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QS APC > Building Contracts - NEC > Flashcards

Building Contracts - NEC Flashcards

1
Q

What does NEC stand for?

A

New Engineering Contract

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2
Q

What does (NEC) ECC stand for?

A

Engineering and Construction Contract (ECC)

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3
Q

Can you tell me about the NEC contract?

A
  • Suitable contract between the contractor and employer
  • Suitable for any sector or industry
  • There are six main options to choose from.
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4
Q

What are the key points to note under the NEC?

A
  • No reference to a Qs in the contract
  • PM assumes fully authority
  • PM controls time and cost
  • Programme is a contract document
  • Requirement for parties to give EWNs
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5
Q

What different NEC contracts are available to you? What are the options?

A
  • Option A: Priced with Activity Schedule
  • Option B: Priced with BoQ
  • Option C: Target cost with Activity Schedule
  • Option D: Target with BoQ
  • Option E: Cost Plus
  • Option F: Management Contract
  • Option G: Term Contract
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6
Q

What are the advantages of the NEC?

A
  • Based on mutual trust and co-operation
  • Focuses on pro-active risk management
  • Contract is written in plain english.
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7
Q

What are the key differences between the NEC 2 & 3?

A
  • Termination was introduced
  • Option F was introduced
  • Dispute resolution was clearly introduced in NEC 3 (Options W1 & W2)
  • No mention of the Housing Rights and Grants Act
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8
Q

What are the key differences between the NEC 3 & 4?

A
  • NEC 4 now gender neutral
  • Employer has become ‘Client’ and Works Information’ becomes ‘Scope’
  • Risk Register is now Early Warning Register
  • There is now an alliance contract.
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9
Q

Can you give an overview of the NEC Option A please?

A
  • Priced with activity schedule
  • Activity schedule simplifies the administration
  • Payments made against the completion of an activity
  • It’s a lump sum contract
  • Project defined at tender
  • Suitable for traditional or D&B
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10
Q

Can you give an overview of the NEC Option B please?

A
  • Priced with BoQ
  • risk of carrying out the work to agreed prices borne by Contractor.
  • Contractor is entitled to be paid a percentage of each BoQ line item within payment schedule.
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11
Q

Can you give an overview of the NEC Option C please?

A
  • Target cost with activity schedule
  • Financial risks are shared between client and contractor in agreed proportion.
  • Motivates the contractor to deliver the project in the most cost effective way.
  • Target cost agreed between the parties and made up of contractor’s estimate of ‘defined costs’ to over costs, overhead and profit.
  • Target cost set by activity schedule
  • Target moves with CE’s
  • Contract uses pain/gain mechanism
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12
Q

Can you give an overview of the NEC Option D please?

A
  • Target cost with BoQ
  • Financial risks are shared between client and contractor in agreed proportion
  • Similar to C but BoQ used.
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13
Q

Can you give an overview of the NEC Option E please?

A
  • Cost reimbursable/Cost plus
  • Employer largely takes the financial risk
  • Contractor reimbursed for all costs
  • Used where the nature of the works or scope cannot be defined.
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14
Q

Can you give an overview of the NEC Option F please?

A
  • cost reimbursable management contract
    -Designed/constructed by multiple sub-contractors appointed by a management contractor.
  • financial risk largely taken by the client
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15
Q

Which Contract is most risky for the client?

A

Option E - because the contractor is being reimbursed for cost plus fee

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16
Q

Which contract is the least financial risk to the client?

A

Option a because it’s a priced fixed contract.

17
Q

What are the secondary options under the NEC?

A
  • W1 & W2 – Dispute Resolution Clauses + new W3 (NEC 4)
  • X Clauses
    o X1 – Inflation
    o X2 – Changes in the Law
    o X3 – Multiple Currencies
    o X4 – PGC
    o X5 – Section completion
    o X6 – Bonus for early completion
    o X12 – Partnering
    o X13 – Performance bond
    o X16 – Retention
  • Options for dealing with legislation
    o Y (UK) 2 – HGCRA 1996
    o Y (UK) 3 – Rights of Third Parties Act.
18
Q

What are Z Clauses?

A

they are used to amend the standard form of NEC contract.

19
Q

What problems can arise when drafting Z clauses into a contract?

A
  • Poorly drafted clauses can be problematic if they do not work in tandem with the core clauses; it may impact the core clauses.
20
Q

What are the different types of programme on the NEC?

A

Total Float, Time risk allowance, Terminal float.

21
Q

What is total float?

A

The time an activity can be delayed from it’s start date without delaying planned completion.

22
Q

What is time risk allowance?

A

The duration allowed in each activity by the contractor to account for the risk in not completing that activity in the minimum period possible

23
Q

What is terminal float?

A

the duration between planned completion and current contract completion date.

24
Q

How can a completion date be changed?

A

Through Compensation Event or Acceleration

25
Q

How can the planned completion date be changed?

A

Anything can change it. The contractor could be delayed in completing activities or works.

26
Q

With regard to the programme, how does the JCT differ from the NEC?

A

Programme is not a contract document under the JCT.
Programme IS a contract document under the NEC.
Under the NEC, upon the request of the client/Contractor - the Contractor or sub-contractor must provide an updated programme within 14 days.

27
Q

What is Works Information?

A

Works information specifies and describes the works the contractor is to provide.
It states any constraints on how the contractor is to provide teh works.
The works information provided by the employer includes:
- Technical information
- Drawings and specifications
- Constraints (safety requirements)
- Employers Requirements

28
Q

What is a Compensation Event?

A

It is usually a change to the works which is not the fault of the contractor and change the cost of the work or time needed to complete it.

the price, key dates and completion dates will be re-assessd and the contractor will be entitled to more money.

29
Q

Does the NEC have releavent events and matters like the JCT?

A

No. These are dealt with under one single heading of ‘Compensation Events’.

30
Q

Where are compensation event’s dealt with in the NEC contract?

A

Clause 60.1

31
Q

What is the time barring period under the NEC?

A

Under clause 61.3, the contractor will require notification of a compensation event within 8 weeks that the Sub-Contractor becomes aware of a compensation event.

32
Q

Does a PMI always result in a compensaiton event?

A

No. The employer may instruct the Contractor to submit a revised programme or instruct the contractor to remove a person off site.

33
Q

What are Early Warning Notices (clause 16.1)?

A

Where both parties identify potential problems, and one party notifies the other of a problem as soon as they come aware which could impact time, cost or quality.

  • Clause 16.1 - it can increase the total price, delay completion, delay meeting a key date or impair the performance of the works in use.
34
Q

What are the key differences between the NEC 3 & 4?

A
  • NEC 4 now gender neutral
  • Employer has become ‘Client’ and Works Information’ becomes ‘Scope’
  • Risk Register is now Early Warning Register
  • There is now an alliance contract.
35
Q

What are the differences between the NEC and JCT?

A
  • NEC in plain English / JCT tries to eliminate the use of legal terms
  • NEC has Early Warnings, JCT does not
  • JCT: Variations / NEC: Compensation Events
  • JCT has separate contracts / NEC has 6 options.
  • NEC is more collborative
  • NEC - programme is contract document. JCT it is not.
  • JCT contains provisional sums, NEC does not.
  • NEC has periods of reply and is very administration heavy.

QS APC (23 decks)

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