New Plymouth District Council in North Island, New Zealand has used NEC Contracts to procure two new water reservoirs. The NZ$19 million (£9.3 million) project to duplicate existing reservoir tanks at Mountain Road and Henwood Road was completed on time and below budget in February 2022.
The existing reservoirs were failing to achieve the target storage level of service, which was 24 hours average or 8 hours peak demand using 50% of the volume, based on current water demands. The addition of new reservoirs at both sites now means the target level of service will now be met for the next 30 years.
Following a year of planning and investigation, the council appointed engineering consultancy Beca in 2017 under an NEC3 Professional Services Contract (PSC) to design the new circular concrete reservoir tanks, which each have a storage capacity of 4,450 m3.
Main contractor Downer was then engaged under an NEC4 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule) and work started on site in December 2019. The main subcontract was with Whitaker Civil Engineering and was let using an NEC4 Engineering and Construction Subcontract (ECS) Option B (priced subcontract with bill of quantities). The council acted as NEC project manager.
Both tank structures were built using precast prestressed concrete panels and beams supplied by Ultimate Engineered Concrete. Despite extensive disruption caused by the Covid-19 pandemic, the reservoirs became operational in August 2021 and the works were completed to the agreed programme and below the revised target price the following February.
Experienced NEC user
Andrew Barron, manager infrastructure projects at the council, says NEC-procured projects now account for over 90% of the council’s annual NZ$100 million (£50 million) infrastructure spend. ‘We started using NEC3 PSC in 2016 for a seven-year consultancy contract with WSP and have since rolled out a variety of NEC3 and NEC4 works and term contracts for everything from minor works to major civil engineering schemes.’
One of the first NEC4 ECC contracts was for the first phase of a water main renewals in the town of Inglewood. The NZ$2 million (£1 million) contract was let to Fulton Hogan in November 2018 using NEC4 ECC Option B. The largest contract to date is a 10-year NZ$155 million (£76 million) NEC4 Term Service Contract (TSC) let to Downer in April 2019 for road maintenance, minor road improvements and water main and sewer renewals, which led to the council being highly commended for the 2023 NEC Client of the Year Award.
Barron says NEC contracts were chosen for the new reservoirs project to promote both good project management and collaboration through the supply chain. ‘In addition to the NEC requirement to “act in spirit of mutual trust and co-operation”, we chose ECC Option C with a 50:50 pain/gain share to provide a further stimulus for collaboration and encourage a one-team, win-win approach. We also piloted the use of option X22 on early contractor involvement.’
He says the project was heavily disrupted by the Covid-19 pandemic. ‘There were over 130 early warnings on the main contract and the resulting delays and cost increases were quickly and fairly resolved using compensation events. We used CEMAR contract management system to help administer these processes.’
Barron says in line with NEC processes there was full transparency on costs. ‘This included regular audits of people costs as per the schedule of cost components. The end result of the NEC-inspired collaboration and transparency was that the main contract was completed in February 2022 to the agreed revised programme and NZ$0.6 million (£0.3 million) below the revised target cost, which was shared equally with the contractor.’
He says one of the key learnings from the project was that it would have been more beneficial to have the main subcontractor on a back-to-back ECS option C contract rather than option B. ‘Having the main sub-contractor involved in the early contractor involvement process would also have been a benefit.’
Barron says overall the council found ECC Option C promoted a good team culture. ‘The openness and transparency and the win-win approach gave us the benefits of working closely with the delivery teams. All these lessons have been incorporated into more recent major NEC projects.’
Benefits of using NEC
- NEC requirement to act in a ‘spirit of mutual trust and co-operation’ encouraged a collaborative, one-team approach to delivery.
- ECC Option C with 50:50 pain/gain share and option X22 on early contractor involvement provided a further stimulus for collaboration and encouraged the one-team, win-win approach.
- NEC early warnings and compensation event process ensured delays and cost increases due to Covid-19 were quickly and fairly resolved.
- NEC-inspired collaboration and cost transparency resulted in the project being completed to the agreed revised programme and below the revised target cost.