As NEC Users’ Group president Rudi Klein says, ‘NEC contracts work best when used in their original, unamended form. Unfortunately, through the “loophole” of option Z, far too many NEC contracts are amended beyond recognition and fail to deliver as they should.’
Though common practice, the misuse of Z clauses to make extensive amendments to NEC3 contracts is generally held to be detrimental their successful operation. Indeed, the so-called ‘curse of the Z clause’ has been widely discussed in recent newsletters (issues 75, 77 and 78).
Cutting out Z clauses
Fortunately, major employers such as the Environment Agency are beginning to recognise the problem. Two years ago it cut the number of Z clauses in its NEC contracts from 30 to 14 (issue 65) due to the ‘confusion and uncertainty’ they were causing within delivery teams.
Even newer employers such as the Hong Kong government announced earlier this year (issue 78) that it was looking to ‘contain the use’ of Z clauses and that ‘further optimisation of Z clauses’ was envisaged.
UK public-sector framework operator Pagabo has taken matters further with a new major works framework in which the NEC3 contracts are completely free of Z clause amendments. Sponsored by Northumberland, Tyne and Wear NHS Foundation Trust, the OJEU-compliant framework was launched in April.
Pagabo has appointed a range of 12 regional and national contractors for the framework, all of which are experienced in delivering public sector works. They include NEC Users’ Group gold members Galliford Try, Interserve, Laing O’Rourke, Morgan Sindall and Vinci.
The framework offers national coverage and is split into three value bands: £5–£15 million, £15–£50 million and over £50 million. It is available to all public sector organisations in the UK.
Easier for clients and suppliers
Pagabo managing director Jason Stapley says the new framework will help to fill a large gap in the public sector construction procurement market. "For example, only 50% of NHS trusts use the NHS Procure21+ framework. The others are procuring their own, or looking at alternative routes, potentially wasting time and money in doing so."
"Public sector organisations need to get more value out of their procurement processes while maintaining compliance. The new major works framework agreement utilises NEC3 contracts for any call-off arrangements with no amendments, making the framework easy to use for both the client and the contractor."
Since its launch in April, Stapley says the framework has already gained a lot of interest and traction from major public sector bodies. "It provides public sector clients with a simple and efficient route to commissioning a full range of building services. With no upfront fees – and no NEC amendments – it provides a realistic, easy-touse route to market."