If during the execution of the Works the Contractor shall encounter physical conditions (other than weather conditions or conditions due to weather conditions) or artificial obstructions which conditions or obstructions could not in her/his opinion reasonably have been foreseen by an experienced contractor the Contractor shall as early as practicable give written notice thereof to the Engineer. Z clauses [ edit ] The repair and indemnity provisions at clauses 82 and 82 have been replaced with a new recovery of costs clause 82. The waiver of subrogation has now been extended to cover both parties, following on from the SSE v Hochtief decision where it was held that insurers had the right to pursue a joint insured. Core Clause 9: termination The 'prohibition on corrupt acts' clause 18 seems minimal, and may result in a more detailed clause being used. At 11.2(19), there is a new definition of subcontractor which excludes labour suppliers. This had been an issue in practice.

Figure 1. Defined cost and expenses in PSC4 option A (a) and options C and E (b), tendered items shown in red were incurred because the Contractor did not follow the acceptance or procurement procedures laid down in the Works information or didn’t give an early warning notice as required. That sharing of risks under ECC Option C is based on the assumption that both parties are incentivised to work together for the benefit of the project and assist each other to increase any gains and avoid overspend. Disallowed costs sit outside this mechanism and are borne in full by the contractor, so the extent of disallowed costs will have a substantial impact on the underlying commercial bargain. Amendments to disallowed costs

Other amendments include costs being disallowed in relation to compensation events under subcontracts or the approval of subcontractors. These amendments are not part of NEC standard forms and contractors need to be aware of their potential impact. Each of the different contracts listed above comes with its own set of guidance notes and flowcharts which should aid understanding of the intent of the drafted clauses. The guidance notes expand on each clause to give extra substance and intent of the original drafters as to how a clause should be understood and interpreted. The flowcharts then map out each of the main processes within each contract and demonstrate how it should operate and what to do next if a party has or has not carried out the next contractual action. The NEC4 Engineering and Construction Contract (ECC) Option C is the target cost main works contract with an activity schedule. It can include any level of design, and is ideal for more complex or larger projects where the client and contractor are willing to share project financial risk in a fully collaborative way. This is an abbreviated version of the ECC contract and most suitable when the contract is considered "low risk" (not necessarily low value) on a project with little change expected. This contract is still between the employer and contractor but does not use all of the processes of the ECC making it simpler and easier to manage and administer.

All compensation events are also assessed based on defined cost plus fee. The only difference between options C and E is that option C has the target mechanism and the consultant’s share, which depends on how well the consultant does compared with the target total of the prices. The purpose of this is to encourage the client and consultant to collaborate and jointly manage risks and jointly reduce the defined cost during delivery of the service. Originally contracts in the civil engineering and construction industries were bespoke and drafted by Chancery pleaders using their knowledge of leases rather than building processes. In 1879, Royal Institute of British Architects for construction projects created RIBA forms which lead to the Joint Contracts Tribunal, JCT forms. For civil engineering the need for a formalized approach to contracts led the Institution of Civil Engineers (ICE) to produce a formalised set of conditions of contract. In 1986, the ICE commissioned the development of a new form of contract as it was felt that there was a need for a form that had clearer language, clearer allocation of responsibilities and reduced opportunities for contractual “gamesmanship”. In 1991, this resulted in a consultative form of the New Engineering Contract form of contract. The first edition was published in 1993. [8] Wider use of the NEC was recommended by the Latham Report in 1994. [ citation needed]

Real costs and rates

The Contractor’s main responsibilities– detailed NEC’s requirements in respect of the provision of the Works, Contractor’s design, design of Equipment, people (key persons), working with the Client and Others, Subcontracting and other responsibilities. Firstly, subcontractors will no longer be appointed until they are accepted by the client and, if required, the subcontract documents are also accepted. NEC3 did not require approval of subcontract forms if NEC contracts were used. NEC4 adds that NEC contracts "must not [be] amended other than in accordance with the additional conditions of contract". This means the client can set limits on acceptable amendments. The Hong Kong government decided to use NEC3 contracts generally for all government projects tendered in 2015/16. After a series of successful NEC3 projects in the region, the Hong Kong government announced in November 2016 that the NEC contract suite would be used for all future public works projects as far as practicable. [12] Since 2017, Hong Kong has progressively moved to adopt NEC4. [13] NEC4 [ edit ] NEC target and reimbursable options (Options C, D, E and F) provide for the contractor to be reimbursed for the actual costs of carrying out the works. These Contracts include reference to costs described as “Disallowed Costs”.