How to start out with NEC contracts: some advice for new NEC users

How to start out with NEC contracts: some advice for new NEC users

Key Points

  • NEC4 ECC and PSC have detailed programme requirements which can be challenging for new users.
  • The simpler ECSC and PSSC short contracts have similar NEC early warning and compensation event processes as ECC and PSC but without the detailed programme requirements.
  • New NEC users might consider starting out with low-risk, low-value construction or consultancy contracts using the ECSC or the PSSC.

So, you have heard all about NEC contracts: they are clear, super flexible and stimulate good management. In Issue 128, you may have also read the introduction to NEC early warnings (Campbell, 2023).

However, you have never used NEC before and you are in a place or country where NEC has not been used before. As such you would be right to be a little concerned about going straight into a fullblown NEC4 Engineering and Construction Contract (ECC).

Certainly you will need some serious training and support to get your first ECC tender document ready. But you are also not sure if your team and indeed if your supply chain are ready for it. So how can you get into NEC with a little less risk?

Low-risk contracts

A good way to start using NEC for construction is to find a low-risk, relatively low value, fixed-priced works scheme and use the NEC4 Engineering and Construction Short Contract (ECSC). This is much simpler that the ECC but it still has the unique NEC benefits of early warnings and compensation events. It does not have the detailed programme requirements of the ECC (see NEC Contract Board, Patterson and Parry 2023 for a comparison), making it easier for everyone to get used to NEC processes and the NEC way of working.

Another option is to start with an even lower-cost and lower-risk NEC consultancy contract. This might be with a friendly firm that that might also be keen to learn about and test the NEC. For this you can use the NEC4 Professional Service Contract (PSC). Note that this has almost all of the same NEC processes and in most cases exactly the same clauses and words as the ECC.

Like all NEC contracts, the PSC has NEC early warnings and compensation events as well as all the programme requirements that are in the ECC. These programme requirements may be a bit extreme for a relatively simple consultancy contract. You could therefore make it easier for everyone and start your NEC experience with the much simpler NEC4 Professional Service Short Contract (PSSC). Like the ECSC, it does not have the detailed programme requirements of its bigger sibling (see NEC Contract Board and Patterson 2023 for a comparison).

Getting help

NEC runs one-day introduction courses on the ECSC, PSSC and all other contracts, which are particularly aimed at new users, along with the recently launched series of ‘Getting it right’ one-day workshops (see the NEC website for more details at www.neccontract.com/products/training).

Also, if you are thinking of using NEC in a country where NEC has never been used before, you should get your proposed NEC contract reviewed by a local construction lawyer to see if any amendments are required by your local laws (Patterson and Higgins, 2021). Typically there may be minor tweaks required regarding payment timing and/or dispute resolution.

NEC has already published clauses to make the contracts fit local laws in the UK, Ireland, New Zealand and for each state in Australia. No changes are required in South Africa. NEC has also published a version of the ECC for Hong Kong and is working with the Singapore government to ensure local suitability.

In all cases, get help from someone that has used NEC before, and good luck.

References

Campbell L (2023) Early warnings – an introduction for new NEC users, NEC Newsletter 128 (November 2023): 10.
NEC Contract Board, Patterson R and Parry N (2023) Comparison of the NEC4 Engineering and Construction Short Contract (ECSC) with the NEC4 Engineering and Construction Contract (ECC), Guidance Note, June 2023, https://www.neccontract.com/news/comparison-of-the-nec4-ecsc-with-the-nec4-ecc/
NEC Contract Board and Patterson R (2023) Comparison of the Professional Service Short Contract (PSSC) with the Professional Service Contract (PSC), Guidance Note, October 2023, https://www.neccontract.com/news/comparison-of-theprofessional-service-short-contract-pssc-with-theprofessional-service-contract
Patterson R and Higgins P (2021) Using NEC outside of the UK – an update, NEC Users’ Group Newsletter 111 (March 2021): 10-11. https://www.neccontract.com/About-NEC/News-and-Media/Using-NEC-outside-of-the-UK-an-update

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