Blogs & Thoughts

Why you need NEC contract management in the construction sector

In the complex world of construction, effective contract management is the key to successful project delivery.

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  • Date: 13th May 2024
  • Author: Miguel Montenegro
Two men on scaffolding on a construction site

If you’ve read my other blogs, you will know I believe that among the various contract management approaches available NEC (New Engineering Contracts) stands out as the gold standard. As a qualified NEC consultant, I wanted to share my thoughts on what NEC contract management entails and why it’s the best choice for the construction sector.

Understanding NEC

NEC is a suite of contracts that provides a flexible and collaborative framework for managing contracts (I created a little video explainer a while ago, which you can view here). They offer a systematic approach to contract administration that promotes transparency, cooperation, and risk management throughout the project lifecycle.

1. Clarity and simplicity

NEC contracts are widely recognised for their clear language, straightforward structure, and emphasis on mutual trust and collaboration. They define roles, responsibilities, and obligations in a manner that leaves no room for ambiguity or misinterpretation. This clarity minimises the potential for disputes, enhances communication, and promotes a collaborative working environment.

2. Flexibility and adaptability

Designed for adaptability, NEC contracts allow for proactive risk and variations management (Compensation Events) to ensure a contract remains responsive to evolving requirements. This adaptability empowers project teams to address unforeseen challenges effectively and maintain project momentum.

3. Early Warning System

As a comprehensive risk management mechanism, the Early Warning System encourages proactive issue identification and resolution by allocating risks to the party best placed to manage them. By promoting open communication and collaborative problem-solving, NEC enables the early resolution of disputes and minimises the impact on project progress.

4. Emphasis on collaboration

Collaboration and mutual trust lie at the core of NEC contract management. This collaborative approach leads to a shared understanding of project goals, promotes innovation, and ensures a collective focus on delivering the best possible outcomes.

5. Enhanced project control

NEC contracts ensure project performance is closely tracked and managed. Defining the Period for Reply is key to keeping control and this level of control enables timely decision-making, efficient resource allocation, and effective project governance.

NEC transformed the construction and service sectors by offering a collaborative, flexible and transparent approach to contract administration. The benefits of NEC contracts are far reaching, ranging from projects delivered on time and costs (or reduced costs), enhanced clarity and simplicity to effective risk management principles. Embracing the power of NEC is a testament to the industry’s commitment to excellence and its determination to drive positive change in the construction landscape.