procurement guide - NEC/ECC contract

It is appropriate here to also mention the New Engineering Contract (NEC) referred to above, was introduced in 1993. Published by the Institute of Civil Engineers it was intended to respond to:

  • Client dissatisfaction with existing forms - too many, too adversarial
  • The inflexibility of existing contracts
  • Disputes - too many, too expensive, too long to settle
  • Management of contracts seen as more important than legal niceties
  • UK as a member of national distinctions disappearing
  • Clients looking to seek alternative procurement strategies

The Latham Report 1994 - Rethinking Construction -  recommended that the NEC contract should become a national standard contract across the whole of the construction industry. In response, the ICE introduced various changes as recommended in the Report, creating the second edition, re-named as “The Engineering and Construction Contract“ (ECC). It requires the parties to work “in a spirit of mutual trust and co-operation”.

The ECC was followed by the Construction Act and as a combination then sought to reduce confrontation and to encourage all concerned to “get on with the job”.

As a contract it:

  • Is intended to be suitable for all the needs of the construction industry and allows a wide range of tender procurement methods
  • Provides for a variety of approaches to risk allocation.
  • Can be adapted for partial design, full design or no design responsibility, and for all current contract options including target, management and cost reimbursable contracts
  • Creates a stimulus for good management

There are six main methods for seeking tendered works under a ECC partnering contract:

  1. A Lump sum with activity schedule
  2. Priced contract with Bill of Quantities (Note - the bill is used only for interim payments, not for valuation of compensation events)
  3. Target contract with activity schedule (lump sum quoted by tenderer as target)
  4. Target contract with Bill of Quantities (subject to re-measurement)
  5. Cost reimbursable style (or Prime-Cost) contract
  6. Management style contract (by involvement of a management contractor)

In addition Construction Management can also be used.   It is therefore extremely flexible.   Indeed it provides a contract to enable good management and a broad set of contract procurement Guide which goes well beyond the scope of this section.

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