Transcript 10-ECC - Construction Engineering

NEC - Engineering and
Construction Contract (ECC)
Background
The ‘traditional’ contract is fully specified and
administered by the Engineer or Architect
 Proportion of ‘traditional’ contracts falling
 The Latham Report (Constructing the Team, 1994) and the Egan
Report (Rethinking Construction, 1998) both reported
widespread Client dissatisfaction with construction
contracts which were seen as:

Too many forms, too adversarial
Contracts which were very inflexible
Disputes - too many, too long to settle
Legal compliance seen as being more important than
effective contract management
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Contract Procurement
 The UK Government has embraced the Private
Finance Initiative (PFI)
 Framework and Partnering agreements have
become widespread with larger clients
 The was therefore a radical need to rethink
traditional construction contracts
 This resulted in the introduction of the New
Engineering Contract (NEC), which later became
the Engineering and Construction Contract
(EEC)
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Engineering and Construction
Contract
 The objectives for the design of the NEC / ECC
were to make improvements under 3 main
headings
Flexibility
– Terminology
Clarity and simplicity
Stimulus to good
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Objectives of ECC -1
Flexibility , the ECC is intended
to be used for engineering and construction work containing any
or all of the traditional disciplines such as civil, electrical,
mechanical and building work.
 to be used whether the Contractor has some design
responsibility, full design responsibility or no design responsibility.
 to provide all the normal current options for types of contract
such as competitive tender (where the Contractor is committed to
his offered prices), target contracts, cost reimbursable contracts
and management contracts.
 to be used in the United Kingdom and in other countries.

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Objectives of ECC -1
Terminology
 In order to achieve uniformity across these sectors,
some changes of terminology have been necessary.
 One example is that the word `Equipment' is used for
what, in the building and civil engineering sectors, has
in the past been called `Constructional Plant'.
 The traditional civil engineering and building term
`temporary works' is covered by `Equipment' as defined
in ECC Clause 11.2(11) and therefore is not used.
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Objectives of ECC - 2
Clarity and simplicity
 The ECC is written in ordinary language. The actions by
the parties which follow from use of the ECC are
defined precisely so that there should be few disputes
about who is to do what and how.
 The ECC is based upon flow charts of the procedures to
be followed by the parties named in the contract.
 Almost all circumstances which may give rise to
additional payment to the Contractor are identified as
compensation events, which must include reviews of
both the cost and time implications.
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Objectives of ECC - 3
Stimulus to good
The ECC is founded upon the proposition
 that co-operative management of the interactions between the
parties can shrink the risks inherent in construction work
 clear division of function and responsibility helps accountability
and motivates people to play their part
 much reduced risk to the Employer of cost and time overruns
and of poor performance of the completed projects.
 much increased likelihood of achieving a profit for the Contractor,
subcontractors and suppliers.
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Objectives of ECC - 3 continued
Stimulus to good
The ECC is founded upon the proposition
 people will be motivated to play their part in collaborative
management if it is in their commercial and professional interest
to do so. Reliance need not be placed upon exhortation either
within the contract or outside it.
 the Project Manager, acting on behalf of the Employer and in
communication with him, should be presented with options for
dealing with the problem from which he can choose, directed by
the interests of the Employer.

The Contractor should be unaffected by the choice made.
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Other changes
Standard form of subcontract, very similar to ECC
 Subcontractors cannot be nominated

Must use direct contract with Employer

The financial control document in the ECC can be either
a traditional bill of quantities or an activity schedule.
The activity schedule is a list of items with lump sum prices.
The total price for the work to be done is divided between
each of the items.
Neither document is used in the ECC for any purpose other
than assessing payments due to the Contractor.
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ECC Documents
the core clauses
 the main option clauses,
 the secondary option clauses,
 the Schedules of Cost Components and
 the Contract Data formats
Plus
 works information
 site information
 Accepted programme

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ECC Core Clauses
General
 Contractors responsibility
 Time
 Quality
 Payment
 Compensation events
 Property
 Risks & insurance
 Disputes and terminations

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ECC Main Option Clauses
A.
B.
C.
D.
E.
F.
Conventional contract with activity schedule
Conventional contract with Bill of Quantities
Target contract with activity schedule
Target contract with Bill of Quantities
Cost reimbursable contract
Management contract
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ECC Secondary Option Clauses
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
Inflation
Retention
Delay damages
Early completion bonus
Low performance damages
Sectional completion
Advance payments
Advance payment bond
Performance bond
Parent company guarantee
Contractors’ liability for his design limited to reasonable skill
and care
VAT and tax
Multiple currencies
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A partnering contract, between
two Parties only, is achieved
by using a standard NEC
contract. This Option X12,
which puts the NEC
Partnering Option into a
contract, is used for partnering
between more than two
parties working on the same
project or programme of
projects
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ECC Cost and Contract forms
 The Schedule of Cost Components is a
complete identification of components of cost
which is not varied from one contract to another
 The Contract Data are selected and completed
for each contract. These data identify such
things as the completion dates, the contract
specific documents (e.g. specifications and
drawings), interest rates and price adjustment
indices to be used.
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ECC Roles & Duties



The ECC sets out the responsibilities and roles of the
following parties:
the Employer,
the Project Manager,
the Supervisor,
the Contractor,
the Subcontractor and
the Adjudicator
Separate functions of Employer's designer and Contractor's
designer are assumed but not mentioned in the contract.
The role played by the Engineer, Architect or Supervising Officer
in other standard forms is divided between the Project Manager,
the Supervisor, the Employer's designer and the Adjudicator.
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Project Manager
 Appointed by Employer to manage contract to
achieve Employer’s objectives
 Appointed at feasibility stage, may advise on
procurement of design, estimates of time and cost,
alternative options, construction procurement
 He should have Employer’s full authority.
 Can change/vary work and instruct contractor
 In compensation events can chose best option
for Employer but must act reasonably or face
Adjudication
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Designers
 If design & construct is separated then
Designers appointed directly by Employer
Develop design to a point where tenders can be
invited
 If Design & Construct
Employers Designer provides a performance
specification
Contractors Designer contracted to Contractor
 Project Manager manages whole design process
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Supervisor
 Appointed by Employer for particular contract
 The role is to check that works are constructed in
accordance with contract
 Similar to role of Resident Engineer or Architect,
but on simple contracts may be a Clerk of Works
 Disputes between Supervisor and Contractor
referred to Adjudicator
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Adjudicator
 Appointed jointly by Employer and Contractor,
who share his fee
 Usually registered
 Employer can insert his choice in contract data
and seek contractor approval, or ask contractor
to supply list of names
 Responsible for deciding any disagreements in
the contract
 If either party does not accept his decision, may
proceed to arbitration or court
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Conclusion
 The ECC is intended to provide a framework for
all parties to work collaboratively and achieve
their own objectives
 Aim is to satisfy Client
 Should lead to much reduced risk of cost and
time overruns
 Increased likelihood of achieving profit for
contractors & suppliers
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