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08/04/2024
We've launched today...so does that define the starting date!? Let me check the Contract Data...
Whether you are new to NEC contracts or have spent many years waiting for yourself to achieve 'Completion', you will find value, knowledge, and sometime a little humour in what will be a new and exciting journey through NEC contracts.
We like to do things a little different here, so our newsletter follows the same structure as an NEC contract with topics selected each week to fit into some of the contract headings:
1 General
2 The Contractor’s main responsibilities
3 Time
4 Quality management
5 Payment
6 Compensation events
7 Title
8 Liabilities and insurance
9 Termination
So what's in the news!?
1 - General
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1 General
Diving in this week we begin with some trivia (but its no trivial clause!). Looking back at the transition from NEC3 to NEC4 we see the separation of clause 10.1 in NEC3 into clauses 10.1 and 10.2 in NEC4.
Why oh why I hear you ask?! Well often we can hear the soothing words of 'Mutual trust and co-operation' whispered in our ear as two parties embark on a journey of dispute.
But we often forget the latter part of clause 10.1, as it was in NEC3, where it said 'act as stated in the contract'. The bit where you agree to actually do what the contract requires of you in your role.
NEC4 draws this to attention by defining each requirement individually and in the following order:
10.1 - Act as stated in the contract
10.2 - with mutual trust and co-operation
Summarised to highlight the fact that we must fulfil our role as the contract requires first and foremost.
Delving deeper into this is an interesting article from NEC themselves - Mutual Trust and Co-Operation
In Industry News:
5 Payment
We recently saw Network Rail announce use of the NEC4 Alliance contract to tender the £1.4bn Midlands Rail hub programme. This is a significant statement and milestone in the use of the Alliance contract, however it isn't new for the 'NEC User Group platinum members'. In April 2020 we saw National Highways adopt the NEC4 Alliance contract for their smart motorways programme up to 2030.
With bold moves such as these the question remains as to how the Alliance contract will fair during challenging projects, and especially through periods of conflict.
Will we see the Alliance contract expand beyond billion-pound infrastructure projects? Time will tell....
6 Compensation Events (CE's)
Speaking of time, its often the case that programme 'prolongation' is a hurdle to agreeing CE's. Disagreement about programme assessment and calculation of costs is difficult, but a clear and detailed explanation by Fenwick Elliot and Claire King explains it all, including comparisons to JCT.
Selecting a couple of the key points from this article we know:
NEC4 contains a time bar for notification by the Contractor
Impacts are intended to be assessed prospectively (Clause 63.1)
Detailed and comprehensive records should be kept
Short and Schedule of Cost Components must be followed
Follow the rules of the contract
X Clauses
The use of X22 (Early Contractor Involvement) has been a growing topic since it was introduced in NEC4, addressing the challenge of appointing a contractor to undertake ECI whilst maintaining continuity by having one contract and thus a common/ linked set of liabilities.
Whilst an optional Z clause was published in January 2016 for use with NEC3 ECC, its only with the inclusion as an X clause in NEC4 that it became more common.
The functions of X22 are explained nicely in this article by Guy Higginbottom, Early Contractor Involvement under X22.
X22 was most recently updated in the January 2023 amendments, providing greater clarity and flexibility in Stage One. Details of the update can be found here, January 2023 X22 Changes.
Reminder of Upcoming Industry Events
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