Over two decades, the NEC has evolved from a 'revolutionary' new form of contract to become a mainstream standard form contract which is particularly conducive to collaborative working and contractual partnering. Use of the NEC has grown steadily in all sectors over its lifetime and a working knowledge of it has become essential for all architects, allied professionals, clients and contractors involved in building projects. Use of the NEC is increasingly driven by client bodies and while architects in some specialist building sectors – such as healthcare and transport – are relatively conversant with it, other architects have limited awareness of it. Architects are also increasingly exposed to the NEC in the private sector and need to be comfortable with it in relation to all potential projects.
Previous guides to NEC3 have tended to focus on its use primarily in the engineering sector of the construction industry and on its legal interpretation. Guide to NEC3 by Frances Forward is the first to explain it from the architect's perspective. Here is an extract that explains NEC3's structure.
'Pick and mix' assembly of the contract
NEC3 contract conditions are structured as a three-tier shopping list, comprising core clauses, main option clauses and secondary option clauses, from which the necessary items must be selected. The selection criteria are to be found in the project type and risk profile.
First, there is a clear group of concepts set out in nine core clause sections, and therein, a clear sequence of clauses dealing with the specific nature of each concept. Cross-referencing between clauses is avoided and related elements are kept within the individual sections. The drafting of these core clause sections is genuinely generic, with the clear intention that they are applicable to any project, whatever its nature, wherever it is in the world and under whatever jurisdiction.
Second, there are six main options, one of which is chosen to determine the pricing mechanism applicable to a particular project; each main option adds the clauses required to operate that particular pricing mechanism.
Third, there is a series of secondary option clauses to assist in fine-tuning the contract to meet the specific needs of the project. An assessment is made as to which, if any, of these secondary option clauses should be selected to meet the specific needs of the project. Finally, a decision is made as to which dispute resolution option applies.
Many standard form contracts pre-suppose that all projects follow a similar enough route under a particular procurement strategy for all the contract conditions to be the same, i.e. generic. Even in the context of a clear decision as to the procurement route and therefore the contract form, this is inflexible and tends to favour a 'form-filling' mentality, rather than a creative approach to assembling the appropriate contract for a particular project. There are parallels for this distinction in other areas of an architect's expertise; for example, when completing an NBS-style specification, one approach would be to leave most standard clauses intact – just in case they prove useful, while the opposite approach would be to start from a blank sheet and to include only those clauses that are considered strictly necessary. NEC3 is analogous to the latter approach, which tends to result in shorter documentation, avoidance of extraneous or superfluous clauses.
'Designing' the project-specific contract
While some organizations have deliberately put in place standard contract preparation procedures to maintain quality, it is clearly inadvisable to follow such procedures when assembling the contract conditions of an NEC contract. The whole point of the three-tier hierarchical structure is that it allows for the contract to be 'designed' as a tight fit for the needs of an individual project, and it is not only acceptable but positively to be expected that different main option and secondary option combinations will be chosen to augment the core clause sections for different projects. Even where projects are of a similar building type, or for the same client body, the decisions on appropriate options should be made afresh each time, in order to enable optimum performance of the NEC3 contract on any one project.
NEC3 is a proactive contract, requiring hands-on management from the outset, including putting it together. There is no default version of the contract and it simply will not be operable if its assembly does not follow the envisaged structure or is incomplete. NEC3 will appeal greatly in the context of wanting a pragmatic framework within which to manage real projects effectively. The skill-set required of architects is such that they should be well equipped to respond to the need to assemble the contract creatively, carefully and in adequate consultation with their clients.
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This article is © Frances Forward, 2011