NEC4 January 2019 amendments

Following publication of the NEC4 suite of contracts in June 2017, there has been much discussion and feedback from users and industry experts on the many new features, forms and changes that were introduced. This feedback has been extremely positive overall and provided many constructive suggestions on how the contracts could be further enhanced.

To build on the constructive feedback and further improve the contracts, NEC published a set of amendments to the NEC4 suite in January 2019. Users should consider reflecting these changes in their upcoming tenders or existing contracts as amendments. The most significant amendments are explained below.

ECC clause 63.5: compensation event delay

A change has been made to NEC4 Engineering and Construction Contract (ECC) clause 63.5 to embed good practice and provide further clarity around the process of assessing a delay due to a compensation event. In summary, the third paragraph has been replaced by the following:

‘The assessment takes into account

• any delay caused by the compensation event already in the Accepted Programme and
• events which have happened between the date of the Accepted Programme and the dividing date.’

The change was in response to user feedback after Practice Note 1 was published in in October 2017 (NEC, 2017), which led to users asking for more formal provision within the contract to embed the good practice contained in the practice note.

The change also applies to the equivalent clauses in the NEC4 Design Build Operate Contract (DBOC), Engineering and Construction Subcontract (ECS), Professional Service Contract (PSC), Professional Service Subcontract (PSS), Supply Contract (SC), Term Service Contract (TSC) and Term Service Subcontract (TSS).

ECC clause 90.2: termination table

A minor change has been made to ECC clause 90.2 to provide consistency with the procedures that apply in the event of termination by the contractor due to the same ‘no fault’ reasons. No changes have been made to the amounts due as stated in the termination table.

The change also applies to NEC4 DBOC, ECS, PSC, PSS and SC.

ECC clause 50.9: agreement of defined cost

Minor improvements have been made to clause 50.9 in ECC Options C, D, E and F (target and cost-reimbursable contracts) to clarify that the finalisation is for the defined cost for a part of the works giving closure to both the client and contractor in relation to these costs. The change also applies to the equivalent clauses in NEC4 DBOC, ECS, PSC, PSS, TSC and TSS.

ECC options W1 and W2: senior representatives

An addition has been made to NEC4 ECC dispute resolution clauses W1.1(1) and W2.1(1) to allow either party to replace their senior representative after notifying the other party of the name of the replacement. This provides a formal process to change the senior representatives, which otherwise would require the mutual agreement of the parties.

This change also applies to the equivalent clauses in NEC4 DBOC, ECS, PSC, PSS, SC, TSC and TSS.

PSSC: consultant’s contract data – people rates

Changes have been made to the NEC4 Professional Service Short Contract (PSSC) to clarify the difference between work undertaken on a time-charge basis as opposed to rates and lump sums. The first change is to clarify that the client has to select one of these options as the contract does not provide for a mixture of time charge and rates and lump sums to be used.

It is now also clear that where work is to be carried out on a time-charge basis, the consultant includes people rates for its own people and people provided by a subcontractor and that these rates should be exclusive of the fee. Where work is undertaken on a time-charge basis, the fourth bullet of clause 53.3 has been changed to make these rates subject to the addition of the fee.

These changes do not apply to any other contracts.

SC, ECS, PSS, TSS: project bank accounts

In the NEC4 SC and the main forms of NEC4 subcontract (ECS, PSS and TSS) the form of trust deed and joining deed for secondary option Y(UK)1 on project bank accounts has been removed as the supplier or subcontractor will become a member of a project bank account created under a main contract.

Reference

NEC (2017), Assessing delays due to compensation events, ECC Practice Note 1, October 2017, free online.