Why do Options C, D and E let the Project Manager disallow costs?

TAGS: Administration, Contract Strategy/Flexibility, NEC, NEC3, NEC4, Payment

Disallowed Cost is a subject that makes almost everyone, no matter which side of the contract they sit on, slightly hot under the collar. The fab four discuss why ‘Disallowed Cost’ is needed as a provision, what happens when it is wrongly applied and practical steps to avoid people getting hot under the collar!

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Introducing Jon Broome, NEC Expert

TAGS: NEC, NEC3, NEC4

Rob Horne, a partner in Simmons & Simmons lawyers, interviews Jon Broome about his background and views on the NEC.

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Overview of the NEC - What sets it apart from other contracts?

TAGS: Clarity & Simplicity, Contract Strategy/Flexibility, Discussion, NEC, NEC3, NEC4

In this video, the panel discuss what aspects make the NEC3 form of contract unique.

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Overview of the NEC - Is the NEC always suitable?

TAGS: Contract Strategy/Flexibility, Discussion, NEC, NEC3, NEC4

Overview of the NEC - Is the NEC always suitable? In this video, the panel discuss whether the NEC form of contract is always the best option for a project and, if ‘Yes’ how to apply it.

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Overview of the NEC - Do the NEC and the Construction Act have common values?

TAGS: Adjudication, NEC, NEC3, NEC4, Payment

In this video, the panel discuss whether there was a joint thinking in the way that the construction act developed and the implementation of the NEC. Adjudication, Payment

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The impact of Adjudication on the development of NEC3

TAGS: Adjudication, Discussion, NEC, NEC3

In this video, the panel discusses Adjudication. In particular, as it is a private process, whether the lack of testing through a court process has stunted its development.

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Does NEC3 have too much process and procedure ?

TAGS: Accepted Programme, Compensation Events, Early Warnings, NEC, NEC3, NEC4

NEC contains a lot of processes from early warning through programme updates to compensation events. In this video, the panel discusses whether these process add unnecessary cost and bog a project down in unnecessary administration?

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What would improve NEC3 in practice?

TAGS: Accepted Programme, Early Warnings, NEC, NEC3

NEC3 was published in 2005 and while there have been some amendments by updates the industry has moved on a lot in that period. In this video, the panel discuss the key areas that could be and improved for NEC4?

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Do the communications clauses of NEC really work effectively?

TAGS: Administration, NEC, NEC3, NEC4

For most major projects, communications are a key ingredient for success. In this video, Rob, Ewen, Ian and Jon debate whether the definitions and applications of the communication clauses, especially 13.1 and 13.7 enable or prevent effective communication?

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'Provide the Works' seems like a simple concept, is it?

TAGS: NEC, NEC3, NEC4

This video is about understanding what is covered by the contract and what operations are to be carried out. The NEC defines this as To Provide the Works, but is it simple to apply in practice? Rob, Ewen, Ian and Jon discuss.

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If an NEC Project Manager instructs the removal an employee who bears the risk of replacement?

TAGS: NEC, NEC3, NEC4

Stability in a project team is important to long term relationship building and managing common goals to achieve optimum outcomes. If someone is removed at the instruction of the Project Manager there is a risk to the project, but whose risk is it? Rob, Ewen, Ian and Jon discuss.

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NEC: Is there really a difference between 'approved' and 'accepted'?

TAGS: Accepted Programme, Administration, NEC, NEC3, NEC4

Accepted and approved sound very similar. One is used in the NEC the other is not. Is this just a matter of semantics or is there an important point of principle underlying this choice of words. What does it mean to “accept” under the NEC and are there any particular consequences ? Jon, Ian, Ewen and Rob discuss and come up with a simple suggestion to improve the contract.

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NEC : Should early warnings be contractual obligations?

TAGS: Early warnings, NEC, NEC3, NEC4

Early warnings are a very practical tool to help a project run smoothly and generate opportunity to identify problems and avoid or mitigate their impact. Does that process work better when it has contractual teeth or should it be a tool to enable collaboration without risk of loss if it is not operated properly. Jon, Ian, Ewen and Rob discuss whilst giving some practical tips on how to use them.

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NEC: Who controls a risk reduction meeting?

TAGS: Early Warnings, NEC, NEC3, NEC4

Part of the early warning process under NEC is the risk reduction meeting. Primarily it is a means to discuss and track the risks which have been identified and notified under the contract. Who is best placed to manage the meeting and the resultant risk register? What happens if someone refuses to attend and how can that be managed ?

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NEC: Why aren't options B and D used much?

TAGS: Contract Strategy/Flexibility, NEC, NEC3, NEC4, Payment

There is a clear preference in the UK market for Options A and C : is there a contractual, legally, technical, or practical reason for that? Jon, Ian, Rob and Ewen discuss this and whether other alternatives are being missed?

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Is there a Final Account mechanism under the NEC3 ?

TAGS: Administration, NEC, NEC3, Payment

When you get to the end of the contract, a key question is to tally up how much it has cost against how much it was planned to cost and reach a financial settlement. How does the NEC achieve this? Is this one area where it is process light compared to other contracts? Why might that be? Jon, Ian, Rob and Ewen discuss.

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NEC: The Schedule of Cost Components is really complicated, why not just use rates?

TAGS: Administration, NEC, NEC3, NEC4, Payment

One of the innovative approaches of the original New Engineering Contract was to provide more definition around what amounts to recoverable “cost” under the contract in the form of the Schedule of Cost Components. Is it really worth the trouble though? Jon, Ian, Rob and Ewen discuss.

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Does the payment mechanism under NEC work efficiently?

TAGS: Administration, NEC, NEC3, Payment

Most contracts assume the contractor will lead the payment application cycle with the certifier reviewing the application. Why is the NEC different in having the process led by the Project Manager ? And what actually happens in practice ? Jon, Ian, Ewen and Rob discuss.

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How do I recover my Subcontractors overheads?

TAGS: Administration, Contract Strategy/Flexibility, NEC, NEC3, NEC4, Payment

NEC allows recovery of Defined Cost plus Fee with each payment option having a slightly different approach to the calculations. So how do you make sure that those definitions tie up with the supply chains, so that no one is either under or over recovering ?

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Is an NEC programme just a bar chart?

TAGS: Accepted Programme, NEC, NEC3, NEC4

The programme is central to most process under the NEC but what exactly is the programme? If it isn’t just a bar chart what exactly is it or what could it include? Jon, Ian, Ewen and Rob discuss.

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How much detail should the Programme include?

TAGS: Accepted Programme, NEC, NEC3, NEC4

For long and complex projects the programme can itself be complicated. How much information should anyone reasonably expect to see on a programme and does the distance away from “time now” matter? If things are further in the future is it OK to be a little more vague about them?

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Is there an implied acceptance of programmes?

TAGS: Accepted Programme, NEC, NEC3, NEC4

Given how central the programme is to NEC, it must be important that everyone works to the same, up to date, version of it. So what happens then if a Contractor submits a programme and hears nothing back? Is it accepted or not ? And does it make a difference? Jon, Ian, Ewen and Rob discuss.

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Are the programmes requirements of NEC too complicated?

TAGS: Accepted Programme, NEC, NEC3, NEC4

Clause 31.2 contains a very long list of what must be included in a compliant programme and clause 32.1 adds to that for each update. Isn’t that really all too much particularly if the project is a relatively simple one ? Rob, Ian, Ewen and Jon discuss.

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NEC: Is the programme submitted with a CE a revised programme under 32.2?

TAGS: Accepted Programme, Compensation Events, NEC, NEC3, NEC4

NEC requires that any compensation event (CE) that has an effect on programme should include the alterations to the Accepted Programme with the quotation for it (clause 62.2). Does that mean a new programme has to be submitted for every compensation event and, if it does, then it becomes the new Accepted Programme ?

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NEC: Float and time risk allowance are the same, aren't they?

TAGS: Accepted Programme, NEC, NEC3, NEC4

An NEC programme should show both time risk allowance and float. What are the practical and programming differences between the two? How do you show them and use them effectively? Rob, Ian, Ewen and Jon discuss.

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Compensation Events tie together all contractual consequences

TAGS: Accepted Programme, Compensation Events, NEC, NEC3, NEC4

The theory behind compensation events in the NEC is to take an event and deal with all of its consequences and how all parties have dealt with it in one go. Does that produce a better result or just a more complicated process? Is it really any different to other contacts in practice ? Ian, Ewen, Rob and Jon discuss.

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Which of compensation events are most common?

TAGS: Compensation Events, NEC, NEC3, NEC4

The compensation event mechanism is intended to be a sole remedy under the contract. So the list of nineteen core compensation events should be all encompassing. Despite that breadth are there trends for which ones are most common ? And are there particular events which rarely seemed to be claimed properly ?

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How do the time bars in clause 61.3 operate?

TAGS: Administration, Compensation Events, NEC, NEC3, NEC4

Clause 61.3 provides that, for certain compensation events, if the Contractor does not notify them within 8 weeks of becoming aware of them, it will lose the right to a change in the total of the Prices and the contractual Completion Date. That doesn’t sound very much like mutual trust and co-operation, does it ? Is it appropriate to have time bars in this contract and do they work ?

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What happens when the Project Manager doesn't reply properly?

TAGS: Administration, Compensation Events, NEC, NEC3, NEC4

There are a number of stages that a compensation event needs to pass through before it becomes contractually implemented. Is it possible for the Project Manager to de-rail the process by refusing to engage in it? If there is a lack of engagement what happens ideally and practically ? Jon, Ewen, Rob and Ian discuss.

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Does clause 63.1 apply to assessing time as well as money?

TAGS: Accepted Programme, Compensation Events, NEC, NEC3, NEC4

Clause 63.1 provides a dividing line between using the cost incurred and using a forecast of cost plus risk for future operations. Given that the compensation event process deals with all aspects of an event in one go does the dividing line established in 63.1 apply equally to delay caused by the event or is there some other mechanism that has to be used? If the latter, does that threaten the all-encompassing approach of compensation events?

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Do the 63.7 assumptions work in practice?

TAGS: Compensation Events, NEC, NEC3, NEC4

Clause 63.7 allows the Project Manager to give some working assumptions to the Contractor where there is not enough detail available for a proper quotation for a compensation event. Are assumptions often given and if they are, do they help the Contractor or just cover the Project Manager ?

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