The pain/ gain share is assessed by reference to the difference at completion of the works between the Total of the Prices and the Price for Work Done to Date. The core clauses (of the main option listed above) are used in conjunction with the secondary options and the additional conditions of contract. Short Schedule of Cost Components: This is only used under option B to assess compensation events so is slightly more condensed than the full schedule which is used for option D. It is made up of eight categories that the Contractor would be able to claim relevant costs for when assessing a compensation event quotation: However, as mentioned above, the Guidance Notes prescribe, for Option A at least, that the list of activities is prepared by the Contractor. The Guidance Notes are silent on this point for Option C. It must be remembered, of course, that the Guidance Notes, while helpful, do not form part of the Contract and so the Parties are free to decide who prepares the list amongst themselves. What should be included in the schedule? From a contractor's perspective, it is essential to ensure that the Activity Schedule breaks down the works into a sufficiently and appropriate level of detail so that the contractor’s cash flow is preserved throughout the course of the works.

So far in this article we have used two types of terminology, activity schedule and Activity Schedule. The former is the original tendered activity schedule (as included in the Contract Data Part 2), the latter is that original schedule “changed in accordance with this contract” (see clause 11.2(20)). There is no limit to the number of activities which can be as few or as many as the drafter of the schedule wishes; however, as will be seen later in this article, it is much more important to get the activities correct under Option A than Option C. Figure 1 represents everything a contractor needs to get paid under an NEC4 ECC. Clause 52.1 − a core clause and so in all the options – draws the line between defined cost and fee. Simply, if it is not in defined cost, the contractor will be deemed to have included for it in itstendered fee percentage. The fee is the fee percentage times defined cost. NEC's history started in 1986 when Martin Barnes was commissioned to start drafting a contract to stimulate good project management. The first edition of NEC was launched in 1993. NEC2 arrived two years later, in 1995. NEC2 was used to build the High Speed 1 railway, between London and the Channel Tunnel. [ citation needed]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] flexibility: NEC3 can be constructed from nine sections of core clauses, six main options, two dispute resolution options and seventeen secondary options. This flexible approach is intended to avoid the need for lots of bespoke amendments, reduce the need for lengthy negotiation and also reduce the potential for disputes. However, in practice most of NEC3 contracts include considerable bespoke amendments – known as the 'Z' clauses as they form part of Option Z under the contract. Under NEC, there are 7 different options for procuring work. This article will provide descriptions of how each option works and explore the pros and cons to establish which option works best for you. Briefly, the options are titled as follows: main options: these relate to contract structure and pricing. One option, from A to F, must be selected: Contractors should also not overlook the inclusion of the design services when negotiating/preparing the Activity Schedule.

The Activity Schedule is the activity schedule unless later changed in accordance with this contract.Hear from the chairman of the APM Contract and Procurement SIG on the development of the PSSC and why APM and NEC enjoy such a strong relationship.