The NEC4 Alliance Contract (ALC) has been adopted for delivering an estimated £1 billion of mechanical, heating, ventilation and air-conditioning (MEH) works and services delivery at the £20 billion Hinkley Point C nuclear power station project in Somerset UK. The contract was signed in June 2019 between Nuclear New Build Generation Ltd (NNB) and an unincorporated joint venture of Altrad, Balfour Beatty, Cavendish Nuclear, Doosan Babcock and NG Bailey.
Although certain bespoke Z clause amendments were required to reflect the specific requirements and regulations relating to nuclear new-build projects, the contract retains the key underlying principles of the ALC, including focus on collaborative behaviours, adoption of a ‘no claims’ contractual arrangement, unanimous decision making, and shared risks and opportunities.
In addition to necessary supplementary provisions, namely nuclear-specific provisions plus ‘boiler-plate’ clauses such as confidentiality and data protection, the two contractual documents which required the most focus and preparation time prior to execution were the implementation plan and the performance table.
Two key documents
The ALC helpfully provides both guidance of the contents and a relatively blank canvas for the structure of the implementation plan and performance table. This allowed the teams to draft provisions tailor made for the MEH works and services and the agreed commercial arrangements, as well as aligning with the core ALC clauses.
The implementation plan includes the organisational and management structure of the alliance, including the roles of the alliance board and alliance manager and the various interfaces with the design and construction teams, plus the day-to-day management and oversight of the MEH services and works. The performance table sets out the agreed performance measures, including focusing on shared behavioural objectives.
It was agreed by all parties that the success of the contract will depend, to a large extent, on their behaviours, attitudes and collaborative ethos. Accordingly, a key focus in preparing the contract has been on the adoption of collaborative behaviours and a ‘one-team’ approach with shared goals and objectives, and these goals are now enshrined in the alliance objectives.
The ‘live’ nature of the implementation plan and performance table, which can be amended at any time by the alliance board, has also prompted specific governance arrangements to be made by all the members of the alliance. The objective is to balance the need for a dynamic implementation plan and performance table, which updates through the different cycles of the project and the MEH works and services, with appropriate governance and assurance measures being put in place for the approval of changes.
Furthermore, in keeping with the ethos of one team and shared risk, the contract retains a ‘no blame no claim’ provision, which encourages the parties to avoid adopting adversarial positions. The alliance board plays a key role in helping resolve disputes, with a further tiered escalation approach including the option of mediation and senior representatives and an independent expert (providing binding opinions) taking an active role in resolving disputes.
One of the key distinguishing features of the contract is that it is part of an overall NNB procurement strategy. There are over 200 other tier 1 contracts on Hinkley Point C, with over 75% of the footprint to be delivered by NEC contracts. Generally these are the NEC3 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule) for works and the NEC3 Professional Service Contract (PSC) and NEC3 Term Services Contract (TSC) for services.
As such interface management is a key feature and priority on the project. For alliance members this means they will need to collaborate closely with non-alliance parties, and share information with them in timely and proactive manner. ALC is best-placed to deliver to this. The first of the power station’s two reactors is due for completion at the end of 2025. When fully operational, the plant will supply 7% of the UK’s electricity.