necnews30

Europe’s biggest construction project – the £4.2billion Terminal 5 at Heathrow airport – is start-ing make its mark on the west London skylinewith half of the 43 m high, 384 m long mainroof structure now completed.

Around 10% of the project value is beingprocured directly by client BAA under NEC con-tracts. The remainder is contracted at first-tierlevel under client BAA’s bespoke T5Agreement, which shares the NEC principles ofpartnering and integrated working. BAA’s ver-sion of the NEC is also the only recommendedform for the thousands of second-tier contracts.

Strand-jacking used for liftsThe third 2500 t section of the spectacular

single-wave roof was hoisted into position ear-lier this month, with the remaining three sec-tions due to be completed by the end of theyear. When finished in 2008, the main terminalwill be the largest single-span building in theUK with an uninterrupted floor space of300 000 m2 – equivalent to 50 football pitches.

In common with London’s Millennium Eyeand Wembley Stadium, hoisting was carriedout by strand jacking and each lift took around10 hours to complete. Airport radar systemslimited both building and working heights to43 m and thus ruled out the use of cranes.

The roof comprises 22 steel-box rafters form-ing bow-string arches supported on 39 m highsteel abutment trusses. There are two base-ment levels beneath the departures and arrivalsconcourses – the upper for people and bag-gage moving systems connecting to satellitebuildings and the lower for the HeathrowExpress and London Underground PiccadillyLine rail station.

T5 is largest project in EuropeTerminal 5 is currently the largest construc-

tion project in Europe. In addition to the main

terminal, the £4.2 billion project includes con-struction of two satellites (one in phase 2), anew control tower, a hotel, a 4000 space multi-storey car park, 60 aircraft stands (13 in phase2), a new spur road from the M25 motorway,diversion of two rivers and over 13.5 km ofbored tunnel and rail links.

Phase 1 alone consists of 16 major intercon-necting projects and 134 sub-projects, all sand-wiched between the two live runways of oneof the world’s busiest airports.

The work encompasses a wide range of engi-neering and systems disciplines, each of whichis represented by integrated supply teams ofdesigners, manufacturers, contractors and spe-cialist consultants. Up to 4500 people will beworking on site.

BAA version of NEC recommendedClient BAA has developed a project-specific

contract for its 60 first-tier suppliers called theT5 Agreement, whereby all risk is retained withthe client. Though not directly based on theNEC, a number of principles of partnering and

integrated working are consistent across thetwo forms of contract.

Each first-tier supplier is responsible for devel-oping their supply chain to deliver the work.BAA is recommending they use its version ofthe NEC Engineering and Construction Contractfor contracts with second-tier suppliers – theonly form recommended. Second-tier contractsare expected to number in the thousands.

1NEC USERS’ GROUP NEWSLETTER•No.30•AUGUST 2004

newsletterU S E R S’ G R O U P

ISSUE No.30AUGUST 2004

www.neccontract.com

Erection of the 43 m high Heathrow Terminal 5 roof structure has now reached the half-waystage. NEC is being used by both BAA and first-tier suppliers

NEC helps BAAdeliver Heathrow T5

BY SIMON FULLALOVE, EDITOR

>continued on page 2

CONTENTSNEC hospital work hits £1.8 billion 2

Court overrules NEC adjudicator 3

Term Contract in Colchester 4

Unfair subcontract amendments 5

A programme or not? 6

FAQs—ECC & JCT 98 compared 7

Diary 8

BAA is also using various NEC contracts, par-ticularly the Professional Services Contract, foraround 150 direct relationships with consul-tants and other suppliers. These representaround 10 % of total project cost. The compa-ny is an experienced user of the NEC havingadopted it shortly after its launch in 1993 forthe Heathrow Express Link.

Work on time and to budgetPhase 1 construction of Terminal 5 is pro-

grammed for five years and can be brokendown into five key stages.

■ Site preparation and enabling works –preparing the site for major constructionactivity. The work included a significantamount of archaeological excavation, ser-vices diversions, levelling the site, removingsludge lagoons and constructing site roads,offices and logistics centres.

■ Groundworks – includes the main earth-works, terminal basements, connecting sub-structures and drainage and rail tunnels.

■ Major structures – the main terminal build-ing (concourse A), first satellite (concourse B),multi-storey car park and ancillary structures.

■ Fit out – significant elements of the fit outinclude building services, the baggage sys-tem, a track transit people-mover systemand specialist electronic systems.

■ Implementation of operational readiness –ensuring phase 1 infrastructure is fully com-plete and that systems are tested, stafftrained and procedures in place ready foroperation in spring 2008.

Phase 1 is now around 40% complete and isprogressing on schedule and to budget. Phase2, which includes a second satellite and addi-tional stands, will start after 2006 when the

residual sewage sludge treat-ment site will be vacated.When completed in 2011, thetwo phases will enableHeathrow to handle an addi-tional 30 million passengers ayear.

Traffic control roomtops out

Significant progress has alsobeen made on the new 87 mhigh air traffic control tower.Though being constructed as part of theTerminal 5 project, when completed in 2006 itwill serve the whole airport and be one of theworld’s tallest control towers.

The 50 t steel-frame roof of the 30 m tallvisual control room, also called the ‘cab’, wassuccessfully lifted into position early last monthusing a 500 t, 60 m tall crane with a speciallydesigned lifting harness.

The cab is being pre-assembled at the south-ern end of the airport near Terminal 4. Glazingis now being installed and when completed itwill be moved to near Terminal 3 where thetower will be built underneath it.

Main power supply switched onAnother recent milestone was completion

last month of a new 33 kV substation, throughwhich the terminal’s main power will be pro-vided. Scottish & Southern Electric’s high-volt-age sub-project included upgrading andreinforcing a large section of its distributionnetwork around the airport.

A significant part of work involved layingtwo 132 kV underground cables. Each of thecircuits is 3 km long and consists of three sepa-rate power cables 100 mm in diameter. The

new bulk supply point is the first and largest ofthe power supply infrastructure that will helpsupport Terminal 5.

A total of 40 additional smaller distributionsubstations and switching stations will com-plete the system. These include a £30 millionproject by London Electricity Services to providehigh-voltage electrical cabling and equipment(see Issue 24). The work was undertaken underoptions B (priced contract with bill of quanti-ties) and E (cost-reimbursable contract) of theNEC Engineering and Construction Contract.

For further information visitwww.baa.com/t5 ●●

2 BOOKS & GUIDES • CONTRACTS • TRAINING • USERS’ GROUP • CONSULTANCY • SOFTWARE • NEWSLETTERS • CONFERENCES

Aerial view showing the new terminal buildingand satellites plus the new link to the M25motorway – the £4.2 billion project will be fullycompleted by 2011

England’s National Health Service is now usingthe NEC for 162 hospital building projectsworth a total of £1.83 billion. All projectshave been started or registered in just thepast 12 months.

The significant take up of the NEC – by farthe largest use of the contract in the buildingsector to date – is due to the success of the NHSEstates ProCure21 framework programme,launched in September last year (Issue 28).

NHS clients are now registering newschemes with the programme at the rate ofaround seven a month, lured by the attractionof getting construction underway around oneyear sooner.

All 12 partners now workingAll of the 12 ‘principal supply chain part-

ners’ have now won work, sharing a total of126 projects worth £1.4 billion. They are allengaged under the NEC Engineering andConstruction Contract option C (target con-tract with activity schedule), which is at theheart of ProCure21.

Laing O’Rourke appears to be doing partic-ularly well with six of the 10 largest projects

awarded so far and a total order book ofaround £600 million. ACM Health Solutionsand Interserve Health are also prospering,with £185 million and £171 million workloadsrespectively.

Major projects include £147 million of men-tal healthcare facility upgrades for MerseyCare NHS Trust and a £120 million scheme forthe National Blood Service. ThoughProCure21 is primarily intended for non-PFIschemes over £1 million, clients of schemes assmall as £100,000 have batched them togeth-er to use the programme.

Framework agreements save timeNHS Estates has entered into a framework

agreement with each principal supply chainpartner, which saves individual NHS clients hav-ing to tender their schemes and then enterNEC option X12 partnering arrangements.

Principal supply chain partners are paid afee percentage as bid in their framework ten-der plus actual cost. For each scheme a targetprice is agreed as a guaranteed maximumprice before construction, by which point par-ties should have identified and evaluated all

risks – aided by a specially developed designand risk tool called DART – leaving only gainshare rather than pain share.

Each principal supply chain partner has aseries of pre-qualified ‘primary supply chainmembers’, covering specific areas such asarchitectural design, civil and structural engi-neering, construction, mechanical and electri-cal services and cost management. There arecurrently 225 primary supply chain members,many of which work for more than one prin-ciple supply chain partner. Following a recentpress report (see page 5), NHS Estates is cur-rently reviewing the subcontracts for primarysupply chain members and setting up a discus-sion forum chaired by Rudi Klein to provideand receive feedback.

Free training workshopsNHS Estates is running a series of half-day

workshops on ProCure21 for the NHS through-out September and October. A full trainingprogramme including use of the NEC option Cis being offered from September onwards

For further information visit www.nhs-pro-cure21.gov.uk ●●

NEC hospital work reaches £1.8 billionBY SIMON FULLALOVE, EDITOR

How the main terminal building will look when completed in2008 – it will be the largest single span structure in the UK

>continued from page 1


The UK Technology and Construction Courtrecently overturned an adjudicator’s award onNEC compensation event interest paymentson the basis he had exceeded his jurisdiction.

McAlpine PPS Pipeline Systems Ltd was con-tracted by Transco plc under the NEC for lay-ing a gas line in Kent and a dispute arose asto whether McAlpine was entitled to interestfor compensation events. In its notice ofreferral to adjudication, McAlpine arguedthat Transco had failed to make payments bythe due date and also included some calcula-tions as to the amount of interest due in thenotice.

Transco contended that the referral noticedid not constitute a comprehensive submis-sion and that it had not had sufficient oppor-tunity to consider the whole of the claimproperly. There followed various replies andresponses. Then, on 12 December 2003,McAlpine served 500 pages of additional evi-dence. Transco maintained this amounted topresenting a new case.

The adjudicator took the view thatMcAlpine should have known the evidencehad been necessary and should have filed itwith the notice to refer. He also said hewould need evidence on the remaining com-pensation events if he were to deal with thepoint. McAlpine responded by serving anadditional 1000 pages of evidence on 23December.

In his decision on 8 January 2004, the adju-dicator made an award in McAlpine’s favourand found it had not changed the basis of itsclaim. When Transco refused to pay,McAlpine commenced summa-ry judgment proceedings inthe Technology andConstruction Court.

Adjudicator exceededjurisdiction

The issue before the courtwas whether the adjudicatorhad exceeded his jurisdictionby deciding matters which hadnot been referred to him, assubmitted by Transco. Thecourt held that the adjudicatorhad exceeded his jurisdictionand dismissed the applicationon 12 May 2004.

There were nine questionswhich an adjudication or courtshould ask when consideringjurisdictional issues.

■ What issues were discussed at meetingsbefore the referral to adjudication?

■ What dispute had been referred after thedefendant had been given an opportunityto comment?

■ Upon what basis had the dispute beenreferred?

■ Had the adjudicator’s decision has beenresponsive?

■ Have new issues been raised?■ Had there been objections to any issues?■ Did any objection go to the fundamental

nature of the dispute?■ Had the fairness of the procedure been

affected?■ Had the fairness of the decision been sig-

nificantly affected?

Taking all the above into account, there hadbeen a change in the whole basis ofMcAlpine’s claim to such an extent thatTransco stood a realistic chance of arguing thatthe adjudicator had either failed to give adecision on the issues presented to him, or hadmade a decision of matters which had notbeen referred to him.

It was also highly arguable that Transco hadsuffered prejudice because of the late submis-sion of such a large amount of evidence insupport of a new case, which should havebeen served with the referral notice.

Based on a case abstract provided by BLISS,the Building Law Information SubcriberService. For further information please contactAnn Glacki on 08707 530 710 or [email protected] ●●

Court overrules adjudicator oninterest payments

BY SIMON FULLALOVE, EDITOR

www.neccontract.com

Newsfrom the NEC panelBY PETER HIGGINS, NEC PANEL CHAIRMAN

The main question you probably wantanswering is: Where is the third editionof the NEC Engineering and ConstructionContract (ECC)? This has been the mainitem of work for the NEC panel over thelast few months, dealing with the finalissues that have been raised.

Apart from a final review of the dis-putes and adjudication provisions, all thedrafting work on the ECC 3rd edition iscompleted and is currently with our flowcharter to test out the logic for thechanges we have introduced.

Flow-charting issuesThe panel will have to review any com-

ments received from the flow charterwhen they are available. We hope that,once we have dealt with flow-chartingissues, we can publish the document fair-ly quickly.

We have also updated the new TermContract so that it is fully compatiblewith the ECC 3rd edition drafting. A copyof this version should be put on the NECwebsite shortly to replace the earlierdraft.

Work on the guidance notes, formsand electronic contract data is continu-ing, with the objective still to publish allthese together. Watch the NEC websitefor publication details and dates.

World Bank opportunitiesAs I announced in Issue 28, Andrew

Baird and I visited the World Bank inWashington earlier this year with ICEengineering knowledge director AmarBhogal to explain how the NEC contractscould work within the bank’s procure-ment system.

The bank is still wary of using contractsother than FIDIC but, at its request, wesent a paper on using NEC for perfor-mance-based procurement. This may leadto further opportunities – we shall keep aclose watch on developments.

For further information please contactthe NEC panel administrator JohnHawkins on 020 7665 2217 or [email protected] ●●

Sign on a restaurant doorway inWashington – a portent of the WorldBank’s interest in the ECC 3rd edition?

UK gas transmission system operator Transco successfullyargued that the adjudicator had exceeded his jurisdiction onawarding interest on compensation events due to the signifi-cant change in the basis of the contractor’s claim

Colchester Borough Council recently signed a10-year, £120 million partnering contract withInspace Partnerships Limited to deliver respon-sive repairs, capital works and planned mainte-nance for its housing stock using a modifiedNEC Term Service Contract. It represents possi-bly the most significant use of the draft con-tract to date.

The client is the council’s arm’s-length man-agement organisation, Colchester BoroughHomes, which was set up to manage the coun-cil’s portfolio of housing, maintain the respon-sive repairs programme and be responsible forbringing the quality of the homes up to theGovernment’s decent-homes standard (Fig. 1).Over £120 million has been set aside throughcouncil and central government funding forthis work.

The council wanted to employ a single maincontractor to carry out the work as well as tomanage and supplement Colchester BoroughHomes’ technical and direct-labour staff. This‘in-sourcing’ arrangement, which in theauthor’s experience is unique in this area ofwork, inevitably led to a partnering require-ment and the need of a partnering form.

Following experiences of other councils, par-ticularly Barnsley MBC, Colchester chose toadopt an NEC contract using option X12 toprovide the partnering ‘glue’. The councilawarded the contract to Inspace and WSAtkins Facilities Management Limited, whichprovides the asset management and technicaldesign and management expertise.

Fig. 2 shows the contractual arrangement.

Why the TSC was chosenThe intention to develop a genuine partner-

ing relationship, with the employer, contractorand subcontractor’s staff working closelytogether, led to the decision to adopt a cost-based rather than price-based strategy. Thedesire to retain incentives and the reality thatthe nature of the work is neither uncertain norhigh risk led to the choice of a targetapproach rather than a straight cost-reim-bursable contract. Since the work is also activi-ty-based rather than lending itself to bills ofquantities, the first obvious choice was there-fore an NEC Engineering and ConstructionContract (ECC) option C contract.

However, just at the time of choosing thecontract, the draft version of the NEC TermService Contract (TSC) had been published forconsultation and possible use, so it was decid-ed this option should be explored. The choicewas not obvious and to understand this it ishelpful to understand the spectrum of ‘serviceto project’.

Service contracts are typically for the supplyand maintenance of a service or existing facili-ty for a period of time, where the service is

often provided through a number of discretejobs or tasks during the service duration. TheTSC has been written with this type of work inmind. A project, on the other hand, is usuallyfor the design and construction of a new facili-ty over the period it takes to provide it – aperiod that can extend or reduce dependingon the success of the project or the degree ofchange.

The work within the Colchester contract, asshown in Fig. 3, ranges from totally service-ori-entated work such as asset management tothe potential design and construction of capi-tal works. The work covers the whole service-project spectrum but only one contract waswanted, so a hybrid form was necessary. Thequestion was whether to choose a TSC andadd ECC amendments, or adopt an ECC andadd TSC amendments. The consensus viewwas to adopt the TSC.

Why was the TSC chosen over the ECC? Thedecision lay in the underlying essence of thecontractual relationship being developed. Thiswas very clearly a 10-year contract. Work wasgoing to be released on an annual cycle, to afixed maximum spend, in established and well-defined packages. There was a very strongservice ethos to the project, with quality of ser-vice to the end-user tenants being at the heartof any incentives in the contract. Finally, andimportantly, there was a willingness by all par-ties to be innovative and groundbreaking evenif that inevitably meant a greater risk profile.

The end choice was the TSC 2003 draftadopting option C (target contract with pricelist) and using options X12 (partnering) andX21 (task orders). The NEC ProfessionalServices Contract (PSC) was used for the Atkinssubcontract, incorporating option X12 toinclude Atkins in the partnering arrangement.

Modifications adoptedInevitably the need to fulfill both service

and project needs has led to modifications andamendments. However, there was a drive

throughout to leave theTSC as unmodified aspossible and only tochange it where neces-sary. This was greatlyaided by being able tobring in clauses from the ECC where needed,which followed the same philosophy and styleof the whole NEC family.

Modifications arose from three sources

■ changes to the original TSC draft docu-ment core clauses because of errors in theearly draft, extra clauses to bring in theproject requirements, or negotiation bythe parties to adjust the risk allocation

■ the nature of in-sourcing■ special clauses relating to the project

added through the Z clauses.

For example, design requirements with asso-ciated clauses on defects were introduced fromthe ECC. Similarly, with such a high-value con-tract, the simplified cost-schedule approach inthe TSC was considered to be inadequatelydefined so bringing the schedule of cost com-ponents across from the ECC was an obvioussolution. Option Y(UK)1, not in the TSC, wasalso incorporated.

Changes had to be introduced because ofthe nature of the in-sourcing arrangement.For example, a modification to the defined‘actual cost’ to include cost of other staff(employer and client) working on the contractwas introduced because the contractorreceives a fee on this cost. These changeswere particular to the special arrangements –but it is significant to note that the open anddisciplined structure of the NEC made thesechanges not only easy to make but easy toexplain.

There were also a number of special clausesrelating to the project. Not only is a targetapproach being adopted where any savingsgenerated are shared with the contractor but


Term Service Contract: delivering housing maintenance in Colchester

BY ROSS HAYES, ANTHONY COLLINS SOLICITORS

Fig. 1. Elmstead Point, part of ColchesterBorough Council’s housing stock which is nowbeing maintained under a 10-year £120 mil-lion NEC Term Service Contract

Fig. 2. Contractual arrangement, showing theunusual labour ‘in-sourcing’ arrangementbetween client and contractor

EmployerColchester BC

ClientColchester

Borough Homes

Shared resourcesthrough in-sourcing

X12 Partnering

TSC

PSC

ContractorInspace

Partnerships Ltd

SubconsultantWS AtkinsFacilities

Management Ltd


www.neccontract.com

For the construction industry, ProCure 21 isbig business. So far, over £1.8 billion of workhas been let using this system and NHSEstates has appointed 12 principal supplychain partners to operate it (see page 2).

Principal supply chain partners are expect-ed to have an established supply chain,bound together by openness and mutualtrust. A key component of the relationshipbetween the principal supply chain partnerand the supply chain is a fair allocation ofrisk. In fact, NHS insists that its principal sup-ply chain partners demonstrate that theirtreatment of the supply chains is exemplary.

NEC subcontract heavily amendedIt is, therefore, with some surprise that I

recently received from one of my contractmonitors a copy of one of the principal sup-ply chain partner’s subcontracts for use on itsProcure 21 work. NHS Estates issues its princi-pal supply chain partners with the NECEngineering and Construction Contract (ECC).But this particular supply chain partner issuesits supply chain with the NEC Engineeringand Construction Subcontract accompaniedby a plethora of amendments, which arealmost as long as the subcontract itself.

The primary reason for a party amendinga standard form is to ensure that the bulk ofrisk is firmly lodged with the other party. Thisis hardly a good omen for a relationship thatis supposed to rest on openness and mutualtrust. All the usual adversarial weaponry isavailable in the subcontract documentationincluding performance bonds, parent compa-ny guarantees and retentions.

The amended subcontract works informa-tion is in the main contract documentation.Why isn’t it extracted and included in thesubcontract documentation? Presumably, theprocess of extraction involves some risk forthe principal supply chain partner in that itdoes not trust itself to particularise the rele-vant information for the subcontractor.

Dumping risk on subcontractorMoreover, the subcontractor is to assume

the liabilities and perform the obligations ofthe principal supply chain partner in relationto the subcontract works – whatever theymight be. In common parlance this is ‘riskdumping’. So, if the principal supply chainpartner has delayed or disrupted the subcon-tract works any resultant liability falls on thesubcontractor.

Payment cycles in the amended subcon-tract are on the high side – a maximum of 65days. However, this figure assumes that theassessment intervals in the main contract aremonthly.

The payment of retentions is linked tomain contract completion. When that hap-pens, the first half of the retention fund isreleased. The second half is released on the

issuing of the main contract defects certifi-cate. Since the timing of the release of reten-tions in the main contract is likely to be ahighly mobile feast, such provision wouldnot be acceptable as an ‘adequate mecha-nism’ for payment under the ConstructionAct.

Compensation events ruled outSome compensation events in the stan-

dard NEC subcontract are ruled out by theamendments. Such events, if they occur,enable the subcontractor to become entitledto extensions of time and compensation.

For example, the principal supply chainpartner’s failure to provide the subcontractorwith possession of the relevant part(s) of thesite by the requisite date, or failure by theprincipal supply chain partner to provideanything (including information) that it isobliged to provide by the date(s) in theaccepted programme, will not entitle thesubcontractor to claim a compensationevent.

The set-off clause is broad. Set-off caninclude sums that ‘the contractor anticipatessuffering or incurring by reason of anybreach or any failure to observe the provi-sions to [the] subcontract (or of any othercontract between the contractor and thesubcontractor) by the subcontractor’. Withsuch a wide provision, the principal supplychain partner is enabled to exercise the rightof set-off from day one because, arguably, itcan anticipate suffering or incurring sumsarising from the likelihood that the subcon-tractor will be in delay for whatever reason.

Scope of adjudication reducedThe principal supply chain partner seeks to

remove from the scope of adjudication anycommunication from the client that is passedon to the subcontractor. Such communicationis deemed final and conclusive (whether, forexample, an instruction, decision or opinion).

Subcontractors working for this particularprincipal supply chain partner under theseconditions may be left wondering whetherthis Procure 21 stuff is all that it is cracked upto be. They will, rightly, wonder whetheranything has really changed. It is vital thatpublic sector procurers send out a clear mes-sage that traditional adversarial practices willnot be tolerated between first-line contrac-tors and their supply chains.

I know that NHS Estates shares this view;this documentation has clearly escaped itsscrutiny.

Based on an article published in Buildingon 23 July 2004. As reported on page 1, NHSEstates is current reviewing the subcontractsfor primary supply chain members. For moreinformation please contact the SEC Group at020 7313 4819 or [email protected].●●

You are theweakest linkBY RUDI KLEIN, SPECIALIST ENGINEERING CONTRACTORS GROUP

a further fee, based on performance againstkey performance indicators, can also beearned. This is increasingly common in thisparticular work sector among local authorityand registered social landlord employers.

Other examples include a full dispute esca-lation procedure, which was introducedthrough option X12, and adaptations to thetermination clauses to deal with failure to per-form against key performance indicators andthe very high cost of termination for breach ofcontract. This last point is, for interest, anissue which always needs to be addressed in acontract with a long duration. Theunchanged standard TSC provides for a fullrecovery of loss-of-fee revenue for the con-tractor arising from termination caused bydefault of the employer, which can lead tounjustifiably high amounts.

Dealing with potential difficultiesFinally, what were the principal areas of dif-

ficulty faced during the development of thiscontract? Leaving the special nature of in-sourcing out of the discussion, difficulties fromthe TSC itself mainly revolved around

■ introducing design into the contract■ understanding the relationship between

the price list and task orders■ integrating key performance indicators

into the incentives and the problems ofdevolving incentives to the subcontractors

■ handling the problems of the use or non-use of option Y(UK)2, not only in the TSCbut also in the PSC subcontract

■ sorting out insurance■ considering whether there should or

should not be a hierarchy of documents■ integrating it with a PSC contract which in

turn had to have a schedule of cost com-ponents included.

The difficulties have been overcome – per-haps in itself evidence of the true nature ofpartnering – and considerably assisted by theconsistent approach and clarity adopted overthe whole NEC family of contracts. Time, tenyears of it, will prove a true test.

This article is a summary of the paper givento the NEC User’s Group in March 2004 by theauthor and Alan Westlake, PartneringProcurement Facilitator for Colchester BoroughCouncil. For further information please con-tact the author on 0121 212 7449 or [email protected] ●●

Fig. 3. The work has both service and projectelements, but the strength of the serviceethos lead to a TSC being chosen with ECCmodifications

A ’project’A ’service’

ECCTSC

Asset managementResponsive repairs

Planned maintenanceCorporate property managment

Capital works–housing and corporate

I have read with interest the comments onprogramming Issues under the NEC by GaryWillets and Chris Joselin in Issues 28 and 29respectively. My thanks go to both authorsfor their contributions and I hope more NECusers will spare the time to express theiropinions of the real issues we are faced within construction – and whether the NEC is upto the task of dealing with them.

I’ll jump straight off the fence at thispoint and say that reverting back to thedays of managing programmes under ICEconditions sends a cold shiver down myspine.

I do not intend to reply to both these arti-cles on a point-by-point basis. They are welllaid out for you to review and I wouldinstead like to focus on the negative use ofprogrammes, which explains my rationalefor pro-NEC programmes.

Programme rarely agreed onICE contracts

I spent the first 10 years of my career on anumber of civil engineering projects underthe ICE Conditions of Contract. Apart frombeing adversarial, frustrating and annoying,the other thing they had in common wasthat there was no agreed clause 14 pro-gramme in place at any time. How did thishappen?

The contractor submitted a bar chartaround the time expected and the engineerperused it. The engineer requested moreinformation but not a lot was forthcoming.The engineer studied it in more detail andcame up with more questions than answers.A few meetings took place but there was noagreement, trust or common purpose. Theprogramme remained ‘not approved’ andthe job rolled on.

In the time-honoured way each projectsuffered its own pinch of change, delays, dis-ruption and other problems. Although notapproved, each party referred to the pro-gramme to argue for or refute certain occur-rences. Eventually the job finished but bythen it was over-budget, late and with gen-erally unsatisfactory relations.

Sometime after substantial completion(often considerably after) the unapprovedclause 14 programme was dusted down andre-appeared. This time it formed the base-line overlaid by actual progress. Any differ-ence between the two was the contractor’sfault, argued the engineer, and vice versa.‘Entitlement’ rang out time and time again.I exaggerate, but only slightly. The pro-gramme became a vehicle for claimsman-ship. This is well tried and tested, I agree.But I also think it is extremely wasteful.

JCT not clear on need forprogramme

Does JCT fare any better? The JCT 1998Private Edition with Quantities has the follow-ing clause 5.3.1.2

‘the Contractor …. shall provide theArchitect …. with 2 copies of his master pro-gramme for the execution of the works’.

Could it be argued here that the use of thepossessive term ‘his master programme’ doesnot require the contractor to do one, only topass two copies to the architect if he has one?

I would argue that neither of the ICE or JCTforms of contract are up to the job when itcomes to how we should set about program-ming and managing the works.

The Society of Construction Law’s delay anddisruption protocol was a positive move forprogramming and I understand there is anindependent amendment and associated prac-tice note published that allow the incorpora-tion of the protocol into JCT contracts. Goodstuff, but it appears to me the key features ofthis protocol are already present in ECC.Anyway, an industry move towards positiveprogramming can only be good for all.

I’ll not harp on about the well-documentedbenefits of the NEC programme. In my opinionwe are only currently hampered by mindsetand competence. We need fully to embracethe positive use of programmes in any projectand we need to improve our knowledge offloat, time and risk allowances, to mention afew, to get the most of out this vital manage-ment tool. I rest my case!

The NEC Users' Group will be debating pro-gramming issues under the NEC at its workshopson 28 September in Manchester and on 12November in London (see page 8). For furtherinformation please contact the author via theNEC office on 020 7665 2446 or on email [email protected] ●●


Members of the NEC Users’ Group benefitfrom direct access to a group of NEC experts,either directly or via the NEC on-line forum atwww.neccontract.com.

In recent months, as the building sector con-tinues to increase its use of the NEC, we havereceived a number of questions requiringcomparisons between the JCT 98 form of con-tract and the NEC Engineering andConstruction Contract (ECC).

In this issue we have covered the some ofthese questions and will continue to providecomparisons of ECC versus JCT and other tradi-tional contracts in future issues.

Programmes Question

How does the ECC compare with the JCT1998 form of contract in terms of the require-ment for a contractor’s programme?Answer

As an example, JCT 1998 Private Editionwith Quantities has the following clause5.3.1.2

‘the Contractor without charge to theEmployer shall provide the Architect (unlesshe shall have been previously so provided)with 2 copies of his master programme forthe execution of the works and within 14days of any decision by the Architect underclause 25.3.1 or of the date of issue of aconfirmed acceptance of a 13A Quotationwith 2 copies of any amendments and revi-sions to take account of that decision or ofthat confirmed acceptance.’

Essentially, one could interpret the use ofthe possessive term ‘his master programme’ asthe contract not requiring the contractor todo a programme and submit it, but merely topass two copies to the Architect if he has one!

Notwithstanding this, it is in the interest ofall parties for the contractor to issue a pro-gramme, though there is no contractual pro-cedure for accepting or rejecting the

FAQsA programmeor not?

A significantly redesigned and enhanced NECwebsite will be launched next month atwww.neccontract.com.

New features will include a log-in area forUsers’ Group members giving exclusive access tonewsletter archives, on-line help, FAQs andworkshop/seminar presentations. Furtherdetails will be provided in the next issue of thenewsletter.

For further details contact the NEC office on020 7665 2446 or email [email protected] ●●

BY REKHA THAWRANI, NEC MANAGER

Home page of the new NEC website,which will be launched next month

BY ROBERT GERRARD, NEC USERS’ GROUP CHAIRMAN

New look for NEC website

programme, or for it to be updated by thecontractor as the project progresses.

The ECC, however, is quite explicit in itsrequirement for a programme. Under clause 31,a programme may be identified in the contractdata prior to the contract date and/or submit-ted to the project manager within a specifiednumber of weeks of the contract date.

The programme is an important documentfor administering the contract. It enablesprogress to be monitored and the time effectsof compensation events to be properlyassessed using ‘live’ information, includingchanges to the completion date.

Programmes submitted for acceptance arerequired to show

■ dates which are stated in the contract dataor the works information

■ dates determined by the contractor■ method statements identifying equipment

and resources which the contractor plansto use

■ order and timing■ float and, separately, time risk allowances■ health and safety requirements■ other information required in the works

information.

The contractor is also required to submitrevised programmes at regular periods. Withintwo weeks of the contractor submitting a pro-gramme, or a revised programme, the projectmanager either accepts it or notifies the con-tractor of its reasons for not accepting it.

The reasons listed in the contract for notaccepting a programme are that

■ the contractor’s plans which it shows arenot practicable

■ it does not show the information whichthe contract requires

■ it does not represent the contractor’s plansrealistically

■ it does not comply with the works infor-mation.

Unfixed materials on siteQuestion

The JCT forms of contract specifically pro-vide for the contractor to be paid for unfixedmaterials either on or off site. How does theECC deal with payment for unfixed materials?Answer

This depends on the option chosen. Underoption A (priced contract with activity sched-ule), the price for work done to date is thetotal of the prices for completed activities. Inorder for the contractor to be paid for unfixedmaterials they must be identified as an activity.

Under option B (priced contract with bill ofquantities), the price for work done to date isthe quantity of work which the contractor has

completed for each item in the bills of quanti-ties multiplied by the rate and proportions oflumps sums in the bills of quantities. In orderfor the contractor to be paid for unfixed mate-rials, they would normally form part ofmethod-related charges.

Under options C, D and E (target contractsand cost reimbursable contract), the price forwork done to date is actual cost which thecontractor has paid plus the fee. The contrac-tor would have to prove that he has paid forthe unfixed materials on site.

Under option F (management contract) theprice for work done to date is the amount ofactual cost which the contractor has acceptedfor payment plus the fee. Unfixed materialswould be included within the subcontractor’saccounts.

Insurances Question

Can you please advise on the insurance pro-visions when working on an existing buildingunder the ECC. Under the JCT forms of con-tract, the employer takes out and maintains ajoint names policy for insurance of the worksand the existing structure. Is this also the caseunder the ECC? Answer

Under the ECC, the contractor providesinsurances in the joint names of the parties asstated in the insurance table. The contractdata also provides for the employer to providethe insurance as an alternative, so again simi-lar to JCT clause 22.

With regard to insurance of the works, thisincludes loss or damage to the works, plant(not the traditional meaning of ‘plant’ – that isnot machinery, vehicles and tools but plantintended for installation into the works) andmaterials. The insurances cover events whichare at the contractor’s risk, that is they excludethe employer’s risks listed under clause 80.1from the starting date until the defects certifi-cate has been issued.

The duration of the insurance is thereforedifferent to JCT in that JCT requires insuranceto be maintained until the date of issue of thecertificate of practical completion.

Contractor’s designQuestion

The JCT forms of contract provide for partialdesign by the contractor through contractor’sdesign portions and also – through the JCTForm with Contractor’s Design – for full con-tractor design responsibility. Can we carry outa design and build contract using the ECC?Answer

Yes, you can. Under the ECC, the worksinformation defines any part of the works andany equipment which is to be designed by thecontractor.

Clause 22 of the ECC then defines the proce-dures for the contractor to submit its designproposals and the reasons for the project man-ager not to accept the design.

Employer’s requirements versuscontractor’s proposalsQuestion

Under the JCT 1998 Form with Contractor’sDesign, where there is a conflict between theemployer’s requirements and the contractor’sproposals, the contractor’s proposals takeprecedence as the recitals confirm that theemployer is deemed to have satisfied itselfthat the contractor’s proposals meet with itsrequirements. How does the ECC deal withsuch issues?Answer

If any part of the contractor’s design doesnot comply with the employer’s requirementsas stated in part 1 of the contract data, theemployer’s requirements take precedence.Hence, under the second bullet point of clause60.1 (1) ‘a change to the Works Informationprovided by the Contractor for his designwhich is made at his request or to comply withother Works Information provided by theEmployer’ is not a compensation event.

If the contractor wishes to propose a changeto its design, then it has to submit the particu-lars under clause 21.2 for the project managerto accept or not accept.

The project manager can reject the contrac-tor’s design as it does not comply with theworks information and/or the applicable law.

If the project manager accepts, then theworks information can be changed according-ly. If it is changed to enable it to comply withthe works information provided by theemployer then it is not a compensation event.If it is changed for other reasons, for examplethe employer wishes to make a change to theworks or the contractor offers a lower specsolution, then it is a compensation event. Thecompensation event is priced based on theforecast change to the actual cost plus the feepercentage.

Construction managementQuestion

We frequently carry out building projectsusing construction management as our pro-curement method. Is there an option underthe ECC for construction management?Answer

There is no specific option for constructionmanagement under the ECC, but you can dothis by appointing a construction managerunder the Professional Services Contract andeach of the ‘trade contractors’ under the ECC.

The construction manager would take theroles of project manager and supervisor undereach of the ECC contracts. ●●


www.neccontract.com

Comparison of ECC with JCT 98BY KELVIN HUGHES, NEC USERS’ GROUP SECRETARY

NEC Users’ Group members are invited to the next workshops taking place on Tuesday 28September in Manchester and Friday 12 November in London. Both workshops will addressprogramming requirements under the NEC and the preparation, management and updatingof programmes.

A panel consisting of Robert Gerrard, Users’ Group Chairman, Kelvin Hughes, Users’ Groupsecretary, Bryan Richardson of Currie & Brown and a speaker from Birse Civil Engineering willpresent case studies on the programme and risk process within the NEC.

The workshops will be held as two half-day sessions, with the morning session repeated inthe afternoon. Due to the popularity of these events members are requested to book theirplaces early.

For details and to register please contact Victoria Russell on 020 7665 2446 or [email protected] ●●

A B Rhead & Associates LimitedA D Architects LtdACT JVAlan Lamb AssociatesAlexander Bruce Consultants LtdAlfred McAlpine Civil EngineeringAllen Construction ConsultancyAMEC GROUP LTDAmec Utilities LtdAnglian Water Services LtdAniscon ConsultingAnthony Collins SolicitorsAnthony G BarkerArupArup AssociatesAshford Borough CouncilAshridge Construction LimitedAWG Construction ServicesLimitedBAA plcBabtie GroupBalfour Beatty Major ProjectsBallast Nedam EngineeringBarton Plant LtdBeachcroft WansbroughsBechtel LtdBerkeley ConsultingBevan Ashford EPLBirse Civils LimitedBirse Metro LimitedBlack & VeatchBolton Metro Borough CouncilBorough of PooleBrealeygreenBrent Housing PartnershipBridgend County BoroughCouncilBritish Waterways Bullen Consutlants LimitedCapita Property ConsultantsCarillion PlcCarillion RailCarillion Services LimitedCarl Bro Group LtdCCC (NI) LtdCCS Group PLCChandler KBSChelmer Housing PartnershipCheshire County CouncilCircle 33 Housing Trust LimitedCity of Glasgow CouncilCity of WestminsterCity of WorcesterClifford ChanceColas LtdComhairle Nan Ellean SiarContracts Consultancy LimitedCornwall County CouncilCostain LimitedCurrie and BrownCyril Sweett LimitedDavis Langdon & EverestDean and Dyball ConstructionLimitedDepartment for RegionalDevelopmentRoads ServiceDept. for Regional Development(NI) - Water ServiceDew Construction LimitedDoig & SmithDoncaster Metropolitan BoroughCouncilDudley Smith PartnershipEarth Tech Engineering LtdEast Lothian CouncilEC HarrisEdmund Nuttall LimitedEdmund Nuttall LtdEllen HayEMCOR Rail LimitedEngineering Contract StrategiesEntec UK LtdEnvironment AgencyErnest J BaytonESKOMEssexcare Trenching LtdEvershedsFaithful & GouldFitzpatrick Contractors LtdFO.AB PartnershipFone-Alarm Installations LtdForward Consult LimitedFrank Griffiths Assoc LtdFranklin & Andrews LimitedGalliford NorthernGardiner & TheobaldManagement ServicesGateley Wareing SolicitorsGDGGent LimitedGlamorgan EngineeringConsultancyGlaxo Smith KlineGleedsGleeds EnergyGleeson MCL LimitedGranshaw LimitedGwynedd ConsultancyHalcrow Group LimitedHammondsHannah Reed and Associates LtdHanson Construction ProjectsHarelaw (Scotland) LtdHaringey Council

Highways AgencyHunter & PartnersInterserve Project Services limitedJackson Civil EngineeringLimitedJMP ConsultantsJohn Smith ProjectsKeepmoat RegenerationKent County CouncilKeppie Design LtdKirkham Board AssociatesLafarge ContractingLaing O’RourkeLancashire County CouncilLawrenceLeeds City CouncilLincolnshire County CouncilLondon Borough of MertonLondon Electricity Services LimitedLovells, International Law FirmM J Gleeson Group PlcManagement Process SystemsLimitedMansell plcMasons SolicitorsMetronet Rail BCV LtdMetronet SSL LtdMorgan Est PlcMott MacDonaldMouchel Parkman Services LtdMWHNational Grid TransCo PlcNeath Port Talbot CountyBorough CouncilNeedlemans LtdNHS EstatesNicholas Ray AssociatesNorfolk County CouncilNorthumbrian Water LimitedNorwest Holst Construction LtdNottinghamshire County CouncilOffice of Government CommerceO’Hare Engineering LtdOne North EastOsborne ClarkeOxfordshire County CouncilPatrick Farfan Associates LtdPell Frischmann Consultants LtdPeter Brett AssociatesPickavance Consulting LimitedPickavance Consulting LtdPosford Haskoning LimitedPryme EuropePTR Services LtdQuantum Consult LtdR A Gerrard LtdRaynesway Construction SouthernLimitedRegional AirportsRhondda-Cynon-Taf C.B.C.Ridgeway Consulting LtdRivers AgencyRobert J. Wren AssociatesRoger Lewendon Assoc.Rotherham MetropolitanBorough CouncilRoyal Borough of KingstonRWE Innogy plcRWE Nukem LimitedSainsbury’s Supermarkets LtdSanderson WeatherallScott WilsonShepherd Construction LtdSimmons & SimmonsSouth African NEC Users GroupAssociationSouth Lanarkshire CouncilStaffordshire Engineering ServicesSwansea Housing Association LtdSWECO VBB ABSymonds Group LtdTaylor Woodrow Construction LtdTelereal Services LtdTendring District CouncilThe Clarkson Alliance LtdThe National Assembly for WalesThurlow AssociatesThyssen Construction LimitedTPS SchalTube Lines LtdTuffin Ferraby & TaylorTurner & TownsendTweedsUK Nirex LtdUKAEAUnion Railways LimitedUniversity of SalfordUniversity of SalfordViridor Waste Suffolk LtdVolker Stevin LtdW B Simpson & Sons (Tiling) LtdW S AtkinsWarwickshire County councilWeir ServicesWheeler Group ConsultancyWilliam Saxby LtdWorcestershire County CouncilWorldcom International LimitedWragge & Co LLPWrekin Construction CompanyLimitedWren Insurance AssociationWSP DevelopmentWSP GroupYorkshire Water Services Ltd

Programme workshopsplanned in Manchester and London

Constructive contributions to the newsletter are always welcomed and should be emailedto the editor Simon Fullalove at [email protected] (telephone 020 8744 2028, fax 020 8891 2462). The current issue of the newsletter is also available on the

NEC website at www.neccontract.com. All other enquires should be made to the NEC manager Rekha Thawrani, NEC, 1 Heron Quay, London, E14 4JD,

telephone 020 7665 2446, fax 020 7538 2847, e-mail [email protected]

NECDIARY

NEC Users’ Group membersNew members shown in bold


BY REKHA THAWRANI, NEC MANAGER

Date Event Venue

09 September ECC: an introduction Altrincham

16 September Compensation events Altrincham

28 September Programme management workshop Manchester

28 September Term Contract Ascot

30 September ECC: an introduction Falkirk

30 September Pre-contract workshop Altrincham

05 October ECC: an introduction Ascot

12 October 50 questions and answers Ascot

13 October 50 questions and answers Altrincham

26 October Post-contract workshop Ascot

November Building conference London

02 November ECC: an introduction Bristol

09 November Pre-contract workshop Ascot

12 November Programme management workshop London

16 November Professional Services and Adjudicators Contract Ascot

23 November Term Contract Ascot

01 December ECC: an introduction Ascot

02 December NEC Building Conference London

07 December Compensation events Ascot

Bold denotes NEC Users’ Group events. For further details of courses and events please visit the NEC website at www.neccontract.com

www.neccontract.com

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