NEC4 Contracts and the Framework Alliance Contract (FAC-1) share a collaborative and cooperative ethos, which is one of the reasons why FAC-1 became part of NEC, the home of collaborative contracting. Here, we look at why NEC4 Contracts are ideal for use with FAC-1 and the benefits of doing so.
The Framework Alliance Contract (FAC-1) is a multi-party contract developed in response to an identified need for a better form of framework agreement for parties involved on complex projects or a series of projects, based on shared goals, improved communication and enhanced learning among alliance members. Similar to NEC Contracts, it is used on a wide range of projects and is recommended by the UK Government.
While FAC-1 provides the overall legal agreement that brings the alliance together, contracts are still needed to govern the relationships between the client and each of the alliance members. FAC-1 was designed to be used with any type of project contract or consultancy agreement. However, there are significant advantages to selecting a contract type that promotes the same aims of collaborative working and open communication, such as the NEC4 suite of contracts.
A recent example saw the Ministry of Justice (MoJ) using FAC-1 and NEC Contracts on its new prisons programme due to be completed in 2031. The NEC4 Engineering and Construction Contract (ECC) and NEC4 Professional Service Contract (PSC), as well as the short contract versions, were used to govern the work phases of each project.
Ensuring consistency throughout the framework
Among the main advantages of using FAC-1 is the ability to ensure consistent objectives and requirements across each project contract. NEC4 Contracts include optional clauses that help ensure that the objectives set at the framework-level are reflected in project contracts.
For example, where whole life cost reductions are a target, NEC4 Option X21 enables contractors to propose revisions to the scope to reduce the operational and maintenance costs of an asset.
Similarly, NEC4 Option X29 enables clients to state their climate change requirements in the scope, provides a mechanism for contractors to set out their strategy for achieving the objectives and introduces the ability to use performance tables in NEC4 Contracts that do not already contain one. This enables clients to set financial incentives to encourage contractors to achieve the stated performance targets.
FAC-1 also allows for ‘pre-contract activities’ to be carried out by alliance members. However, where the pre-contract work required is more complex, or greater control is needed, the early contractor involvement can be managed at the project contract-level by using the NEC4 Option X22 clause.
Sharing values
FAC-1 and NEC4 Contracts share a number of features. Both require parties to work in a collaborative and cooperative way, and in fact include similar wording around the need for mutual trust.
They also include complementary elements, and it is important to consider how these can be integrated and utilised most effectively to successfully deliver the project or series of projects.
The requirement for parties to provide early warnings to others involved in the project is also a feature of both FAC-1 and NEC4 Contracts. Under NEC4 Contracts, an early warning notice must be issued as soon as one of the parties becomes aware of anything that could affect the cost, delay completion, delay the meeting of a key date or impact the performance of the works in use.
Similarly, FAC-1 requires early warning on ‘any matter adversely affecting or threatening the Alliance or the Framework Programme or its own performance or the performance of another Alliance Member’.
As you can see, NEC4 Contracts are ideally suited for use within a FAC-1 framework due to the shared collaborative and cooperative ethos that is the foundation of both.
To find out more about how NEC4 and FAC-1 can be integrated in practice, download our NEC Guidance Note.
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