Pithara section, Great Northern Highway Muchea to Wubin upgrade, Australia

NEC has been successfully trialled on a road project in Western Australia − a new 16km stretch of the Great Northern Highway in the semi-arid Wheatbelt region, north of Perth. The project was delivered on time and on budget using an NEC3 Engineering and Construction Contract (ECC) Option D (target contract with bill of quantities).

Client Main Roads Western Australia and its project delivery partner Arup−Jacobs joint venture trialed NEC on one of ten works packages on the AU$345 million (£168 million) second stage of the Great Northern Highway Muchea to Wubin Upgrade project. The project involved upgrading 79km of highway across a 218km length to improve road safety, network reliability and increase freight efficiency – including making the route suitable for 53.5m long road trains.

The AU$25 million (£12 million) Pithara section was awarded to a joint venture of Highway Construction and Albem Operations in March 2018. The works involved building 10.3km of new single carriageway next to the existing route, upgrading 5.7km of the route through Pithara town site vicinity plus 1.5km of an adjoining road, improving junctions, providing new overtaking lanes and bus bays, and planting 220,000 seedlings. The section was completed on time and on budget in July 2019.

Target contract

Main Roads Western Australia is the first Australian road authority to use NEC. ‘Following consultation with industry, we decided to trial a target-cost contract on at least one of our projects. We believed adopting this type of contract might deliver potential advantages both to ourselves and our supply chain,’ says contracts manager Andrew Ives.

‘After analysis of the various contract options from a commercial and technical perspective, we decided to trial the NEC3 ECC Option D on the Pithara section of Great Northern Highway upgrade. Given the success of the trial to date, we’re now considering further use of NEC target-cost contracts on other projects in the near future.’ 

The integrated project team (IPT) of Main Roads, Arup and Jacob provided training to selected tenderers to help them prepare their bids. ‘The winning contractor, a joint-venture of Highway Construction and Albem Operations, quickly adapted to the target-cost way of working and the full transparency of costs and fees this entailed,’ explains Ives.

Collaborative working

Ives says the IPT and the contractor fully engaged with the NEC obligation to work in a ‘spirit of mutual trust and co-operation’. ‘Both IPT and the contractor made full use of the NEC early warning and risk reduction process, ensuring all issues likely to affect the budget and programme were identified and collaboratively resolved at the earliest opportunity.’

Compensation events were notified were necessary and quickly agreed in line with NEC procedures, providing all parties with a clear and up-to-date picture of the budget and programme throughout the duration of the contract.

‘The contractor’s collaborative approach under NEC extended to its exemplary involvement with the local community,’ says Ives. ‘The joint venture’s supportive approach to trainees, workforce diversity and commitment and focus to Aboriginal training and employment saw the Pithara project win the 2018 Nudge Team/Crew of the Year Award – a fantastic result.’

Benefits of using NEC

• NEC3 ECC Option D target-cost contract provided client with full transparency of costs and fees.
• NEC obligation to work in a ‘spirit of mutual trust and co-operation’ ensured a fully collaborative approach to deliver the project successfully.
• NEC early warning and risk reduction processes ensured that all issues likely to affect budget and programme were effectively resolved at the earliest opportunity.
• Compensation events were notified and quickly agreed in line with NEC procedures, providing all parties with a clear and up-to-date picture of the budget and programme throughout the contract.