Nec contract formation

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The “New Engineering Contract” currently in its 3rd Edition (NEC3) outlooks as a suite of-Construction-Contracts designed to guarantee needs ofdiverse projects.

The-NEC3 can be used for any procurement method and is flexible in terms of amount of design a contractor takes responsibility for, assuring projects being delivered on time andto budget (Boulding, 2006).

It is already widely used and recently implemented on the 2012 London Olympics construction.


NEC CONTRACT AS GOVERNING DOCUMENTChoosing a right NEC contract as a governing document tender for construction, we have to identify some fundamental principles before deliberating how they should be put into effect under the NEC3options and clauses.

The authors of the NEC set out some aims (Gould, 2007):
* Aim for clarity and use of ordinary language reducing potential for claims;
* Achieve greater transparencywhen compared to other current contracts eliminating errors and misunderstandings;
* Clear identification and setting out of key tasks to facilitate management of changes in terms of time and costs;* Optimise outcomes via pro-active risk management with an “Early-Warning” procedure.

In summary, three core principles of a NEC might be said to be flexibility, clarity and a stimulus forgood management (Latham, 1994).



Firstly, the NEC with its set of main and secondary options encourages forethought on collaboration. Along with a suite ofcontracts containing “Early-Warning” necessities, contractors and project managers end up notifying each other if aware of matters that could increase budgets, delay key tasks, etc.

However, there areweaknesses too. It can be noticed that while the NEC places emphasis promoting good management, it also places a project-manager in an extremely demanding role, which implies a heavy administrative...
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