Contents	7
	Preface	13
	Author’s note	15
	1 Introduction	17
	1.1 Development of NEC contracts	17
	1.2 Characteristics of NEC contracts	18
	1.3 Structure of the NEC 3 Engineering and Construction Contract	20
	1.4 Feedback from ECC 2	21
	1.5 Changes from ECC 2	22
	1.6 Points of interest in NEC 3	23
	2 Main options	27
	2.1 Introduction	27
	2.2 Contract strategy	28
	2.3 Option A – priced contract with activity schedule	34
	2.4 Option B – priced contract with bill of quantities	37
	2.5 Target contracts generally	38
	2.6 Options C and D – target contracts	41
	2.7 Option E – cost reimbursable contract	42
	2.8 Option F – management contract	43
	2.9 Option W1 – dispute resolution	43
	2.10 Option W2 – dispute resolution	44
	3 Secondary option clauses	46
	3.1 Introduction	46
	3.2 Option X1 – price adjustment for in.ation	48
	3.3 Option X2 – changes in the law	48
	3.4 Option X3 – multiple currencies	49
	3.5 Option X4 – parent company guarantee	50
	3.6 Option X5 – sectional completion	51
	3.7 Option X6 – bonus for early completion	52
	3.8 Option X7 – delay damages	53
	3.9 Option X12 – partnering	58
	3.10 Option X13 – performance bond	60
	3.11 Option X14 – advanced payment to the contractor	61
	3.12 Option X15 – limitation of contractor’s liability for design	63
	3.13 Option X16 – retention	64
	3.14 Option X17 – low performance damages	66
	3.15 Option X18 – limitation of liability	67
	3.16 Option X20 – key performance indicators	70
	3.17 Option Y(UK)2 – Housing Grants, Construction and Regeneration Act 1996	71
	3.18 Option Y(UK)3 – Contracts (Rights of Third Parties) Act 1999	72
	3.19 Option Z1 – additional conditions	72
	4 Contract documents	74
	4.1 Introduction	74
	4.2 Entire agreements	75
	4.3 Clause 12.4 of NEC 3	76
	4.4 Construction of contracts generally	76
	4.5 NEC 3 documentation	77
	4.6 Essential contract documents	78
	4.7 Identified and defined terms	80
	4.8 The contract date	80
	4.9 Works information	82
	4.10 Site information	85
	4.11 Contract data	87
	4.12 Schedules of cost components	87
	4.13 Ambiguities and inconsistencies in the contract documents	90
	4.14 Schedule of clauses referring to the works information	91
	5 Key players	95
	5.1 Introduction	95
	5.2 Others	97
	5.3 Actions	98
	5.4 The employer	101
	5.5 Express obligations of the employer	102
	5.6 The project manager	103
	5.7 Express duties of the project manager	106
	5.8 The supervisor	110
	5.9 Express duties of the supervisor	111
	5.10 Communications	111
	5.11 The project manager and the supervisor	116
	6 General core clauses	118
	6.1 Introduction	118
	6.2 Actions	119
	6.3 Identified and defined terms	119
	6.4 Interpretation and the law	129
	6.5 Communications etc.	131
	6.6 Instructions	131
	6.7 Adding to the working areas	131
	6.8 Early warning	132
	6.9 Ambiguities and inconsistencies	135
	6.10 Illegal and impossible requirements	136
	6.11 Prevention	137
	7 Obligations and responsibilities of the contractor	142
	7.1 Introduction	142
	7.2 Design obligations, responsibilities and liabilities	145
	7.3 Providing the works	147
	7.4 The contractor’s design	149
	7.5 Using the contractor’s design	152
	7.6 Design of equipment	152
	7.7 People	153
	7.8 Working with the employer and others	154
	7.9 Subcontracting	156
	7.10 Other responsibilities	159
	7.11 Express obligations of the contractor	161
	7.12 Express prohibitions on the contractor	165
	8 Time (and related matters)	167
	8.1 Introduction	167
	8.2 Starting and completion	170
	8.3 Programmes	172
	8.4 Revision of programmes	175
	8.5 Shortened programmes	177
	8.6 Access to and use of the site	178
	8.7 Instructions to stop or not to start work	179
	8.8 Take-over	181
	8.9 Acceleration	183
	9 Testing and defects	186
	9.1 Introduction	186
	9.2 Definitions and certificates	189
	9.3 Tests and inspections	193
	9.4 Testing and inspection before delivery	195
	9.5 Searching and notifying defects	196
	9.6 Correcting defects	198
	9.7 Accepting defects	200
	9.8 Uncorrected defects	201
	10 Payments	204
	10.1 Introduction	204
	10.2 Assessing the amount due	207
	10.3 Payments	210
	10.4 Defined cost	213
	10.5 Payments – main option A	213
	10.6 Payments – main option B	217
	10.7 Payments – main option C	218
	10.8 Payments – main option D	223
	10.9 Payments – main option E	223
	10.10 Payments – main option F	224
	11 NEC 3 compensation event schemes	226
	11.1 Introduction	226
	11.2 Changes in NEC 3 (from ECC 2)	228
	11.3 Outline of procedures	232
	11.4 Defining a compensation event	233
	11.5 Compensation events as exclusive remedies	233
	11.6 Fairness of the compensation event procedures	234
	11.7 Unusual features of the compensation event procedures	235
	12 Listed compensation events	236
	12.1 Introduction	236
	12.2 Omissions from the listed events	237
	12.3 Works information related events	237
	12.4 Employer’s default events	240
	12.5 Employer’s risk events	242
	12.6 Project manager/supervisor related events	243
	12.7 Physical conditions	247
	12.8 Adverse weather	250
	12.9 Prevention	251
	12.10 Measurement related events	252
	12.11 Secondary option clause events 238	254
	13 Notifying compensation events	257
	13.1 Introduction	257
	13.2 Notifications by the project manager	258
	13.3 Notifications by the contractor	260
	13.4 Project manager’s response to notifications	264
	13.5 Last date for notification of compensation events	267
	14 Quotations for compensation events	269
	14.1 Introduction	269
	14.2 Instructions to submit quotations	272
	14.3 Instructions for alternative quotations	275
	14.4 Submission of quotations	276
	14.5 Status of the contractor’s quotations	278
	15 Assessment of compensation events	281
	15.1 Introduction	281
	15.2 Changes from ECC 2	282
	15.3 General assessment rules	283
	15.4 Particular assessment rules	290
	15.5 The project manager’s assessments	294
	15.6 Implementing compensation events	296
	15.7 Other .nancial remedies	297
	16 Title	299
	16.1 Introduction	299
	16.2 Employer’s title to equipment, plant and materials	300
	16.3 Marking equipment, plant and materials	301
	16.4 Removing equipment	301
	16.5 Objects and materials within the site	302
	17 Risks and insurances	304
	17.1 Introduction	304
	17.2 Employer’s risks	308
	17.3 Contractor’s risks	311
	17.4 Repairs	311
	17.5 Indemnity	312
	17.6 Insurance cover	312
	17.7 Insurance policies	313
	17.8 Contractor’s failure to insure	314
	17.9 Insurance by the employer	314
	18 Termination	316
	18.1 Introduction	316
	18.2 Summary of NEC 3 termination provisions	320
	18.3 Termination for ‘any reason’	321
	18.4 Termination under section 9	322
	18.5 Reasons for termination	324
	18.6 Procedures on termination	328
	18.7 Amounts due on termination	329
	19 Dispute resolution	331
	19.1 Introduction	331
	19.2 Developments in dispute resolution	332
	19.3 Meaning of dispute	333
	19.4 Adjudication under Option W1	335
	19.5 Adjudication under Option W2	345
	19.6 Review by the tribunal	349
	19.7 The Adjudicator’s Contract	352
	20 NEC 3 Engineering and Construction Subcontract	353
	20.1 Introduction	353
	20.2 Core clauses – general	355
	20.3 Core clauses – the subcontractor’s main responsibilities	356
	20.4 Core clauses – time	356
	20.5 Core clauses – testing and defects	357
	20.6 Core clauses – payment	357
	20.7 Core clauses – compensation events	358
	20.8 Core clauses – title	359
	20.9 Core clauses – risks and insurance	359
	20.10 Core clauses – termination	359
	20.11 Dispute resolution	360
	21 NEC 3 family of contracts	361
	21.1 The contracts	361
	21.2 NEC 3 Short Contract and Short Subcontract	362
	21.3 NEC 3 Term Service Contract	364
	21.4 NEC 3 Framework Contract	368
	21.5 NEC 3 Professional Services Contract	368
	21.6 NEC 3 Adjudicator’s Contract	370
	21.7 Concluding comment	370
	Table of cases	371
	Table of clause references	375