The NEC 3 engineering and construction contract : a commentary

Contents......Page 5
Preface......Page 11
Author’s note......Page 13
1.1 Development of NEC contracts......Page 15
1.2 Characteristics of NEC contracts......Page 16
1.3  Structure of the NEC 3 Engineering and Construction Contract......Page 18
1.4 Feedback from ECC 2......Page 19
1.5 Changes from ECC 2......Page 20
1.6 Points of interest in NEC 3......Page 21
2.1 Introduction......Page 25
2.2 Contract strategy......Page 26
2.3 Option A – priced contract with activity schedule......Page 32
2.4 Option B – priced contract with bill of quantities......Page 35
2.5 Target contracts generally......Page 36
2.6 Options C and D – target contracts......Page 39
2.7 Option E – cost reimbursable contract......Page 40
2.9 Option W1 – dispute resolution......Page 41
2.10 Option W2 – dispute resolution......Page 42
3.1 Introduction......Page 44
3.3 Option X2 – changes in the law......Page 46
3.4 Option X3 – multiple currencies......Page 47
3.5 Option X4 – parent company guarantee......Page 48
3.6 Option X5 – sectional completion......Page 49
3.7 Option X6 – bonus for early completion......Page 50
3.8 Option X7 – delay damages......Page 51
3.9 Option X12 – partnering......Page 56
3.10 Option X13 – performance bond......Page 58
3.11 Option X14 – advanced payment to the contractor......Page 59
3.12 Option X15 – limitation of contractor’s liability for design......Page 61
3.13 Option X16 – retention......Page 62
3.14 Option X17 – low performance damages......Page 64
3.15 Option X18 – limitation of liability......Page 65
3.16 Option X20 – key performance indicators......Page 68
3.17  Option Y(UK)2 – Housing Grants, Construction and Regeneration Act 1996......Page 69
3.19 Option Z1 – additional conditions......Page 70
4.1 Introduction......Page 72
4.2 Entire agreements......Page 73
4.4 Construction of contracts generally......Page 74
4.5 NEC 3 documentation......Page 75
4.6 Essential contract documents......Page 76
4.8 The contract date......Page 78
4.9 Works information......Page 80
4.10 Site information......Page 83
4.12 Schedules of cost components......Page 85
4.13  Ambiguities and inconsistencies in the contract documents......Page 88
4.14 Schedule of clauses referring to the works information......Page 89
5.1 Introduction......Page 93
5.2 Others......Page 95
5.3 Actions......Page 96
5.4 The employer......Page 99
5.5 Express obligations of the employer......Page 100
5.6 The project manager......Page 101
5.7 Express duties of the project manager......Page 104
5.8 The supervisor......Page 108
5.10 Communications......Page 109
5.11 The project manager and the supervisor......Page 114
6.1 Introduction......Page 116
6.3 Identified and defined terms......Page 117
6.4 Interpretation and the law......Page 127
6.7 Adding to the working areas......Page 129
6.8 Early warning......Page 130
6.9 Ambiguities and inconsistencies......Page 133
6.10 Illegal and impossible requirements......Page 134
6.11 Prevention......Page 135
7.1 Introduction......Page 140
7.2 Design obligations, responsibilities and liabilities......Page 143
7.3 Providing the works......Page 145
7.4 The contractor’s design......Page 147
7.6 Design of equipment......Page 150
7.7 People......Page 151
7.8 Working with the employer and others......Page 152
7.9 Subcontracting......Page 154
7.10 Other responsibilities......Page 157
7.11 Express obligations of the contractor......Page 159
7.12 Express prohibitions on the contractor......Page 163
8.1 Introduction......Page 165
8.2 Starting and completion......Page 168
8.3 Programmes......Page 170
8.4 Revision of programmes......Page 173
8.5 Shortened programmes......Page 175
8.6 Access to and use of the site......Page 176
8.7 Instructions to stop or not to start work......Page 177
8.8 Take-over......Page 179
8.9 Acceleration......Page 181
9.1 Introduction......Page 184
9.2 Definitions and certificates......Page 187
9.3 Tests and inspections......Page 191
9.4 Testing and inspection before delivery......Page 193
9.5 Searching and notifying defects......Page 194
9.6 Correcting defects......Page 196
9.7 Accepting defects......Page 198
9.8 Uncorrected defects......Page 199
10.1 Introduction......Page 202
10.2 Assessing the amount due......Page 205
10.3 Payments......Page 208
10.5 Payments – main option A......Page 211
10.6 Payments – main option B......Page 215
10.7 Payments – main option C......Page 216
10.9 Payments – main option E......Page 221
10.10 Payments – main option F......Page 222
11.1 Introduction......Page 224
11.2 Changes in NEC 3 (from ECC 2)......Page 226
11.3 Outline of procedures......Page 230
11.5 Compensation events as exclusive remedies......Page 231
11.6 Fairness of the compensation event procedures......Page 232
11.7 Unusual features of the compensation event procedures......Page 233
12.1 Introduction......Page 234
12.3 Works information related events......Page 235
12.4 Employer’s default events......Page 238
12.5 Employer’s risk events......Page 240
12.6 Project manager/supervisor related events......Page 241
12.7 Physical conditions......Page 245
12.8 Adverse weather......Page 248
12.9 Prevention......Page 249
12.10 Measurement related events......Page 250
12.11 Secondary option clause events......Page 252
13.1 Introduction......Page 255
13.2 Notifications by the project manager......Page 256
13.3 Notifications by the contractor......Page 258
13.4 Project manager’s response to notifications......Page 262
13.5 Last date for notification of compensation events......Page 265
14.1 Introduction......Page 267
14.2 Instructions to submit quotations......Page 270
14.3 Instructions for alternative quotations......Page 273
14.4 Submission of quotations......Page 274
14.5 Status of the contractor’s quotations......Page 276
15.1 Introduction......Page 279
15.2 Changes from ECC 2......Page 280
15.3 General assessment rules......Page 281
15.4 Particular assessment rules......Page 288
15.5 The project manager’s assessments......Page 292
15.6 Implementing compensation events......Page 294
15.7 Other financial remedies......Page 295
16.1 Introduction......Page 297
16.2 Employer’s title to equipment, plant and materials......Page 298
16.4 Removing equipment......Page 299
16.5 Objects and materials within the site......Page 300
17.1 Introduction......Page 302
17.2 Employer’s risks......Page 306
17.4 Repairs......Page 309
17.6 Insurance cover......Page 310
17.7 Insurance policies......Page 311
17.9 Insurance by the employer......Page 312
18.1 Introduction......Page 314
18.2 Summary of NEC 3 termination provisions......Page 318
18.3 Termination for ‘any reason’......Page 319
18.4 Termination under section 9......Page 320
18.5 Reasons for termination......Page 322
18.6 Procedures on termination......Page 326
18.7 Amounts due on termination......Page 327
19.1 Introduction......Page 329
19.2 Developments in dispute resolution......Page 330
19.3 Meaning of dispute......Page 331
19.4 Adjudication under Option W1......Page 333
19.5 Adjudication under Option W2......Page 343
19.6 Review by the tribunal......Page 347
19.7 The Adjudicator’s Contract......Page 350
20.1 Introduction......Page 351
20.2 Core clauses – general......Page 353
20.4 Core clauses – time......Page 354
20.6 Core clauses – payment......Page 355
20.7 Core clauses – compensation events......Page 356
20.10 Core clauses – termination......Page 357
20.11 Dispute resolution......Page 358
21.1 The contracts......Page 359
21.2 NEC 3 Short Contract and Short Subcontract......Page 360
21.3 NEC 3 Term Service Contract......Page 362
21.5 NEC 3 Professional Services Contract......Page 366
21.7 Concluding comment......Page 368
Table of cases......Page 369
Table of clause references......Page 373