BDC

NEC3 CONTRACTS: COMMON PITFALLS

Alastair-Hamilton

INDEPENDENT property, construction and infrastructure consultancy, Pick Everard, has launched a series of new podcasts delving under the skin of the new suite of NEC contracts. The first episode of ‘Perspective’ has now launched, with ‘Common Pitfalls’ now available to download. Partner Alastair Hamilton discusses what listeners can expect from the firm’s first podcast and what the common pitfalls are when using the contracts.

Producing a podcast series is a first for Pick Everard and we’re delighted to have launched such an innovative and insightful series which aims to aid discussion and improve understanding, educating those in the industry who may not have yet come into contact with the new suite of NEC contracts.

Each episode will feature property and construction leaders – from mechanical and electrical engineers to project managers to surveyors – with a combined experience of more than 100 years. We’re passionate about the industry and I think it really shows.

Our first episode looks at common pitfalls that can arise from NEC3 contracts and how best to avoid them.

The first potential pitfall highlighted as a potential cause for concern is: not understanding what you’re trying to produce and deliver. It’s imperative that there’s clear understanding among all delivery partners involved in a scheme – as well as the client – as to what they’re looking to achieve; what are the client’s key objectives? Once this has been established this will inform a brief and, ultimately, the contract type.

Secondly, understanding the client itself is important as a pitfall can often be a misunderstanding of a company’s structure, its attitude to risk and any potential constraints with regards budget and time. Some clients don’t have a construction background so need and advice and guidance – particularly when it comes to contracts – and, in order to provide this information, a clear understanding of a business is required.

Selecting the correct NEC contract is crucial to ensure that it can enable the key drivers for the project and allocate risks appropriately. Failure to select the most appropriate contract will result in a programme of works that simply doesn’t work for anyone – not to mention creating a particularly difficult job for the project manager, having to negotiate a contract that is not aligned to the requirements of the project.

The idea of ‘one size fits all’ contracts is a contentious subject when it comes to the introduction of Z clauses. These are put in place to personalise a contract but clients need to be aware that they can create ambiguity and duplication which can potentially promote misunderstanding. At Pick Everard, we have a standard set of Z clauses we use but we adopt a precautionary approach to their use to ensure they do not become contradictory.

Finally, the terminology used in NEC contracts can present pitfalls. There are changes to terminology in the new edition, NEC 4, and it is imperative that this is maintained throughout to avoid ambiguity. Failure to maintain consistency means that you risk a subcontractor or client not understanding a contract. This is particularly important with the NEC suite as it is also an important project management tool which is referred to at every stage of a project so needs to be as clear as possible.

Small differences in terminology – for example ‘risk registers’ now being referred to as ‘early warning registers’ – can have a large impact on a project if they’re not accurately identified and understood. Getting a clear and accepted programme of work in place is crucial from the outset and, if used correctly, NEC contracts are an excellent project management tool to ensure that this is the case.

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BDC 305 Jun 2023