The Contractor s NEC3 ECC Handbook

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3 The Contractor s NEC3 ECC Handbook

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5 The Contractor s NEC3 ECC Handbook Steven C. Evans

6 This edition first published John Wiley & Sons Ltd All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse material from this title is available at The right of Steven C. Evans to be identified as the author of this work has been asserted in accordance with law. Registered Offices John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, USA John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, UK Editorial Office 9600 Garsington Road, Oxford, OX4 2DQ, UK For details of our global editorial offices, customer services, and more information about Wiley products visit us at Wiley also publishes its books in a variety of electronic formats and by print on demand. Some content that appears in standard print versions of this book may not be available in other formats. Limit of Liability/Disclaimer of Warranty While the publisher and authors have used their best efforts in preparing this work, they make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives, written sales materials or promotional statements for this work. The fact that an organization, website, or product is referred to in this work as a citation and/or potential source of further information does not mean that the publisher and authors endorse the information or services the organization, website, or product may provide or recommendations it may make. This work is sold with the understanding that the publisher is not engaged in rendering professional services. The advice and strategies contained herein may not be suitable for your situation. You should consult with a specialist where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Library of Congress Cataloging in Publication data applied for ISBN: Cover design by Wiley Cover images: (Main image) usssajaeree/gettyimages; (Background image) James Miller / EyeEm/Gettyimages Set in 10/12pt Warnock by SPi Global, Pondicherry, India

7 v Contents About the Book xiii About the Author xv 1 Introduction 1 Ten Things You Need to Know 1 Author s Note 2 2 The Contract 5 About the NEC Contract 5 Clarity and Simplicity 5 Flexibility 5 Stimulus to Good Management 6 Collaborate or Else! 6 The Latham Report 6 The NEC3 Suite 7 Contracts 7 Flow Charts and Guidance Notes 8 The ECC Form 9 The Core Clauses 9 The Main Options 9 Option A Priced Contract with Activity Schedule 10 Option B Priced Contract with Bill of Quantities 11 Option C Target Contract with Activity Schedule 11 Option D Target Contract with Bill of Quantities 12 Option E Cost Reimbursable Contract 12 Option F Management Contract 13 W Clauses 13 The Secondary Options 14 X Clauses 14 Y Clauses 14 Z Clauses 15 The Contract Data 15 The Schedules 16 The Schedule of Cost Components 16 The Shorter Schedule of Cost Components 16

8 vi Contents Formation of the Contract 16 Offer and Acceptance 16 Attestation 17 Necessary Contract Documents 17 Frequently Asked Questions 17 3 General 19 Overview 19 Actions 19 The Employer 20 The Contractor 22 The Project Manager 27 Impartiality 32 The Supervisor 32 The Obligations 33 Identified and Defined Terms 34 (1) The Accepted Programme 35 (2) Completion 36 (3) Completion Date 38 (4) The Contract Date 38 (5) Defect 39 (6) Defects Certificate 39 (7) Equipment 40 (8) The Fee 40 (9) Key Date 41 (10) Others 42 (11) Parties 42 (12) Plant and Materials 42 (13) To Provide the Works 43 (14) The Risk Register 44 (15) The Site 44 (16) Site Information 45 (17) Subcontractor 45 (18) Working Areas 46 (19) Works Information 46 (20) The Activity Schedule (Main Options A and C Only) 49 Who Prepares the List of Activities? 49 What Should be Included in the Schedule? 50 Relationship to the Accepted Programme 50 Changes to the Activity Schedule 50 Use Under Option A 51 Use Under Option C 51 Errors in the Activity Schedule 51 (21) The Bill of Quantities (Main Options B and D Only) 52 Changes to the Bill of Quantities 53 Use Under Option B 53 Use Under Option D 53 Errors in the Bill of Quantities 54

9 Contents vii (22) to (26) Defined Cost 54 Main Options A and B 54 Main Options C to E 54 Main Option F 55 (25) Disallowed Costs 55 (27) Price for Work Done to Date (Option A) 56 (28) Price for Work Done to Date (Option B) 56 (29) Price for Work Done to Date (Options C to F) 57 (30) Prices (Main Options A and C) 57 (31) Prices (Main Options B and D) 57 (32) Prices (Main Options E and F) 57 (33) The Total of the Prices (Option D) 57 Interpretation and the Law 57 Communications 58 Notification 59 The Project Manager and the Supervisor 60 Adding to the Working Areas 61 Early Warning 61 Ambiguities and Inconsistencies 63 Illegalities and Impossibilities 64 Prevention 64 Frequently Asked Questions 65 4 The Contractor s Main Responsibilities 71 Overview 71 Providing the Works 77 The Contractor s Design 78 Acceptance of the Contractor s Design 78 Using the Contractor s Design 79 Design of Equipment 79 People 80 Working With the Employer and Others 81 Subcontracting 82 Other Responsibilities 84 Frequently Asked Questions 85 5 Time 89 Overview 89 Starting, Completion and Key Dates 89 Commencement and Completion 89 Completion Certificate 90 Key Dates 91 The Programme 91 The First Programme 92 Information on the Programme 92 Acceptance of the Programme 95 Rejection of the Programme 95 Revising the Programme 96

10 viii Contents Access to and Use of the Site 98 Instructions to Stop or Not to Start the Work 98 Takeover 98 Acceleration 99 Frequently Asked Questions Testing and Defects 105 Overview 105 Tests and Inspections 106 Tests and Inspections Before Delivery 107 Searching For and Notifying Defects 107 Searching 107 Notifying 108 Correcting Defects 108 Correction 108 Defect Correction Period 108 Defects Certificate 109 Accepting Defects 109 Uncorrected Defects 110 Frequently Asked Questions Payment 115 Overview 115 Assessing the Amount Due 115 Main Option A 116 Main Option B 117 Main Option C 117 Amounts Due to Subcontractors 118 The Cost of Components in the Schedule of Cost Components 119 Disallowed Costs 119 The Fee 120 Main Option D 120 Amounts Due to Subcontractors 121 The Cost of Components in the Schedule of Cost Components 121 Disallowed Costs 121 The Fee 122 Main Option E 122 Amounts Due to Subcontractors 123 The Cost of Components in the Schedule of Cost Components 124 Disallowed Costs 124 The Fee 125 Main Option F 125 Amounts Due to Subcontractors 126 The Prices for the Work Done by the Contractor 127 Disallowed Costs 127 The Fee 127

11 Contents ix Unfixed Materials on Site 128 Main Option A 128 Main Option B 128 Main Options C, D and E 128 Main Option F 128 The First Programme 128 Payment 128 The Primary Legislation 129 The Secondary Legislation 129 How it Works 129 A Construction Contract 129 The Payment Provisions 130 The Payment Notice 130 The ECC Provisions 131 Interest 132 Defined Cost 132 The Contractor s Share 133 The Activity Schedule 134 The Bill of Quantities 135 Frequently Asked Questions Compensation Events 139 Overview 139 Compensation Events 140 Core Clause Compensation Events 140 Weather Measurement 146 Weather Data 146 Once in Ten Years 146 Bill of Quantity Compensation Events 149 Secondary Option Compensation Events 150 Clause X2.1 Changes in the Law 150 Clause X12.3(6) and (7) Changes in Partnering Information 151 Clause X14.2 Delay in Making Advanced Payment 151 Clause X15.2 Correction of a Defect 151 Clause Y2.4 Suspension Under the Housing Grants, Construction and Regeneration Act Compensation Event Procedure 151 Notifying Compensation Events 151 Quotations for Compensation Events 154 Assessing Compensation Events 156 Effect of the Event on Defined Cost 157 Effect of the Event on Planned Completion 158 Failure to Give Early Warning 159 The Project Manager s Assessment 159 Exhaustive Remedy 161 Implementing Compensation Events 161

12 x Contents Main Option Clauses 161 Summary of Sanctions 163 Other Remedies 164 Frequently Asked Questions Title 169 Overview 169 The Employer s Title to Plant and Materials 169 Marking Equipment, Plant and Materials Outside the Working Areas 170 Removing Equipment 171 Objects and Materials within the Site 171 Frequently Asked Questions Risks and Insurance 173 Overview 173 Employer s Risks 173 Contractor s Risks 174 Repairs 175 Indemnity 175 Insurance Cover 175 Insurance Policies 176 If the Contractor Does Not Insure 176 Insurance by the Employer 177 Frequently Asked Questions Termination 179 Overview 179 Termination 179 Reasons for Termination 180 Procedures on Termination 181 Payment on Termination 181 Frequently Asked Questions Dispute Resolution (W1 and W2 Adjudication) 185 Overview 185 Option W1 185 Dispute Resolution 185 The Adjudicator 186 The Adjudication 188 Review by a Tribunal 191 Option W2 192 Dispute Resolution 192 The Adjudicator 193 The Adjudication 196 Review by a Tribunal 199 Frequently Asked Questions 200

13 Contents xi 13 X and Y Clauses 203 Introduction 203 The X Clauses 203 X1 Price Adjustment for Inflation 203 X2 Changes in the Law 204 X3 Multiple Currencies 204 X4 Parent Company Guarantees 205 X5 Sectional Completion 205 X6 Bonus for Early Completion 205 X7 Delay Damages 206 X12 Partnering 206 X13 Performance Bond 207 X14 Advanced Payment to the Contractor 207 X15 Limitation of Contractor s Liability for his Design to Reasonable Skill and Care 207 X17 Low Performance Damages 208 X18 Limitation of Liability 208 X20 Key Performance Indicators 209 The Y Clauses 209 Y(UK)1 Project Bank Account 209 Overview 209 Definitions 210 Project Bank Account 210 Named Suppliers 210 Payments 211 Effect of Payment 211 Trust Deed 211 Termination 211 Y(UK)2 Housing Grants, Construction and Regeneration Act Overview 212 Definitions 212 Dates for Payment 212 Notice of Intention to Pay Less 212 Suspension of Performance 212 Y(UK)3 Contracts (Rights of Third Parties) Act Overview 213 Frequently Asked Questions Z Clauses 215 Overview 215 Additional Conditions of Contract 215 Frequently Asked Questions Schedules of Cost Components 219 Overview 219 Schedule of Cost Components 219 Subcontractors 220

14 xii Contents People 220 Equipment 220 Plant and Materials 221 Charges 222 Manufacture and Fabrication 222 Design 222 Insurance 222 Shorter Schedule of Cost Components 223 Subcontractors 223 People 223 Equipment 224 Plant and Materials 225 Charges 225 Manufacture and Fabrication 225 Design 225 Insurance 226 Frequently Asked Questions 226 Index 229

15 xiii About the Book When delivering seminars on NEC3 contracts, it was clear that there existed a general lack of knowledge and understanding of how the contract worked and how the relevant personalities were supposed to act. The NEC3 suite differs from many other standard forms of contract and, for that reason, tends to cause misunderstanding and confusion. Although there were books available about NEC3 contracts, including the NEC s own Guidance Notes, what seemed to be missing was a hands on guide for those people who used the contract on a daily basis. A guide explaining what needs to be done, how various parts of the contract fit together and how to be aware of the risks and the pitfalls. That is where this book comes in; it is not intended to be a legal guide to NEC3 ECC and it will rarely make reference to case law or statute. Instead, it is a clear, concise, nuts and bolts guide for those users of the contract who just want to get on with it and not be bogged down in theory or legalese. That being said, due to the inherent ambiguity within some of the clauses, occasionally I have had to resort to presumptions about how a particular provision may operate in practice and how it may be interpreted in the courts. In those cases, I have sought to explain my reasoning. All comments and narrative in this book apply to the version of the NEC3 ECC current at the date of publication this being up to and including the April 2013 amendments. I hope the book is found to be useful and I welcome any feedback or discussion. Steven C. Evans BSc(Hons) LLB(Hons) FCIArb FAMINZ(Arb) FFAVE(Master) FRICS FCIOB FCInstCES PRI sce@stevencevans.com

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17 xv About the Author Steven C. Evans has worked in construction for almost 30 years. He started as an on site trainee quantity surveyor for a top tier multinational contractor, moved on to managing surveyor for a medium sized UK based contractor, and finally switched careers to work in dispute resolution and avoidance. Steven has a wealth of practical experience to supplement his legal knowledge and qualifications. Steven is currently director of a construction consultancy in the UK and in Australia and divides his time between both countries. Steven has represented a range of clients from the smallest builder to the largest m ultinational in dispute resolution forums such as adjudication, arbitration and mediation. He has acted as an adjudicator, arbitrator and expert witness and lectured on matters of contract, commercial management, dispute resolution and similar topics on hundreds of occasions both in the UK and internationally.

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19 1 1 Introduction Ten Things You Need to Know On the first reading of any of the contracts in the NEC3 suite it is readily apparent that there are noticeable differences between them and the many other, standard and more traditional, forms of contract available to the construction supply chain. Possibly because of these differences, the contents of the NEC3 contracts tend to be the cause of misunderstanding, which in turn leads to problems in their use. By way of an introduction, and as an aid to understanding, listed below are, in the Author s opinion, the top ten things you need to know before using the NEC3 ECC, and before reading this book: 1) The NEC3 ECC is not a Partnering contract. It can be made into a Partnering c ontract by the inclusion of secondary Option X12; without X12, it is simply a c ontract that promotes and requires collaborative working. 2) Collaboration is not optional; there are real and effective sanctions in place to ensure the Parties work together to minimise risk and maximise efficient construction. The Parties, the Project Manager and the Supervisor must collaborate or else. 3) Whilst collaboration will naturally reduce disputes, the NEC3 ECC recognises that they will occur and actively encourages early submission to adjudication any disagreement that may arise between the Parties. This effectively means that disputes will not perpetuate and the Parties can quickly resolve their issues and move on. Main Option W1, in particular, provides strict timescales within which disagreements must be referred to adjudication. 4) Adjudication is compulsory for dispute resolution in the first instance. The Parties are prevented from submitting a dispute to a tribunal (i.e. court or arbitration) unless and until it has first been referred to, and decided in, adjudication. Indeed, at least under main Option W1, it would seem a dispute does not exist until it is referred to adjudication. The Contractor s NEC3 ECC Handbook, First Edition. Steven C. Evans John Wiley & Sons Ltd. Published 2017 by John Wiley & Sons Ltd.

20 2 The Contractor s NEC3 ECC Handbook 5) As adjudication is compulsory in the first instance, very few NEC3 ECC disputes arrive in court and so very little court guidance exists as to how the various contractual provisions should be interpreted. When the courts have considered disputes under NEC3, one judge made the comment that the contract was a triumph of form over substance. This is not exactly a resounding endorsement. 6) The terms and conditions are not as clear or as simple as they claim to be. The short sentences and simple phraseology often lead to ambiguity, complexity and confusion where none should exist. It can be a difficult contract to understand and apply. 7) Changes and variations, or compensation events as they are called in NEC3 ECC, are assessed on the basis of the effect of the event on both the cost and the date the Contractor planned to complete the works. If there is a Bill of Quantities or an Activity Schedule, those documents are ignored when making an assessment. Terminal float is owned by the Contractor. 8) Compensation events can go down as well as up. Their name is a misnomer as it suggests there will always be a positive payment to the Contractor in compensation for a change or some other effect of an event. That is not the case; some compensation events will also result in a reduction in Prices. 9) There is no separate design and build form; if the Contractor is to design any of the works, the Works Information simply has to state that. If that is the case, then secondary Option X15 must be incorporated, otherwise the design by the Contractor must be fit for purpose. 10) It is a contract that is often misunderstood and misapplied, which is unfortunate as, despite some of the criticism above, it is a fundamentally worthy contract filled with provisions that focus on fairness, reasonableness and the effective and e fficient completion of the project to the benefit of the Parties. Author s Note Those familiar with the NEC3 suite of contracts will know that terms with a specific meaning either have Capitalised Initials or are in italics. Those with Capitalised Initials are defined terms and are generally (but not always) defined in clause Those in italics are identified in the Contract Data (either part 1 or part 2). Throughout this book I have continued that theme. On occasion, I have directly quoted parts of the NEC3 ECC where it will aid comprehension, but generally I assume that readers will have a copy of the contract to hand for reference. When explaining a particular provision, I refer to the relevant clause number, sometimes in brackets, to aid that reference. Generally, I devote an entire chapter to a Section of the NEC3 ECC; this makes some chapters much longer than others, but, I hope, will assist in easy reference for those readers who simply want to dip in to read about a particular part of the contract.

21 Introduction 3 Throughout, I have referred to the Project Manager, the Employer, the Contractor, the Supervisor etc. as he. This follows the convention within the NEC3 suite of contracts and to quote the NEC3: words in the singular also mean in the plural and the other way around and words in the masculine also mean in the feminine and neuter.

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23 5 2 The Contract About the NEC Contract Construction contracts are complex, adversarial and onerous. This has always been the case. But, in 1986 the Institute of Civil Engineers sought to change that by commissioning the development of a new form of contract that had clearer language, better allocation of risk and responsibility, an increase in collaboration and reduced opportunities for claims. From that commission, in 1993 the New Engineering Contract was first issued and from the outset it was clearly different in style, content and risk allocation to other standard forms. Its characteristics were claimed to be: Clarity and Simplicity The contracts are written using short sentences, with clear objectives. Typical construction terminology such as extension of time is missing; vague notions such as practical completion give way to a defined state of Completion. The contract is short and to the point. But there is a downside to this; fewer words equate to greater ambiguity. Legal interpretation has been difficult because guidance from the courts is almost non existent, not least because adjudication is compulsory in the first instance, so very few disputes arrive at court. When they have arrived, the courts have tended to be critical. There are extensive, officially produced Guidance Notes and Flow Charts, but these are expressly excluded from being used to assist in legal interpretation. Also, to a casual or first time user of the contracts, the Guidance Notes and Flow Charts are often as confusing as the contract itself, sometimes saying nothing more than the clause they seek to provide guidance on, but using more words. Many say it is more a procedure manual than a contract. Flexibility The contracts are designed for use internationally with little or no amendment, for a wide range of projects from the smallest to the largest and for a wide range of pricing mechanisms from lump sum to cost plus. The secondary Options allow an Employer to construct a near bespoke contract to suit his needs from a menu of standard clauses and then add additional conditions of contract as Z clauses that are specific to his requirements. The Contractor s NEC3 ECC Handbook, First Edition. Steven C. Evans John Wiley & Sons Ltd. Published 2017 by John Wiley & Sons Ltd.

24 6 The Contractor s NEC3 ECC Handbook Stimulus to Good Management One of the cornerstones of the NEC philosophy is that the contracts should be an aid to good management, to effective and efficient construction, rather than a barrier to it. The NEC suite of contracts places a great deal of emphasis upon early and effective communication, risk management and project management to the extent that it introduces, occasionally significant, sanctions against those Parties who ignore these requirements. When used properly, there are many reports that it successfully achieves those aims. Collaborate or Else! The NEC suite ensures collaboration by the existence of real and effective sanctions against the Parties should they fail to comply with the various obligations under the contracts that are deemed to be the cornerstone of good and effective management. It is not just a question of the Parties wanting to work together; the NEC suite ensures the Parties do work together. The Latham Report It is often thought that the NEC suite of contracts was born out of the Latham Report; that is not the case, the Latham Report was published in 1994, one year after the first edition of the NEC. The Report, called Constructing the Team, identified key issues that Latham believed should be adopted in all construction contracts, as follows: 1) A specific duty for all parties to deal fairly with each other, and with their subcontractors, specialists and suppliers, in an atmosphere of mutual cooperation. 2) Firm duties of teamwork, with shared financial motivation to pursue those o bjectives. These should involve a general presumption to achieve win win solutions to problems which may arise during the course of the project. 3) A wholly interrelated package of documents which clearly defines the roles and duties of all involved, and which is suitable for all types of project and for any procurement route. 4) Easily comprehensible language and with guidance notes attached. 5) Separation of the roles of contract administrator, project or lead manager and a djudicator. The project or lead manager should be clearly defined as the client s representative. 6) A choice of allocation of risks, to be decided as appropriate to each project but then allocated to the party best able to manage, estimate and carry the risk. 7) Taking all reasonable steps to avoid changes to pre planned works information. However, where variations do occur, they should be priced in advance, with provision for independent adjudication if agreement cannot be reached. 8) Express provision for assessing interim payments by methods other than monthly valuation; that is, milestones, activity schedules or payment schedules. Such arrangements must also be reflected in the related subcontract documentation.

25 The Contract 7 The eventual aim should be to phase out the traditional system of monthly measurement or remeasurement, but meanwhile provision should still be made for it. 9) Clearly setting out the period within which interim payments must be made to all participants in the process, failing which they will have an automatic right to compensation, involving payment of interest at a sufficiently heavy rate to deter slow payment. 10) Providing for secure trust fund routes of payment. 11) While taking all possible steps to avoid conflict on site, providing for speedy dispute resolution if any conflict arises, by a pre determined impartial adjudicator/referee/ expert. 12) Providing for incentives for exceptional performance. 13) Making provision where appropriate for advance mobilisation payments (if necessary, bonded) to contractors and subcontractors, including in respect of off site p refabricated materials provided by part of the construction team. The NEC contract current at the time of the report included eight of the above and the publication of NEC2 in 1995 encompassed all 13. The growth of NEC3 has been significant; it is now the go to contract for many publicly funded projects in the UK, generally due to its adoption by the Government. It is used in over 60 countries worldwide and there is little doubt that its popularity and use will continue to rise. The NEC3 Suite NEC3 contains a suite of contracts, of which the Engineering and Construction Contract (ECC) (the subject of this book) is just one. There are also forms of contract for s ubcontractors, suppliers, professionals, adjudicators and so on. The contracts follow the same style and section numbering and contain similar s ection headings, differing only in respect of their specific application, for example Section 2 in the Engineering and Construction Subcontract, the ECS, is titled The Subcontractor s Main Responsibilities, whereas in the ECC it is The Contractor s Main Responsibilities. Contracts The contracts comprising the NEC3 suite are as follows: NEC3 Engineering and Construction Contract (ECC); NEC3 Engineering and Construction Contract Option A: Priced contract with Activity Schedule; NEC3 Engineering and Construction Contract Option B: Priced contract with Bill of Quantities; NEC3 Engineering and Construction Contract Option C: Target contract with Activity Schedule; NEC3 Engineering and Construction Contract Option D: Target contract with Bill of Quantities; NEC3 Engineering and Construction Contract Option E: Cost reimbursable contract; NEC3 Engineering and Construction Contract Option F: Management contract;

26 8 The Contractor s NEC3 ECC Handbook NEC3 Engineering and Construction Subcontract (ECS); NEC3 Engineering and Construction Short Contract (ECSC); NEC3 Engineering and Construction Short Subcontract (ECSS); NEC3 Professional Services Contract (PSC); NEC3 Professional Services Short Contract (PSSC); NEC3 Term Service Contract (TSC); NEC3 Term Service Short Contract (TSSC); NEC3 Supply Contract (SC); NEC3 Supply Short Contract (SSC); NEC3 Framework Contract (FC); NEC3 Adjudicator s Contract (AC). This book deals exclusively with the NEC3 Engineering and Construction Contract (ECC), although, as many provisions are common across all the contracts in the suite, this book may also prove useful for those other contracts. Flow Charts and Guidance Notes The NEC also produces flow charts, guidance notes and strategies to assist in the understanding and use of the suite of contracts, as follows: NEC3 Engineering and Construction Contract Guidance Notes; NEC3 Engineering and Construction Contract Flow Charts; NEC3 Engineering and Construction Short Contract Guidance Notes and Flow Charts; NEC3 Professional Services Contract Guidance Notes and Flow Charts; NEC3 Professional Services Short Contract Guidance Notes and Flow Charts; NEC3 Term Service Contract Guidance Notes; NEC3 Term Service Contract Flow Charts; NEC3 Term Service Short Contract Guidance Notes and Flow Charts; NEC3 Supply Contract Guidance Notes; NEC3 Supply Contract Flow Charts; NEC3 Supply Short Contract Guidance Notes and Flow Charts; NEC3 Framework Contract Guidance Notes and Flow Charts; NEC3 Adjudicator s Contract Guidance Notes and Flow Charts; NEC3 Procurement and Contract Strategies; NEC3 How to write the ECC Works Information; NEC3 How to use the ECC communication forms; NEC3 How to write the PSC Scope; NEC3 How to use the PSC communication forms; NEC3 How to write the TSC Service Information; NEC3 How to use the TSC communication forms; NEC3 How to use BIM with NEC3 Contracts. It must be remembered that both the Flow Charts and the Guidance Notes expressly state within their contents that they are not legal documents and neither should they be used for the legal interpretation of the meaning of the NEC3 ECC. In other words, whilst the documents can help in users understanding of the c ontracts provisions, an adjudicator or court may take a completely different view, and they very often do.

27 The Contract 9 The ECC Form As stated on its front cover, the Engineering and Construction Contract should be used for the appointment of a contractor for engineering and construction work, including any level of design responsibility, from none to fully contractor designed. On that last point, the NEC3 suite does not contain a separate design and build form; the ECC can be made into a design and build contract simply by adding the obligation to design all or parts of the works to the Works Information. The contract is constructed by first selecting one of the main Option clauses, A to F, which provides the core clauses. To that is added a dispute resolution Option, either W1 or W2, and any number of the X or Y secondary Option clauses. Finally, bespoke clauses can be written and included as additional conditions of contract at secondary Option Z. The Employer completes the Contract Data part 1 and sends that, along with any other documents such as the Works Information and the Site Information, to the tendering contractors. Those contractors complete the Contract Data part 2 and return it, as their tender, to the Employer. Upon the Employer communicating its acceptance of a tender to the successful Contractor, the contract is made. A contract can also be made by the execution by deed or signature on a form of a greement. None of the contracts in the NEC3 suite contains a form of agreement, but a sample form is included in the NEC3 ECC Guidance Notes. The Core Clauses The core clauses are common across all main Options and can be found in nine s ections, as follows: 1) General; 2) Contractor s Main Responsibilities; 3) Time; 4) Testing and Defects; 5) Payment; 6) Compensation Events; 7) Title; 8) Risks and Insurance; 9) Termination. The Main Options The main Options, from which the Employer selects only one when preparing the Contract Data part 1, differ primarily in their payment provisions and their allocation of financial risk. Generally, Option A provides a greater risk for the Contractor and a lesser risk for the Employer. The Contractor is required to compile the activity schedule and provide fixed lump sum Prices for each item. The responsibility for compilation of the schedule and the accuracy of the prices is therefore the Contractor s.