of its decision to let four 5 year NEC3 Framework Contracts last year worth £1.2 billion. The so-called ‘Control period 5 multi- functional framework contracts’ cover a portfolio of over 500 building and civil engineering enhancement projects on the Anglian, Kent, Sussex and Wessex routes in south-east England. The individual projects are being undertaken using ECC options A (priced contract with activity schedule, C and E (cost reimbursable), the NEC3 Professional Services Contract option E and the NEC3 Engineering and Construction Subcontract. The switch to NEC was a major step for Network Rail, which has traditionally used the former ICE Conditions of Contract for infrastructure projects. According to southern region finance and commercial director Phil Bennett, ‘We identified NEC as the optimum industry contract form which aligns and facilitates the corporate objective to transition into a more collaborative client working in a transparent and trusting manner with our suppliers.’ The judges said the frameworks, ‘demonstrate how collaboration starts with the selection of the right suppliers with the right culture and capability to deliver innovation at an early stage in a project, based on BS11000 collaboration principles and supported by the NEC3.’ Britain’s M25 motorway operator Connect Plus and the ICC were highly commended in the client category. VolkerFitzpatrick wins best contractor VolkerFitzpatrick won the NEC Contractor of the Year for its role in Network Rail’s £500 million NEC-based framework for the Anglian route in south-east England. The judges said, ‘The project demonstrates a strong integration of roles, incorporating early contractor involvement and BS 11000 principles, to achieve collaboration supported by the use of the NEC3 to focus on delivering excellence.’ BAM Nuttall and Costain, which are jointly delivering Network Rail’s £300 million NEC-based frameworks for the Kent and Sussex routes, and Graham Construction, currently upgrading Monklands Hospital in Airdrie, Scotland under the NEC-based Health Facilities Scotland 2 framework, were highly commended in the contractor category. Project manager of the year Last but not least, the NEC Project Manager of the Year award went to David Hunter for achieving the highest marks in the NEC3 ECC project manager accreditation programme in 2014. Hunter is a commercial manager with Urban Vision Partnership, a joint venture between Capita, Galliford Try and Salford City Council. An experienced NEC advisor, he nevertheless felt it important to gain a recognised NEC qualification and says he also significantly benefited from attending the programme. ● For further information on each winning and highly commended project, visit the NEC website neccontract.com/awards. 2 NEC usErs’ group NEwslEttEr•No.72•May 2015 tElEphoNE: +44 20 7665 2446 EMail: info@neccontract.com wEB: neccontract.com SIMON FULLALOVE EDitor inaugural NEC award winners include major Dutch project NEC awards winners (left to right) Phil Bennett of Network Rail, Paul Fondse of Brink Groep, David Hunter of Urban Vision Partnership and Paul Gibbs of Pick Everard, together with NEC Users’ Group president Rudi Klein
  • 3. Last month NEC launched a new one-day training programme entitled Commercial Management using the NEC3 ECC. It is specifically designed for people looking to develop into a more senior role as a project or contract manager on an NEC3 Engineering and Construction Contract (ECC) project. The programme aims to equip delegates with the skills necessary to manage commercial aspects and relationships successfully when using the ECC. It condenses key aspects from the popular ECC project manager accreditation programme to offer a consolidated one-day syllabus focusing on the commercial elements of ECC projects. Those who enrol in the programme will gain an appreciation of what commercial management means under the ECC, understand how ECC clauses affect commercial management and be clear on how to develop their own commercial management plan in practice. The training is available in a choice of delivery formats depending on the professional development objectives and learning preferences of individuals and organisations. The next available training day will be on 11 June in Birmingham. The programme can also be delivered by NEC tutors directly to organisations, in-house.● For further information visit neccontract.com/ commercialmanagement. The University of the Witwatersrand in Johannesburg, South Africa has recently successfully completed a 4 year development programme involving 35 separate NEC contracts. In 2008 the university’s campus development and planning team initiated a 6 year capital projects programme to improve existing infrastructure and construct new buildings. A total of over 1.5 billion rand (£80 million) was invested across 45 projects, 35 of which were procured using NEC. The main framework contractors were Murray and Dickson Construction, Tyris Construction and a joint venture of Tri-Star and Enza Construction. NEC3 contracts included the Engineering and Construction Contract (ECC) options A, B and C; the Engineering and Construction Short Contract (ECSC); the Supply Contract (SC); and the Short Supply Contract (SSC). Promoting collaboration According to Spencer Hodgson, director of the capital projects programme, ‘NEC contracts were adopted as the main standard forms to promote a culture change from the traditional ‘them and us’ approach to collaboration. The decision to adopt NEC has clearly resulted in several tangible benefits, particularly value for money. ‘An important part of mobilising the projects has been to ensure that we adopt best practices. Introducing NEC to the Wits projects put us on a learning curve with our consultants and contractors, but it is paying off. We have been able to activate projects quickly, as well as involve contractors in design and value engineering and complete projects within budget.’ The main people in the Wits procurement team in addition to Hodgson were Emmanuel Prinsloo, Ron Watermeyer and Dean Barnes. Successful delivery A study published last year (Laryea and Watermeyer, 2014) indicates that overall the portfolio of projects was delivered within 6% of the control budget over a period of 6 years. ‘The main factors that have contributed to the achievement of projects on time and budget include the cultural change from master−servant to collaboration, discipline of the control budget, competitive negotiation tendering procedure, framework agreements, early contractor involvement and management of building projects by project managers rather than principal agents. All of this has been made possible by using NEC contracts,’ says Hodgson. The success of NEC at Wits has led to its adoption on construction projects at South Africa’s two newest universities: University of Mpumalanga in Mbombela and Sol Plaatje University in Kimberley. Both opened to students in 2014. ● Reference Laryea S and Watermeyer R (2014) Innovative construction procurement at Wits University. Proceedings of the Institution of Civil Engineers − Management, Procurement and Law 167(5): 220 –231. 3CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE south african university delivers 35 NEC projects SAMUEL LARYEA wits uNiVErsity ELIZABETH BROOKFIELD NEC New training course on ECC commercial aspects ELIZABETH BROOKFIELD NEC New NEC3 solutions guide published A new practical solutions guide has been published on contractual issues faced by users of the NEC3 suite of contracts. Based on 245 real queries posed to the NEC Users’ Group Helpdesk over the past 10 years, NEC3 Practical Solutions is intended to be a helpful problem-solving tool, providing hints, tips and answers to common questions. The 296-page guide has been written by NEC Users’ Group secretary Rob Gerrard and NEC trainer Stuart Kings. It focuses on implementing good practice and guides readers through common project pitfalls. The relevant NEC3 contract clause number is given for each query, and tips for the successful use of NEC3 contracts are provided at the end of each chapter. Priced £37.50, the guide is aimed at anyone wishing to work successfully with the NEC3 suite.● For further information and to purchase a copy please visit neccontract.com/practicalsolutions. Wits University’s new Undergraduate Science Centre in South Africa was delivered under a £10 million NEC3 Engineering and Construction Contract option C The next one-day Commercial Management using the NEC3 ECC programme is on 11 June The new book provides answers to 245 common ECC questions
  • 4. 4 NEC usErs’ group NEwslEttEr•No.72•May 2015 tElEphoNE: +44 20 7665 2446 EMail: info@neccontract.com wEB: neccontract.com The Construction (Design and Management) Regulations 2015 (CDM 2015) came into force on 6 April 2015, replacing the 2007 regulations. CDM 2015 creates a new role of principal designer and does away with the former CDM coordinator role, which has implications for NEC3 Engineering and Construction Contracts (ECC) in the UK. Other CDM roles, including the principal contractor, remain unchanged. Responsibility for co-ordination of work in (or ‘safety during’) the pre-construction phase – which is crucial to the management of any successful ECC project – now rests with the CDM principal designer. The role will typically be taken by the lead designer for the project. The role is complimentary to but distinct from the physical and technical co-ordination of design elements produced by various teams and specialists on a project. Pre-construction information CDM requires the client (ECC employer) to pass on to bidders ‘pre-construction information’, which includes residual risks known to those preparing the bid documents. Under CDM 2015 the principal designer has to ‘assist’ the employer with preparing the pre-construction information. At this stage it is likely that the principal designer will be the employer’s lead designer. The pre-construction information will contain some information that should be in the ECC works information and some that should be in the ECC site information. Good practice is to put the information that should be works information or site information in the relevant ECC documents and refer them from the pre- construction information document. Selecting the principal designer As soon as design work is being carried out, the employer is required by CDM to appoint the principal designer. The appointment must be in writing. The principal designer could be a standalone role or could be part of a wider appointment for design. If the employer has to appoint an external organisation it could use the NEC3 Professional Services Contract or the NEC3 Professional Services Short Contract. The ECC works information should name the CDM principal designer. In a contract with significant design by the contractor it is likely to be appropriate, but not essential, for the contractor to take over the role of principal designer. Where there is significant design to be done after award by both the contractor and employer (e.g. for different parts of the works), the principal designer role might be given to the employer’s designer. Split design responsibilities after award of contract may make the CDM principal designer role particularly difficult, not least as the contractor and employer remain responsible for their own designs while the principal designer has responsibilities regarding the health and safety of both designs. The same applies to temporary works design where the principal designer must ensure the contractor’s designer has access to all relevant health and safety information to inform their design, and receives health and safety information back from them to ensure it is made available to other designers and contractors. There would also need to be technical interaction between the temporary works designer and the designer of any permanent works that could be affected by it. Bidders for a contract involving contractor design where design is carried out as part of the bid have to act as coordinators of designers, effectively carrying out the role of the CDM principal designer in respect of their bid design. This is so even if the employer’s designer has retained the formal principal designer role, as will normally be the case. If a bidder’s designer wants more information about health and safety issues during the bid stage they should be asking the incumbent principal designer. This will normally be via the process for requesting information set out in the instructions to bidders. However, direct involvement of the principal designer may be difficult in the bid stage because of the need for commercial confidentiality. It should be noted CDM 2015 gives no ‘concession’ to the role of the principal designer in the bid period. Selecting the principal contractor The appointment of the principal contractor must be in writing. The works information should include either the name and contact details of the principal contractor (if that is not the contractor), or a statement that the contractor is to be the principal contractor. Design submission after award of contract In ECC design and building contracts, the project manager has to accept stated ‘particulars of the contractor’s design’ to be submitted after award of contract. This is for the project manager to have a chance to reject the design if it does not comply with the requirements of the works information or the law. Any such ‘particulars of the contractor’s design’ to be submitted must be set out in the works information (clause 21.2). If the CDM principal designer is the same organisation as the ECC project manager, then the project manager will logically carry out the principal designer duties in parallel with their ECC obligations to accept or not accept designs under the contract. The organisation which is both project manager and principal designer should be very clear who it appoints to carry out each role. It is recommended that the roles are not carried out by the same individual, except perhaps on a very small project. If the CDM principal designer is the ECC contractor, then the ECC works information should state that the contractor’s designs should be reviewed by the principal designer prior to submission to the project manager. The works information should require evidence of such a review to be included with the submission of designs for project manager acceptance. If the CDM principal designer is neither the ECC contractor nor from the same organisation as the project manager, and is also responsible for reviewing design for compliance with the employer’s requirements, then the employer would normally have the project manager pass the designs received from the contractor to the principal designer for comment prior to the project manager accepting or not accepting those designs. However, the employer may set out in the works information that the contractor’s designs should be reviewed by the principal designer prior to submission to the project manager. This is more likely if the principal designer has no other design role in relation to the contract. The works information should require evidence of such a review to be included with the submission of designs for project manager acceptance. Construction phase plan CDM 2015 requires the construction phase plan to be ‘sufficient to ensure that construction work is carried out, so far as is reasonably practicable, without risks to health or safety’ before the contractor starts construction. The principal designer is required to liaise with the principal contractor regarding a ‘construction phase plan’. In the 2007 version, the CDM coordinator was required to confirm that the plan was adequate prior to construction being allowed to start. This is no longer the case – CDM 2015 puts responsibility for the construction phase plan’s adequacy squarely on the contractor, with the client now only having a duty to ensure there is one before construction works commence. In an ideal world it would be sufficient for a competent contractor to assess and manage risks themselves without external checks, but experience with CDM 2007 suggests otherwise. Some employers may still wish to have the principal contractor’s construction phase plan independently reviewed prior to a start on site. The ECC works information could usefully reinforce the importance of the construction phase plan by stating that construction can not start until the principal contractor has formally confirmed to the project manager that the construction phase plan is adequate. An alternative is to make the ‘access date’ (stated in contract data part one) conditional on the formal confirmation from the CDM principal contractor that its construction phase plan is adequate. Health and safety file CDM requires a ‘health and safety’ file to be prepared to help the employer safely use, maintain and alter the assets delivered by the contract. To comply with the Heath and Safety at Work Act, the employer must be able to make available relevant health and safety information, including the health and safety file, to anyone − including its own staff − who is using or maintaining the asset. Under CDM 2015 the principal designer is required to prepare and update the file as design and construction proceeds. The ECC works information will normally require the contractor to submit for project- manager acceptance the as-built drawings and operation and maintenance manuals (if there is NEC contracts and CDM 2015 RICHARD PATTERSON, MARK DAVIES aND BARRY TREBES Mott MaCDoNalD Continuted on page 5 >>
  • 5. 5CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE Virtual observations provide NEC users with location-specific weather reports JOHN FARAGHER MEt oFFiCE A particular challenge for NEC users is ensuring that the weather information contractors incorporate into planning and post-project phases reflects as closely as possible the actual conditions expected or experienced on site. In the UK weather information is generally provided by observation stations. The Met Office runs a network of more than 300 stations around the UK, over 100 of which produce 1-in-10 year weather data for NEC users (see issue 70). However, the Met Office has recently developed a system of ‘virtual observations’ which means this weather information can now come from over 3600 UK locations. Producing virtual observations Physical land surface weather observation stations provide automatic, frequent and accurate readings for weather elements such as wind, rainfall and temperature. It is now possible to interpolate this data into a gridded dataset of virtual observations. Sophisticated statistical and modelling techniques take into account local topography, exposure, altitude and any coastal effects to ensure accurate representation at fine resolution. A second method of producing virtual observations is to use a wider combination of data sources, including weather radar, satellite images, radiosonde and observations from aircraft and ships. These are assimilated and interpolated to provide a detailed view of the current state of the atmosphere, which can then be used to generate observations for any location. The Met Office has used the first method to produce the 1-in-10 year weather values and long-term averages for NEC users on a 1 km grid. These statistics are less sensitive to changes in the data collection frequency or methodology – something that often occurs in longer-term historic data sets. Both are available in the Met Office’s planning average reports. For monthly downtime summary reports, the Met Office uses the latter method, incorporating a wider range of data sources. This methodology was chosen as the required underlying data can be produced routinely and is available immediately at the end of the month, rather than some time later. Benefits of virtual weather reports Virtual observations can be used by NEC users in the same way as station-based observations, and can also be used to address a number of issues that are sometimes associated with station-based observations. For example, they are typically closer to a contractor’s site, and datasets are always complete with no missing values. The Met Office’s systematic verification process has ensured that the new virtual observation reports offer data comparable to actual station- recorded data. While it is not possible to say they are always 100% correct, they provide a more representative view for sites not close to physical observation sites. The new location-based reports can provide more flexibility to contractors, as the previous system sometimes left them finding reports that were not representative of actual on-site weather conditions. In addition, where the station-based reports have just temperature, rain and snow information, the new reports summarise up to 16 different weather elements, 10 of these including long-term averages and 1-in-10 year values. The system has been rigorously tested over a year to verify its robustness. In summary, virtual observations provide NEC users with a greater density of coverage of the UK. The weather information they provide can more accurately reflect on-site conditions for locations that may be a long distance from an observation station or in an area with a different weather profile due to local topography. ● For further information see the NEC and the Weather webinar at neccontract.com/weather. The Met Office now provides virtual weather observations at over 3600 sites in the UK contractor design). Under CDM 2015 the principal contractor is only required to provide ‘other information’ required by principal designer to prepare health and safety file. It is essential therefore to make the contractor’s provision of information required for the health and safety file a requirement for completion under ECC. If the design is complete and the employer chooses to end the appointment of the principal designer prior to completion, the employer can pass on to the contractor the direct obligation to complete the health and safety file. If this is foreseen at the tender it should, of course, be included in the ECC works information. Conclusion NEC users in the UK all need to be aware of CDM. The changes in CDM 2015 may take a little time to get used to. Those preparing and managing ECC contracts need to be aware of and properly manage the interactions between CDM and the contract. ● This is summary of a briefing article by the authors to be published in the ICE journal Management, Procurement and Law, www. managementprocurementandlaw.com. >> Continuted from page 4
  • 6. 6 NEC usErs’ group NEwslEttEr•No.72•May 2015 tElEphoNE: +44 20 7665 2446 EMail: info@neccontract.com wEB: neccontract.com At a recent seminar a colleague and I were discussing the merits of the NEC early warning mechanism. He noted the changes made 10 years ago to clause 16 in the NEC3 Engineering and Construction Contract (ECC), especially those altering the phrase ‘early warning’ to ‘risk reduction’. Certainly it seems odd that the clause title remained as ‘Early warning’ whereas I have always considered (and lectured others) that the emphasis is more on reducing risk. If you type ‘early warning’ into Google expecting to find pages of information and informed discussion relating to NEC and more specifically the ECC early warning clause 16, you will be disappointed. The first two pages of results read like a list of disaster movie catchphrases: tsunami, disaster reduction, fraud, severe weather, dementia, production collapse, exam marking fiasco, diabetes, global meltdown, swine flu and so on. For the past 15 years or so of my professional career I have come across so many companies and individuals who have had difficulty with the NEC early warning and compensation event mechanisms, in particular the use of early warnings. Some of the comments I have heard over the years, and I am sure all readers will recognise some of these, make me shudder. ■ ‘Your early warning is rejected’ − from a project manager. ■ ‘Every time you sneeze you send in an early warning’ − from a project manager. ■ ‘Let’s not send in this early warning, it will upset the client’ − from a commercial director. ■ ‘I thought this contract was about partnering and keeping it friendly, why are you submitting claims all the time?’ − from an employer. Word association Potentially the problem lies in word association. Word association, in this context, is basically the unreflective and immediate human response to a given word or set of words. Type ‘warning’ into online dictionary Wordnik.com and you get the following definitions. ■ ‘An intimation, a threat or sign of impending danger or evil.’ ■ ‘Advise to beware, counsel to desist from a specified and undesirable course of action.’ ■ ‘A cautionary or deterrent example.’ ■ ‘Something, such as a signal, that warns.’ So which of these descriptions best emphasises the intent of NEC contracts? More importantly, which do NEC users think best describes the intent? Time for some analogous thinking. An air-raid siren is a type of early warning; it is a sign of impending danger or threat so falls into the first and fourth definitions above. A guardian angel could be said to be another type of early warning, guiding and guarding whomsoever is lucky enough to have one, giving warning to those who believe in them. They perhaps fall into the second and third definitions above. So which of the options do NEC users normally associate with the word ‘warning’? We are bombarded daily with negative associations of the word, such as veiled warnings, profit warnings and warnings about global warming. As such I believe it is the air-raid siren analogy which more readily addresses our initial and basic instincts. It may be therefore that our basic human instincts and unreflective thoughts are actually counter-intuitive to NEC contracts; a prejudice to bad news demonstrably causing individuals to react negatively to NEC’s ‘jewel in the crown’ early warning procedure. I am sure the NEC drafters would prefer users to consider words such as ‘opportunity’, ‘mitigation’, ‘facilitation’ or ‘prevention’ when using the early warning mechanisms. So yes, I think word association has a part to play in understanding why, for some reason, it occasionally goes wrong. Buddha and ’bergs Let me turn your attention to Buddha just for a moment. According to a report in the New Scientist, committed Buddhists have been found to have an unusually active left prefrontal lobe in their brains; the lobe that is associated with positive emotions, good morals, foresight, planning and self-control. Buddhist meditation apparently brings about a radical change in perception; the Buddhist literally sees a different world from the ‘bad or mediocre man’. Is it too much for us to heed Buddha’s warning that greed, hatred and delusion drive most human beings and are the sources of all suffering? I mentioned disaster movies earlier on so let us also consider the lesson learned from James Cameron’s Titanic. Course corrections are far easier when you have time to make small adjustments; it is too late when you are close to the iceberg. The purpose of this article is to give NEC users a little more insight into what is possibly happening on a fundamental and human level. When we attend the annual NEC seminar and hear how NEC delivers on its promises, how project after project succeeds where others fail because it has mechanisms in place that deal specifically with risk, it is easy to assume that every project is like this. This is not the case. Fundamentally what NEC contracts encourage most (in this context) is the concept that contracting parties warn one another about impending bad news. This is not necessarily contentious bad news, but information about events which could increase the prices or delay completion, which delay meeting a key date or impair the performance of the works. The parties can then do something about it, setting in motion a course of action that will prevent, or at least diminish, the risks and the resultants costs or delays that inevitably follow the event. Duty to warn The concept of openness, of warning one another, is relatively new to the construction industry, especially as a contractual obligation. The duty to warn was always a concept that arose in the law of torts in limited circumstances, indicating that a party will be held liable for injuries caused to another, where one party had the opportunity to warn the other of a hazard but failed to do so. But, from a practical and day- to-day perspective, this duty had limited impact upon construction professionals. NEC elevated the obligation to warn to one of fundamental importance, recognising this by the introduction of a specific clause in the contracts and making that obligation considerably broader in scope than other contracts may have done in the past. The NEC basis is one of foresight; the word ‘could’ in ECC clause 16.1 recognises the requirement to look out for ‘potential’ problems, directly contrasting with provisions in other standard form contracts which appear reactionary in nature; to events that have already happened. In a future revision of NEC, I would like to suggest the following changes in the light of the above. ■ Change the title ECC clause 16 to ‘Risk reduction’. ■ Call an early warning a ‘risk reduction notice’ and remove all reference to early warnings. ■ Consider making provisions to incentivise the process, for instance a contractor’s early warning that saves the project financially could be shared; specifically in non-target cost contracts or target cost contracts that have limited pain-share provisions. ■ Remove any linkage between early warnings (risk reduction notices) and compensation events, so that users do not confuse the two. I think these measures will improve NEC contracts, helping to diminish if not entirely remove the negative attitude of some parties. All too often NEC users are confusing the vital and genuine need for project risk reduction with the commercial needs of the contractor to make money, though it is rarely done with devious intent and purpose. Perhaps we need to insist as an industry that only Buddhists are allowed to be NEC project managers! ● NEC early warnings − the need for a more positive perception STEVE GOODWIN gVE CoMMErCial solutioNs
  • 7. 7CoNtraCts • BooKs aND guiDEs • traiNiNg • usErs’ group • proJECt support sErViCEs • CoNFErENCEs • rECruitMENt • soFtwarE This is a selection of recent questions to the NEC Users’ Group helpline and answers given. In all cases it is assumed there are no amendments that materially affect the standard NEC3 contract referred to. What is an experienced contractor? Question In the NEC3 Engineering and Construction Contract (ECC) clause 60.1(19), bullet point four, the phrase ‘an experienced’ is being subjectively applied by some project managers. Are there any suggestions on dealing with this? Answer This particular clause would only generally apply for rare events. All of the preceding parts have to be positively answered before addressing the issue of ‘an experienced’. This term is used to make sure it is not the particular contractor’s experience that is used to judge this part of the clause but that of an experienced contractor. Otherwise, you may have skewed outcomes where a contractor is inexperienced or new to this type of work. Ambiguities and the project manager Question If there is an ambiguity and the project manager has to make a decision to correct it, how can the project manager decide whether it constitutes a compensation event under the ECC? Does the project manager automatically have to take the position that the contractor had made the lowest cost assumption during the bid? Answer If the ambiguity exists in the works information, the project manager corrects this ambiguity via a change to the works information, (clauses 14.3 and 17) which is a compensation event. It is then assessed as if the prices, the completion date and key dates were for the interpretation most favourable to the party which did not provide the works information, see clause 63.8. Therefore if the works information prepared by the employer is changed then your assertion is correct. Replacing sentences Question Instead of Z clauses, can you remove and replace core clause sentences? Answer You can indeed, but what would you call this and how would you make sure such changes were properly incorporated into the contract? By pointing to the Z clauses in contract data part one and making sure all such clauses sit clearly under the heading ‘Option Z: Additional conditions of contract’, then there should be no doubt of their inclusion. In addition you need to be aware that, if you are using an electronic licence to print your own contracts, the terms of that licence requires that if you make any changes from the standard text they have to be clearly annotated as such. Amending a core clause Question Would it be correct to say that an amendment of a core clause is actually a Z clause? Answer That would be correct. Any amendment, addition or deletion of any core clause should be contained in a Z clause. Examples of bad drafting Question Is there a forum we can use to share examples of bad drafting of Z clauses for the benefit of good practice? Answer We could definitely develop such a forum which might be best via social media but, to be clear, we do not have a right to publish Z clauses we come across as they are the property of others. Common Z clauses Question Why not look into developing a guidance document or FAQs covering various situations where Z clauses are widely or commonly used? Answer We consider that we have already covered the common amendments and additions needed in the contract through the use of the secondary options that we publish. Many of the Z clauses we see have very little practical use and are poorly drafted. However, this has been mentioned a few times and perhaps there may be some merit in trying it. We have yet though to come across an organisation wishing to provide their Z clauses for open scrutiny. If there are any Z clause donor organisations willing to try this, we would be pleased to hear from them. Using other main option clauses? Question Can you write a Z clause to amalgamate certain provisions from one NEC3 contract main option into another, for example using progress- payment provisions from ECC option B (priced contract with bill of quantities) in ECC option A (priced contract with activity schedule)? The reason would be to change the usual option A requirement of requiring completion of a whole activity prior to payment. Answer Yes, it would be possible to do this. However it will lead to sterile arguments about just how much of each activity has been carried out or not carried out each month. The whole point of developing option A was to develop a clear and simple method that would eliminate these monthly arguments that often engender so much ill-will and distrust between the parties. If you are concerned that the activities cover several months of work then you should use smaller activities that cover shorter durations. So, for example, instead of having one activity for all of the piling, break it down into piling in each area, defined by building or grid lines. Valid Z clauses? Question We regularly use Z clauses to deal with issues such as professional indemnity insurance requirements, assignment and collateral warranties. Are these valid uses for Z clauses or should we remove them? Answer It is important to determine what the perceived inadequacy is within say the ECC to decide if indeed a Z clause is required. On the face of it, these are the sorts of matters that could well be appropriate Z clauses. There is though provision in the contract data part one to add in additional insurance requirements to that contained in the core clauses − professional indemnity insurance requirements should therefore be added here instead. If you consider that assignment is an essential provision between the two parties then this should be added as a Z clause – but is it essential and what would happen (where a party needed to assign) if such a clause was not included? A similar comment exists for collateral warranties: are these absolutely necessary and could the provisions of Y(UK)3 be used here instead saving on drafting fees? Mixing contract clauses Question We are currently working under an NEC3 Term Service Contract (TSC) option C with some additions from the ECC via Z clauses. However, although the contract refers to defects and how they are to be dealt with, the defect liability period is excluded. How is this to be dealt with? Answer We are not sure what a defect liability period is as this is not a phrase used in either the TSC or the ECC. Under the TSC, defects are to be notified until the end of the service period and in turn corrected by the contractor within a time which minimises the adverse effect on the employer and others. ● FAQsROBERT GERRARD NEC usErs’ group sECrEtary
  • 8. 8 NEC users’ group Newsletter•No.72•May 2015 telephone: +44 20 7665 2446 email: info@neccontract.com wEB: neccontract.com 04 May ECC project manager accreditation Hong Kong 07 May TSC pre- and post-contract workshop West Midlands 11 May ECC project manager accreditation Scotland 11 May ECC project manager accreditation Hong Kong 12 May Preparing and managing the ECC South West 14 May Introduction to the SC West Midlands 18 May ECC project manager accreditation West Midlands 21 May Introduction to the ECC West Midlands 28 May Introduction to the TSC London 02 June ECC compensation events workshop Scotland 02 June Producing better works information West Midlands 04 June ECC project managers workshop South West 04 June Introduction to the PSC West Midlands 09 June NEC Users' Group workshop Nottingham 11 June Commercial management using ECC West Midlands 15 June NEC Users' Group workshop London 17 June Introduction to the ECC Scotland 17 June Managing risk under the ECC West Midlands 24 June ECC programming workshop Scotland 01 July NEC golf day London Shazad Akram Daniel Barnett Kevin Bell Paul Bell Christopher Benford Jason Bibby Kenneth Birch Demawu Bng Anthony Brady Oliver Brewster Stuart Brown Gary Buick Hei Cheung Robert Corbyn Alan Doherty Alex Dovey Simon Dow Barry Drewett Ian Drummond Jeff Dutton Neil Farmery Rebecca Fleming Nicola Gemmell Paul Gibbs Paul Gorge Andrew Griffiths Philip Harrison Ian Hedley Nicholas Hilder Joel Jackson Julie-Ann Janko Patrick Johnston Mark Kitchingman Tim Knee-Robinson Edward Lax Timothy Lewis Alasdair Macniven Kerry Martin Helen Matheson Richard McLellan Mark McLinden Charles Morris Allen Murray Teresa O’Sullivan Rhodi Owen Tina Parmar Richard Patterson George Reid Jeremy Robinson Paul Romanko Matthew Rowton Ian Shaw Andrew Stephenson Barry Trebes Peter Wilkinson Gerallt Williams Simone Wyatt Martin Young The following individuals are listed on the Institution of Civil Engineers (ICE) Register of Accredited NEC3 ECC Project Managers at nec3eccprojectmanagers.ice.org.uk. The register has been set up to recognise the technical and practical skills required of a project manager using the NEC3 Engineering and Construction Contract (ECC). The individuals on the register have completed the ECC Project Manager Accreditation programme and have successfully passed the stage 1 and stage 2 assessments. PLATINUM Amey Inter Urban AWE Plc Dounreay Site Restoration Ltd High Speed Two (HS2) Highways Agency Lafarge Tarmac Magnox Limited Milton Keynes Service Partnership LLP Pinsent Masons LLP RWE Innogy UK Ltd RWE Technology UK Limited Sellafield Ltd Southend Borough Council Transport for London West Yorkshire Councils GOLD AECOM Professional Services LLP Aggregate Industries UK AMEC Power & Process UK & Europe Amey Local Government Areva S.A Atkins UK Babcock International Group Balfour Beatty Major Civil Engineering Balfour Beatty Regional Balfour Beatty Utility Solutions BAM Nuttall Ltd Barnsley Metropolitan Borough Council Belfast City Council Bolton Metropolitan Borough Council Bracknell Forest Borough Council Bristol City Council Carillion Plc CCS Group PLC Central Procurement Directorate City of Edinburgh Council CNS Planning Ltd Colas Ltd Construction Efficiency & Reform Group, Cabinet Office Costain Limited Cumbria County Council Defence Infrastructure Organisation Department of Health ProCure21 Doncaster Metropolitan Borough Council Dover Harbour Board Driving Standards Agency Dundee City Council EDF Energy Nuclear Generation Limited Eurovia Group Ltd Farrans (Construction) Ltd Fife Council Foreign and Commonwealth Office FTI Consulting Galliford Try Government Procurement Services Government Property Unit Guys and St Thomas NHS Trust Hanson Contracting Horizon Nuclear Power Services Ltd Hugh LS McConnell Ltd Interserve (Facilities Management) Ltd Interserve Construction Ltd J Murphy & Sons Ltd Jackson Civil Engineering Group Ltd Kelda Water Services (Defence) Limited Kier Infrastructure and Overseas Ltd Lagan Construction Ltd Laing O’Rourke Lend Lease Consulting (EMEA) Limited Lincolnshire County Council LLW Repository Ltd Ministry of Justice Moreton Hayward Limited Morgan Sindall Group Plc National Grid Plc Natural History Museum Network Rail NG Bailey Norfolk County Council Northumbrian Water Limited NWSSP Specialist Estates Services Osborne Clarke Ove Arup & Partners Ltd Perth & Kinross Council QinetiQ Ltd Rider Levett Bucknall RPS Consulting Engineers Siemens Skanska Construction Group SLR Consulting Ltd South London & Maudsley NHS Trust Springfields Fuels Ltd SSE Plc Surrey County Council The British Museum The Capita Group PLC The Coal Authority UK Power Networks Ltd United Utilities Water Ltd University Of Cambridge Vinci Construction UK Limited Volker Wessels UK Ltd VPI Immingham Warwickshire County Council Worcestershire County Council WSP UK Ltd WYG Management Services YGC SILVER Aberdeenshire Council Alan Auld Group Ltd Anglian Water Services Ltd Aquila Nuclear Engineering Ltd Balfour Beatty BAM Construct UK Ltd Bezzant Ltd Borough of Poole Boskalis Westminster Ltd Bournemouth Borough Council Brink Management & Advies Cambridge City Council Canal and River Trust CH2M Hill Connect Plus (M25) Ltd Cornwall Council Currie & Brown UK Ltd DarkStar Surveying Ltd Deane Public Works Ltd Dee Valley Water Plc Defence Science & Technology Laboratory DLA Piper UK LLP Dyer & Butler Ltd East Ayrshire Council East Dunbartonshire Council East Riding of Yorkshire Council East Sussex County Council Eastern Solent Coastal Partnership Environment Agency Eskom Faithful & Gould Flagship Housing Franklin & Andrews Gleeds Gve Commercial Solutions Health Facilities Scotland Heathrow Airport Holdings Ltd Hill & Smith Ltd T/A Techspan Systems Imtech Traffic & Infra UK Ltd IPP Contracting Ltd J N Bentley Ltd Jacobs UK Ltd John Sisk & Son Ltd John X Birchall Knowles Ltd Land Engineering (Scotland) Liverpool Mutual Homes London Borough Of Hillingdon London Borough Of Merton Management Process Systems Ltd Mott MacDonald Limited Mouchel Group Plc MWH UK Ltd Natural Resources Wales NBS Services Nexus Rail North Ayrshire Council Northern Ireland Housing Executive Northern Ireland Water Northumberland County Council PD Group Management Pick Everard Playle & Partners Prysmian Cables & Systems Ltd R J McLeod (Contractors) Ltd Ramboll UK Renfrewshire Council Resolute Project Services Ltd Salvation Army Scottish Water South East Water Ltd. South Lanarkshire Council South West Water Ltd States of Jersey Thames Tideway Tunnel The Orange Partnership The Royal Parks Thorntask Limited Turner & Townsend URS Infrastructure & Environment UK Limited Volker Rail Ltd Walter Thompson (Contractors) Ltd Wardell Armstrong LLP Wheeler Group Consultancy Yorkshire Water Services Ltd BRONZE 4Projects Allied Infrastructure Management Ltd AMEC Foster Wheeler Environment & Infrastructure Anthony Collins Solicitors LLP Ardent Consulting Ltd Argyll and Bute Council Beattie Communications Bennetts Associates Bilfinger Industrial Services Uk Ltd Black & Veatch Ltd Blake Newport Associates Bowdon Consulting Limited Brachers LLP Brodies LLP C&V Consulting Caledonian Maritime Assets Limited (CMAL) Castle Hayes Pursey LLP Chandler KBS Client Managers Toolkit Conject Construction Dispute Resolution Crummock (Scotland) Limited Ctori Construction Consultants Limited Diamond Light Source Ltd DKB Project Controls Ltd Docté Consulting Doig & Co Doig & Smith Ltd Dumfries & Galloway Council East Lothian Council Engineering Contract Strategies Fladgate LLP FP McCann Ltd Gearing Consulting Services Ltd George Corderoy & Co GHA Livigunn Ltd Glasgow City Council H A Goddard & Sons Hannah Reed & Associates Ltd Hanover Housing Association HLG Associates Limited Hydro International (Wastewater) Limited Ironside Farrar Ltd J Breheny Contractors Ltd JJL Consultancy Ltd John F Hunt Demolition Keegans Ltd Lancaster City Council Land & Water Group Leicestershire County Council Lindford Consulting Ltd MacKenzie Construction Limited McAdam Design Met Office Mon-Arch Navigant Consulting (Europe) Ltd Newcastle City Council North Yorkshire County Council Nottinghamshire County Council Novi Projects Nuclear Decommissioning Authority Nuvia Limited Orkney Islands Council Oxand Limited Pat Munro (Alness) Ltd Patronus Consulting Ltd pdConsult Pellings LLP Peter Brett Associates Peter Cousins & Associates Portsmouth City Council Procom-IM Ltd Project Enquirer Ltd Pyments Ltd Qatari Diar Quest Interiors Ltd Quigg Golden Ltd R A Gerrard Ltd Ramsden Enterprises Ltd Ramskill Martin Rex Procter & Partners Ridge & Partners Royal Haskoning DHV Ltd Royal Holloway, University of London RSK Environment Ltd Selwood Limited Sheffield City Council Shropshire County Council Solomons Europe Ltd Specialist Engineering Contractor’s Group States Property Services Suffolk County Council Synergie Training Sypro Management Ltd T & N Gilmartin Taylor Wessing LLP Telford & Wrekin Council The Big Red Apple Company Ltd The Clarkson Alliance The Highland Council The Sheffield College Trowers & Hamlins Veale Wasbrough Vizards LLP VHE Construction Plc Viridor Waste Management Ltd Wallace Stone LLP WDR & RT Taggart Weir Power & Industrial Wiltshire County Council ASIA-PACIFIC Advisian Limited Airport Authority Hong Kong APM (HK) Atkins (China) Beria Consultants Ltd BK Surco Ltd Chinese University of Hong Kong Chun Wo Construction & Engineering Co Ltd Civil Engineering & Development Department HKSAR Government CLP Power Hong Kong Ltd Construction Industry Council Continental Engineering Corporation Development Bureau, the Government of the Hong Kong Special Adminstrative Region Drainage Services Department Driver Trett (Hong Kong) Ltd EC Harris (Hong Kong) Ltd Fugro (Hong Kong) Ltd Gammon Construction Ltd Highways Department HKSARG Hogan Lovells (Hong Kong) Hsin Chong Construction Group Ltd Institution of Civil Engineers (Hong Kong) Kum Shing (KF) Construction Co Ltd Langdon & Seah Hong Kong Limited. Leighton Contractors (asia) Ltd M.Y. Cheng & Co (Engineering) Ltd Mace Limited (Hong Kong) Maka Consulting Company Ltd Mayer Brown JSM Meinhardt Infrastructure & Environment Ltd Mott MacDonald Hong Kong Ltd Navigant Consulting (Hong Kong) Ltd Paul Y. Construction Company, Limited Pinsent Masons Shun Yuen Construction Co. Ltd Sum Kee Construction Ltd The Contracts Group Ltd The Hong Kong Construction Association Ltd Turner & Townsend (HK) URS Hong Kong Ltd VSL Intrafor (HK) AUSTRALASIA Arrow Strategy Ltd Christchurch City Council City Care Limited Coffey Projects Ltd Donald Cant Watts Corke Dow Airen Evans & Peck Pty Ltd InfraSol Group Pty Ltd Meridian Energy Limited PBA Ltd RICS Oceania Watercare Services Limited REST OF WORLD Aquaterra Consultants Ltd Cementation Canada Inc Contract Communicator Fulton Hogan Limited Nuclear Consultants International Simpson Grierson Thurlow Associates Transfield Services (New Zealand) Ltd VGI Consulting Inc WorleyParsons RSA ACADEMIA Anglia Ruskin University Glasgow Caledonian University Loughborough University University of Birmingham University of Central Lancashire University of Greenwich University Of Northumbria University Of Portsmouth University Of Salford University Of The West Of England University Of Ulster University Of Wolverhampton ICE Register of Accredited NEC3 ECC Project Managers NEC Users’ Group members A warm welcome is extended to all new members, highlighted in bold in the membership category lists below. All articles in this newsletter are the opinions of the authors and do not necessarily reflect the views of the NEC. For ease of reading, all NEC contract terms are set in lower-case, non-italic type and their meanings (unless stated otherwise) are intended to be as defined and/or identified in the relevant NEC3 contract. Constructive contributions to the newsletter are always welcomed and should be emailed to the editor Simon Fullalove at simon@fullalove.com (telephone +44 20 8744 2028). Current and past issues of the newsletter are also available in the MyNEC area of the NEC website at www.neccontract.com. All other enquires should be made to the NEC Users’ Group manager Joseph Barry, NEC, 1 Great George Street, London, SW1P 3AA, telephone +44 20 7665 2305, email info@neccontract.com. Key: Bold - NEC Users’ Group events, ECC – Engineering and Construction Contract, ECSC − Engineering and Construction Short Contract, PSC – Professional Services Contract, SC − Supply Contract, TSC − Term Service Contract