The New Engineering Contract (NEC), or NEC Engineering and Construction Contract, is a formalised system created by the UK Institution of Civil Engineers that guides the drafting of documents on civil engineering, construction and maintenance projects for the purpose of obtaining tenders, awarding and administering contracts. NEC has become the default suite of contracts for public-sector works, services and supplies in the United Kingdom and Hong Kong. NEC contracts have also been successfully used in Australia, Ireland, the Netherlands, New Zealand, Peru, the Philippines, South Africa, UAE, and many more. They are also increasingly being used in the private sector. There have been four editions, the first in 1993, the second in 1995, the third in 2005 and the most recent in 2017. The NEC3 was launched in 2005 and it was amended in April 2013. The NEC Users' Group, with over 400 members worldwide, brings together organisations and individual users of the NEC contract suite to exchange knowledge and best practice.
History 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. Wider use of the NEC was recommended by the Latham Report in 1994. 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. NEC is a division of Thomas Telford Ltd, the commercial arm of the ICE.
NEC3 The NEC3 suite was launched in 2005 and it was fully revised in 2013 - NEC's 20th anniversary. This suite was used in projects such as Crossrail, London 2012 Olympic and Paralympic games, Halley VI in Antarctica, and the Tin Shui Wai Hospital in Hong Kong. NEC3 was endorsed by the Construction Clients' Board (formerly Public Sector Construction Clients' Forum), Crown Commercial Services, the Facilities Management Board of the UK Cabinet Office, the South African Construction Industry Development Board, the International Organization for Standardization (ISO), the Association for Project Management (APM) and the British Institute of Facilities Management (BIFM). 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. Since 2017, Hong Kong has progressively moved to adopt NEC4.
NEC4 NEC4 was announced in March 2017 and has been available since June 2017. This new edition reflects procurement and project management developments and emerging best practice, with improvements in flexibility, clarity and the ease of administration. It also introduced two new contracts: the NEC4 Design, Build and Operate Contract (DBO) and the NEC4 Alliance Contract (ALC). An NEC4 contract suite covering facilities management was released in 2021. Several changes to terminology were introduced in NEC4, for example:
The term "Employer" was replaced with "Client" "Scope" was used in place of "Works Information" The term "Risk Register" was replaced with "Early Warning Register". One former NEC3 clause which dealt with the "spirit" of the contract was divided into two clauses, to show that both aspects should be complied with:
Clause 10.1: the parties and the service manager act as stated in the contract Clause 10.2: the parties and the service manager act in a spirit of mutual trust and cooperation.
Characteristics The NEC is a family of standard contracts, each of which stimulate good management of the relationship between the two parties to the contract and, hence, of the work included in the contract, can be used in a wide variety of commercial situations, for a wide variety of types of work and in any location, and are clear and simple documents using language and a structure which are straightforward and easily understood. The contracts legally define the responsibilities and duties of Employers (the party which commissions the work) and Contractors (the party which carries out the work) in the works information. The contract consists of two key parts, divided between contract data provided by the Employer and that provided by the Contractor. The NEC3 complies fully with the Achieving Excellence in Construction (AEC) principles. The Efficiency and Reform Group of the UK Cabinet Office recommends the use of NEC contracts by public sector construction procurers on construction projects. NEC documents use some of their own terminology in a specific manner, for example "compensation event" is a term used to encompass variations, losses and expenses, and extensions of time. The term implies that in some situations the contractor will be "compensated" with additional payment, e.g. for additional expenses incurred as a result of client actions, but financial compensation may not always arise and in some cases variations will result in a cost saving.
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