News & Media
July 02, 2019

NEC and Hong Kong: a perfect match

NEC and Hong Kong: a perfect match

NEC contracts are extending their reach and proving their worth across the globe. Already used in places such as Australasia, South Africa and the UK, and for huge signature construction projects such as the London 2012 Olympic Games and Lima 2019 Pan American Games, they have now fully found their way into the Asia Pacific.

NEC contracts are particularly suitable for use in Hong Kong. As in other parts of the world, projects in Hong Kong in the past have been plagued by disputes over cost and time. The philosophy and methodology behind NEC make the delivery process much more collaborative, putting trust at the heart of the contract and potentially reducing delays and overall spend.

The 2017 NEC4 suite and its predecessor, NEC3, allow for risk management to be approached in a much better way than has traditionally been the case in Hong Kong. The contracts provide for early warning meetings to inform clients and allow them to plan ahead. This has a particular resonance in the territory because of the sheer size of the projects being contracted by the government. It has piloted NEC for public procurement but is now using the contract more extensively across a plethora of new developments.

Appetite for innovation

The sheer demand for infrastructure in Hong Kong means there is a strong desire to try out innovative approaches such as NEC and modular integrated construction.

While use of NEC is a relatively new concept in Hong Kong and everyone is still feeling their way to some extent, local offices of international consultants have the advantage of many years of experience of using NEC in the UK and elsewhere.

Certainly the Hong Kong government is enthusiastic about the possibilities offered by NEC. Results so far have been encouraging and the Development Bureau confirms, ‘a new management culture has been revolutionised in the construction industry’. This includes notable improvements in reducing confrontation and improved teamwork. NEC involves pain and gain sharing between the parties and incentivises contractors to strive for lower costs, win-win solutions and early completion.

One major example of a project successfully delivered under NEC was the HK$678 million (£66 million) Happy Valley underground stormwater storage scheme. It took six years to complete and was carried out by Chun Wo Construction and Engineering for the government’s Drainage Services Department (DSD).

Using NEC meant there was close collaboration between the contractor and project manager. That in turn meant labour, plant, equipment and materials usage was maximised, leading to innovation and reduced spending. It led to the contractor proposing an alternative design for the storage tank foundation, which contributed to a total cost saving of around 5%.

Avoiding disputes

We may still be on a journey in terms of NEC use in Hong Kong, but it is an exciting one. Being able to avoid lengthy and expensive disputes at he end of construction projects is a significant breakthrough and is benefitting the many stakeholders involved.

The experience of using NEC in the territory is being closely watched by other countries across Asia Pacific. Many of them are committed to major national infrastructure improvements and are actively assessing NEC’s benefits. In this part of the world, an optimistic future is within sight.

Written by Jill Kennedy, Currie & Brown

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