NEC3 - The Emperor's new clothes

We provide an overview of the April 2013 amendments to the NEC Engineering and Construction suite of contracts.

Two very shiny boxes of new NEC3 material landed on my desk a few months ago.
The NEC3 April 2013 version had arrived. I cannot do justice to NEC3 fully in a short article but what I can do is provide an overview of the new. You can then delve into the forms yourselves.

There is not a huge amount of new text. There is a new contract and a new range of guidance notes on how to use NEC3 contracts. NEC3 has repackaged itself, extended its support and back-up and provided an “NEC Professional Services Short Contract”.

The clauses amended are helpfully listed inside the forms after the list of acknowledgements. The nature of the amendments is not spelt out for every clause, but you can tell what the amendments are in some cases from the list. Key points to note are:

  • The scope for compensation arising has been broadened to include the issue of certificates and correcting an assumption.
  • There is a re-emphasis of the requirement for the PM to notify a contractor whether an event is a compensation event with a more purposive requirement added into clause 61.4.
  • With a slight change of words there is more of an emphasis on the failure of the PM to reply to reply to a quotation or assess a compensation event with the contractor being able to point out a failure to do that.
  • Termination by the contractor for non-payment is now eleven weeks from the date payment should have been made, instead of thirteen weeks from the date of the certificate.

The big news is the introduction of the Project Bank Account as secondary Option Y(UK)1 with Trust Deed and Joining Deed. This was of course available separately, now it is in the form. The updated Construction Act requirements of 2011 are incorporated into secondary Option Y(UK)2.

The Professional Services Short Contract is a trimmed down version of its “bigger” sibling. For example the lengthy programme requirements are gone from clause 31 although they may be provided for in the Scope in pages 8-10 of the form. The number of Compensation Events are reduced from 12 to 4.

There are a number of “how to” guides to assist the user of NEC put it into practice. They include how to write the ECC Works Information; how to use ECC communication forms; how to write the PSC Scope; how use the PSC communication forms; how to write the TSC Service Information; how to use the TSC communication forms and how to use BIM with NEC3 Contracts.

The interesting point is NEC is embracing the CIC (Construction Industry Council) BIM Protocol issued in February 2013. The authors of NEC clearly feel it sensible to incorporate CIC within the NEC contract. CIC also published a best practice guide for professional indemnity insurance that consultants should take note of.

Most of the earlier 2005 editions are retained. The new forms are not massively different from the 2005 editions. I suspect we will still be seeing contracts with additional “Z” clauses in them and amendments to the core clauses though.

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