engineering and construction contractNEC Products and Services mas Unique range c nd produc Our products and services NEC Digital rgani nore, The Contract Management Software iently th ithttp These inn signed to save you time and mone arency and communication, enabling b se efficient project management and re nistrative workEngineering and Construction Contract This contract should be used for the appointment of a contractor for engineering and construction work, including any level of design responsibility An NEC document April 2013 Construction Clients’ Board endorsement of NEC3 The Construction Clients’ Board recommends that public sector organisations, use the NEC3 contracts when procuring construction, Standardising Use of this comprehensive suite of contracts should help to deliver efficiencies across the public sector and promote behaviours In line with the principles of Achieving Excellence in Construction. Cabinet Office UKNEC is a division of Thomas Telford Ltd, which is a wholly owned subsidiary of the Institution of Civil Engineers (ICE), the owner and developer of the NEC. ‘The NEC Is a family of standard contracts, each of which has these characteristics: «Its use stimulates good management of the relationship between the two parties to the contract and, hence, of the work included in the contract. ‘* It can be used in a wide variety of commercial situations, for a wide variety of types of work and in any location. ‘* itis a clear and simple document — using language and a structure which are straightforward and easily understood, NEC3 Engineering and Construction Contract is one of the NEC family and is consistent with all other NEC3 documents. Also available are the Engineering and Construction Contract Guidance Notes, Flow Charts and Options A, B, C, D, E and F. ISBN (complete box set) 978 0 7277 5867 5 ISBN (this document) 978 0 7277 5865 1. ISBN (Engineering and Construction Contract Guidance Notes) 978 0 7277 5903 0 ISBN (Engineering and Construction Contract Flow Charts) 978 0 7277 5905 4 ISBN (Option A: Priced contract with activity schedule) 978 0 7277 5869 9 ISBN (Option B: Priced contract with bill of quantities) 978 0 7277 5871 2 ISBN (Option C: Target contract with activity schedule) 978 0 7277 5873 6 ISBN (Option D: Target contract with bill of quantities) 978 0 7277 5875 0 ISBN (Option E: Cost reimbursable contract) 978 07277 5877 4 ISBN (Option F: Management contract) 978 0 7277 5879 8 ISBN (how to write the ECC Works Information) 978 0 7277 5907 8 ISBN (how to use the ECC communication forms) 978 0 7277 5909 2 Consultative edition 1991. First edition 1993 Second edition 1995 Reprinted November 1995 with amendments. Reprinted with corrections May 1998. Third edition June 2005 Reprinted with amendments June 2006 Reprinted 2007 (twice), 2008, 2009, 2010 (thrice), 2014, 2012 Reprinted with amendments 2013 Reprinted 2014, 2015 British Library Cataloguing in Publication Data for this publication is available from the British Library. Copyright nec 2013 All rights, including translation, reserved. The owner of this document may reproduce the Contract Data and forms for the purpose of obtaining tenders, ‘awarding and administering contracts. Except as permitted by the Copyright, Designs and Patents Act 1988, no part of this publication may be otherwise reproduced, stored in a retrieval system or transmitted in any form or by any ‘means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the NEC Director, Thomas Telford Ltd, One Great George Street, Westminster, London SW1P 3AA, Typeset by Academic + Techinical, Bristol Printed and bound in Great Britain by Bell & Bain Limited, Glasgow, UKCONTENTS Foreword Preface ‘Acknowledgements ‘Amendments Schedule of Options Core clauses Main Option clauses Dispute resolution ‘Secondary Option clauses Note Schedule of Cost Components Shorter Schedule of Cost ‘Components Contract Data Index 4 2 3 4 5 6 7 8 9 A B c D E F w xt x2 x3 xa x8 x6 x7 xa2 x43 xa x15 x16 xa7 xas X20 (UK) Y(uK)2 Y(UK)3 z General The Contractor's main responsibilities Time’ Testing and Defects, Payment Compensation events, Title Risks and insurance Termination Priced contract with activity schedule Priced contract with bill of quantities Target contract with activity schedule Target contract with bill of quantities Cost reimbursable contract Management contract Option WA, Option w2_ Price adjustment for inflation Changes in the law Multiple currencies Parent company guarantee Sectional Completion Bonus for early Completion Delay damages Partnering Performance bond ‘Advanced payment to the Contractor Limitation of the Contractor's liability for his design to reasonable skill and care Retention Low performance damages Limitation of liability Key Performance Indicators Project Bank Account ‘The Housing Grants, Construction and Regeneration Act 1996 The Contracts (Rights of Third Parties) Act 1999 Additional conditions of contract Options X8 to X11 and X19 are not used 60 63 65 78FOREWORD Iwas delighted to be asked to write the Foreword for the NEC3 Contracts. | have followed the outstanding rise and success of NEC contracts for a number of years now, in particular during my tenure as the 146th President Of the institution of Civil Engineers, 2010/11. In my position as UK Government's Chief Construction Adviser, | am working with Government and industry to ensure Britain's construction sector is equipped with the knowledge, skills and best practice it needs in its transition to.a low carbon economy. | am promoting innovation in the sector, including in particular the use of Building Information Modelling (BIM) in public. sector construction procurement; and the synergy and fit with the collaborative nature of NEC contracts is obvious. The Government's construction strategy is a very significant investment and NEC contracts will play an important role in setting high standards of contract preparation, management and the desirable behaviour of our industry. In the UK, we are faced with having to deliver 2 15~20 per cent reduction in the cost to the public sector of construction during the lifetime of this Parliament. Shifting mind-set, attitude and behaviour into best practice NEC processes will go a considerable way to achieving this, Of course, NEC contracts are used successfully around the world in both public and private sector projects; this trend seems set to continue at an increasing pace. NEC contracts are, according to my good friend and NEC's creator Or Martin Barnes CBE, about better management of projects. This is quite achievable and | encourage you to understand NEC contracts to the best you can and exploit the potential this offers us all. Peter Hansford UK Government's Chik Cabinet Office Construction AdviserPREFACE ‘The NEC contracts are the only suite of standard contracts designed to facilitate and encourage good management of the projects on which they are used. The experience of using NEC contracts around the world is that they really make a difference. Previously, standard contracts were written mainly as legal documents best left in the desk drawer until costly and delaying problems had occurred and there were lengthy arguments about who was to blame. ‘The language of NEC contracts is clear and simple, and the procedures set out are all designed to stimulate good management. Foresighted collaboration between all the contributors to the project is the aim. The contracts set out how the interfaces between all the organisations involved will be managed ~ from the client through the designers and main contractors to all the many subcontractors and suppliers. Versions of the NEC contract are specific to the work of professional service providers such as project managers and designers, to main contractors, to subcontractors and to suppliers, The wide range of situations covered by the contracts means that they do not need to be altered to suit any particular situation. The NEC contracts are the first to deal specifically and effectively with management of the inevitable risks and uncertainties which are encountered to some extent on all projects. Management of the expected Is easy, effective management of the unexpected draws fully on the collaborative approach inherent in the NEC contracts. Most people working on projects using the NEC contracts for the first time are hugely impressed by the difference between the confrontational characteristics of traditional contracts and the teamwork engendered by the NEC. The NEC does not include specific provisions for dispute avoidance. They are not necessary. Collaborative management itself is designed to avoid disputes and it really works. It is common for the final account for the work on a project to be settled at the time when the work is finished. The traditional long period of expensive professional work after completion to settle final payments just is not needed. The NEC contracts are truly a massive change for the better for the industries in which they are used. Dr Martin Barnes CBE Originator of the NEC contracts‘YOU ARE READING THE ENGIVERING AND CONSTRUCTION CONTRACTACKNOWLEDGEMENTS The NEC first edition was produced by the Institution of Civil Engineers through its NEC Working Group. The original NEC was designed and drafted by Dr Martin Barnes then of Coopers and Lybrand with the assistance of Professor J. G. Perry then of the University of Birmingham, T. W. Weddell then of Travers Morgan Management, T. H. Nicholson, Consultant to the Institution of Civil Engineers, A. Norman then of the University of Manchester Institute of Science and Technology and P. A. Baird, then Corporate Contracts Consultant, Eskom, South Aftica. The second edition of the NEC documents for engineering and construction contracts was produced by the Institution of Civil Engineers through its NEC Panel. The third edition of the NEC Engineering and Construction Contract was produced by the Institution of Civil Engineers through its NEC Panel. The Flow Charts were produced by John S. Gillespie with assistance from Tom Nicholson, ‘The members of the NEC Panel are: P. Higgins, BSc, CEng, FICE, FCIArb (Chairman) P. A. Baird, BSc, CEng, FICE, M(SAJICE, MAPM M. Barnes, BSo(Eng), PhD, FREng, FICE, FCIOB, CMI, ACIArb, MBCS, FinstCES, FAPM A.J. Bates, FRICS, MinstCES ‘A.J. M. Blackler, BA, LLB(Cantab), MCIArb P. T. Cousins, BEng(Tech), DipArb, CEng, MICE, MCIArb, MCMI L'T. Eames, BSc, FRICS, FCIOB F. Forward, BA(Hons), DipArch, MSo(Const Law), RIBA, FCIArb Professor J. G. Perry, MEng, PhD, CEng, FICE, MAPM N.C, Shaw, FCIPS, CEng, MIMechE T.W. Weddell, BSc, CEng, DIC, FICE, FiStructE, ACIArD NEC Consultant: R.A. Gerrard, 8Se(Hons), MRICS, FCIArb, FCInstCES. Secretariat: A. Cole, LLB, LLM, BL J.M. Hawkins, BA(Hons), MSc F.N. Vernon (Technical Adviser), BSc, CEng, MICE The Institution of Civil Engineers acknowledges the help in preparing the third edition given by many other people, in particular, by: J.C. Broome, BEng ‘A. Else, BSc, CEng, FICE C. Flook, Esq, R. Lewendon, FICE, MIHT, MCIArb, MAPM TH. Nicholson, BSc, FICE R. Patterson, BA, MA(Cantab), MBA, CEng, MICE C. Reed, CEng, MA, MSc, FICE D. Weeks, FRICS S. Zarka, FRICSAMENDMENTS JUNE 2006 The following amendments have been made to the June 2005 edition. Page | Clause Line 10 [324 4 deleted: ‘and of notified early warning matters 61 [Contract Data | 3 added, (with amendments June 2006)’ Part one, 1 64 | Contract Data |23 deleted: ‘if there are additional compensation Part one, 1. events’ and following 4 lines AMENDMENTS APRIL 2013 ‘The following amendments have been made to the June 2005 edition. Full details of all amendments are available on [Link]. Page | Clause Line 11 [aot 1 replace: ‘The subclauses in this clause only apply with This clause only applies” is [61a 1 text replaced 613 41 text replaced a7 je. 1 text replaced 18 [626 2 replace: ‘to this effect’ with ‘of his failure’ 63.1 1 text replaced replace final sentence: ‘In all other ... the event.’ with ‘in all other cases, the date is the date of the notification of the compensation event.’ 19 [64.4 2 replace: ‘to this effect’ with ‘of his failure’ 25 [91.4 1 text replaced 28 [63.14 2. delete: ‘instead of Defined Cost’ 29 [63.13 last paragraph delete: ‘instead of Defined Cost’ 33 [63.44 1 insert new clause 37 | 63.13 last paragraph delete: ‘instead of Defined Cost 39 [63.14 1. insert new clause a1 [eaa4 1 insert new clause 46 |w2.3(7) 1 text replaced w2.3(8) added at end: new sentence w2,3(12) text replaced 55 [Y(UK)t 1 insert new clause: ‘Project Bank Account” 57 | y(uK). 1. insert new clause: ‘Trust Deed’ se | Y(UKIt 1 insert new clause: ‘Joining Deed’Page | Clause Line so fy2.4 (4) 1 text replaced 2.2 1 paragraph 3, text replaced 23 1 text replaced 64 |4t 3rd bullet: text replaced 65 | Contract Data | 4 date replaced with ‘April 2013" Part one, 1. 73 | YUK)s 1 text inserted Y(UK)1 and | 1 text inserted YUK)3 75 | Y(UK)t 1 text insertedkK SCHEDULE OF OPTIONS Option A Option 8 Option ¢ Option D Option Option F Option W4 Option W2 Option x4. Option x2 Option x3. Option x4 Option x5 Option x6 Option x7 Option x12 Option x13. Option x14 Option x15 Option X16 Option X17 Option X18 Option x20 Option Y(UK)1 Option Y(UK)2 Option Y(UK)3 Option 2 Note The strategy for choosing the form of contract starts with @ decision between six main Options, one of which must be chosen. Priced contract with activity schedule Priced contract with bill of quantities Target contract with activity schedule ‘Target contract with bill of quantities Cost reimbursable contract Management contract One of the following dispute resolution Options must be selected to complete the chosen main Option. Dispute resolution procedure (used unless the United Kingdom Housing Grants, Construction and Regeneration Act 1996 applies). Dispute resolution procedure (used in the United Kingdom when the Housing Grants, Construction and Regeneration Act 1996 applies). The following secondary Options should then be considered. It is not necessary to use any of them. Any combination other than those stated may be used. Price adjustment for inflation (used only with Options A, B, C and D) Changes in the law Multiple currencies (used only with Options A and B) Parent company guarantee Sectional Completion Bonus for early Completion Delay damages Partnering Performance bond Advanced payment to the Contractor Limitation of the Contractor's liability for his design to reasonable skill and care Retention (not used with Option F) Low performance damages Limitation of liability Key Performance Indicators (not used with Option X12) The following Options dealing with national legislation should be included if required, Project Bank Account The Housing Grants, Construction and Regeneration Act 1996 The Contracts (Rights of Third Parties) Act 1999 Additional conditions of contract Options X8 to X14 and X19 are not used. \[Link] © copyright nec 20134=nec3 Engineering and Construction Contract CORE CLAUSES 1 General Actions. Identified and defined terms 10 10.4 14 11.2 ‘The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in @ spirit of mutual trust and co-operation. In these conditions of contract, terms identified in the Contract Data are in italics and defined terms have capital initials. (1) The Accepted Programme is the programme identified in the Contract Data or is the latest programme accepted by the Project Manager. The latest programme accepted by the Project Manager supersedes previous Accepted Programmes. (2) Completion is when the Contractor has © done all the work which the Works Information states he is to do by the Completion Date and © corrected notified Detects which would have prevented the Employer from using the works and Others from doing their work. If the work which the Contractor is to do by the Completion Date is not stated in the Works Information, Completion is when the Contractor has done all the work necessary for the Employer to use the works and for Others to do their work, (3) The Completion Date is the completion date unless later changed in accordance with this contract. (4) The Contract Date is the date when this contract came into existence. (5) A Defect is * a part of the works which is not in accordance with the Works Information or * a part of the works designed by the Contractor which is not in accordance with the applicable law or the Contractor's design which the Project Manager has accepted. (6) The Detects Certificate is either a list of Defects that the Supervisor has Notified before the defects date which the Contractor has not corrected of, if there are no such Defects, a statement that there are none. (7) Equipment is items provided by the Contractor and used by him to Provide the Works and which the Works Information does not require him to include in the works. (8) The Fee is the sum of the amounts calculated by applying the subcon- tracted fee percentage to the Defined Cost of subcontracted work and the direct fee percentage to the Defined Cost of other work. [Link] @ copyright nec 2013 3 main option clauses secondary option clauses cost components contract dataCeres main option clauses secondary option clauses cost components contract data’ = NEC'3 engineering and Construction Contract Interpretation and the law 42 412.4 12.2 12.3 12.4 (9) A Key Date is the date by which work is to meet the Condition stated. The Key Date is the key date stated in the Contract Data and the Condition is the condition stated in the Contract Data unless later changed in accordance with this contract. (10) Others are people or organisations who are not the Employer, the Project Manager, the Supervisor, the Adiudicator, the Contractor or any employee, Subcontractor or supplier of the Contractor. (41) The Parties are the Employer and the Contractor. (42) Plant and Materials are items intended to be included in the works. (43) To Provide the Works means to do the work necessary to complete the works in accordance with this contract and all incidental work, services and actions which this contract requires. (14) The Risk Register is a register of the risks which are listed in the Contract Data and the risks which the Project Manager or the Contractor has notified as an early warning matter. It includes @ description of the risk and @ description of the actions which are to be taken to avoid or reduce the risk. (45) The Site is the area within the boundaries of the site and the volumes above and below it which are affected by work included in this contract. (16) Site Information is information which * describes the Site and its surroundings and ® is in the documents which the Contract Data states itis in. (17) A Subcontractor is a person or organisation who has contract with the Contractor to * construct or install part of the works, * provide a service necessary to Provide the Works or © supply Plant and Materials which the person or orgenisation has wholly or partly designed specifically for the works. (18) The Working Areas are those parts of the working areas which are ‘+ necessary for Providing the Works and * used only for work in this contract Unless later changed in accordance with this contract. (49) Works Information is information which either ‘© specifies and describes the works or ‘* states any constraints on how the Contractor Provides the Works and is either ‘* In the documents which the Contract Data states itis in or * in an instruction given in accordance with this contract. In this contract, except where the context shows othenvise, words in the singular also mean in the plural and the other way round and words in the masculine also mean in the feminine and neuter. ‘This contract is governed by the law of the contract. No change to this contract, unless provided for by the conditions of contract, has effect unless it has been agreed, confirmed in writing and signed by the Parties. This contract is the entire agreement between the Parties. al © copyright nec 2013 [Link]Core Clauses NEC'S Communications The Project Manager and the Supervisor Adding to the Working ‘Areas Early warning 43 13.4 13.2 13.3 13.4 13.5 13.6 13.7 13.8 14 144 14.2 143 14.4 45 15.1 16 16.1 Each instruction, certificate, submission, proposal, record, acceptance, notification, reply’ and other communication which this contract requires is ‘communicated in a form which can be read, copied and recorded. Writing is in the language of this contract. ‘A communication has effect when it is received at the last address notified by the recipient for receiving communications or, if none is notified, at the address of the recipient stated in the Contract Data It this contract requires the Project Manager, the Supervisor or the Contractor to reply to @ communication, unless otherwise stated in this contract, he replies within the period for reply. The Project Manager replies to a communication submitted or resubmitted to him by the Contractor for acceptance. If his reply is not acceptance, the Project Manager states his reasons and the Contractor resubmits the commu- nication within the period for reply taking account of these reasons. A reason for withholding acceptance is that more information is needed in order to assess the Contractor's submission fully. The Project Manager may extend the period for reply to a communication if the Project Manager and the Contractor agree to the extension before the reply is due. The Project Manager notifies the Contractor of the extension which has been agreed. ‘The Project Manager issues his certificates to the Employer and the Contrac- tor. The Supervisor issues his certificates to the Project Manager and the Contractor. A notification which this contract requires is communicated separately from other communications. The Project Manager may withhold acceptance of a submission by the Contractor. Withholding acceptance for a reason stated in this contract is not a compensation event. ‘The Project Manager's or the Supervisor's acceptance of a communication from the Contractor or of his work does not change the Contractor's responsi- bility to Provide the Works or his liability for his design, The Project Manager and the Supervisor, after notifying the Contractor, may delegate any of their actions and may cancel any delegation. A reference to an action of the Project Manager or the Supervisor in this contract includes an action by his delegate. The Project Manager may give an instruction to the Contractor which changes the Works Information or a Key Date. The Employer may replace the Project Manager or the Supervisor after he has notified the Contractor of the name of the replacement. The Contractor may submit a proposal for adding an area to the Working Areas to the Project Manager for acceptance. A reason for not accepting is that the proposed area is either not necessary for Providing the Works or used for work not in this contract. The Contractor and the Project Manager give an early warning by notifying the other as soon as either becomes aware of any matter which could © increase the total of the Prices, * delay Completion, * delay meeting a Key Date or * impair the performance of the works in use. \[Link] © copyright nec 2013 5 main option clauses cost secondary option clauses 5 3 5 contract datamain option clauses secondary option clauses cost components contract data = NEC'3 Engineering and Construction Contract 16.2 16.3 16.4 Ambiguities and 47 inconsistencies 17.1 Illegal and impossible 18 requirements 18.1 Prevention 19 49.4 ‘The Contractor may give an early warning by notifying the Project Manager of any other matter which could increase his total cost. The Project Manager enters early warning matters in the Risk Register. Early warning of a matter for which a compensation event has previously been notified is not required. Either the Project Manager or the Contractor may instruct the other to attend @ risk reduction meeting. Each may instruct other people to attend if the other agrees. Ata risk reduction meeting, those who attend co-operate in ‘* making and considering proposals for how the effect of the registered risks can be avoided or reduced, = seeking solutions that will bring advantage to all those who will be affected, = deciding on the actions which will be taken and who, in accordance with this contract, will take them and ‘* deciding which risks have now been avoided or have passed and can be removed from the Risk Register. The Project Manager revises the Risk Register to record the decisions made at each risk reduction meeting and issues the revised Risk Register to the Contractor. If a decision needs a change to the Works Information, the Project ‘Manager instructs the change at the same time as he issues the revised Risk Register. ‘The Project Manager or the Contractor notifies the other @s soon as either becomes aware of an ambiguity or inconsistency in or between the documents which are part of this contract. The Project Manager gives an instruction resolving the ambiguity or inconsistency. The Contractor notifies the Project Manager as soon as he considers that the Works Information requires him to do anything which is illegal or impossible, If the Project Manager agrees, he gives an instruction to change the Works Information appropriately. If an event occurs which ‘= stops the Contractor completing the works or * stops the Contractor completing the works by the date shown on the Accepted Programme, and which * neither Party could prevent and = an experienced contractor would have judged at the Contract Date to have such a small chance of occurring that it would have been unreason- able for him to have allowed for it, the Project Manager gives an instruction to the Contractor stating how he is to deal with the event. 6 © copyright nec 2013 [Link]i Core Clauses = NEC 2 The Contractor's main responsibilities Providing the Works The Contractor's design Using the Contractor's design Design of Equipment People Working with the Employer and Others: 20 20.1 2 2414 21,2 21.3 22 22.4 23 23.1 24 24a. 24.2 25 25.4. 25.2 The Contractor Provides the Works in accordance with the Works Information, The Contractor designs the parts of the works which the Works Information states he is to design. The Contractor submits the particulars of his design as the Works Information requires to the Project Manager for acceptance. A reason for not accepting the Contractor's design is that it does not comply with either the Works Information or the applicable law. The Contractor does not proceed with the relevant work until the Project Manager has accepted his design. The Contractor may submit his design for acceptance in parts if the design of each part can be assessed fully The Employer may use and copy the Contractor's design for any purpose connected with construction, use, alteration or demolition of the works unless otherwise stated in the Works Information and for other purposes as stated in the Works Information. The Contractor submits particulars of the design of an item of Equipment to the Project Manager for acceptance if the Project Manager instructs him to. A reason for not accepting is that the design of the item will not allow the Con: tractor to Provide the Works in accordance with ‘© the Works Information, * the Contractor's design which the Project Manager has accepted or © the applicable law. The Contractor either employs each key person named to do the job stated in the Contract Data or employs a replacement person who has been accepted by the Project Manager. The Contractor submits the name, relevant qualifica tions and experience of a proposed replacement person to the Project Manager for acceptance. A reason for not accepting the person is that his relevant qualifications and experience are not as good as those of the person who is to be replaced, ‘The Project Manager may, having stated his reasons, instruct the Contractor to remove an employee. The Contractor then arranges that, after one day, the employee has no further connection with the work included in this contract. ‘The Contractor co-operates with Others in obtaining and providing information which they need in connection with the works. He co-operates with Others and shares the Working Areas with them as stated in the Works Information. ‘The Employer and the Contractor provide services and other things as stated in the Works Information. Any cost incurred by the Employer as a result of the Contractor not providing the services and other things which he is to provide is assessed by the Project Manager and paid by the Contractor, [Link] © copyright nec 20137 a prey main option clauses secondary option clauses cost components contract datamain option clauses secondary option clauses cost components contract data — 1, = NEC Engineering and Construction Contract, ‘Subcontracting Other responsibilities 25.3 26 26.1 26.2 26.3 27 274 27.2 27.3 27.4 Hf the Project Manager decides that the work does not meet the Condition stated for a Key Date by the date stated and, as a result, the Employer incurs additional cost either * in carrying out work or * by paying an additional amount to Others in carrying out work. ‘on the same project, the additional cost which the Employer has paid or will inour is paid by the Contractor. The Project Manager assesses the additional cost within four weeks of the date when the Condition for the Key Date is met. ‘The Employer's right to recover the additional cost is his only right in these circumstances. If the Contractor subcontracts work, he is responsible for Providing the Works as if he had not subcontracted. This contract applies as if a Subcontractor’s employees and equipment were the Contractor’ The Contractor submits the name of each proposed Subcontractor to the Project Manager for acceptance. A reason for not accepting the Subcontractor that his appointment will not allow the Contractor to Provide the Works, The Contractor does not appoint @ proposed Subcontractor until the Project Manager has accepted him. The Contractor submits the proposed conditions of contract for each subcon- tract to the Project Manager for acceptance unless * an NEC contract is proposed or ‘© the Project Manager has agreed that no submission is required The Contractor does not appoint a Subcontractor on the proposed subcontract conditions submitted until the Project Manager has accepted them. A reason for not accepting them is that * they will not allow the Contractor to Provide the Works or * they do not include a statement that the parties to the subcontract shall act in a spirit of mutual trust and co-operation. The Contractor obtains approval of his design from Others where necessary. ‘The Contractor provides access to work being done and to Plant and Materials being stored for this contract for * the Project Manager, * the Supervisor and * Others notified to him by the Project Manager. ‘The Contractor obeys an instruction which is in accordance with this contract and is given to him by the Project Manager or the Supervisor. The Contractor acts in accordance with the health and safety requirements stated in the Works Information. 8 © copyright nec 2023, ‘[Link] | |L Core Clauses = NEC’ 3 Time Starting, Completion and Key Dates The programme 30 30.1 30.2 30.3 34 31.2 313 The Contractor does not start work on the Site until the first access date and does the work so that Completion is on or before the Completion Date, The Project Manager decides the date of Completion. The Project Manager certifies Completion within one week of Completion. The Contractor does the work so that the Condition stated for each Key Date is met by the Key Dete. If @ programme is not identified in the Contract Data, the Contractor submits 2a first programme to the Project Manager for acceptance within the period stated in the Contract Data, ‘The Contractor shows on each programme which he submits for acceptance « the starting date, access dates, Key Dates and Completion Date, * planned Completion, © the order and timing of the operations which the Contractor plans to do in order to Provide the Works, © the order and timing of the work of the Employer and Others as last agreed with them by the Contractor or, if not so agreed, as stated in the Works Information, © the dates when the Contractor plans to meet each Condition stated for the Key Dates and to complete other work needed to allow the Employer land Others to do thelr work, * provisions for float, time risk allowances, health and safety requirements and the procedures set out in this contract, * the dates when, in order to Provide the Works in accordance with his programme, the Contractor will need * access to a part of the Site if later than its access date, '* acceptances, Plant and Materials and other things to be provided by the Employer and = information from Others, * for each operation, a statement of how the Contractor plans to do the work identifying the principal Equipment and other resources which he plans to use and * other information which the Works Information requires the Contractor to show on a programme submitted for acceptance. Within two weeks of the Contractor submitting a programme to him for acceptance, the Project Manager either accepts the programme or notifies the Contractor of his reasons for not accepting it. A reason for not accepting a programme is that ‘> the Contractor's plans which it shows are not practicable, * it does not show the information which this contract requires, + it does not represent the Contractor's plans realistically or it does not comply with the Works Information. \[Link] © copyright nec 2013 9 main option clauses ‘secondary option clauses cost components contract datai secondary option clauses cost components contract data = NEC’ Engineering and Construction Contract Revising the programme Access to and use of the Site Instructions to stop or not to start work. Take over Acceleration 32 32.4 32.2 33 33.4. 35 35.4 35.2 35.3 36 36.1 36.2 ‘The Contractor shows on each revised programme '* the actual progress achieved on each operation and its effect upon the ‘timing of the remaining work, * the effects of implemented compensation events, © how the Contractor plans to deal with any delays and to correct notified Defects and * any other changes which the Contractor proposes to make to the Accepted Programme. The Contractor submits a revised programme to the Project Manager for ‘acceptance ‘© within the period for reply after the Project Manager has instructed him to, ‘* when the Contractor chooses to and, in any case, * at no longer interval than the interval stated in the Contract Data from the starting date until Completion of the whole of the works. The Employer allows access to and use of each part of the Site to the Contrac- tor which is necessary for the work included in this contract. Access and use is allowed on or before the later of its access date and the date for access shown on the Accepted Programme. The Project Manager may instruct the Contractor to stop or not to start any work and may later instruct him that he may re-start or start it. The Employer need not take over the works before the Completion Date if it is stated in the Contract Data that he is not willing to do so. Otherwise the Employer takes over the works not later than two weeks after Completion. The Employer may use any part of the works before Completion has been certified. If he does so, he takes over the part of the works when he begins to use it except if the use is ** for a reason stated in the Works Information or = to suit the Contractor's method of working. The Project Manager certifies the date upon which the Employer takes over any part of the works and its extent within one week of the date. The Project Manager may instruct the Contractor to submit a quotation for an acceleration to achieve Completion before the Completion Date. The Project ‘Manager states changes to the Key Dates to be included in the quotation. A quotation for an acceleration comprises proposed changes to the Prices and a revised programme showing the earlier Completion Date and the changed Key Dates. The Contractor submits details of his assessment with each quotation. ‘The Contractor submits a quotation or gives his reasons for not doing so within the period for reply. 10 © copyright nec 2013 [Link]Core Clauses = NEC 4 Testing and Defects Tests and inspections Testing and inspection before delivery Searching for and notifying Defects Correcting Defects 40 40.1 40.2 403 40.4 40.5 40.6 42 42.4 42.2 43 43.2 This clause only applies to tests and inspections required by the Works Infor- mation or the applicable law. The Contractor and the Employer provide materials, facilities and samples for tests and inspections as stated in the Works Information. The Contractor and the Supervisor each notifies the other of each of his tests and inspections before it starts and afterwards notifies the other of its results. The Contractor notifies the Supervisor in time for a test or inspection to be arranged and done before doing work which would obstruct the test or inspection. The Supervisor may watch any test done by the Contractor. If @ test or inspection shows that any work has a Defect, the Contractor cortects the Defect and the test or inspection is repeated. The Supervisor does his tests and inspections without causing unnecessary delay to the work or to a payment which is conditional upon a test or inspec- tion being successful. A payment which is conditional upon @ Supervisor's test or inspection being successful becomes due at the later of the defects date and the end of the last defect correction period if * the Supervisor has not done the test or inspection and * the delay to the test or inspection is not the Contractor's fault. The Project Manager assesses the cost incurred by the Employer in repeating a test or inspection after a Defect is found. The Contractor pays the amount assessed. The Contractor does not bring to the Working Areas those Plant and Materials which the Works Information states are to be tested or inspected before delivery until the Supervisor has notified the Contractor that they have passed the test or inspection. Until the defects date, the Supervisor may instruct the Contractor to search for a Defect. He gives his reason for the search with his instruction. Searching ‘may include ‘* uncovering, dismantling, re-covering and re-erecting work, * providing facilities, materials and samples for tests and inspections done by the Supervisor and * doing tests and inspections which the Works Information does not require. Until the defects date, the Supervisor notifies the Contractor of each Defect as soon as he finds it and the Contractor notifies the Supervisor of each Defect as soon as he finds it ‘The Contractor corrects a Defect whether or not the Supervisor notifies him of it The Contractor corrects a notified Defect before the end of the defect correction period. The defect correction period begins at Completion for Defects notified before Completion and when the Defect is notified for other Defects. [Link] © copyrightnec 2013 11 main option clauses ‘secondary option clauses ‘cost | components. contract datasecondary option clauses cost components | contract data’ =NEC'S Engineering and Construction Contract Accepting Defects Uncorrected Defects 43.3 43.4 44 441 44.2 45 45.2 The Supervisor issues the Defects Certificate at the later of the defects date and the end of the last defect correction period. The Employer's rights in respect of a Defect which the Supervisor has not found or notified are not affected by the issue of the Defects Certificate. The Project Manager arranges for the Employer to allow the Contractor access to and use of a part of the works which he has taken over if they are needed for correcting a Defect. In this case the defect correction period begins when the necessary access and use have been provided. ‘The Contractor and the Project Manager may each propose to the other that the Works Information should be changed so that a Defect does not have to be corrected, If the Contractor and the Project Manager are prepared to consider the change, the Contractor submits a quotation for reduced Prices or an earlier ‘Completion Date or both to the Project Manager for acceptance. If the Project Manager accepts the quotation, he gives an instruction to change the Works Information, the Prices and the Completion Date accordingly. If the Contractor is given access in order to correct @ notified Defect but he has not corrected it within its defect correction period, the Project Manager ‘assesses the cost to the Employer of having the Defect corrected by other people and the Contractor pays this amount. The Works Information is treated as having been changed to accept the Defect. if the Contractor is not given access in order to correct a notified Defect before the defects date, the Project Manager assesses the cost to the Contrac- tor of correcting the Defect and the Contractor pays this amount. The Works Information is treated as having been changed to accept the Defect, 42 © copyright nec 2013, [Link]I core Clauses NEC 5 Payment Assessing the amount due Payment 50 50.4 50.2 50.3 50.4 50.5 51 51.2 513 51.4 The Project Manager assesses the amount due at each assessment date. The first assessment date is decided by the Project Manager to suit the procedures of the Parties and is not later than the assessment interval after the starting date. Later assessment dates occur ‘* at the end of each assessment interval until four weeks after the Supervisor issues the Defects Certificate and * at Completion of the whole of the works. The amount due is * the Price for Work Done to Date, * plus other amounts to be paid to the Contractor, * less amounts to be paid by or retained from the Contractor. ‘Any tax which the law requires the Employer to pay to the Contractor is included in the amaunt due. If no programme is identified in the Contract Data, one quarter of the Price for Work Done to Date Is retained in assessments of the amount due until the Contractor has submitted a first programme to the Project Manager for acceptance showing the information which this contract requires. In assessing the amount due, the Project Manager considers any application for payment the Contractor has submitted on or before the assessment date. The Project Manager gives the Contractor details of how the amount due has been assessed, The Project Manager corrects any wrongly assessed amount due in a later payment certificate. ‘The Project Manager certifies a payment within one week of each assessment date. The first payment is the amount due. Other payments are the change in ‘the amount due since the last payment certificate. A payment is made by the Contractor to the Employer if the change reduces the amount due. Other payments are made by the Employer to the Contractor. Payments are in the currency of this contract unless otherwise stated in this contract. Each certified payment is made within three weeks of the assessment date or, if different period is stated in the Contract Data, within the period stated. If a certified payment is late, or if a payment is late because the Project Manager does not issue a certificate which he should issue, interest is paid fon the late payment, Interest is assessed from the date by which the late payment should have been made until the date when the late payment is made, and is included in the first assessment after the late payment is made. If an amount due is corrected in a later certificate either * by the Project Manager in relation to a mistake or a compensation event or * following a decision of the Adjudicator or the tribunal, interest on the correcting amount is paid. Interest is assessed from the date when the incorrect amount was certified until the date when the correcting, amount is certified and is included in the assessment which includes the correcting amount. Interest is calculated on a daily basis at the Interest rate and is compounded annually. [Link] © copyright nec 2013 13 main ‘option clauses ‘secondary option clauses cost ymponents i ‘contract data= NEC’ Engineering and Construction Contract Defined Cost 52 52.1 All the Contractor's costs which are not included in the Defined Cost are ‘treated as included in the Fee. Defined Cost includes only amounts calculated using rates and percentages stated in the Contract Data and other amounts at open market or competitively tendered prices with deductions for all discounts, rebates and taxes which can be recovered, oo Cees main option clauses secondary option clauses cost components contract data 14 © copyright nec 2013 ‘[Link]Core Clauses NEC'3 6 Compensation events Compensation events 60 60.1. The following are compensation events. (4) The Project Manager gives an instruction changing the Works Information except * a change made in order to accept a Defect or * a change to the Works Information provided by the Contractor for his design which is made either at his request or to comply with other Works Information provided by the Employer. (2) The Employer does not allow access to and use of a part of the Site by the later of its access date and the date shown on the Accepted Programme. {3) The Employer does not provide something which he is to provide by the date for providing it shown on the Accepted Programme. (4) The Project Manager gives an instruction to stop or not to start any work or to change a Key Date. (5) The Employer or Others ‘+ do not work within the times shown on the Accepted Programme, ‘+ do not work within the conditions stated in the Works Information or ‘© carry out work on the Site that Is not stated in the Works Information. (6) The Project Manager or the Supervisor does not reply to a communication from the Contractor within the period required by this contract. (7) The Project Manager gives an instruction for dealing with an object of value or of historical or other interest found within the Site. (8) The Project Manager or the Supervisor changes a decision which he has previously communicated to the Contractor. (9) The Project Manager withholds an acceptance (other than acceptance of a quotation for acceleration or for not correcting a Defect) for a reason not stated in this contract. (40) The Supervisor instructs the Contractor to search for @ Defect and no Defect is found unless the search is needed only because the Contractor gave insufficient notice of doing work obstructing a required test or inspection. (4.1) A test or inspection done by the Supervisor causes unnecessary delay. (112) The Contractor encounters physical conditions which © are within the Site, ‘© are not weather conditions and * an experienced contractor would have judged at the Contract Date to have such a small chance of occurring that it would have been unreason- able for him to have allowed for them. Only the difference between the physical conditions encountered and those for which it would have been reasonable to have allowed is taken into account in assessing 2 compensation event. (43) A weather measurement is recorded = within a calendar month, ' before the Completion Date for the whole of the works and. + at the place stated in the Contract Data the value of which, by comparison'with the weather data, is shown to occur on average less frequently than once in ten years. www [Link] © copyright nec 201315, secondary option clauses cost ymponents. ‘contract lis datamai option clauses secondary ‘option clauses cost ‘components. contract data es = NEC'S Engineering and Construction Contract Notifying compensation events 60.2 60.3 et 61.1 61.2 613 Only the difference between the weather measurement and the weather which the weather data show to occur on average less frequently than once in ten years is taken into account in assessing a compensation event. (14) An event which is an Employer's risk stated in this contract. (45) The Project Manager certifies take over of a part of the works before both Completion and the Completion Date. (16) The Employer does not provide materials, facilities and samples for tests and inspections as stated in the Works Information. (17) The Project Manager notifies a correction to an assumption which he has stated about 2 compensation event. (18) A breach of contract by the Employer which is not one of the other compensation events in this contract. (29) An event which + stops the Contractor completing the works or = stops the Contractor completing the works by the date shown on the Accepted Programme, and which = neither Party could prevent, ‘= an experienced contractor would have judged at the Contract Date to have such a small chance of occurring that it would have been unreason- able for him to have allowed for it and + is not one of the other compensation events stated in this contract. In judging the physical conditions for the purpose of assessing a compensa- tion event, the Contractor is assumed to have taken into account the Site Information, publicly available information referred to in the Site Information, information obtainable from a visual inspection of the Site and other information which an experienced contractor could reasonably be expected to have or to obtain. If there is an ambiguity or inconsistency within the Site Information (including. the information referred to in it), the Contractor is assumed to have taken into ‘account the physical conditions more favourable to doing the work. For compensation events which arise from the Project Manager or the Superv: sor giving an instruction, issuing a certificate, changing an earlier decision or correcting an assumption, the Project Manager notifies the Contractor of the ‘compensation event at the time of that communication. He also instructs the Contractor to submit quotations, unless the event arises from a fault of the Contractor or quotations heve already been submitted. The Contractor puts the instruction or changed decision into effect. ‘The Project Manager may instruct the Contractor to submit quotations for a proposed instruction or a proposed changed decision. The Contractor does not put a proposed instruction or a proposed changed decision into effect. ‘The Contractor notifies the Project Manager of an event which has happened or which he expects to happen as @ compensation event if ‘= the Contractor believes that the event is a compensation event and * the Project Manager has not notified the event to the Contractor. If the Contractor does not notify a compensation event within eight weeks of becoming aware of the event, he is not entitled to a change in the Prices, the Completion Date or a Key Bate unless the event arises from the Project Man- ager of the Supervisor giving an instruction, issuing a certificate, changing an earlier decision or correcting an assumption. 16 © copyright nec 2013, [Link]core Clauses NEC'3 Quotations for ‘compensation events 61.4 615 616 617 62 62.1 62.2 62.3 62.4 If the Project Manager decides that an event notified by the Cantractor * arises from a fault of the Contractor. ‘* has not happened and is not expected to happen, * has no effect upon Defined Cost, Completion or meeting a Key Date or is not one of the compensation events stated in this contract he notifies the Contractor of his decision that the Prices, the Completion Date and the Key Dates are not to be changed. If the Project Manager decides otherwise, he notifies the Contractor accordingly end instructs him to submit quotations. The Project Manager notifies his decision to the Contractor and, if his decision is that the Prices, the Completion Date or the Key Dates are to be changed, instructs him to submit quotations before the end of either = one week after the Contractor's notification or © a longer period to which the Contractor has agreed. If the Project Manager does not notify his decision, the Contractor may notify the Project Manager of his failure. A failure by the Project Manager to reply Within two weeks of this notification is treated as acceptance by the Project ‘Manager that the event is a compensation event and an instruction to submit quotations. If the Project Manager decides that the Contractor did not give an early warning of the event which an experienced contractor could have given, he notifies this decision to the Contractor when he instructs him to submit quotations. If the Project Manager decides that the effects of a compensation event are too uncertain to be forecast reasonably, he states assumptions about the event in his instruction to the Contractor to submit quotations. Assessment of the event is based on these assumptions. if any of them is later found to have been wrong, the Project Manager notifies a correction, ‘A compensation event is not notified after the defects date. After discussing with the Contractor different ways of dealing with the com- pensation event which are practicable, the Project Manager may instruct the Contractor to submit alternative quotations. The Contractor submits the required quotations to the Project Manager and may submit quotations for other methods of dealing with the compensation event which he considers practicable. Quotations for compensation events comprise proposed changes to the Prices and any delay to the Completion Date and Key Dates assessed by the Contractor. The Contractor submits details of his assessment with each quotation. If the programme for remaining work is altered by the compensa- tion event, the Contractor includes the alterations to the Accepted Programme in his quotation. The Contractor submits quotations within three weeks of being instructed to do so by the Project Manager. The Project Manager replies within two weeks of the submission. His reply is ‘* an instruction to submit a revised quotation, ® an acceptance of a quotation, * a notification that a proposed instruction will not be given or a proposed changed decision will not be made or ‘a notification that he will be making his own assessment. The Project Manager instructs the Contractor to submit a revised quotation only after explaining his reasons for-doing so to the Contractor. The Contractor submits the revised quotation within three weeks of being instructed to do so. [Link] © copyright nec 2019417, main option clauses ‘secondary option clauses cost ‘components contract dataclauses main option clauses secondary option clauses cost ‘components, contract data TEC Engineering and Construction Contract 62.5 62.6 Assessing compensation 63 events 63.4. 63.2 63.3 63.4 635 636 63.7 63.8 63.9 ‘The Project Manager extends the time allowed for ‘© the Contractor to submit quotations for a compensation event and © the Project Manager to reply to a quotation if the Project Manager and the Contractor agree to the extension before the submission or reply is due. The Project Manager notifies the extension that has been agreed to the Contractor. If the Project Manager does not reply to a quotation within the time allowed, the Contractor may notify the Project Manager of his failure. If the Contractor submitted more than one quotation for the compensation event, he states in his notification which quotation he proposes is to be accepted. If the Project Manager does not reply to the notification within two weeks, and unless the quotation is for a proposed instruction or a proposed changed decision, the Contractor's notification is treated as acceptance of the quotation by the Project Manager. The changes to the Prices are assessed as the effect of the compensation ‘event upon ‘= the actual Defined Cost of the work already done, «the forecast Defined Cost of the work not yet done and * the resulting Fee. If the compensation event arose from the Project Manager or the Supervisor giving an instruction, issuing a certificate, changing an earlier decision or oor- recting an assumption, the date which divides the work already done from the ‘work not yet done is the date of that communication. In all other cases, the date is the date of the notification of the compensation event. If the effect of a compensation event is to reduce the total Defined Cost, the Prices are not reduced except as stated in this contract. ‘A delay to the Completion Date is assessed as the length of time that, due to ‘the compensation event, planned Completion is later than planned Completion ‘as shown on the Accepted Programme. A delay to a Key Date is assessed as the length of time that, due to the compensation event, the planned date when the Condition stated for 2 Key Date will be met is later than the date shown on the Accepted Programme. ‘The rights of the Employer and the Contractor to changes to the Prices, the Completion Date and the Key Dates are their only rights in respect of a ‘compensation event. If the Project Manager has notified the Contractor of his decision that the Contractor did not give an early warning of 2 compensation event which an experienced contractor could have given, the event is assessed as if the Contractor had given early warning. [Assessment of the effect of a compensation event includes risk allowances for cost and time for matters which have a significant chance of occurring and are at the Contractor's risk under this contract. Assessments are based upon the assumptions that the Contractor reacts competently and promptly to the compensation event, that any Defined Cost and time due to the event are reasonably incurred and that the Accepted Programme can be changed. ‘A compensation event which is an instruction to change the Works Information in order to resolve an ambiguity or inconsistency is assessed as if the Prices, the Completion Date and the Key Dates were for the interpretation most favourable to the Party which did not provide the Works Information. If @ change to the Works Information makes the description of the Condition for a Key Date incorrect, ‘the Project Manager corrects the description. This correction is taken into account in assessing the compensation event for the ‘change to the Works Information. 18 © copyright nec 2013, [Link]core Clouses = NEC'3 The Project Managers 64 assessments 64.1 64.2 643 64.4 Implementing 65 compensation events 65.2 The Project Manager assesses a compensation event, * if the Contractor has not submitted a quotation and details of his assess- ‘ment within the time allowed, * if the Project Manager decides that the Contractor has not assessed the ‘compensation event correctly in @ quotation and he does not instruct the Contractor to submit a revised quotation, when the Contractor submits quotations for a compensation event, he hhas not submitted a programme or alterations to a programme which this contract requires him to submit or ‘when the Contractor submits quotations for a compensation event, the Project Manager has not accepted the Contractor's latest programme for one of the reasons stated in this contract. ‘The Project Manager assesses a compensation event using his own assess- ment of the programme for the remaining work if ® there is no Accepted Programme or * the Contractor has not submitted a programme or alterations to a programme for acceptance as required by this contract. ‘The Project Manager notifies the Contractor of his assessment of a compen- sation event and gives him details of it within the period allowed for the Contractor's submission of his quotation for the same event. This period starts when the need for the Project Manager's assessment becomes apparent. If the Project Manager does not assess a compensation event within the time allowed, the Contractor may notify the Project Manager of his failure. If the Contractor submitted more than one quotation for the compensation event, he states in his notification which quotation he proposes is to be accepted. If the Project Manager does not reply within two weeks of this notification the notification is treated as acceptance of the Contractor's quotation by the Project Manager. ‘A compensation event is implemented when * the Project Manager notifies his acceptance of the Contractor's quotation, © the Project Manager notifies the Contractor of his own assessment or * a Contractor's quotation is treated as having been accepted by the Project Menager. The assessment of a compensation event is not revised if a forecast upon which it is based is shown by later recorded information to have been wrong. \[Link] © copyright nec 2013 19 eo clauses ‘secondary main option clauses option clauses ‘cost ‘components contract datamain option clauses | secondary option clauses cost ‘components. contract data =TNEC'S Engineering and Construction Contract 7 Title Tho Employer's title to Plant and Materials Marking Equipment, Plant and Materials, outside the Working Areas Removing Equipment Objects and materials within the Site 70 TOA 70.2 72 724, 73 734 73.2 Whatever title the Contractor has to Plant and Materials which is outside the Working Areas passes to the Employer if the Supervisor has marked it as for this contract. Whatever title the Contractor has to Plant and Materials passes to the Employer if it has been brought within the Working Areas. The title to Plant ‘and Materials passes back to the Contractor if it is removed from the Working ‘Areas with the Project Manager's permission. The Supervisor marks Equipment, Plant and Materials which are outside the Working Areas if « this contract identifies them for payment and + the Contractor has prepared them for marking as the Works Information requires. ‘The Contractor removes Equipment from the Site when it is no longer needed unless the Project Manager allows it to be left in the works. ‘The Contractor has no title to an object of value or of historical or other interest within the Site. The Contractor notifies the Project Manager when such ‘an object is found and the Project Manager instructs the Contractor how to eal with it. The Contractor does not move the object without instructions. ‘The Contractor has title to materials from excavation and demolition only as stated in the Works Information. 20 © copyright nec 2013, [Link]8 Risks and insurance Employer's tisks 80 80.1 The Contractor's risks 81 814 Repairs 82 82.4 Indemnity 83 [Link] 83.4 83.2 Core Clauses = NEC'S The following are Employer's risks. '* Claims, proceedings, compensation and costs payable which are dué to ‘© use or occupation of the Site by the works or for the purpose of the works which is the unavoidable result of the works, ‘© negligence, breach of statutory duty of interference with any legal right by the Employer or by any person employed by or contracted to him except the Contractor or a fault of the Employer or a fault in his design. * Loss of or damage to Plant and Materials supplied to the Contractor by the Employer, or by Others on the Employer's behalf, until the Contractor has received and accepted them. + Loss of or damage to the works, Plant and Materials due to ‘© war, civil war, rebellion, revolution, insurrection, military or usurped power, strikes, riots and civil commotion not confined to the Contractor's employees or ‘© radioactive contamination. * Loss of or wear or damage to the parts of the works taken over by the Employer, except loss, wear or damage occurring before the issue of the Defects Certificate which Is due to ‘a Defect which existed at take over, ‘ an event occurring before take over which was not itself an Employer's risk or « the activities of the Contractor on the Site after take over. * Loss of or wear or damage to the works and any Equipment, Plant and Materials retained on the Site by the Employer after a termination, ‘except loss, wear or damage due to the activities of the Contractor on the Site after the termination. ‘* Additional Employer's risks stated in the Contract Data, From the starting date until the Defects Certificate has been issued, the risks which are not catried by the Employer are carried by the Contractor. Until the Defects Certificate has been issued and unless otherwise instructed by the Project Manager, the Contractor promptly replaces loss of and repairs damage to the works, Plant and Materials Each Party indemnifies the other against claims, proceedings, compensation and costs due to an event which is at his risk. The liability of each Party to indemnify the other Is reduced if events at the other Party's risk contributed to the claims, proceedings, compensation and costs. The reduction is in proportion to the extent that events which were at the other Party's risk contributed, taking into account each Party's responsibilities under this contract. p copyright nec 2013 21. main ‘option clauses ‘secondary option clauses cost ponents. a ‘contract dataclauses | ection option clauses | components | data \ = NCC'3 Engineering and Construction Contract Insurance cover Insurance policies If the Contractor does not insure Insurance by the Employer 84 84.4. 84.2 85 85.1 85.2 85.3 85.4 86 87 B74 ‘The Contractor provides the insurances stated in the Insurance Table except any insurance which the Employer is to provide as stated in the Contract Data. ‘The Contractor provides additional insurances as stated in the Contract Data. ‘The insurances are in the joint names of the Parties and provide cover for events which are at the Contractor's risk from the starting date until the Defects Certificate or a termination certificate has been issued. INSURANCE TABLE imum amount of cover or minimum limit of indemnity Insurance against The replacement cost, including the amount stated in the Contract Data for the replacement of any Plant and Materials provided by the Employer Loss of or damage to the works, Plant and Materials Loss of or damage to Equipment Liability for loss of or damage to property (except the works, Plant and Materials and Equipment) and liability for bodily injury to or death of ‘The replacement cost The amount stated in the Contract Data for any one event with cross liability so that the insurance applies to the Parties separately a person (not an employee of the Contractor) caused by activity in Connection with this contract Liability for death of or bodily injury to employees of the Contractor arising ut of and in the course of their ‘employment in connection with this contract ‘The greater of the amount required by the applicable law and the amount stated in the Contract Data for any one event Before the starting date and on each renewal of the insurance policy until the defects date, the Contractor submits to the Project Manager for acceptance certificates which state that the insurance required by this contract is in force. The certificates are signed by the Contractor's insurer or insurance broker. A reason for not accepting the certificates is that they do not comply with this contract. Insurance policies include a waiver by the insurers of their subrogation rights against directors and other employees of every insured except where there is fraud. ‘The Parties comply with the terms and conditions of the insurance policies. ‘Any amount not recovered from an insurer is borne by the Employer for events which are at his risk and by the Contractor for events which are at his risk. ‘The Employer may insure a risk which this contract requires the Contractor to Insure if the Contractor does not submit a required certificate. The cost of this insurance to the Employer is paid by the Contractor. The Project Manager submits policies and certificates for insurances provided by the Employer to the Contréictor for acceptance before the starting date and afterwards as the Contractor instructs. The Contractor accepts the policies and certificates if they comply with this contract. 22 © copyright nec 2013 [Link]core Causes NEC 87.2. The Contractor's acceptance of an insurance policy or certificate provided by the Employer does not change the responsibility of the Employer to provide ‘the insurances stated in the Contract Data, 87.3 The Contractor may insure a risk which this contract requires the Employer to insure if the Employer does not submit a required policy or certificate. The cost of this insurance to the Contractor is paid by the Employer. main option clauses secondary option clauses cost components contract, data [Link] © copyright nec 2013 23| eotion seconaary cost ‘components | contract data —_ *, = TNCC’3 Engineering and Construction Contract 9 Termination Termination Reasons for termination 90 90.4 90.2 90.3 90.4 90.5 on 91.4 If either Party wishes to terminate the Contractor's obligation to Provide the Works he notifies the Project Manager and the other Party giving details of his reason for terminating, The Project Manager issues a termination certificate to both Parties promptly if the reason complies with this contract. The Contractor may terminate only for a reason identified in the Termination Table. The Employer may terminate for any reason. The procedures followed and the amounts due on termination are in accordance with the Termination Table. ‘TERMINATION TABLE Terminating Party | Reason Procedure ‘Amount due The Employer A reason other PA and P2 A, A2 and Aa than R1-R21. RL-R15 or R18 | P4,P2 and P3 | Al and AS R17 of R20, PA and PS Ad and A2 R24 Pa and Pa Ad and A2 The Contractor | R1-R10,R16 or | P1 and P4 Ad, A2 and A4 R19 RIT or R20 PA and Pa Ad and A2 ‘The procedures for termination are implemented immediately after the Project Manager has issued a termination certificate. Within thirteen weeks of termination, the Project Manager certifies a final payment to or from the Contractor which is the Project Manager's assessment of the amount due on termination less the total of previous payments. Payment is made within three weeks of the Project Manager's certificate, After a termination certificate has been issued, the Contractor does no further work necessary to Provide the Works. Either Party may terminate if the other Party has done one of the following or its equivalent. ‘© Ifthe other Party is an individual and has presented his petition for bankruptey (R1), had a bankruptcy order made against him (R2), had a receiver appointed over his assets (R3] or made an arrangement with his creditors (R4). « If the other Party is a company or partnership and has had @ winding-up order made against it (R5), had a provisional liquidator appointed to it (R6), passed a resolution for winding-up (other than in order to amalgamate or reconstruct) (R7), had an administration order made against it (R8), had a receiver, receiver and manager, or administrative receiver appointed over the whole or a substantial part of its undertaking or assets (R9) or © made an arrangement with its creditors (R10). 24 © copyright nec 2013 [Link]core Clauses NEC 91.2 91.3 91.4 915 91.6 917 Procedures on termination 92 92.1. 92.2 The Employer may terminate if the Project Manager has notified that the Contractor has defaulted in one of the following ways and not put the default right within four weeks of the notification * Substantially failed to comply with his obligations (R14). ** Not provided a bond or guarantee which this contract requires (R12). * Appointed a Subcontractor for substantial work before the Project Manager has accepted the Subcontractor (R13). The Employer may terminate if the Project Manager has notified that the Contractor has defaulted in one of the following ways and not stopped defaulting within four weeks of the notification. + Substantially hindered the Employer or Others (R14), * Substantially broken a health or safety regulation (R15). The Contractor may terminate if the Employer has not paid an amount due under the contract within eleven weeks of the date that it should have been paid (R16). Either Party may terminate if the Parties have been released under the law from further performance of the whole of this contract (R17). If the Project Manager has instructed the Contractor to stop or not to start any substantial work ar all work and an instruction allowing the work to re-start or start has not been given within thirteen weeks, © the Employer may terminate if the instruction was due to a default by the Contractor (R18), © the Contractor may terminate if the instruction was due to a default by the Employer (R19) and #eahes Canty may termina if the Ineiuetion wads aus to ary other reason R20). ‘The Employer may terminate if an event occurs which * stops the Contractor completing the works or * stops the Contractor completing the works by the date shown on the Accepted Programme and is forecast to delay Completion by more than 13 weeks, and which * neither Party could prevent and ® an experienced contractor would have judged at the Contract Date to have such a small chance of occurring that it would have been unreason- able for him to have allowed for it (R21). On termination, the Employer may complete the works and may use any Plant and Materials to which he has title (P1). The procedure on termination also includes one or more of the following as set out in the Termination Table, P2_ The Employer may instruct the Contractor to leave the Site, remove any Equipment, Plant and Materials from the Site and assign the benefit of any subcontract or other contract related to performance of this contract to the Employer. P3_ The Employer may use any Equipment to which the Contractor has title to complete the works. The Contractor promptly removes the Equipment from Site when the Project Manager notifies him that the Employer no longer requires it to complete the works. P4 The Contractor leaves the Working Areas and removes the Equipment. ww [Link] © copyright nec 201325 a clauses main option clauses ] _ secondary | option clauses cost components contract dataee conuact data = NCC’ Engineering and Construction Contract Payment on termination 93 93.4. 93.2 ‘The amount due on termination includes (A1} ‘an amount due assessed as for normal payments, ‘* the Defined Cost for Plant and Materials ‘© within the Working Areas or ‘= to which the Employer has title and of which the Contractor has to accept delivery, = other Defined Cost reasonably incurred in expectation of completing the whole of the works, = any amounts retained by the Employer and ‘© 2 deduction of any un-repaid balance of an advanced payment. ‘The amount due on termination also includes one or more of the following as set out in the Termination Table. A2_ The forecast Defined Cost of removing the Equipment. ‘A3__ A deduction of the forecast of the additional cost to the Employer of com- pleting the whole of the works. ‘Ad The direct fee percentage applied to * for Options A, B, C and D, any excess of the total of the Prices at the Contract Date over the Price for Work Done to Date or for Options E and F, any excess of the first forecast of the Defined Cost ‘or the works over the Price for Work Done to Date less the Fee. 26 — «@ copyright nec 2013, [Link]MAIN OPTION CLAUSES Option A: Priced contract with activity schedule Identified and defined terms The programme ‘Acceleration The Activity Schedule Assessing compensation events 31 31.4 36 36.3 544 54.2 54.3 63 63.10 63.12 (20) The Activity Schedule is the activity schedule unless later changed in accordance with this contract. (22) Defined Cost is the cost of the components in the Shorter Schedule of Cost Components whether work is subcontracted or not excluding the cost of preparing quotations for compensation events. (27) The Price for Work Done to Date is the total of the Prices for * each group of completed activities and = each completed activity which is not in a group. A completed activity is one which is without Defects which would either delay or be covered by immediately following work. (30) The Prices are the lump sum prices for each of the activities on the Activity Schedule unless later changed in accordance with this contract. The Contractor provides information which shows how each activity on the Activity Schedule relates to the operations on each programme which he submits for acceptance. When the Project Manager accepts a quotation for an acceleration, he changes the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme. Information in the Activity Schedule is not Works Information or Site Information. If the Contractor changes a planned method of working at his discretion so that the activities on the Activity Schedule do not relate to the operations on the Accepted Programme, he submits a revision of the Activity Schedule to the Project Manager for acceptance. A reason for not accepting a revision of the Activity Schedule is that * it does not comply with the Accepted Programme, ‘ any changed Prices are not reasonably distributed between the activities or © the total of the Prices is changed. If the effect of a compensation event is to reduce the total Defined Cost and the event is + a change to the Works Information or * a correction of an assumption stated by the Project Manager for assessing an earlier compensation event, the Prices are reduced. Assessments for changed Prices for compensation events are in the form of changes to the Activity Schedule. ‘[Link] copyright nec 2013 27 ‘secondary ‘components= NEC’S Engineering and Construction Contract 63.14 If the Project Manager and the Contractor agree, rates and lump sums may be sed to assess a compensation event. Implementing 65 compensation events 65.4 The changes to the Prices, the Completion Date and the Key Dates are included in the notification implementing a compensation event. Payment on termination 93 93.3 The amount due on termination is assessed without taking grouping of activities into account. secondary option clauses cost components contract data 28 © copyright nec 2013 \[Link]Main Option Clauses © NEC3 Option B: Priced contract with bill of quantities Identified and defined 14 terms 11.2 Acceleration 36 36.3 The Bill of Quantities 55 55.4 Compensation events 60 60.4 60.5 60.8 60.7 (21) The Bill of Quantities Is the bill of quantities as changed in accordance with this contract to accommodate implemented compensation events and for accepted quotations for acceleration. (22) Defined Cost is the cost of the components in the Shorter Schedule of Cost Components whether work is subcontracted or not excluding the cost of preparing quotations for compensation events. (28) The Price for Work Done to Date is the total of ‘© the quantity of the work which the Contractor has completed for each item in the Bill of Quantities multiplied by the rate and ‘* a proportion of each lump sum which is the proportion of the work ‘covered by the item which the Contractor has completed. Completed work is work without Defects which would either delay or be covered by immediately following work. (31) The Prices are the Jump sums and the amounts obtained by multiplying the rates by the quantities for the items in the Bill of Quantities. When the Project Manager accepts a quotation for an acceleration, he changes the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme. Information in the Bill of Quantities is not Works Information or Site Information. A difference between the final total quantity of work done and the quantity stated for an item in the Bill of Quantities is a compensation event if * the difference does not result from a change to the Works Information, * the difference causes the Defined Cost per unit of quantity to change and * the rate in the Bill of Quantities for the item multiplied by the final total quantity of work done is more than 0.5% of the total of the Prices at the Contract Date. If the Defined Cost per unit of quantity is reduced, the affected rate is reduced. A difference between the final total quantity of work done and the quantity for an item stated in the Bill of Quantities which delays Completion or the meet. ing of the Condition stated for a Key Date is a compensation event. The Project Manager corrects mistakes in the Bill of Quantities which are departures from the rules for item descriptions and for division of the work into items in the method of measurement or are due to ambiguities or inconsistencies. Each such correction is a compensation event which may lead to reduced Prices. In assessing a compensation event which results from a correction of an consistency between the Bill of Quantities and another document, the Contractor is assumed to have taken the Bill of Quantities as correct. \[Link] © copyright nec 2013 29 core clauses cost ‘secondary components | option clauses contract datamain cust secondary option clauses cost mponents. |e contract data = NEC’3 engineering and Construction Contract Assessing compensation 63 events 63.10 63.13 Implementing 65 compensation events 65.4 If the effect of 2 compensation event is to reduce the total Defined Cost and the event is ‘© a change to the Works Information or * a correction of an assumption stated by the Project Manager for assessing aan earlier compensation event, the Prices are reduced. ‘Assessments for changed Prices for compensation events are in the form of changes to the Bill of Quantities. ‘ For the whole or a part of a compensation event for work net yet done and for which there is an item in the Bill of Quantities, the changes are = a changed rate, * a changed quantity or * a changed lump sum. * For the whole or a part of a compensation event for work not yet done and for which there is no item in the Bill of Quantities, the change is a ew priced item which, unless the Project Manager and the Contractor agree otherwise, is compiled in accordance with the method of measure- ment. * For the whole or a part of a compensation event for work already done, the change is a new lump sum item. If the Project Manager and the Contractor agree, rates and lump sums may be used to assess a compensation event. ‘The changes to the Prices, the Completion Date and the Key Dates are included in the notification implementing @ compensation event. 30 © copyright nec 2013, ‘[Link]