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THREE AREAS OF UNTAPPED POTENTIAL IN NEC4 CONTRACTS

Contractors and consultants will often find themselves working under the NEC4 form of contract. However, there still remains a wealth of untapped potential within this suite of contracts. NEC4 Drafter, Co-Author of NEC4 Practical Solutions and Consultant at project and contract management software firm Sypro, Dr Stuart Kings discusses three options within the suite that could provide huge amounts of added benefit for clients and delivery partners alike.

Sypro

NEC4 was introduced in 2017 to replace the then 12-year-old NEC3 suite, making a number of key changes. But three years on, some options under the contract are still underutilised despite having the facility to enable things such as improved sustainability practices or effective collaboration.

Option X12 – multiparty collaboration

This option has been around for years, previously existing under the name of ‘Partnering’ in NEC3, but it remains an under-used part of the contract process. Its aim is to promote the collaboration between parties working on the same project or programme who are not parties to the same construction contract.

Everyone talks about collaboration across the construction industry, but we don’t seem to embed this into contracts as much as we could. What needs to happen in order to truly achieve this coveted collaboration is to formalise the process.

One consideration is that various parties often get involved in a project at different points. For example, practical delivery partners may come in towards the end of a designer’s tenure. This being said, a truly collaborative client will lead on how they wish delivery partners to work together throughout the project. Option X12 allows the additional facility to embed incentives into the contract as well, providing the all-important direction on what is most important to the client, be this SME engagement,health and safety measures or more.

With Option X12, it is important to note that you don’t necessarily have to identify KPIs in the contract upfront, which is where the potential in this option becomes even more powerful. You can opt to have the option engaged but sitting dormant until the appropriate point once the project is underway.

Option X21 – whole-life costing

Whole-life costing is a complicated matter, and we have to consider that the usual calculation of ‘whole-life cost’ is based on a 60-year lifespan, typically coming in at around five times that of the capital expenditure. However, not every building will be the same and we can expect that facilities in certain sectors like healthcare or manufacturing will see an even greater ‘whole-life cost’.

Like with Option X12, employing this option is worth including within contracts to allow the consideration of different products or alternative ways of working to reduce the overall whole life cost of a scheme – benefitting not just the client in terms of budget, but the local community and wider environment in terms of reducing carbon.

Option X22 – early contractor involvement

Option X22 was new to the NEC4 suite of contracts in 2017 and allowed a contractor to be appointed at an early stage to input into the design process and innovate and eliminate risk in order to achieve better time and cost certainty. The provision was amended in October 2020 to provide greater flexibility in the development of a project in stage one and to provide a more structured process for the contractor’s submissions and the notice to process to stage two.

There is no doubt that early contractor involvement can greatly aid the commercials of a scheme. With the contractor on board from very early on in a project, this allows the whole project team to input on the pre-construction phase. Contractors can bring their buildability expertise to ensure that designs are commercially viable with the client’s budgets from the outset.

In conclusion, a multitude of major infrastructure projects have been procured under NEC4 over recent years, and with a construction and economic recovery on the horizon we know many more are to come.

If we open up conversations with clients about how these options work and the flexibility they can bring, we will be able to ensure that they – and their delivery partners – understand the true potential that can be unleashed by NEC4 will be central moving forwards to helping the public sector get the most out of their contracts.

Dr Stuart Kings is an NEC4 Drafter, Co-Author of NEC4 Practical Solutions and Consultant at project and contract management software firm, Sypro.

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