NEC4 PSC picked to procure major railway consultancy project in Hong Kong

The Railway Development Office (RDO) of Hong Kong government’s Highways Department (HyD) has adopted the NEC4 Professional Service Contract (PSC) for a major consultancy study. It is the first use of NEC4 PSC for a railway-related consultancy in Hong Kong.

In February 2020, Ernst & Young Transactions Limited was engaged to undertake a 12-month review of monitoring and control strategies for new railway projects in Hong Kong to improve public safety, quality, cost and programme control. In addition to a desk study, the consultant interviewed relevant stakeholders to enhance its understanding of their current practices and latest developments to prepare for the challenges of delivering future railway projects.

The government’s 2014 railway development strategy recommended that seven new railway projects be implemented progressively subject to further technical and financial studies, updated demand assessment, availability of resources and implementation of new development areas and housing developments. The new projects included Tung Chung line extension, Tuen Mun south extension, Northern Link (including Kwu Tung station), Hung Shui Kiu station, North Island line, East Kowloon line and South Island line (west).

Piloting NEC4 PSC

Piloting NEC4 PSC in the HK$8 million (£0.8 million) RDO consultancy is the latest of many public works contracts and consultancies initiated by government works departments since the introduction of NEC4 in 2017, as part of a transition from NEC3 to NEC4. The government’s Development Bureau has promoted the NEC contract suite as its procurement route for major public works projects since 2016.

RDO’s project team considered the collaborative culture and proactive communication mechanisms of NEC4 PSC made it well suited to facilitate delivery of this complex consultancy study. The project team put a great effort into procuring the consultancy using NEC4 PSC, including mapping the differences between NEC4 PSC and traditional consultancy form. They hope the success of the trial will facilitate the progressive transition from NEC3 to NEC4 in public works consultancies in Hong Kong.

RDO was highly commended for the 2020 NEC Contract Innovation Award for its innovative drafting of the NEC4 PSC. The judges said, ‘The client clearly understands the value of collaboration, bringing this culture into a railway environment and assisting in the transition between NEC3 and NEC4. It is interesting to see a holistic approach, including smart procurement and monitoring’. 

RDO’s project team said the NEC4 PSC contract data part one was carefully drafted to specify the relevant qualification and experience requirements of key people, specialists and subcontractors. The procurement process included checking the reasonableness of professional manpower resources proposed by the consultant at tender stage, and the adequacy of these resources was reviewed every 3 months after contract award.

The project team said the activity schedule template was drafted to allow pricing flexibility to match the likely cashflow of the consultant. Furthermore, the scope was written to promote collaboration and partnership among the project team, the consultant and relevant stakeholders towards a common goal of excellent performance throughout the contract.

Partnering platforms

A multi-purpose partnering workshop was included in the consultancy to appreciate and align objectives, develop common goals, evaluate risks and establish collaborative working relationships among the different parties.

According to RDO’s project team, the client, service manager and consultant took the study forward in a highly collaborative manner, with intensive communications through multiple channels, such as interviews, workshops and co-location arrangements. In particular there was enhanced transparency in sharing information and initial thoughts between the project team and the consultant to stimulate generation of good ideas and solutions to achieve better project outcomes.

RDO’s project team highlighted the importance of integrated discussion forums, comprising a project steering group and working group as well as online communications, which were used to resolve challenges in a timely manner. With active participation by various parties and the clause 10.2 obligation to act in a ‘spirit of mutual trust and co-operation’, a collaborative culture was firmly reinforced in the various stages of the consultancy.

The team added that the NEC early warning mechanism had encouraged timely risk identification and problem solving in a proactive manner. This had helped to ensure that the consultancy remained on programme and within budget.

Benefits of using NEC

• NEC4 PSC’s collaborative culture and proactive communication mechanisms made it well suited for delivery of a complex consultancy study.
• Flexibility of NEC4 PSC scope and contract data facilitated precise specification of the professional resources required, and the activity schedule template allowed pricing flexibility to match the consultant’s cashflow.
• NEC4 PSC scope and clause 10.2 obligation to work in a ‘spirit of mutual trust and co-operation’ ensured collaborative working between the parties, helping to achieve optimum project outcomes.
• NEC4 PSC’s early warning mechanism encouraged timely risk identification and problem solving in a proactive manner, helping to keep the consultancy on programme and within budget.