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The NEC4 Engineering and Construction Contract: A Commentary

Brian Eggleston

ISBN13: 9781119478751
Previous Edition ISBN: 9781118989364
Published: April 2019
Publisher: Wiley-Blackwell
Country of Publication: UK
Format: Hardback
Price: £103.95



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The New Engineering Contract (NEC) is one of the leading standard forms of contract for major construction and infrastructure projects. The latest edition of the contract (NEC4) is now a suite of contracts widely used in the UK, Australia, Hong Kong, South Africa, Ireland, and New Zealand. This timely and important book provides a detailed commentary on the latest edition of the main NEC4 Engineering and Construction Contract (NEC4 ECC) form. It explains how the contract is intended to operate and examines each clause to consider its application and legal interpretation. It also draws upon the author's highly successful third edition of the book covering the previous contract. It identifies and comments on the changes between the current and previous version of the form.

After a brief introduction to the new edition of the form, The NEC4 Engineering and Construction Contract offers in-depth chapters covering everything from main options and secondary option clauses to risk assurances and NEC 4 family contracts. In between, readers will learn about general core clauses, the obligations and responsibilities of the contractor, testing and defects, payments, compensation events, and much more.

  • Covers the latest version of the NEC Engineering and Construction Contract, the leading standard form contract for major construction projects
  • Examines the new contract clause by clause and compares it with the previous edition
  • Previous editions were widely acknowledged as detailed and fair analyses of the NEC contracts
  • Written by a highly regarded contracts commentator, experienced arbitrator, and adjudicator
The NEC4 Engineering and Construction Contract: A Commentary is an excellent book for construction industry professionals working for clients, employers, main contractors, project managers, subcontractors, and specialist contractors.

Subjects:
Construction Law
Contents:
Preface xv
Author’s notex vii
1. Introduction 1
1.1 Overview 1
1.2 Background 1
1.3 Objectives 1
1.4 Impacts of change 2
1.5 The NEC4 suite of contracts 3
1.6 Characteristics of NEC contracts 3
1.7 Structure of the NEC4 Engineering and Construction Contract (ECC4) 4
1.8 Changes ECC3 to ECC4 6
1.9 Review of points of interest 7
1.10 Entire agreement 7
1.11 Exclusion of common law rights 8
1.12 Conditions precedent to compensation event claims 8
1.13 Role and powers of the Project Manager 8
1.14 Changes to Scope (previously Works Information) 9
1.15 Prevention 9
1.16 Quotations for compensation events 9
1.17 Assessments of compensation events 9
1.18 Dispute avoidance and dispute resolution 10
2. Changes from ECC3 11
2.1 Evolution 11
2.2 Features and enhancements 11
2.3 Terminological changes 12
2.4 Changes to core clauses 12
2.5 Changes to dispute resolution procedures 15
2.6 Changes to Secondary Option clauses 16
2.7 Data sheet changes 16
3. Main options 17
3.1 Introduction 17
3.2 Contract strategy 18
3.3 Responsibility for design 19
3.4 Certainty of price 20
3.5 Allocation of risk 21
3.6 The Client’s requirements 22
3.7 Operating restrictions 23
3.8 Early start and/or rapid finish 23
3.9 Flexibility in contractual arrangements 23
3.10 Aversion to disputes 23
3.11 Single point responsibility 24
3.12 Option A – priced contract with Activity Schedule 24
3.13 Option B – priced contract with bill of quantities 25
3.14 Target contracts generally 27
3.15 Options C and D – target contracts 29
3.16 Option E – cost reimbursable contract 30
3.17 Option F – management contract 31
3.18 Options W1, W2, W3 – resolving and avoiding disputes 31
4. Secondary options 32
4.1 Introduction 32
4.2 Choice of Secondary Option clauses 33
4.3 Status of Secondary Option clauses 33
4.4 Option X1 – price adjustment for inflation 34
4.5 Option X2 – changes in the law 34
4.6 Option X3 – multiple currencies 35
4.7 Option X4 – ultimate holding company guarantee 36
4.8 Option X5 – sectional completion 36
4.9 Option X6 – bonus for early completion 37
4.10 Option X7 – delay damages 37
4.11 Option X8 – undertakings to the Client or Others 42
4.12 Option X9 – transfer of rights 42
4.13 Option X10 – information modelling 43
4.14 Option X11 – termination by the Client 43
4.15 Option X12 – MultiParty collaboration 44
4.16 Option X13 – performance bond 45
4.17 Option X14 – advanced payment to the Contractor 47
4.18 Option X15 – the Contractor’s design 48
4.19 Option X16 – retention 49
4.20 Option X17 – low performance damages 50
4.21 Option X18 – limitation of liability 51
4.22 Option X20 – key performance indicators 55
4.23 Option X21 – whole life cost 56
4.24 Option X22 – early Contractor involvement 56
4.25 Option Y(UK)1 – project bank account 57
4.26 Option Y(UK)2 – Housing Grants, Construction and Regeneration Act 1996 57
4.27 Option Y(UK)3 – Contracts (Rights of Third Parties) Act 1999 58
4.28 Option Z – additional conditions of contract 58
5. Contract documents 59
5.1 Introduction 59
5.2 Entire agreements 60
5.3 Clause 12.4 of ECC4 61
5.4 Construction of contracts generally 62
5.5 ECC4 documentation 63
5.6 Essential contract documents 64
5.7 Identified and defined terms 65
5.8 The Contract Date 66
5.9 Scope 67
5.10 Site Information 70
5.11 Contract Data 72
5.12 Schedules of cost components 72
5.13 Ambiguities and inconsistencies in the contract documents 74
5.14 Schedule of clauses referring to the Scope 74
6. Key players 79
6.1 Introduction 79
6.2 Others 81
6.3 Actions 82
6.4 Mutual trust and co-operation 83
6.5 The Client 84
6.6 Express obligations of the Client 85
6.7 The Project Manager 86
6.8 Express duties of the Project Manager 89
6.9 The Supervisor 97
6.10 Express duties of the Supervisor 97
6.11 Communications 98
6.12 The Project Manager and the Supervisor 102
7. General core clauses 104
7.1 Introduction 104
7.2 Mutual trust and co-operation 105
7.3 Actions 106
7.4 Identified and defined terms 107
7.5 Interpretation and the law 116
7.6 Communications 117
7.7 The Project Manager and the Supervisor 117
7.8 Instructions 118
7.9 Early warning 118
7.10 Contractor’s proposals 121
7.11 Requirements for instructions 121
7.12 Illegal and impossible requirements 122
7.13 Corrupt Acts 123
7.14 Prevention 123
8. Obligations and responsibilities of the Contractor 128
8.1 Introduction 128
8.2 Design obligations, responsibilities and liabilities 131
8.3 Providing the works 133
8.4 The Contractor’s design 134
8.5 Using the Contractor’s design 137
8.6 Design of equipment 138
8.7 People 138
8.8 Working with the Client and Others 140
8.9 Subcontracting 142
8.10 Other responsibilities 145
8.11 Assignment 147
8.12 Disclosure 147
8.13 Express obligations of the Contractor 148
8.14 Express prohibitions on the Contractor 155
9. Time (and related matters) 157
9.1 Introduction 157
9.2 Starting and completion 159
9.3 Programmes 161
9.4 Revision of programmes 165
9.5 Shortened programmes 167
9.6 Access to and use of the site 168
9.7 Instructions to stop or not to start work 169
9.8 Take over 171
9.9 Acceleration 173
10. Quality management 175
10.1 Introduction on quality management 175
10.2 Contractual provisions of ECC4 on quality management 176
10.3 Understanding the contractual provisions on quality management 177
10.4 Introduction on testing and defects 177
10.5 Definitions and certificates 180
10.6 Tests and inspections 183
10.7 Testing and inspection before delivery 186
10.8 Searching for and notifying defects 186
10.9 Correcting defects 188
10.10 Accepting defects 190
10.11 Uncorrected defects 191
11. Payments 193
11.1 Introduction 193
11.2 Assessing the amount due 196
11.3 Payments 198
11.4 Defined cost 201
11.5 Payments – Main Option A 202
11.6 Payments – Main Option B 205
11.7 Payments – Main Option C 206
11.8 Payments – Main Option D 210
11.9 Payments – Main Option E 211
11.10 Payments – Main Option F 211
11.11 Final assessment 212
11.12 Status of and disputes on final assessments 213
12. ECC4 compensation event schemes 215
12.1 Introduction 215
12.2 Structure of ECC4 compensation events schemes 217
12.3 Amendments and additions 217
12.4 Outline of procedures 219
12.5 Defining a compensation event 220
12.6 Compensation events as exclusive remedies 220
12.7 Fairness of the compensation event procedures 222
12.8 Unusual features of the compensation event procedures 222
13. Listed compensation events 223
13.1 Introduction 223
13.2 Omissions from the listed events 224
13.3 Scope-related events 224
13.4 Client’s default events 226
13.5 Client’s liability events 229
13.6 Project Manager/Supervisor-related events 230
13.7 Physical conditions 233
13.8 Adverse weather 236
13.9 Prevention 237
13.10 Measurement-related events 238
13.11 Secondary Option clause events 240
14. Notifying compensation events 242
14.1 Introduction 242
14.2 Notifications by the Project Manager 242
14.3 Notifications by the Contractor 244
14.4 Project Manager’s response to notifications 248
14.5 Last date for notification of compensation events 250
15. Quotations for compensation events 252
15.1 Introduction 252
15.2 Instructions to submit quotations 253
15.3 Failure to give early warning 253
15.4 Assumptions for assessment of quotations 254
15.5 Primary clauses on quotations 255
15.6 Submissions of quotations 255
15.7 Revised quotations 256
15.8 Failure to reply to quotations 256
15.9 General comment on ECC4’s assessment and quotation systems 256
16. Assessment of compensation events 258
16.1 Introduction 258
16.2 Changes from ECC3 259
16.3 General assessment rules 260
16.4 Particular assessment rules 265
16.5 The Project Manager’s assessments 268
16.6 Implementing compensation events 270
16.7 Other financial remedies 272
17. Title 273
17.1 Introduction 273
17.2 Client’s title to equipment, plant and materials 274
17.3 Marking equipment, plant and materials 275
17.4 Removing equipment 276
17.5 Objects and materials within the site 276
18. Liabilities and insurance 279
18.1 Introduction 279
18.2 Liabilities and insurance under ECC4 283
18.3 Client’s liabilities 284
18.4 Contractor’s liabilities 287
18.5 Recovery of costs 288
18.6 Insurances 289
18.7 The Insurance Table 289
18.8 Insurance policies 289
18.9 Contractor’s failure to insure 290
18.10 Insurance by the Client 291
19. Termination 292
19.1 Introduction 292
19.2 Termination under ECC4 294
19.3 Reasons for termination under ECC4 295
19.4 The Termination Table and the Termination Certificate 296
19.5 Comment on reasons 297
19.6 Procedures on termination 300
19.7 Amounts due on termination 301
20. Dispute avoidance and dispute resolution 303
20.1 Introduction 303
20.2 Overall structure of ECC4 dispute avoidance and dispute resolution provisions 304
20.3 Option W3 – the Dispute Avoidance Board 305
20.4 Choice of Options 305
20.5 Involvement of Senior Representatives 305
20.6 Meaning of dispute 306
20.7 Adjudication under Option W1 308
20.8 Adjudication under Option W2 316
20.9 Review by the tribunal 320
20.10 The Adjudicator’s contract 323
21. NEC4 Engineering and Construction Subcontract 324
21.1 Introduction 324
21.2 Structure of the ECC4 subcontract 325
21.3 Common core clause grouping 326
21.4 Core clauses – general 327
21.5 Core clauses – the Subcontractor’s main responsibilities 327
21.6 Core clauses – time 328
21.7 Core clauses – quality management 329
21.8 Core clauses – payment 329
21.9 Core clauses – compensation events 330
21.10 Core clauses – title 330
21.11 Core clauses – liabilities and insurances 331
21.12 Core clauses – termination 331
21.13 Resolving and avoiding disputes 331
22. Legal decisions on NEC-based contracts 333
22.1 Introduction 333
22.2 ABB Limited v. Bam Nuttall Ltd [2013] EWHC 1983 (TCC) 333
22.3 Amey LG Ltd v. Cumbria County Council [2016] EWHC 2856 (TCC) 333
22.4 Amey Wye Valley Ltd v. The County of Herefordshire District Council (Rev1) [2016] EWHC 2368 (TCC) 334
22.5 Anglian Water Services Ltd v. Laing O’Rourke Utilities Ltd [2010] EWHC 1529 (TCC) 334
22.6 Arbitration Application No 2 of 2016 & [2017] Scot CS CSOH 23 (P1039/16) 335
22.7 Arcadis UK Ltd v. May and Baker Ltd (t/a Sanofi) [2013] EWHC 87 335
22.8 AMEC Group Ltd v. Secretary of State for Defence [2013] EWHC 110 (TCC) 335
22.9 Aecom Design Build Ltd v. Staptina Engineering Services Ltd [2017] EWHC 723 (TCC) 336
22.10 Atkins Ltd v. Secretary of State for Transport [2013] EWHC 139 (TCC) 336
22.11 Balfour Beatty Ltd v. Gilcomston North Ltd and O Turner Insulation Ltd [2006] Scot CS CSOH 81 337
22.12 Cleveland Bridge UK Ltd v. Sarens (UK) Ltd [2018] EWHC 751 (TCC) 337
22.13 Beumer Group UK Ltd v. Vinci Construction UK Ltd [2016] EWHC 2283 (TCC) 338
22.14 Costain Ltd v. Tarmac Holdings Ltd [2017] EWHC 319 (TCC) 338
22.15 Dynniq UK Ltd v. Lancashire County Council [2017] EWHC 3173 (TCC) 339
22.16 Costain Ltd & O’Rourke Civil Engineering Ltd & Bachy Soletance Ltd & Emcor Drake and Scull Group PLC v. Bechtel Ltd & Mr Fady Bassily [2005] EWHC 1018 (TCC) 339
22.17 Ecovision Systems Ltd v. Vinci Construction UK Ltd (Rev1) [2015] EWHC 587 (TCC) 340
22.18 Farelly (M&E) Building Services Limited v. Byrne Brothers (Formwork) Ltd [2013] EWHC 1186 (TCC) 340
22.19 Fermanagh District Council v. Gibson (Banbridge) Ltd [2014] NICA 46 341
22.20 Ground Developments Ltd v. FCC Construction SA & Ors [2016] EWHC 1946 (TCC) 341
22.21 Henry Brothers (Magherafelt) Ltd & Ors v. Department of Education for Northern Ireland [2007] NIQB 116, [2008] NIQB 105 341
22.22 Imtech Inviron Ltd v. Loppingdale Plant Ltd [2014] EWHC 4006 (TCC) 342
22.23 Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2018] EWHC 1577 (TCC) 342
22.24 Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2016] EWHC B30 (TCC) [2017] EWHC 1763 (TCC) 342
22.25 Imperial Chemical Industries Ltd v. Merit Merrell Technology Ltd [2015] EWHC 2915 (TCC) 343
22.26 Liberty Mercian Ltd v. Cuddy Civil Engineering Ltd & Anor [2013] EWHC 2688 (TCC), [2013] EWHC 4110 (TCC), [2014] EWHC 3584 (TCC) 343
22.27 McAlpine PPS Pipeline Systems Joint Venture v. Transco PLC [2004] EWHC 2030 (TCC) 344
22.28 FP McCann Ltd v. The Department for Regional Development [2016] NICh 12 344
22.29 McConnell Dowell Constructors (Aust) Pty Ltd v. National Grid Gas PLC [2006] EWHC 2551 (TCC) 344
22.30 Mears Ltd v. Shoreline Housing Partnership Ltd [2013] EWHC 27, [2015] EWHC 1396 345
22.31 Maersk Oil UK Ltd (formerly Kerr-McGee Oil (UK) PLC) v. Dresser-Rand (UK) Ltd [2007] EWHC 752 (TCC) 345
22.32 J Murphy & Sons Ltd v. W. Maher and Sons Ltd [2016] EWHC 1148 (TCC) 345
22.33 Northern Ireland Housing Executive v. Combined Facilities Management [2014] NIQB 75 [2015] 346
22.34 Northern Ireland Housing Executive v. Healthy Buildings Ltd [2013] NIQB 124/[2017] NIQB 43 346
22.35 ROK Building Limited v. Celtic Composting Systems Ltd [2009] EWHC 2664 (TCC), [2010] EWHC 66 347
22.36 RWE Npower Renewables Ltd v. JN Bentley Ltd [2013] EWHC 978 (TCC) 347
22.37 RWE Npower Renewables Ltd v. JN Bentley Ltd [2014] EWCA Civ 150 347
22.38 Secretary of State for Defence v. Turner Estate Solutions Limited [2015] EWHC 1150 (TCC) 348
22.39 SGL Carbon Fibres Ltd v. RBG Ltd [2012] Scot CS CSOH 19, [2010] CSOH 77 348
22.40 Stork Technical Services (RBG) Ltd v. Ros [2015] CSOH 10A 348
22.41 Shepherd Construction Ltd v. Pinsent Masons LLP [2012] EWHC 43 (TCC) BLR 213, 141 Con LR 232 348
22.42 Seele Austria GmbH & Co Kg v. Tokio Marine Europe Insurance Ltd [2009] EWHC 2066 (TCC) 349
22.43 SSE General Ltd v. Hochtief Solutions AG & Anor [2015] Scot CS CSOH 92 349
22.44 Vinci Construction UK Ltd v. Beumer Group UK Ltd [2017] EWHC 2196 (TCC) 350
22.45 Volker Stevin Limited v. Holystone Contracts Limited [2010] EWHC 2344 (TCC) 350
22.46 Wales and West Utilities Limited v. PPS Pipeline Systems GmbH [2014] EWHC 54 (TCC) 351
22.47 Walker Construction (UK) Ltd v. Quayside Homes Ltd and Peter Brett Associates LLP [2014] EWCA Civ 93 351
22.48 (1)Walter Llewellyn & Sons Limited (2) ROK Building Limited v. Excel Brickwork Limited [2010] EWHC 3415 (TCC) 352
22.49 AE Yates Trenchless Solutions Ltd v. Black & Veatch Ltd [2008] EWHC 3183 (TCC) 352
22.50 Weatherford Global Products Ltd v. Hydropath Holdings Ltd & Ors [2014] EWHC 2725 (TCC) 352
22.51 WSP Cel Ltd v. Dalkia Utilities Services PLC [2012] EWHC 2428 (TCC) 353
Table of cases355
Table of clause references359