Words and phrases to avoid when talking about NEC contracts

Key Points

• NEC contracts are written in clear and simple English for ease of use and understanding.
• They also have their own unique terminology.
• Many terms commonly used in other contracts should not be used as they do not exist in NEC and so have no contractual meaning.

NEC contracts, unlike many other procurement forms, are written in clear and simple English. To facilitate and encourage good management or risks and uncertainties, they also have their own terminology. This means that many terms commonly used in other contracts do not apply. 

The following are some of the most commonly misapplied words and phrases when talking about NEC contracts. NEC users should try to avoid all these terms as they have no contractual meaning. 

Provisional sum

‘Provisional sums’ do not exist in NEC, and users should not try to include them. For any possibly required work, state clear assumptions regarding the defined cost and time required in the scope. Bidders can then build this into their prices and programmes. 

Any changes to the assumptions can then be managed as a change in scope and a compensation event. 

General communication

‘General communication’ is the name often given in cloud-based NEC contract management systems which do not have a proper NEC form for a specific action. If you must use such a general communication, make sure you state the NEC clause under which the communication is made. 

Raise

We do not ‘raise’ anything in an NEC contract. Instead use the verbs in the contract, so ‘instruct’ a change to the scope or a stop to the works, and ‘notify’ early warnings, compensation events and defects. Also make sure you do that ‘notification’ separately from all other communications (see clause 13.7). 

Approval 

‘Approval’ gets only two mentions in the NEC4 Engineering and Construction Contract (ECC). Clause 27.1 says, ‘The Contractor obtains approval of its design from Others where necessary.’ And if Option X22 on early contractor involvement is included, then clause X22.3(6) says, ‘The Contractor obtains approvals and consents from Others as stated in the Scope.’ The project manager should only ‘accept’, never ‘approve’. It is then protected by clause 14.1.

Snag

There are no ‘snags’ in NEC. Instead, there are just ‘defects’, which we could divide into ‘big’ and ‘little’ defects. Big defects are the ones that prevent the client using the works and so hold up completion (clause 11.2(2)), while little defects are the ones that do not prevent the client from using the works and so do not hold up completion. 

Practical completion

‘Practical completion’ does not exist in NEC. Instead, the contracts properly define what ‘completion’ is. Clause 11.2(2) says it is when the contractor has done all the work which the scope states is to be done by the completion date and has also corrected all notified big defects (see above). 

Commissioning

There is no ‘commissioning’ in NEC. There may be a series of tests in the scope before completion, in which case these should be called ‘tests to demonstrate completion’.

Handover

There is no ‘handover’ in NEC. There is just ‘completion’ by the contractor followed by ‘take over’ by the client.

Beneficial use

Do not say ‘beneficial use’. In NEC, clients can use a part of the works whenever they feel like it. If that use is not for a reason stated in the scope, or just to suit the contractor’s method of working (see clause 35.2), that use will be a takeover of that part of the works, which will be certified by the project manager. It will be a compensation event only if it happens before both completion and the required completion date (see clause 60.1(15)).

Defects period

There is no ‘defects period’ in NEC. The contract data states an unnamed period in weeks (usually 52) from completion of the whole of the works to the ‘defects date’. The defects date is the last date for the supervisor to notify a defect (clause 43.2) or instruct a search for a defect (clause 43.1). The supervisor issues a defects certificate on or soon after the defects date (clause 44.3).

Defects liability period

There is also no ‘defects liability period’ in NEC. But if Option X18 on limitation of liability is used, there is an ‘end of liability date’ which is effectively the end of such a period. This is usually stated as 12 or 6 years after completion to match the liability period in the UK, depending on whether the contract was signed as a deed or not. 

It will be for everyone’s benefit if you just use the language of the contract.