What makes NEC different from its competitors?
Traditionally, contracts were prepared to identify who was responsible for what, and thus to identify who would be liable if something went wrong. It included very few provisions for active management of the works – that was left for either the specification or people to sort out as the project progressed. The ICE – prompted by Martin Barnes – recognised that this approach was not suiting the industry well, and created the New Engineering Contract (ie the NEC) in 1991 to set out how the construction work would be managed to avoid or reduce the number of things going wrong.
It aimed at a collaborative way of working, and included novelties such as early warning and target price contracts – virtually unknown in the construction industry at the time. Unlike most contracts which gather dust after signing, the NEC was not a contract to be left in the drawer, and that is still the case with all our contracts today.
The starting point in all NEC contracts is Clause 10. Clause 10.1 requires the Parties to act as stated in the contract; this allows actions to be specified – who does what and when - rather than stating some future obligation. Clause 10.2 is crucial, but perhaps less well understood than many other provisions; it requires those involved to act in a spirit of mutual trust and co-operation. This means that they are trusted to do what the contract says they will do, but also that they will co-operate in doing that; that is, they will work together in achieving the contract objectives.Unlike most contracts which gather dust after signing, the NEC was not a contract to be left in the drawer, and that is still the case with all our contracts today.
Peter speaking at the 2025 NEC Annual Conference
What was your first experience with NEC?
Back in 1990, I was first shown a copy of the consultative draft of the New Engineering Contract. At that time, I was specialising in advice on contracts and more used to the ICE Conditions of Contract. This one was very different, and took some getting used to. I had a barrister as part of my team and showed it to him. He said he couldn’t understand it – he claimed it was not written in proper English!
Fairly quickly, I got to understand the basis for the contract and how it was aimed at improving construction. I started working with early adopter clients, who were dissatisfied with existing contracts and wanted something better. I remember one organisation asked me to be the Adjudicator on an early contract, then made sure there was a referral so they could understand how adjudication worked!
When the first edition of the New Engineering Contract was published, I was asked by Martin Barnes to lead a small team to prepare a contract for the Project Manager and Supervisor. We quickly realised that the contract could be much wider than that and could cover the full range of professional services. Following a consultation period, this led to the first edition of the Professional Services Contract in 1994. It came as a bit of a shock to some professionals who did not think professional services were susceptible to programming!
I was then asked to lead the NEC Panel (which evolved into the NEC4 Contract Board), which was charged with drafting the third edition of the contracts.
The NEC4 Contract Board at the ICE, One Great George Street – Prof David Mosey, Helen Sturdy, Peter Higgins, Ian Heaphy, Matthew Garratt, Shy Jackson (not pictured: Dale Evans).
How many NEC projects have you worked on and which is your favourite?
My work has been in advising rather than in working on contracts. I have provided advice on how to set up contracts and how to manage them efficiently in order to achieve overall project objectives. I also provided dispute resolution services to those whose contracts were not well set up or managed, or where major difficulties were encountered which the parties were not able to deal with without external help.
I spent a lot of time working with the Highways Agency, as it was then known, in setting up some of their NEC contracts for maintenance work and for new construction. One major achievement was developing the early contractor involvement approach with the Highways Agency, which was later developed into the optional clause included in the Engineering and Construction Contract – Option X22. When it was first introduced, people were worried about appointing a contractor without a firm price for construction. Using this approach also identified the essential need to develop a realistic budget.
Another initiative I developed was with local and national highway authorities holding risk workshops during the tender period with all tendering contractors together, to identify risks to be put in the first early warning register.One major achievement was developing the early contractor involvement approach with the Highways Agency, which was later developed into Option X22.
I spent some time working in Africa as a dispute board, and in the Middle East as arbitrator and mediator on contracts based on the FIDIC form. This reinforced my belief in the strength of collaborative contracting.
Dispute board work in Ethiopia
Which clause from the Contracts is most pertinent in the world today and why?
This is quite difficult since there are a number of provisions which make NEC stand out. Just to mention three:
As mentioned above, Clause 10.2 is fundamental as it sets the scene for how the contract is to be managed. It describes the way in which early warnings, programme, compensation events and all other elements of the contract are to be managed.
A very close second-most important provision is the early warning procedure. This aims at solving problems before they arise, and again feeds very strongly in the concept of mutual trust and co-operation.Clause 10.2 is fundamental as it sets the scene for how the contract is to be managed.
Third most pertinent is the compensation event procedure. This is aimed at getting certainty on price and completion date when changes occur, rather than leaving it to later. The key point here is that disruption to the works is assessed at the time, rather than being dealt with as a separate claim. Having fixed the compensation for delay and disruption, the Contractor’s motivation is to minimise their effect to maximise profit.
Why are collaborative contracts important and what would the world look like without them?
As I stated above, traditional contracts tended to be of a confrontational nature; the Client was looking to get their project delivered as specified, on time and at the minimum price, whilst the Contractor was looking to make a return on the project whether or not the Client was happy with the time taken, the cost or indeed whether the finished quality met Client expectations. These conflicting requirements were difficult to reconcile and on many – if not most – contracts, disputes arose which required time to resolve, often well after the project was completed.
A collaborative contract is aimed at avoiding that conflict by identifying the Parties’ expectations and getting the Parties to work together in achieving each other’s objectives. The key function of collaboration is to drive out waste. Stop creating Defects in the work, stop wasting time, avoid unnecessary overspend. The Parties – and the Project Manager and Supervisor – collaborate to achieve this, to the benefit of all involved.
A prime example of this is the target contract, introduced to construction contracting through NEC. Sharing savings and cost overruns means both Client and Contractor are motivated to keep costs down. Perhaps paradoxically, the less the Client pays the Contractor, the more profit the Contractor makes.A collaborative contract is aimed at avoiding conflict by identifying the Parties’ expectations and getting the Parties to work together in achieving each other’s objectives.
Conversely, of course, without collaboration, both Parties lose this benefit. The Contractor alone takes responsibility for cost and time consequences, so employs extra people to look for ways of covering that risk – likely to give rise to extra claims and potential disputes. The Client has little trust in the Contractor, so employs extra people to watch closely what the Contractor is doing and to assess/ challenge these claims. A downward spiral into the worst we saw of construction some 40 or 50 years ago.
Celebrating Peter’s 80th Birthday in December
Outside of NEC, what do you like to do in your spare time? How do you take your tea?
I find plenty of activities to fill in the time I am not working. I have a 100 year old house and around an acre of grounds to look after – a fair bit of general maintenance needed. There always seems to be work outstanding. People ask if I have a ride-on mower for my large lawn – no, I have a run-behind mower.
I grow my own vegetables and fruit, and I make jam from my currants and berries. I enjoy cooking, am appointed the head chef in our household, and make my own bread.
I am part of the Lingfield Art Exhibition team, who manage and put on a major art exhibition every year in Lingfield – around 400 exhibits. This involves planning the show, running a seven-day exhibition, then reviewing performance afterwards. I am the treasurer, which increases the workload for some months before and after the exhibition. Oh, and I am also the webmaster. I also manage and join a small group of artists who meet weekly to paint/ draft together.
Visitors at Lingfield Art Exhibition
I have always had an interest in computers, from the early days of the Sinclair ZX 81 and Spectrum, and still spend a fair bit of time developing applications to work with Word, Excel and the like.
Tea - strong builder’s tea, very little milk.
With thanks to Peter Higgins for taking the time to answer our questions. If you’d like to nominate someone for this series or take part yourself, please do get in touch.
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