NEC4 arriving in June

NEC4 arriving in June

NEC4, the next evolution in the NEC suite of collaborative-style procurement contracts, will be launched at the NEC Users’ Group Annual Seminar at County Hall in London on 22 June 2017. Support for the now extensively used NEC3 suite, launched 12 years ago, will continue for existing users and projects as required.

As with NEC’s previous evolutions, the proven and unique processes for collaboration, fair dealing and good management will remain. The first three versions of the contract suite have now successfully delivered several hundred billion pounds worth of works, services and supplies throughout the world.

NEC4 has been improved and streamlined to take into account unprecedented levels of user feedback together with consultation responses, industry developments and emerging best practice. The result is further improvements in flexibility, clarity and ease of use – making it ‘the best NEC yet’.

New DBO and alliancing contracts

NEC has led the way in industry transformation and evolving practices and two new additions to the suite reflect this.

A new NEC4 Design Build Operate Contract (DBO) will be added to the suite in June, reflecting the increasing demand for contracts extending into the operational phase. This is already popular for projects funded by international development banks and aligns with the UK governments’ drive towards initiatives such as ‘soft landings’ and building information modelling.

A consultative NEC4 Alliance Contract (ALC) for multi-party integrated teams is also being published in June. Alliancing is another exciting procurement direction for a number of clients, particularly for highly complex projects with an emerging scope.

Improved dispute resolution process

NEC4 contracts will provide improved dispute resolution procedures over NEC3, with new and further processes to help parties avoid the time and expense of formal disputes. Dispute resolution option W1 and W2 will provide for disputes to go to senior representatives in the first instance, while a new option W3 will offer recourse to a dispute avoidance board.

The new procedures require a different way of appointing dispute resolution services, so a new NEC4 Dispute Resolution Service Contract (DRSC) is being launched in June in place of the NEC3 Adjudicator’s Contract.

New names and new provisions

To provide greater consistency and clarity, a number of NEC3 contract terms and processes have been changed in NEC4. For example, ‘works information’ and ‘service information’ become ‘scope’, ‘employer’ becomes ‘client’, ‘risk register’ becomes an ‘early warning register’ and section 8 of the main contracts is re-written around ‘liabilities’ rather than ‘risk’.

There are new provisions encouraging contractors to propose changes in scope to reduce capital costs, a new secondary option for contractors to propose changes to whole-life costs, and changes to promote quality management systems.

Also new are provisions for a final assessment to be made, for deemed acceptance of programmes, for a compensation event for proposed instructions not being given, for additional compensation events stated in the contract data, and for dealing with corruption, assignment and disclosure.

Schedule of cost component changes

The standard and short (rather than ‘shorter’) schedule of cost components in the NEC4 Engineering and Construction Contract will now appear in other NEC4 contracts. 

Working areas overhead has been removed from the standard schedule, while the short schedule now has pre-priced people rates, treats subcontractors as a cost item and no longer has a percentage for people overheads.

Support for NEC4 users

As with NEC3, there will be a comprehensive range of support for NEC4 users. Guidance notes have been updated and consolidated into four documents -- covering procurement strategy, contract preparation, supplier selection and contract management – which is intended to make them more logical and helpful.

New and updated guide books as well as training courses, workshops and webinars will be rolled out during 2017 and beyond.

The NEC team in London and the NEC Users’ Groups in the UK, Hong Kong and New Zealand look forward to helping new and existing NEC users improve the outcomes they can achieve using NEC4 contracts in the future.

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