Now Available in Paperback From its launch in 1991 the New Engineering Contract has rapidly overtaken traditional building and civil engineering contracts to become the UK's leading standard form for major construction projects. Additionally, under the generic title NEC 3, there is now a family of New Engineering Contract standard forms.
This book provides a detailed commentary on the latest edition of the main form - NEC 3 Engineering and Construction Contract. It explains how the contract is intended to operate and examines each clause to consider its application and legal interpretation. It draws upon the author's successful book on the second edition of the Engineering and Construction Contract, ECC 2, and it identifies and comments on the changes between ECC 2 and NEC 3.
Particular attention is given to the revised compensation event procedures in NEC3, with five chapters of the book devoted to this subject. In-depth analysis is also given to:
- The role of the project manager
- The obligations of the parties
- The liabilities of the parties
- The revised dispute resolution procedures
Table of Contents:
Preface xi Author’s note xiii
1 Introduction 1
1.1 Development of NEC contracts 1
1.2 Characteristics of NEC contracts 2
1.3 Structure of the NEC 3 Engineering and Construction Contract 4
1.4 Feedback from ECC 2 5
1.5 Changes from ECC 2 6
1.6 Points of interest in NEC 3 7
2 Main options 11
2.1 Introduction 11
2.2 Contract strategy 12
2.3 Option A – priced contract with activity schedule 18
2.4 Option B – priced contract with bill of quantities 21
2.5 Target contracts generally 22
2.6 Options C and D – target contracts 25
2.7 Option E – cost reimbursable contract 26
2.8 Option F – management contract 27
2.9 Option W1 – dispute resolution 27
2.10 Option W2 – dispute resolution 28
3 Secondary option clauses 30
3.1 Introduction 30
3.2 Option X1 – price adjustment for inflation 32
3.3 Option X2 – changes in the law 32
3.4 Option X3 – multiple currencies 33
3.5 Option X4 – parent company guarantee 34
3.6 Option X5 – sectional completion 35
3.7 Option X6 – bonus for early completion 36
3.8 Option X7 – delay damages 37
3.9 Option X12 – partnering 42
3.10 Option X13 – performance bond 44
3.11 Option X14 – advanced payment to the contractor 45
3.12 Option X15 – limitation of contractor’s liability for design 47
3.13 Option X16 – retention 48
3.14 Option X17 – low performance damages 50
3.15 Option X18 – limitation of liability 51
3.16 Option X20 – key performance indicators 54
3.17 Option Y(UK)2 – Housing Grants, Construction and Regeneration Act 1996 55
3.18 Option Y(UK)3 – Contracts (Rights of Third Parties) Act 1999 56
3.19 Option Z1 – additional conditions 56
4 Contract documents 58
4.1 Introduction 58
4.2 Entire agreements 59
4.3 Clause 12.4 of NEC 3 60
4.4 Construction of contracts generally 60
4.5 NEC 3 documentation 61
4.6 Essential contract documents 62
4.7 Identified and defined terms 64
4.8 The contract date 64
4.9 Works information 66
4.10 Site information 69
4.11 Contract data 71
4.12 Schedules of cost components 71
4.13 Ambiguities and inconsistencies in the contract documents 74
4.14 Schedule of clauses referring to the works information 75
5 Key players 79
5.1 Introduction 79
5.2 Others 81
5.3 Actions 82
5.4 The employer 85
5.5 Express obligations of the employer 86
5.6 The project manager 87
5.7 Express duties of the project manager 90
5.8 The supervisor 94
5.9 Express duties of the supervisor 95
5.10 Communications 95
5.11 The project manager and the supervisor 100
6 General core clauses 102
6.1 Introduction 102
6.2 Actions 103
6.3 Identified and defined terms 103
6.4 Interpretation and the law 113
6.5 Communications etc. 115
6.6 Instructions 115
6.7 Adding to the working areas 115
6.8 Early warning 116
6.9 Ambiguities and inconsistencies 119
6.10 Illegal and impossible requirements 120
6.11 Prevention 121
7 Obligations and responsibilities of the contractor 126
7.1 Introduction 126
7.2 Design obligations, responsibilities and liabilities 129
7.3 Providing the works 131
7.4 The contractor’s design 133
7.5 Using the contractor’s design 136
7.6 Design of equipment 136
7.7 People 137
7.8 Working with the employer and others 138
7.9 Subcontracting 140
7.10 Other responsibilities 143
7.11 Express obligations of the contractor 145
7.12 Express prohibitions on the contractor 149
8 Time (and related matters) 151
8.1 Introduction 151
8.2 Starting and completion 154
8.3 Programmes 156
8.4 Revision of programmes 159
8.5 Shortened programmes 161
8.6 Access to and use of the site 162
8.7 Instructions to stop or not to start work 163
8.8 Take-over 165
8.9 Acceleration 167
9 Testing and defects 170
9.1 Introduction 170
9.2 Definitions and certificates 173
9.3 Tests and inspections 177
9.4 Testing and inspection before delivery 179
9.5 Searching and notifying defects 180
9.6 Correcting defects 182
9.7 Accepting defects 184
9.8 Uncorrected defects 185
10 Payments 188
10.1 Introduction 188
10.2 Assessing the amount due 191
10.3 Payments 194
10.4 Defined cost 197
10.5 Payments – main option A 197
10.6 Payments – main option B 201
10.7 Payments – main option C 202
10.8 Payments – main option D 207
10.9 Payments – main option E 207
10.10 Payments – main option F 208
11 NEC 3 compensation event schemes 210
11.1 Introduction 210
11.2 Changes in NEC 3 (from ECC 2) 212
11.3 Outline of procedures 216
11.4 Defining a compensation event 217
11.5 Compensation events as exclusive remedies 217
11.6 Fairness of the compensation event procedures 218
11.7 Unusual features of the compensation event procedures 219
12 Listed compensation events 220
12.1 Introduction 220
12.2 Omissions from the listed events 221
12.3 Works information related events 221
12.4 Employer’s default events 224
12.5 Employer’s risk events 226
12.6 Project manager/supervisor related events 227
12.7 Physical conditions 231
12.8 Adverse weather 234
12.9 Prevention 235
12.10 Measurement related events 236
12.11 Secondary option clause events 238
13 Notifying compensation events 241
13.1 Introduction 241
13.2 Notifications by the project manager 242
13.3 Notifications by the contractor 244
13.4 Project manager’s response to notifications 248
13.5 Last date for notification of compensation events 251
14 Quotations for compensation events 253
14.1 Introduction 253
14.2 Instructions to submit quotations 256
14.3 Instructions for alternative quotations 259
14.4 Submission of quotations 260
14.5 Status of the contractor’s quotations 262
15 Assessment of compensation events 265
15.1 Introduction 265
15.2 Changes from ECC 2 266
15.3 General assessment rules 267
15.4 Particular assessment rules 274
15.5 The project manager’s assessments 278
15.6 Implementing compensation events 280
15.7 Other financial remedies 281
16 Title 283
16.1 Introduction 283
16.2 Employer’s title to equipment, plant and materials 284
16.3 Marking equipment, plant and materials 285
16.4 Removing equipment 285
16.5 Objects and materials within the site 286
17 Risks and insurances 288
17.1 Introduction 288
17.2 Employer’s risks 292
17.3 Contractor’s risks 295
17.4 Repairs 296
17.5 Indemnity 296
17.6 Insurance cover 296
17.7 Insurance policies 297
17.8 Contractor’s failure to insure 298
17.9 Insurance by the employer 298
18 Termination 300
18.1 Introduction 300
18.2 Summary of NEC 3 termination provisions 304
18.3 Termination for ‘any reason’ 305
18.4 Termination under section 9 306
18.5 Reasons for termination 308
18.6 Procedures on termination 312
18.7 Amounts due on termination 313
19 Dispute resolution 315
19.1 Introduction 315
19.2 Developments in dispute resolution 316
19.3 Meaning of dispute 317
19.4 Adjudication under Option W1 319
19.5 Adjudication under Option W2 329
19.6 Review by the tribunal 333
19.7 The Adjudicator’s Contract 336
20 NEC 3 Engineering and Construction Subcontract 337
20.1 Introduction 337
20.2 Core clauses – general 339
20.3 Core clauses – the subcontractor’s main responsibilities 340
20.4 Core clauses – time 340
20.5 Core clauses – testing and defects 341
20.6 Core clauses – payment 341
20.7 Core – compensation events 342
20.8 Core clauses – title 343
20.9 Core clauses – risks and insurance 343
20.10 Core clauses – termination 343
20.11 Dispute resolution 344
21 NEC 3 family of contracts 345
21.1 The contracts 345
21.2 NEC 3 Short Contract and Short Subcontract 346
21.3 NEC 3 Term Service Contract 348
21.4 NEC 3 Framework Contract 352
21.5 NEC 3 Professional Services Contract 352
21.6 NEC 3 Adjudicator’s Contract 354
21.7 Concluding comment 354
Table of cases 355
Table of clause references 359
About the Author :
Brian Eggleston, CEng, FICE, FIStructE, FCIArb is a registered arbitrator.
Review :
‘Eggleston is the author of a number of highly successful guides to engineering contracts […] he writes with a certainty and facility that commends him to many practising lawyers and with an ease which makes him highly readable for other construction professionals. Given its readability and perceptiveness, Eggleston can be thoroughly recommended to all construction professionals.’ – Paul Newman, Construction Law
‘A very useful and helpful guide.’ – Fiona Hammond, Legal Advisor, BAA plc
‘Brian Eggleston’s books are always good. This one is unique, as the only analysis on this contract that is both detailed and fair. The light it shines is startlingly revealing.’ – Robert Fenwick Elliott, Fenwick Elliott, Solicitors
'Those who pride themselves on a comprehensive law library will buy this book straightaway. Others would be well advised to buy it as soon as they are faced with the prospect of an NEC project.' - Construction Industry Law Letter
'everyone involved in projects using the NEC should have a copy' Building Magazine
