NEC Key features and challenges

Our partner Roseanne Serrelli, Head of Strategic Projects and Innovation, examines the key features and challenges of the latest NEC suites of construction contracts.

What would you say is the main contribution of NEC to project/contract management?

The real contribution has been shift of focus from the “master/servant” obligations and liabilities of the parties onto good management and collaboration. The form introduced the concept of a Project Manager which is a far more hands on role than the supervisory role of the architect or engineer.

The NEC obligation to act “in a spirit of mutual trust and co-operation” has been considered by the Technology and Construction Court in Mears Ltd v Shoreline Housing Partnership Ltd [2015] EWHC 1396, Costain Ltd v Tarmac Holdings Ltd [2017] EWHC 319, and more recently in Van Oord UK Ltd v Dragados UK Ltd [2021] CSIH 50.

This leads to a reduction in the risks and cost overruns that are a common occurrence in construction projects.

In your experience, what are the NEC key features allowing such collaboration?

A few features allow for good management and collaboration at an early stage e.g., the Risk Register or Early Warning Register sets out the project risks, how they will be managed, and the associated time and cost. Also, the early warning system encourages a forward thinking and a pro-active approach to problems.

Key Performance Indicators measure the Contractor’s performance against the Client’s objectives and the amount that the Contractor will be paid in reward if it meets the target. This focus on quality of performance is again a shift in emphasis on “time and cost”. The concept being that is it behaviours and being on top of information that leads to those better key outcomes.

Use of multi-party collaboration and core groups (X12) is also an important feature. Though of course not unique to NEC, collaboration works well with the NEC suite of contracts because everyone from suppliers, to professionals and facilities management providers, can be appointed using the same philosophy. Core clauses are the same across the family.

Does the simplicity of language used in NEC assist its collaborative approach and key features?

Simplicity of language is intended to reduce the occurrence of disputes. In some instances, this means that terms and expressions that have repeatedly been the subject of judicial scrutiny, and have well understood meanings, are not used. NEC does not aim to legislate for every eventuality and leaves considerable room for interpretation. While this may encourage full consideration to be given to the real intention of the provision and of the parties, it potentially leaves the equivalent terms and expressions that NEC uses open to interpretation and yet to be similarly defined by the courts.

What would you say is one of the challenges to overcome when using the suite?

The biggest single factor in the successful adoption of NEC is understanding. The parties really need to understand the form and its processes and use them to the letter.

NEC contracts require active day to day management by the parties involved. The way they are drafted and the various responsibilities that they place on the parties mean that management time and administration time are increased (e.g., numerous notices required to be given). Naturally, this may depend on the experience of the parties involved and how familiar they are with NEC and their level of understanding of the concepts and processes in it. As a result, having an experienced project manager and legal adviser in place early in the project can be beneficial for all involved.

This article and video is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email enquiries@sharpepritchard.co.uk.