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NEC Top Tips

Our NEC4 expert, Miguel Montenegro has brought together the following NEC Contract guidance to help you understand the ins and outs of these intricate and essential contracts.

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  • Date: 12th April 2023
  • Author Miguel Montenegro
NEC Top Tips

NEC is the ideal contract for most infrastructure projects, but with complex contracts comes a myriad of considerations for both the client and the contractor.

1. Assess your teams’ training needs.

Before embarking on the NEC journey, it’s essential that all relevant parties are equipped with the information and knowledge required. Check that your team’s (and your own) knowledge is at the right level to manage your NEC contract. Check who has practical experience with NEC, and decide what training needs to happen to ensure everyone is up to speed.

2. Define and delegate responsibilities.

A common NEC pitfall is not having clearly identified responsibilities for all parties – client, contractor, and project or service manager. Ensure that these are defined, and key personnel are identified before the contract starts, this will ensure operational resilience.

3. Agree a system for communication.

Remember that all communications on NEC must be written, stored, recorded, and accessible to read. There are several options to suit a variety of business needs, from manual recording to software solutions. Without a comprehensive record of communication, it becomes very difficult to investigate any errors, should they occur down the line.

4. Use the Early Warning Process.

“Warning” might sound like a scary word, but the more you have, the better the process will be. It’s better to be aware of an issue as soon as possible, so that solutions can be implemented efficiently. For example, you might want an Early Warning implemented as a consequence of any change between the bidding stage and contract award. In that case, you would prepare your Early Warning register by having an initial meeting. And don’t forget that you can call an Early Warning meeting at any time.

5. Identify any areas that need clarification.

Even the most professional and comprehensive Scope of Services will have some grey areas. If your NEC is managed well, any inconsistencies and ambiguities will be identified at the early stages.

6. Review your X and Z Clauses.

Both the client and contractor must spend time understanding their NEC contract. Whilst NEC is a standardise form of contract, X clauses allow tailoring to suit the client’s needs. Moreover, through Z clauses, the client may add modifications to the entire contract. So read, and read again, to understand the implications of those additions.

7. Watch your time.

NEC is time bound, so it’s important to keep an eye on dates. It’s critical to have your new contract in place by the date agreed and reply to communication forms in the time specified in the contract. An instruction for work may be accepted by no response from the service/project manager, or a Compensation Event accepted by no response.

8. Accepted programme.

Remember that there is only one accepted programme at any point in time, and that is the last one accepted by the service/project manager. So, work collaboratively to have it in place by the date agreed. Otherwise, the client must withhold 25% of the invoicing. Remember, this programme is more than just a spreadsheet with dates.

9. Payments and assessment.

Set up an assessment date to allow your contractor to present the Application for Payments. This will remind both parties what is happening during the month and will keep track of payment dates. Consequently, the contractor will be paid for the last period of work. As a client, you should ensure the finance/accounting team is paying the bills on time and in accordance with the conditions of the contract.

10. Task orders.

Remember that specific projects can be instructed through NEC. Work collaboratively and provide as much detail as possible with your Task Order; this will make life easier for both parties. If something unexpected happens, you have the Compensation Event process to address it.

11. Prepare for change.

As with all projects, it’s impossible to tell the future. An NEC protects you against unforeseen changes through Compensation Events. This allows the contractor and/or client to deal with changes in prices and timing to the original plan without too much hassle.

12. Collaborate

Don’t forget the golden 10.1 and 10.2 clauses of NEC: “Mutual trust and cooperation and act as stated in the contract.” This is for the benefit of all parties to ensure that client and contractor work collaboratively to achieve the SLAs and KPIs for your project or service.

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