England: New NEC4 Contracts are coming - "evolution not revolution"
The NEC suite of contracts remains ever popular since it was first published in 1993. NEC3 was published in 2005, and is used extensively on construction and engineering projects throughout the UK, with particular uptake in the public sector. It has been used on complex, high profile projects, such as Crossrail and the London 2012 Olympics.
NEC3 has also found favour internationally, being adopted on projects in Hong Kong, the UAE, India, Australia and New Zealand amongst others.
A new suite of contracts, NEC4, will be launched in June 2017, but the NEC assures us the new suite of contracts "builds upon the content of NEC3", and is a natural "evolution not revolution".
So, what can we expect from NEC4?
The NEC4 suite will update the existing NEC3 contracts and introduce two new contracts, a DBO (Design Build and Operate Contract) and an ALC (a multi-party Alliance Contract).
All the contracts will retain the overarching principles of fair dealing, collaboration and project management, but will introduce streamlined processes, improved clarity and simplicity, and will continue to seek to stimulate good project management.
We understand certain terminology changes will be introduced, so that "Employer" becomes "Client", "Scope" will now be used throughout the suite to identify the document which describes the work being provided (replacing the "Works Information" in the ECC), and the "Risk Register" becomes the "Early Warning Register".
Other new features, many of which are often added by the parties as bespoke amendments by what are known as 'Z Clauses', will be included in the NEC4 (either as core clauses, or as discretionary secondary options) including addressing:
Undertakings to others (i.e. collateral warranties);
- Anti-bribery and corruption;
- Confidentiality and publicity;
- Transfer of benefits (assignment);
- Quality management.
The NEC tells us the new contract edition responds to the demands from users, and that NEC4 supports the ongoing drive for further collaboration, dispute avoidance and risk management. As ever, the devil is in the detail of the contract drafting. It will be interesting to see the response, both in the UK and internationally, but it is likely the new contracts will be well received and quickly adopted by employers, particularly in the public sector.
Senior Associate, Ashfords LLP
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