Why is NEC needed?
Business and governments need projects to secure their goals. Unfortunately, too many projects are delivered late, over budget or simply do not meet their objectives.
Performance varies between sectors, but a reliable study of large industrial infrastructure projects puts the failure rate as high as 65%. NEC is unique. It is the only standard contract whose development has been led by project practitioners and not lawyers. Their insight means that the of use of NEC stimulates good management of the relationships within the project and the work the parties deliver together.
Why does contract choice matter?
Allocation and management of risk is the core of the legal and commercial relationship established by a project’s contract. This allocation must be fair and sustainable through the life of the project. The party holding a risk should also be able to count on the co-operation of the other party to identify and resolve issues as they arise. NEC therefore built around procedures for sensible risk allocation and ensuring that when risks do emerge the parties collaborate to deal with them quickly and decisively.
Unfortunately, many contracts do not support this collaborative approach to risk management. They start from the assumption of failure and attempt to offload risk and costs on to suppliers.
Any security or protection this appears to give the client is illusory. This type of contract creates a defensive, adversarial environment, in which information is withheld and the best minds of the project devote their energies to defending their commercial position. The result is often multiple legal claims and counter claims which can continue for many years after the project has been completed.