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Issue No. 40 October 2007
NEC taking off in New Zealand

An NEC Roadshow in Auckland and a full day seminar in Wellington attracted between them more than 85 professionals in September 2007. The events were organised by the New Zealand Centre for Advanced Engineering (CAENZ) and supported by ICE (NZ), Roading NZ and Constructing Excellence in New Zealand. The presentations given on the day are available to NEC Users�s Group members on the NEC website.

At the seminar, case studies were presented by some of the early adopters of the contract in New Zealand. Warwick Fergusson of Meridian Energy shared the success story that was a NZ$100 million refurbishment of the mechanical and electrical equipment in the 40 year old Manapouri Hydropower station, New Zealand�s biggest. Meridan, NZ�s largest procurer of Hydropower, has also turned to the NEC Engineering and Construction Short Contract and the NEC Term Service Contract (for provision of access services across Manapouri Lake) and will consider the NEC for its planned future projects. Warwick was also able to give the results of his research comparing similar projects carried out under the NEC and under FIDIC. Here a single slide struck accord: FIDIC has an Engineer to the Contract; The NEC Engineering and Construction Contract (ECC) has a project manager, reflecting the ECC�s focus on project objectives through the contract.

Cliff Boyt gave the benefit of his first � and generally positive � experience as an NEC Project Manager for a landfill site for Envirowaste, one of New Zealand�s biggest waste operators. The Chief Executive of Roading New Zealand (the trade body for road contractors), Chris Olsen gave a very balanced view of the pros and potential cons of the NEC in New Zealand compared with the �incumbent� standard contract NZ 3910, based on his own experience and on many conversations with his members.

The Halley VI research base in the Antarctic was an impressive example of the use of the NEC for a truly extreme contract. Sian Nash, of Connell Wagner explained how she had used NEC contracts to support an innovative procurement strategy including a design competition, a single contractor working with the top three designers to develop the designs. Once the favoured design had been selected, a target cost ECC contract was developed and negotiated to formalise some very unusual risk allocation for a very special project. This work was carried out by Sian for Connell Wagner�s sister company, Mott MacDonald, and an concluded with an explanation of how Connell Wagner is preparing for the inevitable growth in the use of the NEC in New Zealand.

Lisa Curran, of lawyers Simpson Grierson, gave an all important New Zealand legal view of the contract. Lisa has recently advised Auckland�s Metrowater on the use of the NEC Framework Contract for a rolling programme of improvements to its pipeline networks. She emphasised that some minor changes were needed due to the Construction Contracts Act which deals with payment timing and provides a right to adjudication. This will soon be covered by NEC in a NZ-specific secondary option (Y(NZ)2), which is now being finalised. Lisa, along with all other presenters, emphasised the fundamental differences of the NEC as a collaborative contract.

Trust and collaboration � and how these are engendered by the NEC was one of the key messages from Garry Miller from the Academy of Constructing Excellence. He also drew on research by Chris Farhi of Auckland University on the appetite in New Zealand for a �new� form of contract. He finished with a quote from that research: �The key lesson learnt by participants in their projects was the strong requirement of education about the contract prior to undertaking the project. The NEC is sufficiently different to NZS3910 and other standard forms to require full training of staff, particularly in the areas of risks and roles�.

All this was sandwiched between presentations by NEC Consultant, Richard Patterson, based in the UK, who was in New Zealand as part of an Australasian tour including visits also to Melbourne and Sydney. Richard started with a short introduction to the NEC, explaining how the contracts live up to their principles as being clear, flexible and a stimulus to good management. He gave many examples of the exhaustive range of projects and services in which they have been used in more than 20 countries. The last presentation of the day focused on how both pre- and post-contract, the NEC facilitates and supports effect risk management.

All this was followed by an open discussion on the NEC and how its use might be encouraged and supported in New Zealand. Those attending the roadshows and the seminar were given the option of one years free membership of the NEC Users� group. This resulted in 15 new members, including Meridian Energy and Auckland City Council. Copies of all the seminar presentations are available to User Group members through the NEC website. NEC will support New Zealand users of the contract through the Users� Group helpline and, with local partners, will make quality NEC-branded training available in New Zealand.

Click on the website link below to sample the Wellington Seminar presentations.

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