Issue No.74 september 2015 neccontract.com
NEWSLETTER
New infrastructure provider to let £2 billion NEC contracts for Thames Tideway tunnel
SIMON FULLALOVE EDITOR Contents NEC: delivering collaboration and best 2 Thames Water’s new ‘infrastructure provider’, Simms. Chief executive officer is Andy Mitchell, value on infrastructure megaprojects Bazalgette Tunnel Limited, is set to let around £2 former programme director of the £14.8 billion billion of NEC contracts to deliver the 25 km long NEC-procured Crossrail project. NEC Australasia Users’ Group builds 2 momentum Thames Tideway tunnel in London. Work on the eight-year project will start next year. Eight-year programme Hong Kong government produces 3 The ‘super sewer’ is the biggest tunnelling Due for completion in 2023, the Thames tunnel NEC practice notes project ever undertaken by the UK water will be built from 24 construction sites across Crossrail completes ECC tunnelling contracts 3 industry. It was tendered as three similar-sized London. The project will employ 4000 people main contracts: west, central and east. The total directly and create another 5000 jobs indirectly. TSC road form updated 3 estimated value of the three contracts is between The work involves building a 7.2 m diameter Meridian uses multiple NEC3 contracts to 4 £1.4 billion and £2.25 billion (see issue 64). sewer up to 65 m under the River Thames between deliver major hydro refurbishment in All three contracts are being let under the NEC3 storm tanks in Acton, west London to Abbey Mills New Zealand Engineering and Construction Contract option C pumping station in the east. It will pick up 34 ECC used for civil and electrical works at 4 (target contract with activity schedule) with 50/50 combined sewer overflows along the way and have pain/gain share arrangements. a storage capacity of 1.6 million m3. Wellington wind farm Most of the 39 Mt annual storm discharges from Cooperation, collaboration and how 5 Joint ventures the overflows − which currently go straight into NEC provides a framework for both the river − will be transferred from Abbey Mills The three winning NEC contractors are all The obligation to instruct and timely notices 6 joint ventures of major international construction to Beckton sewage works via the £635 million Lee companies. tunnel, which is also being built using ECC option FAQs 6 The west section has been won by BMB, a C by a joint venture of Morgan Sindall, Vinci and ICE Register of Accredited NEC3 8 joint venture of BAM Nuttall, Morgan Sindall and Bachy Soletanche (see issue 59). ECC Project Managers Balfour Beatty; the central section will be built CH2M Hilll was appointed programme manager by FLO, a joint venture of Ferrovial Agroman and for both tunnel projects in 2008. ● Diary 8 Laing O’Rourke; and the east section has gone to Model view of the completed foreshore works at Victoria Embankment for the NEC-procured Thames CVB, a joint venture of Costain, Vinci and Bachy Tideway tunnel in London Soletanche. Other organisations shortlisted for the contracts included Bouygues and joint ventures of Dragados and Samsung; Skanska, Bilfinger and Razel Bec; Bechtel and Strabag; and Hochtief and Murphy. Amey will provide systems integration across all contracts under a £10–15 million ECC option E (cost reimbursable contract).
Infrastructure provider The employer is Bazalgette Tunnel Limited, a specially created independent infrastructure provider that successfully bid to finance and deliver the project for Thames Water. It is a consortium of investors comprising funds managed by Allianz, Amber Infrastructure Group, Dalmore Capital Limited and DIF. Bazalgette, which now has its own licence from water industry economic regulator Ofwat, is chaired by former Carillion chairman Sir Neville
CONTRACTS • BOOKS AND GUIDES • TRAINING • USERS’ GROUP • PROJECT SUPPORT SERVICES • events • webinars • SOFTWARE 2 NEC users’ group Newsletter•No.74•September 2015 telephone: +44 20 7665 2446 email: [email protected] wEB: neccontract.com
NEC: delivering collaboration and best value on infrastructure megaprojects
STEVE ROWSELL NEC USERS’ GROUP CHAIRMAN
At the highly successful NEC Users’ Group annual Construction Contract requires parties merely conference in the UK in April this year, we heard to work together in a spirit of mutual trust and first-hand accounts of the application of NEC3 cooperation. contracts as part of collaborative approaches to The spirit of cooperation is of course project delivery. supported by contract procedures that require Since then a general election has taken the parties physically to work together on place and the UK has a new government. Like aspects such as early warnings, risk mitigation, many other EU governments, it has set out programme and compensation events. plans for austerity to reduce the national deficit In my view the combination of the and indicated a continuing commitment to requirement for a spirit of mutual trust Thames Tideway tunnel is one of over investment in major infrastructure projects to and cooperation supported by the contract £100 billion of major UK infrastructure support economic growth. procedures means NEC3 is not only an projects being procured under NEC − In such an economic climate it is more appropriate contract suite to support collaboration will play a key role in delivery important than ever that NEC users apply lessons collaborative delivery, it is also the best. learnt and best practice from previous projects The full benefits of collaboration do, however, the whole supply chain in project collaboration to ensure best value for money is delivered on rely on more than just the choice of contract. arrangements supported by the use of NEC3 future projects. As Nick Woodrow explains in more detail on subcontracts. There are currently plans for a wide range of page 5, NEC3 contracts play an important role in Secondly, we must ensure, as NEC users, that major infrastructure projects in Britain. These supporting a collaborative culture, in which the contracts are as close to the standard form as include Thames Tideway tunnel (see page 1), requirements of the contracts are delivered, and possible. Instead of simply criticising clients for Hinckley Point C, High Speed 2 and 3, Crossrail in providing a fair and equitable position, which using Z clauses we should make more effort 2, London Underground upgrades, Highways is required to facilitate collaboration. to help them understand the disadvantages England’s road programme and the Environment We are also seeing an increasing focus by of unnecessary Z clause in terms of cost, risk Agency’s Thames Estuary programme. Together infrastructure clients on application of BS11000 premiums and inefficiency. they are worth more than £100 billion. Collaborative Business Relationships to the Thirdly, we should support the early It is exciting to see that NEC3 is, or is highly delivery of major projects, though the principles engagement and involvement of the supply likely to be, the contract suite of choice for apply equally to projects of all sizes. chain in projects, both to maximise the value the delivery of all of these megaprojects and I believe collaboration across the industry they can add and to support the development of programmes. It is also highly probable that will be supported by more consistent and collaborative relationships. collaboration principles will be a key part of their standardised methods and procedures based on And last but not least, we need to support the delivery strategies. the NEC3 suite. use of supplier selection procedures aimed at identifying the best suppliers who demonstrate Supporting and enabling collaboration Doing more to deliver best value the right collaborative behaviours. This will help The importance of collaboration in project The discussions at the NEC annual conference us to deliver successful project outcomes as delivery was emphasised in all the case studies highlighted a number of lessons learnt where we efficiently as possible. ● presented at the NEC annual conference. NEC is can and should do more to support the delivery recognised as being a collaborative contract suite, of best value in the use of NEC3 contracts. For further information please email info@ albeit that clause 10.1 of the Engineering and First, we need to see a greater involvement of neccontract.com or visit neccontract.com. NEC Australasia Users’ Group builds momentum
TIM WARREN NEC AUSTRALASIA USERS’ GROUP SECRETARY
Following our recent re-launch in New Zealand One of the first tasks has been to appoint a Art Gallery (see issue 73). in May, the Australasia Users’ Group is continuing new chair and to start planning the Australasia There is also a more global view in the to gather momentum. We have strong interest Users’ Group conference, which is now region, with more international performance in our planned meetings this year and new confirmed for 5 November at the Commodore comparators being used for Australasian membership enquiries are coming in too. Airport Hotel in Christchurch. construction businesses. We will also start planning for events in 2016 Overseas interests and experience are New NEC steering group and initiate the launch of expert sector interest becoming more obvious, and we are also Looking forward, our next steps have included groups, such as for buildings and facilities are seeing Australasian businesses and staff setting up an Australasia Users’ Group steering management. collaborating more with those in the Asia-Pacific group. One of its key roles is to identify the wants region. and needs of Australasian construction markets Strong pick up for NEC As a final note it is also great to see some and how best to support the introduction and Locally the New Zealand construction market of our members taking advantage of the NEC implementation of NEC3 contracts throughout is continuing to grow, with spending look set on-line help desk form, with great response times the region. to continue rising over the next couple years. from our advisors as well. ● The steering group met briefly on 11 August From this we are seeing a strong pick up for in Auckland and will do so again on 8 September NEC in the building sector – with three in Christchurch, immediately after the regular significant projects coming to market in For further information please email info@ Australasia Users’ Group meetings. Christchurch already, including Christchurch neccontract.com or visit neccontract.com. CONTRACTS • BOOKS AND GUIDES • TRAINING • USERS’ GROUP • PROJECT SUPPORT SERVICES • CONFERENCES • RECRUITMENT • SOFTWARE 3
Hong Kong government produces NEC practice notes
IVAN CHEUNG NEC ASIA-PACIFIC USERS’ GROUP SECRETARY
The Hong Kong government has recently November 2015. further accreditation programmes are on the engaged EC Harris to produce a set of NEC Around 80% of those attending the first NEC website. practice notes to help its staff administer their session in February have now qualified as ever-increasing number of NEC contracts. Accredited ECC Project Managers, comparable Workshop and conference Though prepared as an internal document, with the pass rates in other regions. The NEC Asia-Pacific Users’ Group workshop it is likely the practice notes will serve as an Given NEC is still in its relative infancy in on 27 August 2015 focused on ECC risk provisions invaluable guide not just for government staff Hong Kong, programme tutors considered the and managing ECC compensation events. Please but also a standard method for managing NEC in standard of participants’ understanding of ECC visit the NEC website for further details. general. high and the results encouraging. Details of Finally, the NEC Asia-Pacific Users’ Group Certainly it is a very positive step by the annual conference has now been scheduled government to ensure consistency and drive for 10 November 2015. Further details will be efficiency across its NEC projects. We look published soon. ● forward to seeing the document in due course. For further information please email info@ neccontract.com or visit neccontract.com. Accreditation programme The NEC3 Engineering and Construction Leighton-Able joint venture is designing and Contract (ECC) project manager accreditation building the HK$2.9 billion (£240 million) Tin Shui programme is proving extremely popular since its Wai hospital for the Hong Kong government under an ECC option A (priced contract with Hong Kong launch earlier this year. The waiting activity schedule), with completion scheduled for list for the classroom sessions now extends to summer next year
Bechtel is similarly engaged under a PSC worth £400 million. Crossrail completes Design framework agreements are based on the NEC3 Framework Contract (FC), while all stations and systems are generally being procured using ECC option C or A (priced ECC tunnelling contracts contract with activity schedule). From 2018 Crossrail trains will transport up to 72 000 passengers per hour across SIMON FULLALOVE EDITOR London. ●
The epic tunnelling programme for the NEC- schedule) was used to procure the tunnels and For further information see the Crossrail NEC procured £14.8 billion Crossrail project in shafts, with a total value of £2.5 billion. lecture at youtube.com/nec3contract. London has finally been completed. The largest contract, worth over £500 Tunnel boring machine (TBM) Victoria million, was for the eastern running tunnels, Prime minister David Cameron celebrates the − one of eight used on the project − broke which were completed by a joint venture of end of Crossrail’s NEC-procured tunnelling into the new Farringdon Crossrail station on Dragados and John Sisk. programme 28 May, completing a total of 42 km of 6.2 m A joint venture of Bam Nuttall, Ferrovial diameter rail tunnels in just 3 years. Agroman and Kier Construction completed The 980 t, 148 m long TBMs worked around both the western running tunnels and station the clock to excavate 3.4 Mt of London Clay, tunnels, together worth £500 million, while much of which is being used to create a Balfour Beatty, Vinci and Morgan Sindall built wetland bird habitat in Essex. the eastern station tunnels. The tunnels are up to 42 m below ground and weave their way between existing Full range of NEC3 contracts underground lines, sewers, utility tunnels and A full range of NEC3 contracts is being building foundations. used on the project. Programme partner Transcend, a joint venture of Aecom, CH2M ECC option C used for tunnels Hill and Nichols Group, is engaged under The NEC3 Engineering and Construction a £100 million NEC3 Professional Service Contract option C (target contract with activity Contract (PSC), and project delivery partner
associated specification and other tools are helping to streamline the way England’s 153 local highway authorities procure £3 billion TSC road form updated of road maintenance work each year. The second edition includes amendments and additions to the TSC April 2013 edition and SIMON FULLALOVE EDITOR comprises the HMEP form of agreement, contract data parts one and two, a template for service The government-supported UK Highways which is based on the NEC3 Term Service information and guidance. Maintenance Efficiency Programme (HMEP) has Contract (TSC). A new price list and standard method of published a second version of its standard form First published in November 2012 measurement also now form part of the HMEP of contract for highway maintenance services, (see issue 61), the standard contract and procurement suite. ● 4 NEC users’ group Newsletter•No.74•September 2015 telephone: +44 20 7665 2446 email: [email protected] wEB: neccontract.com
Meridian uses multiple NEC3 contracts to deliver major hydro refurbishment in New Zealand
NICK HORSWELL MERIDIAN ENERGY
Meridian Energy is using more than 50 NEC3 upgrades and fire-suppression systems to all key to ensuring this programme of work is, and contracts to refurbish its Waitaki hydropower seven generating units and the commissioning of continues to be, delivered in a fair, collaborative station in New Zealand. The complex NZ$40 (£20 unit 3 which seized in 1998. In addition there is a and productive manner.’ million) programme to overhaul the dam, power unit-outage-dependent package of work, ranging station and surrounding infrastructure started from new intake screens to new priming-valve Contract management tool in 2012 and is due for completion at the end of arrangements. Meridian’s project managers Chris Baldwin next year. and Caroline Rea are using a web-based contract Located in Waitaki Valley in the South Island, Over 50 different contracts management tool from NEC licenced partner the 1930s plant has seven 15 MW turbines The nine work packages are being procured Conject to tender and administer the various generating up to 105 MW. It is owned and using more than 50 different contracts from the NEC3 contracts. operated by Meridian, the country’s largest NEC3 suite. These range from small task orders ‘This has been key to standardising renewable electricity generator and a major user carried out under a master PSC to multi-million administrative tasks and ensuring contractors of NEC contracts since the early 2000s. dollar ECC option A contracts (priced contract understand what is sometimes new terminology NEC3 contracts being used at Waitaki include with activity schedule). and often a new way of working with the the Professional Services Contract (PSC), the Other ECC variants include option B (priced employer,’ says Baldwin. Engineering and Construction Contract (ECC), contract will bill of quantities) and option C Contractors and suppliers include ABB, the Supply Contract (SC) and associated short (target contracts with activity schedule). Also in Damwatch Engineering, Electrix, E-Type contracts. use are the SC, Engineering and Construction Engineering, Farra Engineering, McConnell Short Contract (ECSC) and Supply Short Dowell Constructors, Mitton Electronet, Mace Nine works packages Contract. Engineering, Otis Elevator Company, PSC, TLJ The programme has been split into two According to Meridian’s project manager Chris Switchgear, Transfield Services, Wormald and PB projects with a total of nine works packages. Baldwin, ‘The NEC3 suite of contracts has been Power. ● The projects and packages include input from a range of specialist hydropower consultants and contractors in the mechanical, electrical, civil and structural engineering disciplines. The site refurbishment project led by Caroline Rea consists of erosion remediation of surrounding civil engineering structures, seismic enhancements to the powerhouse and modifications to the dam uplift drainage system. It also includes a package of site-enabling works, ranging from refurbishment of the historic wood- panel lift to upgrading the site road junction with the state highway. The unit refurbishment project led by Chris Baldwin includes overhauling two 80-year-old The NEC-procured work includes overhauling All external works at the plant are being generating units, installing new protection two of the 80-year-old generating units carried out under a variety of NEC3 contracts
ECC used for civil and electrical works at Wellington wind farm
CHRIS MORE MERIDIAN ENERGY
Last year Meridian Energy started generating which had already successfully delivered and cabling, tower foundations and associated electricity from its new Mill Creek wind farm in infrastructure at three of New Zealand’s largest drainage and structures. A total of 800 000 m3 the Ohariu Valley near Wellington, New Zealand. wind farms, including Meridian’s Te Apiti and of earthworks with associated environmental The extensive civil works were procured using West Wind projects. management and full compliance were an NEC3 Engineering and Construction Contract The electrical balance of plant works contract substantially completed by November 2013 − a (ECC) option C (target contract with activity value was NZ$1.9 million (£1 million) and the significant achievement for a winter programme. schedule), while the electrical balance of plant transmission line was NZ$5.6 million (£3 million). The pavement works, trenching and cabling, works and transmission line were procured Construction started in January 2013 and and foundation construction works progressed using ECC option A (priced contract with activity commercial operation started in September 2014. over three separate phases for the 26 turbine schedule). bases, and all were delivered on time. In total Mill Creek has 26 turbines with a total capacity Extensive civil works there were 24 km of roads, 12 km of cabling and of 60 MW. The NZ$33 million (£17 million) civils The civil works included access roads, bulk 10 000 m3 of concrete and 1 300 t of steel in the work was undertaken by Higgins Contractors, earthworks, pavement construction, trenching foundations. Continued on page 7 >> CONTRACTS • BOOKS AND GUIDES • TRAINING • USERS’ GROUP • PROJECT SUPPORT SERVICES • CONFERENCES • RECRUITMENT • SOFTWARE 5
Cooperation, collaboration and how NEC provides a framework for both
NICK WOODROW CEMAR
During a lively debate at the NEC Users’ Group processes to impose cooperation and go further Use early warnings as stated in the contract − annual seminar in April this year, someone asked to facilitate collaboration include the following. which is for anything that could compromise the why we were talking about collaboration when NEC’s early warnings and risk reduction project − and you will benefit as the contract NEC3 contracts only ask for, ‘a spirit of mutual meetings involve communicating potential issues, intended. trust and co-operation’. making and considering proposals, seeking Third, you do not need to agree the What followed was an interesting discussion solutions advantageous to all those who will be programme but it does need accepting. In NEC3 on the differences between collaboration and affected and agreeing actions to be taken. This contracts the accepted programme is not called cooperation and how NEC3 contracts are written is clearly a collaborative approach to problem the agreed programme or the contractor’s to compel the latter and facilitate the former. solving and is integral to the NEC3 suite of programme, and it is not a commercial weapon Also, given that collaboration is a more beneficial contracts. or shield to be used in times of dispute. It is state than co-operation, delegates discussed The NEC programme submission, acceptance the lifeblood of the project: having a recently what practical steps could be taken to achieve and updating process involves communicating accepted programme is the only way either party collaboration. and articulating the plan, allowing a considered can really understand how the shared concept of response and providing for regular updates to the common problem is going to be dealt with. Defining cooperation and collaboration keep everyone informed. An accepted plan of Fourth, spend the majority of time and effort Anyone can cooperate. Obeying the speed how the project is going to get from start to pre-contract on the NEC works information and limit, putting the rubbish out, signing a contract finish promotes shared ownership and a shared site information. If this is brilliantly written and − these actions are evidence of cooperation. concept of common objectives. They involve assisting someone or complying Notifications, responses and quotations compiled then any number of Z clauses and with their requests. relating to NEC compensation events all have changes to the equitable nature of the contract Collaboration is different as it requires a sanctions described in the contract to improve timescales will not affect the team’s ability to positive choice to be made. Working jointly on the momentum of decision making and not allow collaborate. What is required, when and where an activity or project is collaborative working. It issues to stagnate. will be simply described and easy to follow. requires shared ownership and a shared concept Commitments, either contractual or otherwise, Fifth, act consistently. When submitting and of a common problem. Communication is also to raise notices and respond in a timely fashion responding to quotations, programmes, payment required along, potentially, with negotiation and are clearly evidence of fostering a collaborative assessments and any other NEC communications, compromise. environment, not just one of cooperation. behave in a consistent manner. The clauses of The distinction between co-operation and Do not forget that the timescales are the the contract do not change and the principles of collaboration could perhaps be defined as the maximum and there is no imperative to use responses should not either. In any relationship, difference in how we participate − it is either up all of the time. Real collaboration would inconsistent behaviour will lead to distrust and active or passive. People can cooperate by taking recognise when those timescales must be reduce effective means of communication. no action at all, while it would be hard to say bettered for the common good, and the NEC Last but not least, do not forget to talk to each the same about collaboration. To collaborate we concept of project manager’s assumptions can other. It is people who manage NEC projects, must communicate, and possibly negotiate and assist in streamlining that process even further. not contracts or computer systems, the latter compromise, while taking positive actions. Either through NEC target-cost options with simply serve to make people more efficient and A good way of looking at the distinction is in shared savings, or through secondary options effective. Nothing improves on co-location of relation to cooperative labour, where the tasks such as X6 bonus for early completion and X12 project teams and joint reviews of programmes, required are just divided up by the resource partnering, the project team can be further quotations, proposed instructions and any event available. Anyone can see that this may not be incentivised to work collaboratively. Cost and where ‘two heads are better than one’. the most efficient way of undertaking the work. time savings now become a shared benefit Collaboration would lead to the most efficient and a common goal, both critical elements to Conclusions use of those resources, benefitting all involved. collaborative working. It is difficult to answer succinctly what There is an academic model which clearly the difference is between cooperation and outlines why moving from cooperation to Practical steps to achieve collaboration collaboration, but we all know it when we see it. As we can see above, NEC3 contracts are collaboration is useful and effective. The Thomas NEC3 contracts have been drafted to provide a embedded with processes that engender at least Kilmann Conflict Mode Instrument plots cooperative platform and, as outlined above, we cooperation. However they cannot force the assertiveness with cooperativeness to identify can build on that with good practice to create a five distinct conflict-handling modes: competing, positive actions and assertiveness that result in collaborative environment ‘in a spirit of mutual avoiding, accommodating, compromising and collaboration. trust and co-operation’. ● collaborating. So what real and practical steps can be taken We have all worked on projects where parties to move from the four sub-optimal modes of act in the first four of those conflict-handling conflict-handling described in the Thomas modes, and we all remember fondly projects Kilmann Conflict Mode Instrument to the win- where assertiveness combined with cooperation win one of collaboration? Building on NEC’s has resulted in collaborative action. framework for collaborative working as described above, there are six simple and practical How NEC facilitates collaboration guidelines which can be followed by all. The NEC3 suite outlines a framework in which First, adhere stringently to ECC clause 10.1 to cooperate. It even makes that cooperation a – and not just the friendly second part. It is contractual obligation in the form of clause 10.1 critical that parties, ‘act as stated in this contract’. of the Engineering and Construction Contract Only in that consistent environment can trust, (ECC): ‘The Employer, the Contractor, the Project cooperation and ultimately collaboration grow. Manager and the Supervisor shall act as stated in Second, utilise ECC clause 16 on early warning this contract and in a spirit of mutual trust and as it was intended, not as pre-notification The Thomas Kilmann Conflict Mode Instrument co-operation.’ of a compensation event. This is where the − collaboration is a combination of cooperation Examples of where NEC3 contracts provide contractual relationship can be made and broken. and assertiveness (courtesy CPP, www.cpp.com) 6 NEC users’ group Newsletter•No.74•September 2015 telephone: +44 20 7665 2446 email: [email protected] wEB: neccontract.com
issue of a package order or a time charge order, Other employers have a much more proactive then a separate contract is set up to carry out approach, requiring regular meetings with all those works or services, and is governed by the of the suppliers on each framework and, for particular NEC3 contract that the FC specifies example, instigating at the completion of each will be used. In addition, there are no payment order a complete appraisal of everybody’s provisions under the FC itself. The consideration contribution. for that contract is in kind. FAQs The framework information governs only Reviewing contractor design ROBERT GERRARD the management of the FC part. The works Question NEC USERS’ information (ECC) or scope (NEC3 Professional We understand the ECC stipulates a period of GROUP SECRETARY Services Contract (PSC)) in each order contract 3 weeks for the review of fabrication drawings will govern what is to be done under that arising from a contractor-designed portion. contract. So, the framework information As project manager we would interpret this to contains information about how the FC is to mean that a particular drawing revision should be managed. For example, it will say what be reviewed within 3 weeks. However, this may co-ordination meetings will be required or what result in a revision to that drawing, which would This is a selection of recent questions to the NEC other commitments the parties have that will not require further review and may take longer than Users’ Group helpline and answers given. In all be paid for under the time charge or package the 3 weeks time period stipulated. cases it is assumed there are no amendments orders. It does not contain information on the Clearly, we would want to review a particular that materially affect the standard NEC3 contract various packages of service that will be ordered referred to. under the FC. revision of a drawing much quicker than the 3 What should be in the framework information week period but, depending on the scale of the Preparing the framework information is anything relating to the way the employer project, there could be a considerable amount Question wishes to manage the framework. What of drawings to review. The contractor has We are in the process of preparing a set should not be in it is anything to do with the interpreted the contract to mean that the total of documents using the NEC3 Framework management or requirements of the services or period for drawing review should be 3 weeks, Contract (FC). Could you please clarify what works work carried out under the orders issued. regardless of whether drawings need to be information should be included in the framework That should be included in the scope (PSC) or revised or not. What are your thoughts on this? information? There is no detailed guidance works information (ECC) that forms part of the on the document and to a degree it is open to contract for those orders. Answer interpretation as to what should be included in What the framework information does include ECC makes no direct mention of reviews the framework information. depends entirely on the way you want to manage of fabrication drawings, a 3 week period, or a the FC and therefore it is difficult to say what contractor-designed portion. Answer ‘should’ be in it. It is up to you. Some employers We assume you are referring to a part of the It is important to note that the FC is not a carry out very little in the way of managing their works that the contractor is to design. In that contract to carry out any works or services. It is FCs, other than issuing contract documents case clause 21.1 simply states that the contractor a contract to provide a quotation for work when for the proposed orders to the suppliers, designs those parts of the works which the works asked. Once that quotation is accepted by the getting back their quotes and choosing one. information states the contractor is to design.
The issue turned on the interpretation of PSC clause 61.3 and in particular whether this was a The obligation to situation where the time limit did not apply as, ‘the Employer should have notified the event to the Consultant but did not’. The employer argued that since it did not consider this to be a change, it instruct and timely had no obligation to issue an instruction. The court rejected that argument and held that if the employer gives an instruction that, as a matter of fact, constitutes a compensation event notices then it is obliged under clause 61.1 to notify it as a compensation event, regardless of its own belief as to whether or not the event constitutes SHY JACKSON PINSENT MASONS a compensation event. All the more so when the wording is contrasted with the wording relating Questions relating to changes and how they In May 2013 the consultant gave notice that to the consultant’s obligation to notify which does are instructed are a common feature of all it considered the instruction recorded in the refer to the consultant’s belief. constructions projects. A decision of the Court of minutes to be a compensation event. There were When considering the meaning and effect Appeal in Northern Ireland last year (Northern therefore two issues to consider. Did the minutes of the obligations in PSC clause 61.3, the court Ireland Housing Executive v. Healthy Buildings of the meeting record an instruction changing also referred to the provisions of clause 10.1, as (Ireland) Ltd [2014] NICA 27) provided some the scope of the services, thereby giving rise to they apply to the language of clause 61.1. The useful guidance on the NEC mechanism for a compensation event? And was the notice of court went on to hold that the overall time bar instructing changes and notifying compensation compensation event out of time, because it was provision in clause 61.3 was an exclusion clause events. served more than 8 weeks after the consultant in favour of the employer and fell to be construed became aware of the event? contra proferentem (i.e. against the employer). Issues to be determined The consultant obtained an adjudicator’s The employer, Northern Ireland Housing decision to the effect that this was a change and Conclusions Executive, is a housing authority with a large that they were not time barred. The employer’s number of tenants in domestic dwellings. It has This case is a useful reminder of the risks attempt to resist enforcement in the High Court of using informal instructions instead of the an obligation to manage risks and it appointed failed and it appealed to the Court of Appeal. consultant Healthy Buildings to carry out asbestos contractual mechanisms and the uncertainty surveys under an NEC3 Professional Services that can then arise with regard to notifying Contract (PSC). Court of Appeal’s decision compensation events. Based on the specification provided with The Court of Appeal considered the original The decision was based on the original 2005 the contract it was possible to undertake the scope of work set out in the contract and wording of clause 61.3. This has since been surveys using a sampling strategy. However, the concluded that the requirement for a greater replaced in NEC3 2013 contracts with, in the case minutes of a meeting in January 2013 recorded amount of sampling was a change to the original of ECC, ‘unless the event arises from the Project that the employer required every room to be scope of works. The court then went on to Manager or the Supervisor giving an instruction, surveyed. This greatly increased the workload and consider whether the notice of compensation issuing a certificate, changing an earlier decision laboratory testing. event was out of time. or correcting an assumption.’ ● CONTRACTS • BOOKS AND GUIDES • TRAINING • USERS’ GROUP • PROJECT SUPPORT SERVICES • CONFERENCES • RECRUITMENT • SOFTWARE 7
The assumption therefore is that the works in accordance with its terms. If they fail to do reconsider the decision. information puts responsibility on the contractor so then, in this case, it will be a compensation If you think you have made a mistake then you for this design − if not then the contractor has event. ‘We do not have enough time’ is not a should discuss this with the contractor and agree no responsibility for design. If you wish it to take reason in the contract to not accepting, or for to change your previous decision. Otherwise it is such responsibility as project manager, you must replying later than the period for reply. Such likely the employer will end up in an adjudication instruct a change to the works information and matters should have been considered when it will probably lose. that instruction will be a compensation event the employer chose the period for reply when under clause 60.1(1). drawing up the contract. Using the activity schedule to assess In addition, as project manager managing the compensation events works on behalf of the employer, you have no Changing decisions on rejected Question automatic right to review the design unless the compensation events I am the project manager on a project using works information says so (clause 21.2). And, Question ECC option A. We are in the process of agreeing if the works information says so, you have to We have a compensation event time bar the quotation for a compensation event to delete accept or not accept the design − see the first query. The contractor has notified a number of items of work from the contract. The items sentence of clause 21.2 and clause 13.8. You then compensation events within the 8 week time have prices in the activity schedule. Why would have the period for reply stated in the contract bar stipulated within the ECC. Some of these the quotation not be simply the value of these data part one to do this (see clause 13.3) − and have been rejected as they were deemed to not items in the activity schedule? The contractor it appears likely that in your case the employer be compensation events given the information is suggesting otherwise and provided a cost has stipulated this to be 3 weeks. If you do not available at the time. Further substantiation is build-up of about 60% of this value. The activity reply within that period it will be a compensation now available and the contractor would like to schedule has items to cover all general items with event (see clause 60.1(6)), which will allow the resubmit a notification of compensation event site establishment and supervision cost and so contractor to be compensated for the time and for the same issues. However, this is now outside on, and the work is not reducing time on site as it money consequences of the failure. of the 8 week period for which the contractor is not on the critical path. If you do not accept the design, you have to would have become aware of the compensation give a reason. Any reason can be given. The event. Answer contractor then resubmits its design within the How does the time bar operate in relation to The simple answer to your question as to period for reply to deal with that reason (a new resubmitted notifications of compensation events why the value is not the amount in the activity one, so another 3 weeks) and you deal with it that refer to an event which had previously schedule is because that is what the contract again within another new period for reply. See been notified within the correct timescales but says. clause 13.4 for all of this. subsequently rejected? The deletion of work in the works information If the reason given for non-acceptance is not is an instruction to change the works information in the contract then this will be a compensation Answer issued in accordance with clause 14.3, which event again (see clause 60.1(9)). If the reason is Your question assumes this is one of a is a compensation event under clause 60.1(1). in the contract, then there is no compensation minority of compensation events that the Compensation events are assessed in accordance event (see clause 13.8). The reasons for not contractor, rather than you as project manager, with the rules set out in clause 63. Specifically accepting the design can be found in clauses 13.4 is supposed to notify (see clauses 61.1 and 61.3 clause 63.1 states they are assessed as the effect and 21.2. to define those), but that will not necessarily the compensation event has upon the forecast From the above you will see that there is be the case. If, for example, this compensation defined cost of the work that is not to be carried no room for ‘comment’. The project manager event has arisen as a result of you issuing an out, plus the fee. Therefore, in the case of either accepts or does not accept. What effect instruction, then the time bar in clause 61.3 does deleted work, you are required to assess the non-acceptance will have with regards to time not apply at all. forecast defined cost of carrying out the deleted and monies depends upon the reasons given. Once the contractor has notified the work to which the fee is added. The resultant Please note that the term used is, deliberately, compensation event, you as project manager can figure is then deducted from the total of the ‘acceptance’ rather than ‘approval’. The contract only reject it for a reason set out in clause 61.4. If prices in the activity schedule – see clause 63.12. makes it clear that any such acceptance does not the contractor considers the reason is incorrect, The process and timescales involved in transfer liability from the contractor – see clause then it should tell you and provide additional assessing compensation events can be found 14.1. information if necessary. However, the contractor in clauses 61−65. If you do not agree with the With regard to the number of drawings, does not need to notify the compensation event contractor’s quotation, you are entitled to make project managers have to ensure they have again. All the contractor has to do is to provide your own assessment – see clause 62.3 and the sufficient resources to administer the contract the additional information and invite you to 2nd bullet of clause 64.1. ●
>> Continued from page 4 Collaborative working ‘We found that the ECC supported collaborative Electrical balance of plant works and Acting in accordance with ECC’s ‘spirit of working by having clearly defined processes overground transmission lines to the national mutual trust and co-operation’, Meridian and and timeframes, which promoted openness and grid were then delivered under separate ECC Higgins worked together to drive opportunities, responsiveness’. contracts. Siemens manufactured, delivered and innovation and smart construction methodology ‘This was the first option A and C contract installed the 26 2.3 MW 82VS turbines, which to help deliver the critical civil works for the used by both parties and, despite their being a have a rotor diameter of 82.4m and hub height wind farm on time and on budget. few surprises along the way, we found the overall of 80 m. According to project manager Chris Jones, contractual experience to be very positive.’ ●
NEC-procured civils works included 800 000 m3 earthworks and 24 km The 26 bases for 80 m tall turbine towers were delivered on time using of access roads ECC option C 8 NEC users’ group Newsletter•No.74•September 2015 telephone: +44 20 7665 2446 email: [email protected] wEB: neccontract.com
ICE Register of Accredited NEC3 ECC Project Managers NEC Users’ Group members Airport Authority Hong Kong A warm welcome is extended to all new members, APM (HK) The following individuals are listed on the Institution of Civil Engineers (ICE) Register Atkins China Ltd highlighted in bold in the membership category lists below. of Accredited NEC3 ECC Project Managers at nec3eccprojectmanagers.ice.org.uk. The Beria Consultants Ltd PLATINUM Vinci Construction UK Limited Beattie Communications BK Surco Ltd register has been set up to recognise the technical and practical skills required of a project AWE Plc Volker Wessels UK Ltd Bennetts Associates Chinese University of Hong manager using the NEC3 Engineering and Construction Contract (ECC). The individuals on Dounreay Site Restoration Ltd VPI Immingham LLP Bilfinger Industrial Services Kong High Speed Two (HS2) Warwickshire County Council Uk Ltd Civil Engineering & the register have completed the ECC project manager accreditation programme and have Highways England Co Ltd WSP UK Ltd Black & Veatch Ltd Development Department, successfully passed the stage 1 and stage 2 assessments. Lafarge Tarmac WYG Management Services Blake Newport Associates HKSAR Government Magnox Limited SILVER Bowdon Consulting Limited CLP Power Hong Kong Ltd Milton Keynes Service Aberdeenshire Council Brachers LLP Construction Industry Council Austin Addison- Robert Corbyn Kerry Hutchings Tina Parmar Partnership LLP Alan Auld Group Ltd Caledonian Maritime Assets Continental Engineering Pinsent Masons LLP Limited (CMAL) Smyth Alan Doherty Joel Jackson Christopher Prior Anglian Water Services Ltd Corporation RWE Innogy UK Ltd Castle Hayes Pursey LLP Angus Council Deacons Shazad Akram Julie-Ann Janko George Reid RWE Technology UK Limited CEMAR Alex Dovey Aquila Nuclear Engineering SJs Property Services Chandler KBS Development Bureau, HKSAR Ada Albert Joe Dowds Patrick Johnston Andrew Reid Ltd Government Southend Borough Council Balfour Beatty Compton Verney House Demawu Apeti Bng Mark Kitchingman Paul Romanko Surrey County Council Trust Drainage Services Simon Dow BAM Construct UK Ltd Department, HKSAR Transport for London Conject Allan Armstrong Bezzant Ltd Government Kenneth Douthwaite Tim Knee-Robinson Jeremy Robinson West Yorkshire Councils Construction Dispute Borough of Poole Resolution Driver Trett (Hong Kong) Ltd Daniel Barnett Edward Lax Matthew Rowton GOLD Boskalis Westminster Ltd Barry Drewett Corderoy EC Harris (Hong Kong) Ltd Kevin Bell AECOM Professional Bournemouth Borough Crummock (Scotland) Limited Ian Drummond Timothy Lewis Andrew Ryder Services LLP Council Fugro (Hong Kong) Ltd Ctori Construction Paul Bell Jeff Dutton Duncan MacKillop Ian Shaw Aggregate Industries UK Brink Management & Advies Consultants Limited Gammon Construction AMEC Power & Process UK Cambridge City Council Deane Public Works Ltd LtdHighways Department, Christopher Benford & Europe HKSAR Government Neil Farmery Alasdair Macniven Carl Sperke Canal and River Trust Diamond Light Source Ltd Amey Local Government Martin Belshaw CH2M Hill UK Docté Consulting Hogan Lovells (Hong Kong) Manuel Fernandez Kerry Martin Andrew Stephenson Areva S.A Connect Plus (M25) Ltd Doig & Co Institution of Civil Engineers Jason Bibby de la Concha Atkins UK Helen Matheson Barry Trebes Cornwall Council Doig & Smith Ltd (Hong Kong) Babcock International Group Kenneth Birch Rebecca Fleming Stuart McArthur Li Yan Chun Currie & Brown UK Ltd Dumfries & Galloway Council Kum Shing (KF) Construction Balfour Beatty Major Civil DarkStar Surveying Ltd Co Ltd Engineering East Lothian Council Piotr Bogusiewicz Nicola Gemmell Dee Valley Water Plc Langdon & Seah Hong Kong Richard McLellan Martin Young Balfour Beatty Regional Engineering Contract Defence Science & Technology Strategies Limited. Stuart Brown Paul Gibbs Mark Mclinden Tim Waite Balfour Beatty Utility Solutions Laboratory FP McCann Ltd M.Y. Cheng & Co BAM Nuttall Ltd Anthony Brady Paul Gorge Charles Morris Lee Webster DLA Piper UK LLP Gearing Consulting (Engineering) Ltd Barnsley Metropolitan Services Ltd Borough Council Dyer & Butler Ltd Mace Limited (Hong Kong) Oliver Brewster Andrew Griffiths Allen Murray Simone Wyatt GHA Livigunn Ltd Belfast City Council East Ayrshire Council Maka Consulting Company Glasgow City Council Gary Buick Philip Harrison Terence O’Connor Peter Wilkinson Bolton Metropolitan Borough East Dunbartonshire Council Limited East Riding of Yorkshire H A Goddard & Sons Council Mayer Brown JSM Adrian Ceney Mark Harvey Teresa O’Sullivan Gerallt Williams Bracknell Forest Borough Council Hannah Reed & Associates Ltd Meinhardt Infrastructure & Council East Sussex County Council Hanover Housing Association Hei Wing Cheung Ian Hedley Rhodri Owen Alan Wilson Environment Ltd Bristol City Council Eastern Solent Coastal HLG Associates Limited Partnership Mott MacDonald Hong Carillion Plc Hydro International Chung Ho Clarence Nicholas Hilder Richard Patterson Sarah Wilson Kong Ltd Caulfield Contractors Ltd EnServe Group Limited (Wastewater) Limited CCS Group PLC Environment Agency Ironside Farrar Ltd Navigant Consulting (Hong Kong) Ltd Central Procurement Eskom J Breheny Contractors Ltd Directorate Faithful+Gould JJL Consultancy Ltd Pinsent Masons City of Edinburgh Council Flagship Housing John F Hunt Demolition Sum Kee Construction Ltd CNS Planning Ltd Gleeds Corporate Services Ltd John Papworth Ltd The Contracts Group Ltd Gve Commercial Solutions 02 September Introduction to the ECC Glasgow Colas Ltd Keegans Ltd The Hong Kong Construction Costain Limited Health Facilities Scotland Lancaster City Council Association Ltd Cubic Transportation Systems Heathrow Airport Holdings Land & Water Group ITMS Ltd Turner & Townsend (HK) 03 September ECC project managers’ workshop Birmingham Lindford Consulting Ltd Cumbria County Council Hill & Smith Ltd T/A Techspan URS Hong Kong Ltd Systems MacKenzie Construction 07 September ECC project manager accreditation Hong Kong Defence Infrastructure Limited VSL Intrafor (HK) Organisation IPP Contracting Ltd McAdam Design Water Supplies Department, Department of Health Jacobs UK Ltd 07 September NEC Users’ Group workshop Christchurch, NZ Met Office HKSAR Government ProCure21 JN Bentley Limited Mon-Arch Chun Wo Construction & Dover Harbour Board John Sisk & Son Ltd 08 September Introduction to the TSC Birmingham Natural Resources Wales Engineering Co Ltd Driving & Vehicle Standards John X Birchall Agency Navigant Consulting Hsin Chong Construction Knowles Ltd Dundee City Council (Europe) Ltd Group Ltd 14 September ECC project manager accreditation Bristol Land Engineering (Scotland) Eurovia Group Ltd Newcastle City Council Leighton Contractors Leicestershire County Council 15 September ECC supervisor accreditation Birmingham Farrans (Construction) Ltd North Yorkshire County (Asia) Ltd London Borough Of Council Paul Y. Construction Fife Council Hillingdon Nottinghamshire County Company, Limited 17 September Introduction to the PSC London Foreign and Commonwealth London Borough Of Merton Council Office Shun Yuen Construction Management Process Novi Projects FTI Consulting Co. Ltd 17 September Commercial management using the ECC London Systems Ltd Nuclear Decommissioning Galliford Try Mott MacDonald Limited Authority AUSTRALASIA Guys and St Thomas Mouchel Group Plc Nuvia Limited 17 September NEC breakfast briefing Wellington, NZ NHS Trust AECOM MWH UK Ltd Orkney Islands Council Hanson Contracting Arrow Strategy Ltd NBS Services Oxand Limited 22 September Introduction to the ECC Birmingham Horizon Nuclear Power Christchurch City Council Services Ltd Neath Port Talbot County Pat Munro (Alness) Ltd Borough Council City Care Limited Hugh LS McConnell Ltd Patronus Consulting Ltd 24 September NEC Users’ Group workshop Leeds Nexus Rail Coffey Projects Ltd Interserve (Facilities pdConsult 29 September NEC Users’ Group workshop Bristol Management) Ltd North Ayrshire Council Pellings LLP Constructing Excellence NZ Interserve Construction Ltd Northern Ireland Housing Peter Brett Associates Donald Cant Watts Corke Executive J Murphy & Sons Ltd Peter Cousins & Associates Dow Airen 30 September Managing risk under the ECC Glasgow Northern Ireland Water Jackson Civil Engineering Portsmouth City Council Evans & Peck Pty Ltd Group Ltd Northumberland County 07 October Introduction to the ECSC Birmingham Council Procom-IM Ltd InfraSol Group Pty Ltd Kelda Water Services Project Enquirer Ltd (Defence) Limited PD Group Management Meridian Energy Limited Pyments Ltd 08 October Introduction to the SC London Kier Infrastructure and Pick Everard OSPRI New Zealand Limited Overseas Ltd Playle & Partners Quigg Golden Ltd PBA Ltd 15 October Introduction to the ECC Bristol Lagan Construction Ltd Prysmian Cables & R A Gerrard Ltd Laing O’Rourke Systems Ltd Ramsden Enterprises Ltd RICS Oceania Lend Lease Consulting (EMEA) R J McLeod (Contractors) Ltd Ramskill Martin Watercare Services Limited 19 October TSC service manager accreditation Birmingham Limited Ramboll UK Rex Procter & Partners REST OF WORLD Lincolnshire County Council Renfrewshire Council Ridge & Partners Aquaterra Consultants Ltd 22 October ECC compensation events workshop London Lincolnshire County Council Resolute Project Services Ltd Royal Haskoning DHV Ltd Cementation Canada Inc. LLW Repository Ltd Salvation Army Royal Holloway, University 29 October Practical application of the ECC Birmingham Mace Group Scottish Water of London Contract Communicator Ministry of Justice South East Water Ltd. RSK Environment Ltd Exarchou and Rosenberg 29 October NEC Users’ Group workshop Glasgow Moreton Hayward Limited South Lanarkshire Council Selwood Limited International Morgan Sindall Group Plc South West Water Ltd Sheffield City Council Fulton Hogan Limited 02 November ECC project manager accreditation Hong Kong National Grid Plc Spie Limited Shropshire County Council Simpson Grierson Network Rail States of Jersey Solomons Europe Ltd Thurlow Associates 03 November ECC supervisor accreditation London NG Bailey Thames Tideway Tunnel Specialist Engineering Contractor’s Group VGI Consulting Inc. Norfolk County Council The Orange Partnership States Property Services WorleyParsons RSA 05 November ECC programming workshop Birmingham Northumbrian Water Limited Thorntask Limited Suffolk County Council NWSSP Specialist Estates Turner & Townsend ACADEMIA Services Synergie Training 05 November NEC Users' Group conference Christchurch, NZ University of Glasgow Anglia Ruskin University Osborne Clarke Sypro Management Ltd Volker Rail Ltd Glasgow Caledonian Ove Arup & Partners Ltd T & N Gilmartin 10 November NEC Users' Group conference Hong Kong Walter Thompson University Perth & Kinross Council Taylor Wessing LLP (Contractors) Ltd Leeds Metropolitan University QinetiQ Ltd Wardell Armstrong LLP Telford & Wrekin Council 16 November ECC project manager accreditation resit London Loughborough University Rider Levett Bucknall Wheeler Group Consultancy The Big Red Apple Company Ltd Oxford Brookes University 17 November NEC Users' Group workshop Belfast RPS Consulting Engineers Worcestershire County Siemens Council The Highland Council University of Birmingham Skanska Construction Group Yorkshire Water Services Ltd The Sheffield College University of Central 19 November Introduction to the ECC London Trowers & Hamlins SLR Consulting Ltd BRONZE Lancashire Veale Wasbrough Vizards LLP South London & Maudsley 4Projects University of Greenwich 23 November ECC project manager accreditation London NHS Trust VHE Construction Plc AJK Quantity Surveying Ltd University Of Northumbria Springfields Fuels Ltd Viridor Waste Management Allied Infrastructure Ltd University Of Portsmouth 25 November Preparing and managing the ECC London SSE Plc Management Ltd Wallace Stone LLP University Of Salford The British Museum AMEC Foster Wheeler The Capita Group PLC Environment & Infrastructure WDR & RT Taggart University Of The West Of Key: Bold - NEC Users’ Group events, ECC – Engineering and Construction Contract, The Coal Authority Andrew Sinclair Ltd Weir Power & Industrial England ECSC − Engineering and Construction Short Contract, PSC – Professional Services UK Power Networks Ltd Anthony Collins Solicitors LLP Wiltshire County Council University Of Ulster United Utilities Water Ltd Ardent Consulting Ltd ASIA-PACIFIC University Of Ulster Contract, SC − Supply Contract, TSC − Term Service Contract University Of Cambridge Argyll and Bute Council Advisian Limited University Of Wolverhampton
All articles in this newsletter are the opinions of the authors and do not necessarily reflect the views of the NEC. Only NEC’s wholly-owned products and services are endorsed by NEC, so users need to satisfy themselves that any other products and services referred to are suitable for their needs. For ease of reading, all NEC contract terms are set in lower-case, non-italic type and their meanings (unless stated otherwise) are intended to be as defined and/or identified in the relevant NEC3 contract. Constructive contributions to the newsletter are always welcomed and should be emailed to the editor Simon Fullalove at [email protected] (telephone +44 20 8744 2028). Current and past issues of the newsletter are also available in the MyNEC area of the NEC website at www.neccontract.com. All other enquires should be made to the NEC Users’ Group manager Joseph Barry, NEC, 1 Great George Street, London, SW1P 3AA, telephone +44 20 7665 2305, email [email protected].