NEC4 – a new generation?

NEC4 information for the construction sector

Evolution rather than revolution

At the SCL Conference held last month the drafters of the NEC contract form announced the forthcoming release of “the next generation of NEC contracts – NEC4”.

We were told NEC4 is evolution rather than revolution. In terms of the drafting of the core clauses we can get excited by having “Employer” replaced by “Client”, “Scope” being used throughout as the term for the document which describes the works or services being provided, the term “liabilities” used instead of “risk”, a rationalisation of “Defined Cost” and gender neutral drafting throughout. Core clauses have been added to deal with confidentiality, quality management and assignment.

Other “innovative” features include a facility to include project specific compensation events, a new compensation event to allow the Contractor to recover the costs of quoting for a proposed instruction which is not then accepted, a procedure added to deal with final accounts and to make the periodic payment procedure initiated by an application by the Contractor.

New secondary options allow for Design and Build (D&B), Early Contractor Involvement (ECI), Building Information Modelling (BIM) and for collateral warranties to be provided where third party rights are for whatever reason unpalatable.

What commercial developers really require in a contract

It rather seems to me that the “evolution” here is that the drafters of the NEC are finally acknowledging the reality of what commercial developers require in a contract. I’m not knocking it if it does cut down on the Z clauses – the new editions can’t come too soon!

They say the changes have been the direct result of feedback from the industry to provide solutions which clients want.

I have to wonder just how extensive and in depth that consultation was.

NEC contracts

Thinking back over the various NEC contracts which have come across my desk in the last 20 years I have seen more unfair and frankly vicious alterations to the parties’ risk profile made in NEC contracts than in any other contract form – published or bespoke! And that is in a contract form that finds the need to expressly prescribe the manner in which the parties are to act.

I am eager to see the new editions. The changes do sound positive although the devil is in the detail as always. I’ll try to remain open minded, and continue to draft, advise and negotiate in that NEC “spirit of mutual trust and co-operation”.

I’d like to see some of the UK’s major contractors and institutions do the same.

Regardless of these changes, my advice remains that the NEC is not for anyone who is contractually inexperienced or under resourced administratively.

Pam Allardice, Allardice Associates