Temporal longstops and avoidance of delay

The rigour of NEC4 communications coupled with the requirement to fix a period for reply in the Contract Data (Part One) effectively eliminate any significant doubt over when any contractual issue will be resolved. While NEC4 does make provision for consensual extending of timescales,¹⁵⁷ it is reasonable to assume that such consensus will only be forthcoming when it is genuinely in both contractual parties’ interest to allow more time for a particular issue. Experience suggests that where NEC4 is properly operated, it is quite rare for communication time periods to be extended. It is perhaps slightly more common on building projects for compensation event quotation and/or reply periods to be extended; this is because the periods of three and two weeks respectively are generically prescriptive,¹⁵⁸ rather than decided on a project-specific basis. Consequently, depending on the building project in question, it is foreseeable that quotations for compensation events may be more time consuming, whether because of the complexity of an individual compensation event, the involvement of subcontractors, or a plethora of contemporaneous compensation events. In such circumstances, it may be in both parties’ interests to agree in advance to a limited extension of the period in question, although in order to maintain the relative certainty NEC4 engenders, blanket extensions should never be given.

Real time

One of the most important and potentially beneficial aspects of managing projects under the NEC4 form of contract is the underlying rationale of running projects in real time, without reliance on future negotiations.¹⁵⁹ This can be seen as quite a controversial aspect of NEC4, in that it leaves no room for either procrastination or revisiting difficult decisions. However, this aspect of NEC4 should not be perceived as necessarily requiring greater certainty of project objectives at the outset; indeed, NEC4 is predicated on the principle of needing flexibility.

One of the best ways for architects to decide whether NEC4 is something they wish to embrace is possibly to reflect on their own approach to management. Anyone for whom decision-making is preferably an incremental process is likely to find the requirements of NEC4 quite onerous. Whereas anyone who tends towards a holistic approach to making the right decision in all the circumstances at a snapshot in time is much more likely to find NEC4 second nature to them.

The whole project

The use of NEC contracts to date has seen advantages in appointing everyone within the supply chain for a particular project on an NEC form of contract. These advantages stem from having back-to-back contractual relationships, whether in the context of professional services or in the context of construction. Architects may be used to a convention of seeing the description ‘supply chain’ as solely relating to contractors and subcontractors; however, given the flexibility of procurement routes which can be supported by NEC4, it is perhaps helpful to get used to the idea that a supply chain includes consultants and subconsultants.

A way of life

Clearly, if NEC4 users get accustomed to and enjoy working collaboratively in such an environment of truly back-to-back contractual relationships, with no gaps or overlaps between the contracts making up the totality of project requirements, it becomes quite appealing to make NEC4 contracts the default for new projects. Architects are in a unique position with their building clients to influence the form of contract proposed for a particular project, in that they are appointed early, if not first, in the process. Of course, there will be other knowledgeable and influential players, such as cost consultants or even contractors, and naturally clients themselves will often have strong views about forms of contract. However, in the context of some architects occasionally feeling sidelined over key project management decisions, such as forms of contract, it is worth remembering that knowledge is power; adequate knowledge of NEC4 will therefore almost certainly put architects in a stronger position to ensure that their designs can be realised reliably and efficiently. It is perhaps also worth remembering that the balance of power in collective knowledge of NEC4 within the construction industry currently rests predominantly outside of the architectural profession and that it is arguably about time that more architects got up to speed. No one is advocating that a particular profession should take sole ownership of NEC4 – it is in essence a democratic form of contract and there are cogent arguments in favour of collaborative ownership, including where appropriate by architects.

All or nothing

NEC4 is undoubtedly a standard form of contract which offers the potential to manage projects in a proactive and efficient manner. Indeed, it requires a degree of commitment that is uncommon with other standard form contracts. The Contract is too precise to be operated successfully in anything but a completely committed manner.

Of course, there are real-life examples where the NEC contract has not been particularly well received and where the parties have not benefited from its use; however, there is strong evidence that such an outcome stems primarily from the way in which the parties approach the Contract. It is not a form of contract quite like any of its predecessors and it is certainly not a contract for any ambivalent members of the building industry. If the parties attempt to operate NEC4 in exactly the same way as older standard form contracts or with only half-hearted embracing of the newer approach, they will almost inevitably fail simply because such older standard forms, even in their latest editions, are not predicated on the same level of objectivity or precision as NEC4.

No one is likely to be overheard saying they ‘quite like NEC4’ – they will invariably tend towards a more polarised position. Those who believe in NEC4 are likely to be people with a ‘can do’, collaborative approach, who like to have a clear structure for managing a project but who also like a degree of autonomy in making that structure support their particular needs on that project. Anyone who prefers more rigid contractual mechanisms or who has slightly hierarchical tendencies (possibly getting some satisfaction from thrashing out any difficulties on a project with an occasional adversarial ‘bunfight’) is likely to be less enamoured of NEC4.

In the context of architects advising their clients on procurement strategies, having analysed contract typology and contract form, it may also be beneficial for the players in a building project to indulge in a little psychoanalysis before finalising their project strategy. Depending on the personalities of the key players on a particular project, they may be more or less well suited to the rigours of proactively managing that project under NEC4 contracts.

While there is no absolute necessity to use NEC4 family contracts across the entire supply chain for a project, and there is certainly no prohibition on mixing and matching other standard form contracts with NEC4, it is almost certainly worth actively considering the sense of this on any particular project. The potential success of a matrix of standard form contracts to cover all the relationships on a building project will be as dependent on the personalities of the parties forming those relationships as it will be on the actual standard form contracts. Experience also suggests that even one person out of an entire project team who is actively uncomfortable with a particular contract can be enough to interfere with the operation of that contract to the point where project success is potentially jeopardised.

The moral to this emphasis on personalities and commitment is almost certainly that NEC4 should ideally only be used where the key players have in principle both understood and bought into its philosophy and management techniques.

Use patterns

Use of the NEC contract has multiplied exponentially since its inception. The engineering sector within the construction industry has seen its use become the norm on a range of project types, including highways, railways, water supply and other infrastructure areas. Government endorsement of NEC3 and NEC4 has been important in influencing further use and there is no question that NEC has now been embraced wholeheartedly in the public sector for both engineering and building projects. High-profile projects undertaken using NEC include the London 2012 Olympics and Crossrail, where the NEC integration of engineering and building requirements in the Contract has been replicated in situ with multidisciplinary supply chains. Uptake of the NEC was initially slower in the building sector than the engineering sector, which was probably due to two distinct issues:

• The tendency for engineering works to be on a relatively large scale and sponsored by important, often public sector, patrons, where the incentive is high to adopt state-of-theart best practice.
• The apparently trivial but disproportionately significant subtitling of the NEC in 1995 (second edition) with ‘Engineering and construction contract’.

While the latter was clearly intended to emphasise that the NEC philosophy encompasses more than conventional civil, structural or other engineering works, it was arguably too subtle. Had the subtitle been ‘Engineering and building contract’, it is reasonable to assume that architects and those in their sphere of influence would have picked up on its significance much sooner. Nevertheless, time has taken its course and the building sector has caught up significantly in the use of the NEC form of contract. There are now many buildings standing that have been built under the NEC form of contract, whether hospitals, educational establishments, supermarkets or one-off houses. Public sector clients showed the way and private sector clients have followed.

In the early years of NEC, architects and quantity surveyors or cost consultants tended to be introduced to NEC by their clients, which was perhaps readily understandable. The building sector had a long history of using standard form contracts traceable back to the Victorian era,¹⁶⁰ and architects held a reasonable reluctance to put forward untried or untested methods in any aspect of building. However, a position has been reached where state-of-the-art knowledge in the UK building industry clearly includes the NEC4 form of contract, and architects will therefore want to use it of their own volition and be a ‘safe pair of hands’ in its implementation.