The NEC: A user's guide

The last RICS survey of contracts in use showed that the JCT forms accounted for more than 90% of projects. That comes as a bit of a surprise when you look at the rate at which the public sector is adopting partnering contracts in order to comply with government guidance and to secure funding. The sort of client that is moving towards partnering seldom seems to want to use a JCT contract, even with a partnering Charter overlay. The most common options they tend to adopt are the New Engineering Contract or PPC2000.

These contracts require the parties to work quite differently than in the old JCT ways. For instance, the procedure under the NEC contract for compensation events includes quite defined and tight timescales for notification, which can come as a bit of a shock to those not used to them. Under PPC2000 the multiparty nature of the contract and the collaborative way everyone is required to work means that newcomers to the contract have to relearn the relationships and processes.

It may be that the continuing high level of usage of the JCT forms explains why there is a tendency for people working under the newer contracts to slip back into doing things in the way they always have. One of the challenges for project teams using other contracts is to alter the way they think and operate.

Successful projects are those that recognise that initial contract training is not enough. To move away from the JCT process you need a long-term cultural change programme focused on people. It's a bit like driving a car. After you've turned the steering wheel and pointed the car round a bend, you can't take your hands off the wheel and congratulate yourself on a job well done. But that is what a lot of people expect to do when they adopt a new contract.

It is also important to deal with the myth that under NEC or PPC2000, in the partnering contract environment, the signed contract can be put away in the drawer. In fact, it's the opposite. When using a new contract it needs to be consulted frequently and used as a day-to-day management tool.

When using a new contract it needs to be consulted frequently and used as a day-to-day management tool

So it's good that one of the guiding principles of the NEC contract at the beginning was that it was to be written in "ordinary language" with an aim of clarity and simplicity. But there is a question as to whether it has managed to achieve this aim.

For example, look at the payment provisions under the "priced contract with bill of quantities" and how defective work is dealt with. Broadly, the contract says that the contractor gets paid for completed work. It then unhelpfully says: "In this clause, completed work means work without defects which would either delay or be covered by immediately following work." Apologies to the authors of NEC, but if I were a project manager looking to the contract to tell me whether to pay for a foundation base that might not be quite up to scratch, I do not think this would be too helpful.

I think what it means is that the "work" is viewed as an element, in this case foundations, and that this work is completed if it has been done AND has no defects or no defects that are either (1) to be covered up by the next phase of work or (2) are likely to delay work. So in the case of foundations where there is a defect, say in the starter bars for columns, the foundations would not be paid for as (1) they will be covered up by later works and (2) rectification is likely to cause delay. Presumably just one of these heads would be enough to qualify.

It was interesting that when I asked a couple of experienced NEC users what this clause meant, they couldn't tell me. Worse, when I asked how they dealt with defective work under NEC, they summed it up as "much the same as under the JCT contracts". That emphasises the need for a continuing cultural change process.