Practical Guide to the NEC3 Engineering and Construction Contract (eBook)

Michael Rowlinson MSc, DipArb, MRICS, FCIOB, FCIA, FCICES, is a director of Alway Associates, Construction Contracts & Commercial Consultants based in Banbury, Oxfordshire. He is an experienced construction professional, having qualified initially as a Chartered Quantity Surveyor and later as a Chartered Builder. After over 20 years with private practice and contractors Michael joined Alway Associates in 1998, specialising in Construction Contracts and Law. As part of his work Michael has lectured extensively for the Construction Study Centre and direct for his own clients, predominantly on the NEC suite of Contracts. He has written a number of articles on this suite of contracts which have been published in the Civil Engineering Surveyor and the NEC User Group's Newsletter, as well as on Alway Associates website.

A Practical Guide to the NEC3 Engineering and Construction Contract 5
Contents 7
1 Introduction 13
1.1 General 13
1.2 Mechanics not law 14
1.3 A simple formula for understanding a contract 14
1.4 Mandatory or discretionary 15
1.5 Conditions precedent 16
1.6 Note on use of upper case in key words and phrases 16
2 Background to the NECECC 17
2.1 The background: First edition 17
2.2 The second edition 18
2.3 The third edition 19
2.4 Endorsement of NEC3 by the Office of Government Commerce 19
2.5 General philosophy: Aims and objectives 20
2.6 Flexibility 20
2.7 Clarity and simplicity 21
2.8 Stimulus to good management 21
2.9 Other characteristics 22
3 The Options: An Overview 25
3.1 General arrangement of the ECC 25
3.2 Other documents referred to 27
3.3 Contract Data 28
3.4 The published documents 28
3.5 Main Options: General outline 29
4 ‘Spirit of Mutual Trust and Cooperation’ 31
4.1 Introduction 31
4.2 Core clause 10.1 31
4.3 What does it mean? 33
4.4 Practical issues 34
5 The Cast of Characters 37
5.1 Introduction 37
5.2 The Employer 37
5.3 The Project Manager 39
5.4 The Supervisor 41
5.5 The Contractor 42
5.6 The Adjudicator 43
5.7 Subcontractors 44
5.8 ‘Others’ 44
5.9 Designers 45
5.10 CDM Coordinator 46
5.11 Principal Contractor 46
5.12 Practical issues 47
6 Communications, Early Warnings and other General Matters 49
6.1 Introduction 49
6.2 Communications: The clause 49
6.3 Communications: Practical issues 50
6.4 Early warnings: The clause 52
6.5 Early warnings: Practical issues 54
6.6 Other matters: The clauses 56
6.7 Other matters: Practical issues 59
7 The Contractor’s Main Responsibilities 61
7.1 Introduction 61
7.2 Providing the Works 61
7.3 Contractor’s design 63
7.4 Other matters 64
7.5 Practical issues 67
8 Subcontracting 71
8.1 Introduction 71
8.2 Definition of a Subcontractor 71
8.3 The core clauses 72
8.4 Provisions in the Main Options 73
8.5 Practical issues 73
8.6 Options for forms of subcontract in the NEC3 family 74
9 Testing and Defects 77
9.1 Introduction 77
9.2 Tests and inspections 77
9.3 What is a Defect? 79
9.4 The Defect procedure 80
9.5 The Defects Certificate 82
9.6 Uncorrected Defects 82
9.7 Practical issues 83
10 Title 85
10.1 Introduction 85
10.2 The core clauses 85
10.3 Practical issues 86
11 Risks and Insurance 89
11.1 Introduction 89
11.2 The core clauses 89
11.3 Practical issues 92
12 Time 97
12.1 Introduction 97
12.2 The programme: Contents 98
12.3 The programme: Submitting, accepting and revising 103
12.4 The programme: Practical issues 105
12.5 Starting and finishing 114
12.6 Other matters 117
12.7 Secondary Options related to Time 120
12.8 Practical issues 122
13 Payment 125
13.1 Introduction 125
13.2 The payment process 125
13.3 Payments in multiple currencies 128
13.4 The amount due and the Price for Work Done to Date 128
13.5 Supporting documents and records 138
13.6 The Contractor’s share 141
13.7 The Contractor’s share: Practical issues 143
13.8 Special provisions for the UK 144
13.9 Related Secondary Options 146
13.10 Practical issues 148
14 The Schedules of Cost Components 151
14.1 Introduction 151
14.2 The Schedule of Cost Components 151
14.3 The Shorter Schedule of Cost Components 156
14.4 Application to Subcontractors 157
14.5 Practical issues 158
15 Compensation Events: Theory and Events 163
15.1 Introduction 163
15.2 The theory 163
15.3 The events 165
15.4 Practical issues 180
16 Compensation Events: Procedures 183
16.1 Introduction 183
16.2 Notification by the Project Manager 184
16.3 Notification by the Contractor and the Project Manager’s reply 187
16.4 Other matters associated with notifying compensation events 190
16.5 Quotations: Substance 192
16.6 Quotations: Submission and reply 194
16.7 Assessments by the Project Manager 198
16.8 Implementing compensation events 200
16.9 Practical issues 201
17 Compensation Events: Assessment 207
17.1 Introduction 207
17.2 Changes to the Prices 208
17.3 Changes to the Completion Date and any Key Dates 212
17.4 Project Manager’s assumptions 215
17.5 Other related matters 216
17.6 Practical issues 218
18 Termination 221
18.1 Introduction 221
18.2 Reasons for termination 221
18.3 Implementing termination 225
18.4 Procedures after termination 226
18.5 Assessing the amount due after termination 227
18.6 Practical issues 229
19 Dispute Resolution 231
19.1 Introduction 231
19.2 Option W1 232
19.3 Option W2 235
19.4 Practical issues 240
20 Secondary Options 243
20.1 Introduction 243
20.2 X2: Changes in the law 243
20.3 X4: Parent company guarantee 244
20.4 X12: Partnering 244
20.5 X13: Performance bond 249
20.6 X17: Low performance damages 250
20.7 X18: Limitation of liability 250
20.8 X20: Key Performance Indicators 251
20.9 Y(UK)3: The Contracts (Rights of Third Parties) Act 1999 252
20.10 Z: Additional conditions of contract 252
20.11 Practical issues 253
21 Completing the Contract Data 255
21.1 Introduction 255
21.2 Purpose and form of the Contract Data 255
21.3 Part One: Data for the core clauses 256
21.4 Part One: Data for the Main Option clauses 260
21.5 Part One: Data for the Secondary Option clauses 261
21.6 Part Two: Data for the core clauses 264
21.7 Part Two: Data for the optional statements 265
21.8 Part Two: Data for Main Options A or B 267
21.9 Part Two: Data for Main Options C, D or E 268
21.10 Practical issues 269
22 The Supporting Documents: Need and Content 273
22.1 Introduction 273
22.2 Works Information 273
22.3 Site Information 282
22.4 Practical issues 283
Bibliography 285
Appendix 1 Tables of Clause Numbers, Case Law and Statutes 287
Appendix 2 Tables of Employer’s, Project Manager’s, Supervisor’s, Contractor’s and Adjudicator’s Actions 297

"An experienced surveyor and builder now a consultant in Oxfordshire, Rowlinson offers both novice and experienced negotiators a guide to the third edition of the New Engineering Contract Engineering and Construction Contract." (Booknews, 1 June 2011)