New Zealand district council chooses NEC4 ECC Option B to renew urban water mains

A local council in New Zealand’s north island has successfully used an NEC4 works contract to upgrade 3 km of urban water supply mains. Client and project manager New Plymouth District Council completed the NZ$2 million (£1 million) first phase of Inglewood’s water mains renewal in line with expectations in 2019 under an NEC4 Engineering and Construction Contract (ECC) Option B (priced contract with bill of quantities).

The year-long contract with Fulton Hogan involved replacing some of the town’s existing older cast-iron mains with polyvinyl chloride (PVC) pipework. Deterioration of the existing pipes, some of which were over 110 years old, was resulting in discolouration of tap water and parts of the system were also undersized, which limited flow capacity for firefighting. The town’s remaining 4 km of substandard pipework is being replaced under part of a separate NEC4 Term Service Contract option C (target contract with price list) due for completion by 2021.

Designer and NEC supervisor WSP was engaged under a seven-year NEC3 Professional Services Contract (PSC) Option C (target contract with activity schedule), which was let in 2016.

‘ We decided it made sense to jump straight into the then recently launched NEC4 version of ECC. This has since been adopted for three more of our projects’

Promoting collaboration

According to the council’s projects manager Andrew Barron, ‘We decided back in 2016 to base our new infrastructure professional services contract on the NEC3 PSC due to its promotion of collaboration and good project management. We have since rolled out a series of NEC3 Engineering and Construction Short Contracts (ECSC) for lesscomplex low-risk works.

‘For the more complex Inglewood water mains renewal, we decided it made sense to jump straight into the then recently launched NEC4 version of ECC. This has since been adopted for three more of our projects, including an NZ$13 million (£6 million) contract to build two new reservoirs. However, much as we like the target cost arrangement of the PSC, we chose Option B for Inglewood as lump-sum pricing based on bills of quantities is the most widely recognised payment mechanism for this type for work in New Zealand.’

Barron says option X18 was also used to limit the contractor’s liability to the client. ‘This option, which does not exist on standard contracts in New Zealand, also helped to build the contractor’s trust. The scope of the works was prepared using volume 2 of the NEC4 ECC users guide, Preparing 
an Engineering and Construction Contract, which required a one-off redraft of the council’s standard specifications to align with NEC4 requirements.’

Delivery on time and budget

The Inglewood contract was let in November 2018 and was successfully delivered in line with the client’s expectations in December 2019. ‘The project team worked together in a highly collaborative manner in accordance with the NEC4 ECC clause 10 obligation to act “as stated in this contract” and “in a spirit of mutual trust and co-operation”,’ says Barron. He says team working and collaboration was enhanced by all team members being new to NEC4. ‘This required all team members to support each other and learn together. We also used a cloud-based NEC4 management system, which greatly helped with contract compliance and team learning.’

A total of 128 early warnings were notified during the works, with 60 by the contractor and 68 by the project manager. These were discussed at early warning meetings held during weekly progress meetings, and revised programmes were submitted and accepted on a monthly basis. A total of 89 compensation events were notified and agreed, though many of these were for traffic management as originally agreed when the contract was let.

‘We decided during the procurement process to remove traffic management from the scope. The traffic management requirements for each part of the works were then discussed and agreed by the project manager and contractor to ensure the most appropriate solution for health and safety was used. This was then instructed as a change to the scope and a compensation event notified for each element of the works.’ 

BENEFITS OF USING NEC

• NEC4 ECC clause 10’s obligation to act ‘as stated in this contract’ and ‘in a spirit of mutual trust and co-operation’ promoted collaborative working and good project management.
• NEC early warning and compensation event process minimised the risk of disputes and cost and time over-runs. 
• The payment mechanism in ECC Option B lump-sum contract with bill of quantities was readily understood by New Zealand’s utility works supply chain.
• Option X18 to limit contractor’s liability to client was new to New Zealand and helped to build trust.