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The Contractor's Nec3 Ecc Handbook
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Table of Contents

About the Book xiii

About the Author xv

1 Introduction 1

Ten Things You Need to Know 1

Author's Note 2

2 The Contract 5

About the NEC Contract 5

Clarity and Simplicity 5

Flexibility 5

Stimulus to Good Management 6

Collaborate...or Else! 6

The Latham Report 6

The NEC3 Suite 7

Contracts 7

Flow Charts and Guidance Notes 8

The ECC Form 9

The Core Clauses 9

The Main Options 9

Option A - Priced Contract with Activity Schedule 10

Option B - Priced Contract with Bill of Quantities 11

Option C - Target Contract with Activity Schedule 11

Option D - Target Contract with Bill of Quantities 12

Option E - Cost Reimbursable Contract 12

Option F - Management Contract 13

W Clauses 13

The Secondary Options 14

X Clauses 14

Y Clauses 14

Z Clauses 15

The Contract Data 15

The Schedules 16

The Schedule of Cost Components 16

The Shorter Schedule of Cost Components 16

Formation of the Contract 16

Offer and Acceptance 16

Attestation 17

Necessary Contract Documents 17

Frequently Asked Questions 17

3 General 19

Overview 19

Actions 19

The Employer 20

The Contractor 22

The Project Manager 27

Impartiality 32

The Supervisor 32

The Obligations 33

Identified and Defined Terms 34

(1) The Accepted Programme 35

(2) Completion 36

(3) Completion Date 38

(4) The Contract Date 38

(5) Defect 39

(6) Defects Certificate 39

(7) Equipment 40

(8) The Fee 40

(9) Key Date 41

(10) Others 42

(11) Parties 42

(12) Plant and Materials 42

(13) To Provide the Works 43

(14) The Risk Register 44

(15) The Site 44

(16) Site Information 45

(17) Subcontractor 45

(18) Working Areas 46

(19) Works Information 46

(20) The Activity Schedule (Main Options A and C Only) 49

Who Prepares the List of Activities? 49

What Should be Included in the Schedule? 50

Relationship to the Accepted Programme 50

Changes to the Activity Schedule 50

Use Under Option A 51

Use Under Option C 51

Errors in the Activity Schedule 51

(21) The Bill of Quantities (Main Options B and D Only) 52

Changes to the Bill of Quantities 53

Use Under Option B 53

Use Under Option D 53

Errors in the Bill of Quantities 54

(22) to (26) Defined Cost 54

Main Options A and B 54

Main Options C to E 54

Main Option F 55

(25) Disallowed Costs 55

(27) Price for Work Done to Date (Option A) 56

(28) Price for Work Done to Date (Option B) 56

(29) Price for Work Done to Date (Options C to F) 57

(30) Prices (Main Options A and C) 57

(31) Prices (Main Options B and D) 57

(32) Prices (Main Options E and F) 57

(33) The Total of the Prices (Option D) 57

Interpretation and the Law 57

Communications 58

Notification 59

The Project Manager and the Supervisor 60

Adding to the Working Areas 61

Early Warning 61

Ambiguities and Inconsistencies 63

Illegalities and Impossibilities 64

Prevention 64

Frequently Asked Questions 65

4 The Contractor's Main Responsibilities 71

Overview 71

Providing the Works 77

The Contractor's Design 78

Acceptance of the Contractor's Design 78

Using the Contractor's Design 79

Design of Equipment 79

People 80

Working With the Employer and Others 81

Subcontracting 82

Other Responsibilities 84

Frequently Asked Questions 85

5 Time 89

Overview 89

Starting, Completion and Key Dates 89

Commencement and Completion 89

Completion Certificate 90

Key Dates 91

The Programme 91

The First Programme 92

Information on the Programme 92

Acceptance of the Programme 95

Rejection of the Programme 95

Revising the Programme 96

Access to and Use of the Site 98

Instructions to Stop or Not to Start the Work 98

Takeover 98

Acceleration 99

Frequently Asked Questions 100

6 Testing and Defects 105

Overview 105

Tests and Inspections 106

Tests and Inspections Before Delivery 107

Searching For and Notifying Defects 107

Searching 107

Notifying 108

Correcting Defects 108

Correction 108

Defect Correction Period 108

Defects Certificate 109

Accepting Defects 109

Uncorrected Defects 110

Frequently Asked Questions 111

7 Payment 115

Overview 115

Assessing the Amount Due 115

Main Option A 116

Main Option B 117

Main Option C 117

Amounts Due to Subcontractors 118

The Cost of Components in the Schedule of Cost Components 119

Disallowed Costs 119

The Fee 120

Main Option D 120

Amounts Due to Subcontractors 121

The Cost of Components in the Schedule of Cost Components 121

Disallowed Costs 121

The Fee 122

Main Option E 122

Amounts Due to Subcontractors 123

The Cost of Components in the Schedule of Cost Components 124

Disallowed Costs 124

The Fee 125

Main Option F 125

Amounts Due to Subcontractors 126

The Prices for the Work Done by the Contractor 127

Disallowed Costs 127

The Fee 127

Unfixed Materials on Site 128

Main Option A 128

Main Option B 128

Main Options C, D and E 128

Main Option F 128

The First Programme 128

Payment 128

The Primary Legislation 129

The Secondary Legislation 129

How it Works 129

A 'Construction Contract' 129

The Payment Provisions 130

The Payment Notice 130

The ECC Provisions 131

Interest 132

Defined Cost 132

The Contractor's Share 133

The Activity Schedule 134

The Bill of Quantities 135

Frequently Asked Questions 135

8 Compensation Events 139

Overview 139

Compensation Events 140

Core Clause Compensation Events 140

Weather Measurement 146

Weather Data 146

Once in Ten Years 146

Bill of Quantity Compensation Events 149

Secondary Option Compensation Events 150

Clause X2.1 - Changes in the Law 150

Clause X12.3(6) and (7) - Changes in Partnering Information 151

Clause X14.2 - Delay in Making Advanced Payment 151

Clause X15.2 - Correction of a Defect 151

Clause Y2.4 - Suspension Under the Housing Grants,

Construction and Regeneration Act 1996 151

Compensation Event Procedure 151

Notifying Compensation Events 151

Quotations for Compensation Events 154

Assessing Compensation Events 156

Effect of the Event on Defined Cost 157

Effect of the Event on Planned Completion 158

Failure to Give Early Warning 159

The Project Manager's Assessment 159

Exhaustive Remedy 161

Implementing Compensation Events 161

Main Option Clauses 161

Summary of Sanctions 163

Other Remedies 164

Frequently Asked Questions 164

9 Title 169

Overview 169

The Employer's Title to Plant and Materials 169

Marking Equipment, Plant and Materials Outside the

Working Areas 170

Removing Equipment 171

Objects and Materials within the Site 171

Frequently Asked Questions 171

10 Risks and Insurance 173

Overview 173

Employer's Risks 173

Contractor's Risks 174

Repairs 175

Indemnity 175

Insurance Cover 175

Insurance Policies 176

If the Contractor Does Not Insure 176

Insurance by the Employer 177

Frequently Asked Questions 177

11 Termination 179

Overview 179

Termination 179

Reasons for Termination 180

Procedures on Termination 181

Payment on Termination 181

Frequently Asked Questions 183

12 Dispute Resolution (W1 and W2 Adjudication) 185

Overview 185

Option W1 185

Dispute Resolution 185

The Adjudicator 186

The Adjudication 188

Review by a Tribunal 191

Option W2 192

Dispute Resolution 192

The Adjudicator 193

The Adjudication 196

Review by a Tribunal 199

Frequently Asked Questions 200

13 X and Y Clauses 203

Introduction 203

The X Clauses 203

X1 - Price Adjustment for Inflation 203

X2 - Changes in the Law 204

X3 - Multiple Currencies 204

X4 - Parent Company Guarantees 205

X5 - Sectional Completion 205

X6 - Bonus for Early Completion 205

X7 - Delay Damages 206

X12 - Partnering 206

X13 - Performance Bond 207

X14 - Advanced Payment to the Contractor 207

X15 - Limitation of Contractor's Liability for his Design to Reasonable Skill and Care 207

X17 - Low Performance Damages 208

X18 - Limitation of Liability 208

X20 - Key Performance Indicators 209

The Y Clauses 209

Y(UK)1 - Project Bank Account 209

Overview 209

Definitions 210

Project Bank Account 210

Named Suppliers 210

Payments 211

Effect of Payment 211

Trust Deed 211

Termination 211

Y(UK)2 - Housing Grants, Construction and Regeneration Act 1996 212

Overview 212

Definitions 212

Dates for Payment 212

Notice of Intention to Pay Less 212

Suspension of Performance 212

Y(UK)3 - Contracts (Rights of Third Parties) Act 1999 213

Overview 213

Frequently Asked Questions 213

14 Z Clauses 215

Overview 215

Additional Conditions of Contract 215

Frequently Asked Questions 216

15 Schedules of Cost Components 219

Overview 219

Schedule of Cost Components 219

Subcontractors 220

People 220

Equipment 220

Plant and Materials 221

Charges 222

Manufacture and Fabrication 222

Design 222

Insurance 222

Shorter Schedule of Cost Components 223

Subcontractors 223

People 223

Equipment 224

Plant and Materials 225

Charges 225

Manufacture and Fabrication 225

Design 225

Insurance 226

Frequently Asked Questions 226

Index 229

About the Author

About the Author
Steven C. Evans is Director of construction consultancies in the UK and in Australia. He has worked in construction for nearly 30 years, beginning as an on-site trainee quantity surveyor for a top tier multinational contractor, moving on to managing surveyor for a medium sized UK based contractor, and finally, as a dispute resolution and avoidance specialist. Mr. Evans has a wealth of practical experience to supplement his legal knowledge and qualifications.

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