The New Engineering Contract= a promising start

Martin Banes, chairman of the ICE panel for the New Engineering Contract, reports on the non-adversarial contracts encouraging first year and introduces a professional services version which is also suited toCCT.
What do the following have in common?
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HeathrowExpress,maintunnels Dustbunkermodification,Draxpower station Peninsula Hotel, Bangkok HappyValleyRacecourseredevelopment, Hong Kong LeemingBar WastewaterTreatment Works, Yorkshire 700 medium and low voltage electricity distribution contracts, South Africa

The answer is that these are all contracts now under way or completed using the New Engineering Contract. They illustrate the worldwide spread which it has achieved in a short time and also the variety of construction projects to which it isbeing applied. The Happy Valley Racecourse development in Hong Kong has an approximate value of L64 million, which is topped by the PeninsulaHotel in Bangkok with an approximate valueof L100 million. At the small end of the scale, we have the Leeming Bar Wastewater Treatment Works 1.65 at million, the Coal Unloading plant at Aberthaw Power Station at 04 million and the Stand development at Gatwick Airport at LO.8 million.

The New Engineering Contract was designed to be applied to all types of engineering and construction and it is encouraging that its early use illustrates this. The Peninsula Hotel in Bangkok is a highly complex, highly serviced building project for a luxury hotel 40 stories high. In Belize, on a contract financed by the ODA, the NEC is being used for road construction projects being carried out by local contractors. NEC was It is only just over a year since the launched at a ceremony at theICE in London and already its versatility is being fully demonstrated. Clients for projects are choosing NEC because of the stimulus to good project management which it offers and the opportunity to get things designed and built without the adversarial attitudes which have come to be associated with traditional formsof contract. Early scepticism is being replaced by positive reactions by contractors who have actually carried out work under the new contract. There are minor teething troubles which people are happy to overcome in order to secure the advantages which the NEC, in practice and in principle, offers. The construction industry, in particular the

Tunnelling works on the Heathrow Express rail link are among thefirst to benefit from the non. adversarial approach of the NEC

BRIEFING building sector, has given lot a of attention over the past twelve months to Sir Michael Lathams investigation into the shortcomingsof conventional management and contractual systems. It is encouragingfor the ICE, a s sponsor of the developmentof the New Engineering Contract, that many of the submissions to SirMichael Latham recommend that he takes the New Engineering Contract seriouslya s a possible way forward for the construction industry as awhole. The team put together by the ICE to design, develop and draft theNEC remains in existence to deal with technical issues arising from the use of the NEC and to oversee the design and development of extensions to the NEC family of contracts. The work of this panel includes production of the Professional Services Contract which is nearingcompletion. This is an NECstyle contract with the same simplicity of structure and languagea s the NEC, but it is designed to be used for all typesof professional appointment. These include the appointment of designers, project managers, supervisors and adjudicators towork alongside the NEC construction contracts. The Professional Services Contract can also be used for professional appointments when NEC is not being used for construction. It is also intended that this version of the NEC should be used for compulsory competitive tendering(CCT) contracts in the public sector. This further extension of its influence has been secured as a result of cooperation between the ICES NEC Panel and the various representative bodies who are involved with the implementationof the CCT. Further down theline of development, but with an expectation of early publication, are an NEC-style contract for survey and investigation work and another for supply-only contracts. When these are published, the NEC family will be complete and all aspectsof engineering construction and its surrounding professional activities will be able to reap the benefits of NEC-style management. TheNEC survey and investigation contract is intended to be used for site investigation, marine and estuarial surveys, land surveys, traffic surveys and, indeed, any type of contract for gathering and analysing data, withor without testing. The New Engineering Contract was many years in the preparation but, after only one year of availability for general use, the take-up is extremely promising and the extension of it into new areas is forging ahead fast. A users group hasbeen set up tobe operated by NEC usersfor NEC users. Its chairman isDavid Williams, Projects Director at BAA. Everybody who is using NEC as client, contractor, proFor further fessional consultantor subcontractor should information on join. The interactionbetween members of the the NEC Users users group is intended to help people to Group and details progress along the learning curve fast and to of how to join, provide feedback to the ICE of experience in call Steven Cross on 071 987 6999. use.

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Competing through innovation

UK construction professionals could double their competitiveness within ten years by being more innovative, says Peter Bransby, Director General of the Construction Industry Research and Information Association (CIRIA).
Europe and US$2 in China and India. The UK construction is both important and sucfuture looks truly daunting, given present cessful. It accounts for one-tenthof the UKs threats from the Asian tigers, where wages are GDP, one-third of its manufacturing base and about half European levels and where, for half of all its fixed investment. The valueof example, Korea will soon produce proportionconstruction work carried out abroadby UK ately more PhDs than the UK. companies increased toL2.4 billion in 1993, of UK conwhile consulting engineers increased their over- The sustained competitive success struction firmswill therefore depend on our seas earnings toL603 million, second only to ability to innovate and to enhance value for the USA. clients. What is importantis the performance of To survive and grow, the UK construction industry must improve the satisfaction it gives firms in those few, central processes by which to clients and enhance its international competi- they carry out their business. Examples are product conception and design, the construction tiveness. In particular, UK construction must process, knowledge acquisition and project find a way of providing unique addedvalue. management. Theobjective of research and Competition will come from countries with lower labour costs and sharply improving edu- innovation is then to make these processes work better-to be quicker, to be cheaper and cation and technology, The intensity of comto deliver better quality and value. This view of petition is illustratedby the average daily innovation shifts the focus from new techwages in manufacturing: US$90 in Europe and nology alone towards the effective working of the USA, US$7.50 in Mexico and Eastern

This articleis based on Dr Bransbys 1994 Unwin Memorial Lecture, the full text of which is available from the ICE library.