Introducing NEC - R Patterson

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neccontract.com copyright nec 2007

NEC3: Introduction to NEC contracts

NEC Annual Seminar

Wellington, 24 September 2007


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Intro

Richard Patterson Chartered Engineer, MICE

10 years with the NEC withMott MacDonald

also NEC Consultant


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Welcome and housekeeping

Safety Facilities


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The Plan

NEC brief history

NEC - principles

NEC - family NEC - in use

NEC - global contracts NEC - business benefits


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The Plan

NEC brief history NEC - principles

NEC - family

NEC - in use



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NEC - well proven

1985 The UK Institution of Civil Engineers (ICE) ledfundamental review of alternative contractstrategies .. to identify ..needs for good practice

1986 - ICE commissioned new style of contract 1991 - Consultative version trialled in South Africa,

Hong Kong, and UK

Strongly favoured by UK reviews of procurement

1995 - Engineering and Construction Contract (2nd

Edition)


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10 years of successful use and expansion of theNEC family UK and internationally

NEC3 launched (2005) incorporated users feedback

consistently revised across NEC family

introduced new members to the NEC family

2005

specifically endorsed by UK government 2007

Very well established in UK and South Africa

used in 20 other countries including New Zealand

NEC - well proven


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The Plan

NEC brief history

NEC - principles NEC - family

NEC - in use

NEC - global contracts

NEC - business benefits


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Fundamental NEC Objectives

Flexibility Clarity

Stimulus to good management


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Flexibility multi-disciplinary

allocation of design responsibility

choice of pricing mechanisms

Range of bolt-on secondary options

risk allocation clear.. and flexible international application

Artist impression of Antarctic Research Station: Halley VI


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A B C D E F

X1

X2

X3

X4

X5

X6

X7

X12

X1

3

X14

X1

5

X1

6

X17

X1

8

X2

0

W1 W2

Y(UK)2 Y(UK)3

C

W1

X5

X6

Z

X1

8

X2

0

main (payment) option

additional conditions

jurisdiction-specific options

secondary options

dispute resolution option

1 - 9 core clauses

Flexibility


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Clarity

plain language present tense

minimises subjective judgements

legal jargon out as far as possible

structure

flow charts guide notes


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Stimulus to good management

NOT a contract for the bottom drawer! each process designed to contribute

up-to-date programme

early warning

compensation events


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Early warning

duty to warn of events that may affectkey project objectives

requirement to discuss and agree

possible ways forward sanctions if early warning not given

encourages proactive risk management


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Compensation events

onlyway to change price and/orCompletion Date

all in one place (almost!) and treated in

the same way cost: assessed at forecastchange in cost time: forecastdelay based on latest

Accepted Programme All to tight and defined timescales


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Partnering/Collaborative working

Clear roles and processes supportcollaborative working and openness

early warning

change based on real cost and time. now target cost options further incentivise

collaboration

Option X12 available for multi-party partnering


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The NEC contracts are...Management

procedure

Risk

allocation

tool

Definition of

rights and

obligations

with orwithout partnering


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The Plan

NEC brief history

NEC - principles




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Abbreviations

NEC now the brand for the familyof contract

documents

ECC the Engineering and Construction Contract

the works contract

CMA

Completely meaningless acronym !


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ECCEngineering & Construction Contract

TSCTerm Services Contract

ECSCEngineering & Construction

Short ContractTSSC

Term Services Short Contract

(planned for 2007)

PSC

Profe

ssion

alServic

esCon

t

ract

Supply Contract(planned for 2007)

design construction operationbusinesscase

ECSEngineering & Construction

Subcontract

ECSSEngineering & Construction

Short Subcontract

Framework ContractAdjudicators Contract

Supply

Low

High

Project

C

omplexity

NEC3 the family


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NEC family

NEC3 Engineering and Construction Contract(black book), 3ed 2005 between an Employer and a Contractor for a

project

NEC3 Professional Services Contract (PSC),3ed 2005

for engaging a supplier of professional services

NEC3 Engineering and Construction ShortContract (ECSC), 2ed 2005 between an Employer and a Contractor, for low

risk, straightforward work


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NEC family

NEC3 Engineering and ConstructionSubcontract (ECS), 3ed 2005

between a Contractor and a Subcontractor, backto back with ECC

NEC3 Engineering and Construction ShortSubcontract (ECSS), 2ed 2005

between a Contractor and a Subcontractor, undereither ECC or ECSC


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NEC family

NEC3 Term Service Contract (TSC), 1ed 2005 for engaging suppliers of services for a period of

time

NEC3 Adjudicators Contract (AC), 3ed 2005 for engaging an Adjudicator to decide a dispute

between parties under an NEC contract

NEC3 Framework Contract (FC),1ed 2005

for engaging suppliers to provide services (of alltypes) operating under a framework


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NEC family

Guidance Notes & Flow Charts To support all NEC3 contracts


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NEC Family

modern day contracts for projects and services

to effect almost any procurement route

NEC Procurement and Contract Strategies

guide to NEC3 contracts in differentprocurement and contract strategies

free at www . neccontract . com


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The Plan

NEC brief history

NEC - principles

NEC - family

NEC - in use NEC - global contracts NEC - business benefits


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NEC in Building

Hospitals - National Health Service England - ProCure21, 5 years 1.4bn/year Welsh, Scottish & Northern Ireland - equivalent

programmes

BAA Heathrow Terminal 5 (4bn) Schools for the Future

HM Prison Service (new prisons)

Large sporting event in 5 years in London

Glaxo Smith Kline (possible globalapplication)


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NEC in Building

Housing Circle Anglia, Arena Housing, Hull Council,Birmingham Council

Developers Land Securities Trillion, Bovis Lend Lease

Others Cambridge University, Bristol Airport, Barclays Bank,

Cardiff Millennium Stadium, Sainsburyssupermarkets, Boots, British Telecommunications(Telereal)


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NEC in Infrastructure

Utilities Most water companies National Grid

Power

UKAEA British Nuclear Group British Energy

Transport Highways Agency and many local authorities Transport for London Channel Tunnel Tail Link


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Environment Agency British Waterways


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Communications Vodafone

National Grid Transco Wireless

Oil majors Shell

retail projects

two projects in Africa

also used NEC PSC for consultants in India and Australia


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NEC in Facilities Management

Nottingham Hospital Trust M&E maintenance in secure hospital

Colchester City Council

housing maintenance 10 yr, 120m deal Worcester City Council

street lighting

Portsmouth City Council housing repairs


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Endorsements

Office of Government Commerce (UK) 2005 OGC.. . concluded that the NEC3

suite of contracts was fully compliant with

OGC's Achieving Excellence in Construction

initiative and OGC gave its support to the useof NEC3 by public sector procurers.

South African Government One of four forms endorsed for use


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The NEC Contract is a positive and

progressive form of contract which

allows all parties to collaborate and

contribute to the successful delivery

of buildings, facilities and best valuesolutions

Cliff Jones, Senior Construction Manager, ProCure 21 ,

NHS Construction


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The Plan

NEC brief history

NEC - principles




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Global application

Specifically designed to be as independentas possible of legal jurisdiction

Minor secondary options to make contract

complaint with specific legislation. Eg: Y(UK)2 Housing Grants Act

Y(UK)3 Contracts (Rights of Third Parties) Act

Y(NZ)2 to be confirmed soon for egConstruction Contracts Act


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NEC in New Zealand Envirowaste

Hampton Downs Landfill

Meridian Energy

Manapouri Hydro Refurbishment And other contracts (NEC Term Service

Contract and NEC Short Contract

Meridian Energy


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NEC elsewhere

More than 20 countries South Africa

ESKOM, SASOL, Anglo Platinum, Transnet,

ABSA Bank of South Africa, MegChem,Metrorail, Nuclear Energy Corporation, VeoliaWater, Department of Roads and Transport,

National Department of Public Works


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NEC elsewhere

France Framatome ANP

India

Abu Dhabi Aldar Properties for $US 10 billion Al Raha Beach

waterfront

Dubai likely

Hong Kong Govt trialling on drainage project


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NEC User Group members

Belgium China France Ghana GreeceHong Kong Ireland Korea

NetherlandsNew ZealandNigeriaQatar South Africa Sri Lanka Taiwan

Tanzania United Kingdom USA

NEC l b l A t 2007


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User GroupKnown use

LeadsDownloads

NEC: global August 2007


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The Plan

NEC brief history

NEC - principles





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The Plan


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NEC - a better way to do business






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NEC tried and tested NEC - principles





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NEC tried and tested NEC clarity, flexibility, management





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NEC for any type of procurement NEC - in use




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NEC for any type of procurement NEC - in any sector




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NEC - anywhere



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NEC - anywhere



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clarity of requirements and risk allocation

rigorous processes for time and costmanagement

discipline in a managed project environment

standardisation

supports & encourages collaborative working

gives people the tools to apply their skills andcommon sense


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More info?

Contact the NEC support team www . necontract . com

t: +44 (0)20 7665 2446

f: +44 (0)20 7538 2847

e: info @ neccontract . com

Documents

Introducing NEC - R Patterson