Many employers procuring civil engineering projects have turned to the NEC reluctantly and for want of any alternative. Now the ICC has positioned itself as a genuine rival
For many years, the ICE contract (Institution of Civil Engineers) was to civil engineering works what the JCT contracts were to building works – the default contract of choice. Civils works usually involve a greater unforeseeable element than building works, as much of the work is underground. The ICE contract recognised this. It also gave a prominent role to the engineer as contract administrator, which appealed to many employers, especially local authorities.
However, in 2010, the ICE threw its weight behind the NEC (New Engineering Contract) instead. They announced that they would not be updating the ICE 7th edition, effectively abandoning it. The ICE contract laboured on for a few more years under a new name, the Infrastructure Conditions of Contract, but in truth, it had had its day. With 71 conditions, it was hopelessly out of line with the much shorter JCT forms, and of course with the NEC itself.
A new contract, slimmed down to just 24 clauses, was published in October last year by the Association of Consulting Engineers (ACE) and the Civil Engineering Contractors’ Association (CECA) under the name of the Infrastructure Conditions of Contract with Quantities (ICC). Ben Worthington reviewed it on these pages (10 October 2014) and suggested that it could provide significant competition to the NEC. It may well do just that, so long as employers and their consultants are prepared to try it out.
The NEC’s emphasis on warnings and notices is seen as sensible risk management by NEC fans, but as administratively burdensome by many others
So, where does the ICC score over the NEC?
First, the ICC contains various essential clauses that the NEC does not have. The NEC assumes that these will be put into the Works Information document (effectively, the specification). For example, it says that the contractor will provide the works in accordance with the Works Information and will design the parts of the works which the works information says he is to design. That is all very well, but it leaves somebody with more drafting to do. The ICC by contrast sets out specific legal obligations regarding the contractor’s workmanship, materials and design.
Similarly, the ICC deals more fully than NEC with such matters as insurance, title to materials and valuation of variations. There is even a form of agreement for signature - something the NEC strangely lacks. So the ICC will appeal to employers who are looking for a more or less complete package of conditions, without the need for further drafting.
Second, the way in which the ICC deals with delay events is more subtle, and also more employer-friendly, than the NEC regime. The terms “employers’ risks” on the one hand and “shared risks” and “excepted risks” on the other may mean “time and money” and “time only” in ordinary language, but this risk allocation will appeal to employers more than the NEC’s rather blunt approach. In the NEC, all 19 compensation events give extensions of time, and money, in principle at least. Employers using the ICC need not worry about the contractor claiming an increase to the contract sum for an event that neither party could prevent, or for exceptional weather conditions, as they have to with the NEC.
The ICC has another handy plus point for employers here. If the risk is not one of the listed ones, the contractor takes it.
Third, the contract has some gadgets that the NEC has not yet caught up with: BIM and sustainability clauses, for example. It also has optional clauses relating to milestones and free-issue materials. The NEC has optional clauses too, of course (“secondary options”) but these include clauses covering such matters as sectional completion, delay damages and retention. Most people regard these as important enough to merit a place in the conditions themselves - and the ICC duly puts them there.
Of course, many of the factors that will sway a decision as to which contract to use are matters of personal preference. For example, the NEC’s emphasis on warnings and notices is seen as sensible risk management by NEC fans, but as administratively burdensome by many others. Similarly, the ICC has a traditional final account procedure, whereas the NEC prefers to deal with money issues as they arise. Both methods have their supporters but it’s clear the NEC now has a genuine rival. It will be interesting to see whether employers are enterprising enough to give it a go.
Ian Yule is a partner in Weightmans