The Evolution of NEC3 Contracts: NEC4 is almost here!

Not long ago we wrote about digital transformation in the construction industry on LinkedIn, anticipating the imminent arrival of the next stage in the evolution in the NEC contract suite was about to be announced: NEC4.

NEC4 is designed to be an upgrade on NEC3, using the feedback of NEC3 contracted projects, learning from the best practice of the industry, and designed to specifically aid and support the digital advancements of global communication through all stages of the supply chain.

Here’s our brief overview of what the NEC4 contract suite will look like:

The main improvements are as follows:

  • Improved delivery, better value and greater certainty.
  • An increased amount of flexibility.
  • Based on user experience and industry best practice.

The new NEC4 suite of contracts will be officially launched on 22nd June 2017 at the NEC Users Group Annual Seminar in London. The event will collate all of the contract designers to be able to deliver a comprehensive view on the main benefits and changes.

The main benefits of NEC4 will be:

  • Improved Risk Opportunity and Risk Management.
  • Provision for BIM and earlier contractor involvement.
  • Reduced potential for problems.
  • Better contract administration – cutting administrative costs.
  • More streamlined processes and updated definitions.

There will be two new contracts joining the NEC family suite:

  1. Design, Build and Operate (DBO) : This will allow the design, construction/ maintenance to be included to traditional design and build.
  2. Alliance Contract (ALC) : This is a multi-party contract which will allow for an integrated delivery team within one contract in which all parties will share client objectives as well as sharing risk and reward.

A Few More Updates:

  1. “Risk Register” will be changed to “Early Warning Register” – great news!! This not only changes the improve the positive connotations of the language used, but also to actively encourage positive events and opportunities to be included in this section.
  2. A new compensation event has been added for the cost of preparing a quote which does not come to fruition.
  3. Additional compensation events will be able to be included without having the need for adding Z Clauses into the contract – more great news! This will minimise the potential ambiguity and miscommunication of additional Z clauses.
  4. “Deemed Acceptance” of the programme if the Project Manager fails to respond, as well as a subsequent reminder.
  5. The requirement to show “implemented compensation events” has been removed from revised programmes, avoiding the previous confusion as to whether non-implemented compensation events should be shown.

The initial changes / improvements seem to be addressing some of the core issues with the NEC3 contract suite to date, and the focus on improved communication especially with the digitisation of global construction businesses can only be a good thing. We’re eagerly anticipating the release of NEC4 and we’re excited to see it in action! We’re working closely with our NEC expert, Steven Evans, to update our specialist NEC contract management software to help make best use of the advancements in the NEC4 contract suite.

If you would like any further advice or help with managing your NEC managed construction projects, please get in contact for a chat about how we can help improve your projects efficiency.