NEC Contracts

This article gives you an understanding about NEC Contracts.

Updated this week

NEC stands for New Engineering Contract. The NEC is a family of standard contracts, each of which has these characteristics:

  • Its use stimulates good management of the relationship between two parties to the contract and, hence, of the work included in contract.

  • It can be used in a wide variety of commercial situations, for a wide variety of types of work and in any location.

  • It is a clear and simple document - using language and a structure which are straightforward and easily understood.

There are four editions of NEC. The latest edition NEC4 was introduced in 2017, while the previous version NEC3 was introduced in 2005. The process flow remains same in both the recent editions of NEC i.e. NEC3 and NEC4.

Differences between NEC3 and NEC4

  • New forms of contract - the Design Build and Operate Contract (DBO), the Alliance Contract (ALC), and the Facilities Management Contract (FMC)

  • Improved clarity and simplicity across the NEC4 suite

  • New and improved support for dispute avoidance, early contractor involvement, quality management, and more.

  • NEC4 is a positive evolution of NEC3, building upon and enhancing the previous generation

  • Innovative new features and new contracts help users further achieve improvements to the efficiency and outcome of their projects and work programmes

  • The style, layout, terminology and key project management processes that run through NEC3 contracts remain in NEC4

  • All of the changes are a direct result of feedback from industry

Types of Contracts in NEC

ECC - Engineering and Construction Contract

PSC - Professional Services Contract

TSC - Term Services Contract

ECSC - Engineering and Construction Short Contract

ECS - Engineering and Construction Subcontract

SC - Supply Contract

Please note that there are few other types of contracts which are not widely used and hence are currently not a part of Asite Contract Manager.

Depending on the requirement, your Asite Professional Services Consultant can give you access to the required type of contract forms on your project. This set of forms would be accessible to you from a specific area like 'Project Forms' or 'Contracts' based on how it is enabled.

ECC - Engineering and Construction Contract

Suitable for any construction ­based contract between a Client and a Contractor. It is intended to be suitable for any sector of the industry, including civil, building, nuclear, oil & gas, etc.

The ECC type of contract is most frequently used contract from the NEC4 family which has been used on both high profile and everyday projects such as infrastructure, buildings, highways and process plants.

The key parties on the NEC4 ECC type of contract are:

Client

This is the organisation with whom the Contractor has a contract. Also called as the client organisation.

Project Manager

This is the client role on the contract. The Project Manager is the main contact person within the client organisation charged with managing the contract.

Supervisor

The Supervisor works for the Client and checks that the works are constructed in accordance with the contract.

Contractor

This is the supplier role on the contract. The Contractor is the main contact person within the Supplier organisation charged with managing the contract.

In Asite NEC4 Contract Manager, most of the roles used in your contract process may be already defined in the project on which you are given access. See examples below:

NEC-ECC-Client Draft for PM

NEC-ECC-Client View Only

NEC-ECC-Contractor

NEC-ECC-Contractor Draft for PM

NEC-ECC-Project Manager

NEC-ECC-Supervisor

NEC-ECC-Supplier View Only

For any questions on how to configure roles, role privileges and form permissions based on your project requirements specific to Contract process, remember to reach out to your Asite Professional Services Consultant.

Roles and Responsibilities

Roles

Responsibilities / Key Activities

Contractor

Raises early warnings with delay, cost and performance implications

Raise Compensation events

Submit Instruction to submit quotation

Submit Quotations against CE

Submit Assessment for final remaining amount

Raise changes in scope

Raise Programme Submission

Communicate internally for queries with Contract team

Raise late notices

Raise extension period

Project Manager

Raise a Contract

Raise early warnings with delay, cost and performance implications

Review and acceptance of Contractor’s design

Decide date of Completion

Instruct Contractor to submit / resubmit quotations

Acceptance for submitted quotations

Notify contractor for compensation events

Raise assessment against CE

Review Compensation events

Raise extension period

Review completion certificates

Certify final payment for termination

Supervisor

Communicate with contractor for contract related queries

Raise defects in a Contract and notify contractor for defects

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