NEC4: Engineering and Construction Contract | Products (2024)

FAQs

What is the NEC4 engineering construction contract? ›

The NEC4 Engineering and Construction Contract (ECC) has been developed for the appointment of a contractor for engineering and construction project work, including any level of design responsibility.

The ECC can include any level of design. It has six main payment Options: A (priced contract with activity schedule), B (priced contract with bill of quantities), C (target contract with activity schedule), D (target contract with bill of quantities), E (cost reimbursable contract) and F (management contract).

The NEC4 Supply Short Contract (SSC) is perfect for lower risk items such as building materials and products, stationery, personal protective equipment and parts.

NEC Option C is a cost reimbursable contract set against a target contract price, more commonly known as the target cost. The NEC defines cost through its schedule of cost components (SoCC). There is also definition as to what is allowable and disallowable.

Limited scope: NEC contracts are not suitable for all types of projects. For example, they are not well-suited to projects that involve a high degree of design risk. Cost: NEC contracts can be more expensive than other forms of contract.

One key difference between NEC3 and NEC4 is the approach to the fee percentage. The NEC3 allowed a “subcontracted fee percentage” to cover subcontractor's overheads and profit and “direct fee percentage” to cover the subcontractor's own direct costs.

Z clauses are used to amend the standard NEC contract clauses by means of adding new clauses or amending the wording of existing clauses. They are incorporated through the contract data.

Generally, NEC contracts are aimed at engineering projects but are easily adapted to building works. JCT contracts are aimed at building works rather than engineering projects but again can be adapted for both.

NEC Option B

Priced contract with bill of quantities – Compared with Option A, the main difference is the use of a bill of quantities (BoQ) – similar to that of a Joint Contracts Tribunal (JCT). It can be used on projects such as infrastructure and buildings.

What is equipment in NEC4? ›

In the NEC3 and NEC4 Engineering and Construction Contract (ECC), equipment is defined as what the contractor uses to provide the works.

The NEC4 ECC Option A is the priced main works contract with an activity schedule. It can include any level of design, and is ideal for relatively straightforward projects where the client has a fixed budget and is confident of its contractor's willingness and ability to manage financial risk.

To answer market's demands and industry's developments, NEC4 introduces two new contracts: NEC4 Design, Build and Operate Contract (DBO) and the consultative NEC4 Alliance Contract (ALC).

It can include any level of design, and is ideal for more complex or larger projects where the client and contractor are willing to share project financial risk in a fully collaborative way. The contractor prices activities in the client's activity schedule based on actual cost plus a fee, resulting in a target price.

The New Engineering Contract (NEC) is a series of contracts designed to manage any project from start to finish. The contracts are written in plain English with a straightforward structure and are designed to be easily understood. NEC contracts aim to prevent costly disputes.

Engineering, procurement, and construction (EPC) contracts (a type of turnkey contract) are a form of contract used to undertake construction works by the private sector on large-scale and complex infrastructure projects.

Engineering contracts are formal agreements that assign the specific terms and conditions governing the relationship between clients and engineering firms.

The NEC is often considered a more progressive contract, aiming to patch some of the downfalls of prior construction contracts. The FIDIC is often described as a more traditional contract. Each contract appoints a person who acts on behalf of the employer.