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NEC3 vs NEC4 – NEC4 Changes

Summary of NEC3 vs NEC4 changes and the NEC4 overview guide from Thomas Telford highlighting the main changes with the NEC4 family of contracts.

NEC3 vs NEC4: Summary of Key Changes

The new NEC4 suite of contracts are being published on the 22nd June this year. Below is a NEC3 vs NEC4 summary of some if the main changes, in terms of the family of contracts and specifically the individual contracts (but in particular the ECC contract). On the surface of it there are some very welcome additions or amendments that will further enhance the use of these contracts within the industry.

NEC3 vs NEC4: New contracts within the family

  1. Design, Build and Operate(DBO): to allow for the operation and/or maintenance to be
    included to traditional design and build
  2. Alliance Contract (ALC): multi party contract allowing for an integrated delivery team within
    one single contract where by the Parties are all working together to achieve client objectives
    but sharing the risk/rewards along the way.

NEC3 vs NEC4: New features within the contracts generally

  1. Includes “Contractor Proposals” to change scope or to achieve acceleration, which the client
    can accept or not and share benefits accordingly.
  2. PSC, TSC, SC contracts will all use Defined Cost in the same way as ECC contracts
  3. A consensual dispute resolution process – where there is a four week period for escalation
    and negotiation of a dispute (instead of going straight to adjudication). Senior nominated
    representatives will try to negotiate a solution within this period
  4. Option C/D/E/F cost based contracts will allow Contractor to instigate a review of Defined
    Cost in an attempt to encourage agreement of Defined Cost and importantly Disallowed
    Costs as works proceed rather than at end of contract
  5. Contractors are obliged to submit applications rather than the PM obliged to assess if they
  6. Requirement for Contractor to issue quality management systems/plans
  7. Term “Employer” has been replaced to “Client” throughout the contracts
  8. Terms Works Information, Service Information and Service Information in their respective
    contracts have all been changed to “Scope”
  9. All contracts are written gender neutral (no more “he/his”)
  10. Contract Data has been reformatted to make it more practical/intuitive

NEC3 vs NEC4: Main ECC changes

  1. Additional compensation events can be included within contract data without the need for Z
  2. New compensation event added for cost of preparing a proposed quotation that does not go
  3. “Risk Register” has been changed to “Early Warning Register” (alleluia!)
  4. There will be a “deemed acceptance” of the programme if the Project Manager fails to
    respond to the issued programme and a subsequent reminder
  5. Requirement to show “implemented compensation events” removed from revised
    programmes – making it clear that revised programmes should be showing the effect of non-implemented compensation events (not just implemented ones)

NEC3 vs NEC4: New Secondary options

  1. Contractor can propose changes to scope which would reduce maintance or running costs
    over the assets life – and again the Parties share in the savings that it will lead to
  2. Design and Build option: to provide more specific elements associated with supporting
    design and build contracts
  3. Early Contractor Involvement now included as a secondary option
  4. Business Information Modelling (BIM)
  1. Schedule of Cost Components – quite a few subtle changes such as:

NEC3 vs NEC4: Schedule of Cost Components

Quite a few subtle changes such as:

  1. C/D/E now only use SCC not option to use SSCC (shorter schedule)
  2. Working area overhead and People Overhead been removed and these costs paid as part of
    Defined Cost
  3. Adjusted to allow the cost of people working at different locations – not just within the
    Working Areas
  4. Shorter Schedule has pre-priced people cost which will be filled in within contract data part
  5. Only one fee percentage – no separate subcontract fee percentage.