NEC3 to NEC4: Changes to the Engineering and Construction Contract

We have reviewed some of the common changes between the two contract forms from NEC 3 to NEC 4 and have listed and overview as below.

1. Terminology – The new NEC4 ECC has incorporated some amended terms; the ‘Employer’ becomes ‘Client’, and ‘Works Information’ becomes ‘Scope’. This falls in line with common construction industry language and it makes it clear to everyone, even people that have not necessarily used the NEC suite of contracts before.
2. Programme -There are some programming changes (as can be seen in clause 31.3), which are similar to those used in compensation events, that solves the impasse that can sometimes occur when assessing programme submissions.
3. Early Warnings – With regards to early warnings, in NEC4 the ‘Risk Register’ has been renamed the ‘Early Warning Register’ to help separate it from the project risk register, often used as a wider project management tool.
4. Payments – Contractors must submit applications for payments, rather than the project manager being obliged to assess if they don’t.

5. The NEC is all about collaboration and mutual trust, and these new items included within NEC4 are aimed at encouraging exactly that:

1. Disputed Matters W1 – W2 changes – There is now an option for a four-week period for escalation and negotiation of a potential dispute, which takes place prior to any formal proceedings. This requires a nominated senior representative of each party (named in the Contract Data) to meet and try to reach a negotiated solution; this has obvious time and cost benefits, as we all know how expensive and time-consuming any formal proceedings can be.
2. Identifying opportunities – This additional procedure allows for the identification of opportunities by either party (client or contractor).

8. Additional provisions in ECC NEC4 include the following:
   1. Collaboration – In secondary option X12, ‘Partnering’ has been amended to ‘Collaboration’ to better reflect the intent i.e. that collaboration is a key provision within the suite of contracts.
   2. Retention – The secondary option X16 for retention now includes the optional provision of a retention bond instead of having money retained.
   3. Fee percentage – There is now only one fee percentage, with no separate fee percentage for subcontracted works.
   4. Schedule of cost components – These changes have been made to simplify this section, and under options C, D and E the Short Schedule has been removed in its entirety and is only used for option A and B.

We at Djj Consultancy are Construction Claims Specialists that have experienced consultants that can advise your team and or you on the common pitfalls of the contract and provide contract opinion and or if so required sit with your team or you for a period of time to help you.