The Hong Kong government’s Civil Engineering and Development Department (CEDD) is trialling the NEC3 Professional Services Contract (PSC) on one of its many landslip prevention and mitigation programme consultancy contracts.
It is the first use of the PSC option C (target contract) for public works projects in Hong Kong. CEDD's geotechnical engineering office awarded the 5 year, HK$16 million (£1.3 million) contract to Aecom Asia Co. Ltd in April 2014.
CEDD‘s rolling landslip prevention and mitigation programme deals systematically with landslide risks throughout Hong Kong arising from both substandard man-made slopes and vulnerable natural hillside catchments.
Under the pilot PSC contract, Aecom is carryng out natural terrain hazard study for one hillside study area. The consultant will undertake detailed design, supervision and contract administration of landslip prevention and mitigation works for the hillside catchments and a total of 25 substandard man-made slopes and retaining walls.
The individual landslip prevention and mitigation works will be procured separately under an NEC3 Term Service Contract, tentatively scheduled for mid-2015.
"Under PSC option C the consultant is generally paid based on time charge," says senior geotechnical engineer Thomas Wong. "This option provides a mechanism for pain/gain share in respect of the consultancy fee, under which CEDD and Aecom share the difference between the actual price and the final target price."
For the pilot project Wong says a pain cap corresponding to 110% of the target price has been adopted by CEDD. ‘The pain/gain is shared equally between CEDD and Aecom unless the actual price is higher than the above pain cap, in which case the consultant bears all the pain beyond the pain cap.‘
Special provisions for interim assessment of the consultant‘s pain share have also been incorporated in the contract to avoid over-payment and undue front-loading.
"The pain/gain share mechanism should, in principle, drive the contracting parties to a common goal of completing the services more efficiently in terms of cost and time – this will be carefully reviewed at the end of the pilot scheme," says Wong.
‘So far, the contract is proceeding smoothly and the consultant is able to achieve all the key dates stipulated in the scope. CEDD is partnering with Aecom as a team and the working relationship has been good.‘
Benefits of using NEC
- NEC3 Professional Services Contract option C provides a mechanism for pain/gain share in the consultancy fee.
- Pain/gain share mechanism drives contracting parties to common goal of completing services more efficiently in terms of cost and time.
- Contract encourages employer to partner with the consultant, leading to a good working relationship.