|This year’s NEC Users’ Group Annual Seminar falls on the 25th anniversary of the NEC, and next year will be 25th anniversary of the NEC Users’ Group. Issue 1 of this newsletter, published a few weeks after our launch in January 1994, reported that 700 NEC contracts had already been let around the world.|
Among UK users, the former British Airports Authority led the way, with 13 NEC contracts let by March 1994. A few months later NEC received a major boost when the late Sir Michael Latham’s (1994) report described the approach of NEC as ‘extremely attractive’.
The following year the second edition of NEC was launched with a new title, the NEC Engineering and Construction Contract, to reflect a suggestion from Sir Michael’s report. Other report suggestions taken on board included the reference to parties dealing with each other, ‘in a spirit of mutual trust and co-operation’.
Focus on communication
At the time, the surprise for many in the industry was that a contract could be drafted in such a way as to improve collaborative behaviours. It gradually began to dawn on people that efficient and effective project management could only be achieved when there was regular and adequate communication between the parties as the project proceeded. NEC put communication at the heart of contracting like never before.
NEC’s overriding contribution to the contracting culture, both in the UK and internationally, was to challenge pre-conceived notions about approaches to contract drafting and the very nature of contracting itself. It gave practical expression to relational contracting, by which both parties acknowledge that open and constructive communication about risk has to be to their mutual advantage.
Over the past 25 years NEC has continued to attract interest and adherents around the world. I do some teaching at Stuttgart University to a group of students studying international construction contracts at master’s level.
Their interest is captivated by a contract that promotes pro-active risk management in contrast to traditional contracts, which tend to comprise deadpan, ‘black-letter’ rules about obligations and entitlements obscured by myriad procedures for either enforcing obligations or claiming entitlements. One German student highlighted this in her dissertation when comparing NEC with the standard German construction contract, Vergabe- und Vertragsordnung für Bauleistungen (VOB).
Moreover, NEC maintains its dominant market share by continuing to innovate and listening to users’ concerns. This year will be no exception. As reported on page 1, last month’s annual seminar welcomed the new NEC4 Alliance Contract, further details of which are on page 4.
As we look ahead in years to come, the hope is that our approach to procurement will have dramatically changed. Following this year’s collapse of Carillion (Issue 90) and Dame Judith Hackitt’s report (2018) on building safety, the pressure is now on the industry and its clients to move towards a more integrated and collaborative delivery process. Within this context, NEC will surely come into its own.
Hackitt J (2018), Building a Safer Future – Independent Review of Building Regulations and Fire Safety: Final Report, www.gov.uk/government/publications/independent-review-of-building-regulations-and-fire-safety-final-report (accessed 12 June 2018).
Latham M (1994), Constructing the Team – Final Report of the Government / Industry Review of Procurement and Contractual Arrangements in the UK Construction Industry, constructingexcellence.org.uk/resources/constructing-the-team-the-latham-report (accessed 12 June 2018).