NEC3: Introduction to NEC contracts NEC Annual Seminar Wellington, 24 September 2007

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Intro
Richard Patterson Chartered Engineer, MICE 10 years with the NEC with Mott MacDonald also NEC Consultant

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Welcome and housekeeping

Safety Facilities

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The Plan
NEC brief history NEC - principles NEC - family NEC - in use NEC - global contracts NEC - business benefits
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The Plan

NEC brief history

NEC - principles NEC - family NEC - in use NEC - global contracts NEC - business benefits
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NEC - well proven

1985 The UK Institution of Civil Engineers (ICE) led fundamental review of alternative contract strategies .. to identify ..needs for good practice 1986 - ICE commissioned new style of contract 1991 - Consultative version trialled in South Africa, Hong Kong, and UK Strongly favoured by UK reviews of procurement 1995 - Engineering and Construction Contract (2nd Edition) neccontract.com

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NEC - well proven

10 years of successful use and expansion of the NEC family UK and internationally NEC3 launched (2005)
incorporated users feedback consistently revised across NEC family introduced new members to the NEC family

2005
specifically endorsed by UK government

2007
Very well established in UK and South Africa used in 20 other countries including New Zealand

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The Plan
NEC brief history

NEC - principles
NEC - family NEC - in use NEC - global contracts NEC - business benefits
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Fundamental NEC Objectives

Flexibility Clarity Stimulus to good management

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Flexibility
multi-disciplinary allocation of design responsibility choice of pricing mechanisms Range of bolt-on secondary options risk allocation clear.. and flexible international application

Artist impression of Antarctic Research Station: Halley VI

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Flexibility
Z
Y(UK)2 Y(UK)3

additional conditions jurisdiction-specific options secondary options dispute resolution option

X20 X20 X18 X18 X17 X16 X15 X14 X13 X12 X7 X6 X6 X5 X5 X4 X3 X2

X1

W1 A B C D

W2 E F

main (payment) option

1-9

core clauses

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Clarity
plain language present tense minimises subjective judgements legal jargon out as far as possible structure flow charts guide notes
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Stimulus to good management

NOT a contract for the bottom drawer! each process designed to contribute up-to-date programme early warning compensation events

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Early warning
duty to warn of events that may affect key project objectives requirement to discuss and agree possible ways forward sanctions if early warning not given encourages proactive risk management

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Compensation events
only way to change price and/or Completion Date all in one place (almost!) and treated in the same way
cost: assessed at forecast change in cost time: forecast delay based on latest Accepted Programme

All to tight and defined timescales

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Partnering/Collaborative working
Clear roles and processes support collaborative working and openness early warning change based on real cost and time. now target cost options further incentivise collaboration Option X12 available for multi-party partnering

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The NEC contracts are...

Management procedure Risk allocation tool Definition of rights and obligations

with or without

partnering

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The Plan
NEC brief history NEC - principles

NEC - family
NEC - in use NEC - global contracts NEC - business benefits
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Abbreviations
NEC
now the brand for the family of contract documents

ECC
the Engineering and Construction Contract the works contract

CMA
Completely meaningless acronym !
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Supply High Project Complexity Low

Supply Contract
(planned for 2007)

ECC
Professional Services Contract Engineering & Construction Contract

TSC
Term Services Contract

ECS
Engineering & Construction Subcontract

business case

PSC

ECSC
Engineering & Construction Short Contract

TSSC
Term Services Short Contract (planned for 2007)

ECSS
Engineering & Construction Short Subcontract

Framework Contract Adjudicators Contract design construction operation

NEC3 the family

NEC family
NEC3 Engineering and Construction Contract (black book), 3ed 2005
between an Employer and a Contractor for a project

NEC3 Professional Services Contract (PSC),

3ed 2005

for engaging a supplier of professional services

NEC3 Engineering and Construction Short Contract (ECSC), 2ed 2005

between an Employer and a Contractor, for low risk, straightforward work neccontract.com copyright nec 2007

NEC family
NEC3 Engineering and Construction Subcontract (ECS), 3ed 2005
between a Contractor and a Subcontractor, back to back with ECC

NEC3 Engineering and Construction Short Subcontract (ECSS), 2ed 2005

between a Contractor and a Subcontractor, under either ECC or ECSC

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NEC family
NEC3 Term Service Contract (TSC), 1ed 2005
for engaging suppliers of services for a period of time

NEC3 Adjudicators Contract (AC), 3ed 2005

for engaging an Adjudicator to decide a dispute between parties under an NEC contract

NEC3 Framework Contract (FC), 1ed 2005

for engaging suppliers to provide services (of all types) operating under a framework neccontract.com
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NEC family
Guidance Notes & Flow Charts
To support all NEC3 contracts

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NEC Family
modern day contracts for projects and services to effect almost any procurement route NEC Procurement and Contract Strategies
guide to NEC3 contracts in different procurement and contract strategies free at www . neccontract . com
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The Plan
NEC brief history NEC - principles NEC - family

NEC - in use
NEC - global contracts NEC - business benefits
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NEC in Building
Hospitals - National Health Service
England - ProCure21, 5 years 1.4bn/year Welsh, Scottish & Northern Ireland - equivalent programmes

BAA Heathrow Terminal 5 (4bn) Schools for the Future HM Prison Service (new prisons) Large sporting event in 5 years in London Glaxo Smith Kline (possible global application)
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NEC in Building
Housing
Circle Anglia, Arena Housing, Hull Council, Birmingham Council

Developers
Land Securities Trillion, Bovis Lend Lease

Others
Cambridge University, Bristol Airport, Barclays Bank, Cardiff Millennium Stadium, Sainsburys supermarkets, Boots, British Telecommunications (Telereal) neccontract.com
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NEC in Infrastructure
Utilities
Most water companies National Grid

Power
UKAEA British Nuclear Group British Energy

Transport
Highways Agency and many local authorities Transport for London Channel Tunnel Tail Link neccontract.com
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NEC in Infrastructure
Environment Agency British Waterways

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NEC in Infrastructure
Communications
Vodafone National Grid Transco Wireless

Oil majors
Shell
retail projects two projects in Africa also used NEC PSC for consultants in India and Australia

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NEC in Facilities Management

Nottingham Hospital Trust
M&E maintenance in secure hospital

Colchester City Council

housing maintenance 10 yr, 120m deal

Worcester City Council

street lighting

Portsmouth City Council

housing repairs neccontract.com

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Endorsements
Office of Government Commerce (UK)
2005 OGC.. . concluded that the NEC3 suite of contracts was fully compliant with OGC's Achieving Excellence in Construction initiative and OGC gave its support to the use of NEC3 by public sector procurers.

South African Government

One of four forms endorsed for use

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 The NEC Contract is a positive and

progressive form of contract which allows all parties to collaborate and contribute to the successful delivery of buildings, facilities and best value solutions

Cliff Jones, Senior Construction Manager, ProCure 21 , NHS Construction

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The Plan
NEC brief history NEC - principles NEC - family NEC - in use

NEC - global contracts

NEC - business benefits
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Global application
Specifically designed to be as independent as possible of legal jurisdiction Minor secondary options to make contract complaint with specific legislation. Eg:
Y(UK)2 Housing Grants Act Y(UK)3 Contracts (Rights of Third Parties) Act Y(NZ)2 to be confirmed soon for eg Construction Contracts Act
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NEC in New Zealand

Envirowaste
Hampton Downs Landfill

Meridian Energy
Manapouri Hydro Refurbishment And other contracts (NEC Term Service Contract and NEC Short Contract
Meridian Energy neccontract.com

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NEC elsewhere
More than 20 countries South Africa
ESKOM, SASOL, Anglo Platinum, Transnet, ABSA Bank of South Africa, MegChem, Metrorail, Nuclear Energy Corporation, Veolia Water, Department of Roads and Transport, National Department of Public Works

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NEC elsewhere
France
Framatome ANP

India Abu Dhabi

Aldar Properties for $US 10 billion Al Raha Beach waterfront

Dubai likely Hong Kong

Govt trialling on drainage project neccontract.com
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NEC User Group members Belgium China France Ghana Greece Hong Kong Ireland Korea Netherlands New Zealand Nigeria Qatar South Africa Sri Lanka Taiwan Tanzania United Kingdom USA
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NEC: global August 2007

Known use User Group Leads Downloads

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The Plan
NEC brief history NEC - principles NEC - family NEC - in use NEC - global contracts

NEC - business benefits

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The Plan
NEC brief history NEC - principles NEC - family NEC - in use NEC - global contracts NEC - business benefits
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NEC - a better way to do business

NEC brief history NEC - principles NEC - family NEC - in use NEC - global contracts NEC - business benefits
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NEC - a better way to do business

NEC tried and tested NEC - principles NEC - family NEC - in use NEC - global contracts NEC - business benefits
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NEC - a better way to do business

NEC tried and tested NEC clarity, flexibility, management NEC - family NEC - in use NEC - global contracts NEC - business benefits
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NEC - a better way to do business

NEC tried and tested NEC clarity, flexibility, management NEC for any type of procurement NEC - in use NEC - global contracts NEC - business benefits
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NEC - a better way to do business

NEC tried and tested NEC clarity, flexibility, management NEC for any type of procurement NEC - in any sector NEC - global contracts NEC - business benefits
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NEC - a better way to do business

NEC tried and tested NEC clarity, flexibility, management NEC for any type of procurement NEC - in any sector NEC - anywhere NEC - business benefits
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NEC - a better way to do business

NEC tried and tested NEC clarity, flexibility, management NEC for any type of procurement NEC - in any sector NEC - anywhere NEC - business benefits
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NEC - a better way to do business

clarity of requirements and risk allocation rigorous processes for time and cost management discipline in a managed project environment standardisation supports & encourages collaborative working gives people the tools to apply their skills and common sense
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More info?
Contact the NEC support team www . necontract . com t: +44 (0)20 7665 2446 f: +44 (0)20 7538 2847 e: info @ neccontract . com

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