A new survey of nearly 1,000 UK construction businesses confirms NEC3 contracts are now the most popular procurement route for clients − and continue to increase their overall market share at the expense of other standard contract forms.
The 2015 national Construction Contracts and Law Survey 2015 by NBS, part of the Royal Institute of British Architects (RIBA), found the NEC3 contract suite is now most used by 42% of clients compared to 32% mostly using JCT contracts.
Overall NEC is reported to be most used by 30% of the construction industry, up from 22% in the last survey three years ago, while JCT contracts are most used by 39% of the industry, down from 48% in 2012.
Significant shift to NEC
Furthermore, over half (53%) the construction industry says it has now used NEC at least once over the past 12 months compared to just 38% three years ago.
According to Adrian Malleson, head of research, analysis and forecasting at NBS, ‘We can see a shift in contract use, with NEC contracts becoming more often used, JCT contracts less so. The shift is not small.
‘Since 2011, there has been an increase of 14 percentage points in the number of people telling
us they use NEC contracts most often. The number for JCT contracts has fallen by over a third in the same period.’
Growing PSC dominance
NEC’s market penetration is even greater for professional services appointments, with the NEC3 Professional Service Contract (PSC) now being used by 44% of clients, up from 41% three years ago. Client usage of RIBA agreements has remained at 14% while their use of bespoke contracts has risen slightly to 34%.
In addition, the PSC has now overtaken RIBA agreements across the whole industry, being used on 37% of projects compared to 25% for RIBA agreements. Bespoke consultancy agreements are still the most commonly used overall at 51%, with the highest use (60%) by contractors.
‘The NEC Professional Services Contract has, among our respondents, seen a significant growth in use, up from 15% in 2011 to 37% in 2015. It now has more users than the RIBA forms of appointment,’ says Malleson.
Suitable for all values
In terms of project values, NEC contracts now appear to be used fairly evenly across the value range, with 47% above £5 million and 53% below.
Nearly three quarters (74%) of JCT contracts are used on projects below £5 million and nearly half (48%) of Fidic contracts are over £25 million.
The survey was based on responses from individuals at 981 construction businesses, including 126 clients (generally commissioning and maintaining larger projects), 202 contractors and 532 architects, engineering consultancies and surveyors.
The data relates to projects carried out between mid-2014 to mid-2015. Around half the projects reported were publically funded and around half private.
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