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Members get the NEC4 lowdown

6 October 2019

Understanding NEC4 was the subject of a recent panel event organised by CIOB’s London Hub and hosted by Decipher. Another seminar will be held at its Leeds office on 17 October.

Like any contract, the latest NEC form isn’t without risk, particularly for those less familiar with it. Some may be tempted to treat it as they would JCT or another standard form. That would be very risky, as it operates in quite a different way. The CIOB seminar aimed to help people spot the key differences.

Often criticised by lawyers for its simple language, NEC4 is no different to NEC3 in that respect. It has retained its “plain English” approach. But many solicitors suggest this creates opportunity for ambiguity. Where ambiguity exists, there is opportunity for dispute. 

Notable changes include the requirement for a quality management system. There are more detailed options for implementing BIM, and changes to party names. The Risk Register is now an Early Warning Register.  For commercial people and lawyers, it’s worth noting that dispute resolution has changed. Many law firms have produced handy guides.

Also of note is the change created by the “Healthy Buildings case” (Northern Ireland Housing Executive v Healthy Buildings (Ireland) [2017] NIQB 43). This means that assessing compensation events in NEC contracts is now different. If you have to assess (or prepare) a compensation event for time, after the event, it’s likely that known facts will be taken into consideration. This was not thought to be the case before the decision.

In any discussion, the thorny question of z-clauses seems to arise. Employers (or clients) will often seek to reallocate and shift risk using z-clauses. Entire papers are dedicated to the use of and risks of using these clauses.

Garima Singh of Turner & Townsend notes a shift towards changing terms relating to termination. The aim is to make it easier for the employer to terminate a contract. This should be something to look out for when signing up to an NEC contract.

Image: www.neccontract.com

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