NEC4 is only a couple of weeks old but everyone has been busy with their keyboards and PowerPoint presentations already. It’s really good to see the level of enthusiasm for the NEC forms of contract and people have been keen to understand the changes NEC4 brings with it. There’s some good information out there, and it is worth a read but I would of course also advise you take time to read the contract yourself. Don’t believe the first bit of information you hear on NEC4 as it may take a little while for all the changes to be understood.
The changes are not wholesale, there is some updating of terminology so Works Information becomes Scope, Employer becomes Client etc. The drafters have also made the contracts gender neutral. Below are some of the changes that I’ve picked up so far:
- There is a provision for the agreement of Contractor’s Defined Cost throughout the project life cycle, rather than waiting for the inevitable Client audit at the end
- The multiple, and sometimes confusing, Fees have been replaced by a single Fee
- Contractor’s can make proposals that would save money and the parties can share in the benefits of this
- Programmes will be treated as accepted if the PM fails to respond to submitted programmes
- Common z clauses have been incorporated in the core clauses – bribery and corruption, confidentiality etc.
- The Contractor is now obligated to submit an application if it wants paying – reflecting what happens in the real world
- There is a dispute escalation procedure to encourage senior members of the parties to try and negotiate the resolution of disputes
- There are some new forms, a design, build operate (DBO) form and an alliance contract is undergoing consultation – have your say on the alliance contract here https://www.neccontract.com/NEC4-Products/NEC4-Contracts/NEC4-Alliance-Contract
- Some of the issues with NEC3 have been resolved – the Risk Register is renamed the Early Warning Register (this wasn’t an issue to anyone who actually read the contract, but the NEC is all about clarity after all!)
- Some of them haven’t fully – the issue of which programme you use to assess the time impact of compensation events has not been fully dealt with it seems – see Glenn Hide’s article on this issue https://gmhplanning.co.uk/wp-content/uploads/2017/06/NEC4-Elephant-in-the-room.pdf
- In a number of instances those who use the contract regularly have been heard and their feedback has been taken on board by the drafting panel and incorporated into NEC4 https://www.linkedin.com/groups/2893228/2893228-6288999024699674624
Of all the changes that NEC4 has made, the fact the drafting panel are listening to those who (in some instances) live and breath the NEC forms of contract is encouraging and in my opinion very important to the continued success of the NEC forms.
So what does this mean? Are we going to see wholesale change from the industry towards NEC4? It is only my opinion but I suspect the answer is no. A lot of existing Employers (Clients) will continue with NEC3 for some time before adopting NEC4. But let me know what you think. Are you planning on using NEC4? What changes have you identified? Do you think it solves the most common problems you experience with NEC3?