--~nec

PROCURE. M A N A G E . DELIVER.

Managing the contract: the ECC processes

Click on each icon to visit all of the sections to progress

01 B 02 03 B 04 05 B 06 07 B 08 B 09

© ©@© © © © © ©
General
Provisions
Contractor's
main
Time Quality
management
Payment Compensation
events
Title Liabilities
and
Termination
and
responsibilities insurance dispute
resolution
3.1 General provisions

Actions

Identified and defined terms

Communications

Project Manager and Supervisor

Early warning
Actions

Act as stated in the contract (10.1)

• obliges the persons to do everything the contract states

Act in a spirit of mutual trust and co-operation (10.2)

• covers obligations and attitude
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

10
(1) Accepted
Programme
16
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

10
(2) Completion
(certainty of
16 18 19 requirements)
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(3) Completion
Date
11 14 16 17 18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

9 10
(5) Corrupt Act

11 14 16 17 18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

10
(6) Defect (two
types)
11 14 16 17 18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

10
(9) Equipment

11 14 16 17 18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(10) Fee (covers

all costs not in
11 14 16 17 18 19 20 Defined Cost
(52.1))
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(11) Key Date

16 18 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(14) Plant and

Materials
16 17 18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(16) Scope

17 18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(17) Site

18 19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(18) Site
Information
19 20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(19)
Subcontractor
20
Identified and defined terms
• Identified terms in Contract Data are in italics

• Defined terms, capitalised and in 1 1.2

Click each term number to reveal

(20) Working
Areas
Communications

Must be in a form that Use of a "communication Replies within period for Notifications and
can be read, copied and system" (13.2) reply or as in contract (13.3) certificates to
recorded (13.1) be communicated
• see simple examples in separately (13.7)
delegate packs
 Project Manager and Supervisor

Pro
J i ec1: ana
9 er (?M) manages ECC for Client

PM has a great deal of authority

PM must be even handed in matters such as assessing payment

PM constrained by need to give reasons if rejects a Contractor's submission - if

not in contract then Contractor is compensated

Supervisor checks Contractor's compliance with the Scope

k.
Project Manager and Supervisor

Acceptance of any communication (programme, design etc.) by the PM ox

Supervisor does not change the Contractor's responsibility to Provide the
Works or liability for its design (14.1)

PM ox Supervisor may delegate any actions (14.2)

PM \s the only person who may give an instruction changing the Scope or Key
Date (14.3)
Early warning
Contractor and PM have a duty to notify the other as soon as they are aware of a 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 (1 5. 1) or
• adversely affect the creation or use of the Information Model (X1 0.3)

PM or Contractor may give an early warning by notifying the other of any other matter
which could increase Contractor's total cost

PM enters early warning matters i n Early Warning Register (1 5.1)

Early warning

PM prepares and issues first Early PM instructs first early warning

Warning Register within one meeting within two weeks of
week of starting date (1 5.2) starting date

Further early warning

Either party may at any time meetings occur
instruct the other to attend •when instructed by a party
later early warning meeting and
no longer than intervals
stated in Contract Data
Early warning

A Subcontractor attends if attendance will assist (1 5.2)

Those attending co-operate in: making and considering proposals to avoid

or reduce effects, seeking solutions, deciding actions, reviewing and
perhaps removing matters from Early Warning Register (1 5.3)

PM revises Early Warning Register to record decisions and issues within one
week (1 5.4)

Encourages collaboration, innovation and ability to adjust to circumstances

°§°(04 during the contract
Contractor's proposals

Contractor may propose If the PM accepts the For Option A and B, the
changes to Client's Scope proposal, the PM issues an benefit is shared by the value
which reduces the total of instruction changing the engineering percentage
the Prices (16.1) Scope (16.2) (63.12) if:
• the change is to Client's
Scope and
• the total Defined Cost is
reduced by the
compensation event
3.2 Con tra ctor's main responsibilities

1 Providing the Works

2 Contractor's design

3 People

4 Working with the Client and Others

5 Subcontracting
The Contractor's main responsibilities

Providing the Works (20)

• Contractor Provides the Works in accordance with the Scope
Design

Contractor's design (21) Using the design (22) Design liability

• Contractor designs the parts of • Contractor owns its • Contractor may have
the works which the Scope rights (22.1) unless limited design liability
states it is to design Option X9 adopted (Option X1 5)

• default is Client design

• design acceptance before proceeding

• reasons for not accepting design

People

The Contractor
•employs each key person stated in Contract Data or
• employs replacement person accepted by PM (24.1)

• X• • Reasons for not accepting (24.1)

mi

PM may instruct removal of a person (24.2)

Working with Client and Others - Key Dates
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Contractor co-operates Multi-contract projects If the PM decides (25.3) Optional - no

with Others (25.1) are coordinated •work does not meet obligation to use
through use of Key Condition stated for a Key Dates
Dates, by which stated Key Date by the date
conditions have to be stated and
met • Client incurs additional
cost
the additional cost is paid
by Contractor
Subcontracting
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If subcontracts, Contractor Con tractor submits for all Options Contractor additionally
still responsible for • name of each proposed submits for Options C t o F
Providing the Works (26.1) Subcontractor t o PM for •proposed pricing
acceptance (26.2) information (26.4)
•proposed subcontract documents
except pricing information unless
•NEC contract is proposed,
unamended except for
changes in main contract, or
• PM agrees no submission
required (26.3)
3.3 Time

Starting, Completion and Key Dates

Programme

3 Stopping and starting work

Starting, Completion and Key Dates
Contractor does not start work on site until first access date (30.1)
and does work so that Completion is on or before Completion Date

PM decides date of Completion and certifies within a week (30.2)

Contractor does work so that condition stated for each Key Date is
met by Key Date (30.3)

Completion Date can be changed by PM as a result of compensation

events or acceleration (36)
Take over
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Take over (35) is Contractor is Client takes over Client may take over PM certifies take
not the same as responsible for within 2 weeks of part of the works over of part of
Completion works until Completion unless before Completion - the works within
take over Client has stated in will be a one week
Contract Data it will compensation event
not take over "early", if before
i.e. before Completion Completion Date
Date (35.1) (60.1(15))
Programme

Can be submitted with tender Programme includes (31.2) Likely to be collection

or after Contract Date (31.1) • various dates of documents which
may include, resource
• order and timing of operations
statements, information
• order and timing of work of required schedules,
Client and Others network diagrams,
• provisions for float, time risk bar charts
allowances
• for each operation, a statement
of how Contractor plans to do
work identifying principal
Equipment and resources
Accepting programme

Programme must Reasons for not If PM does not notify

be accepted or accepting (31 .3) acceptance or non-acceptance
rejected by PM • Contractor may notify
within two weeks PM of failure
of submission • if no action by PM,
programme is treated
as accepted
Updating programme
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Programme has to be updated regularly (32)

Shows a number of things including the actual progress achieved on each

operation and its effect on remaining work (32.1)

How frequent?
• on instruction by PM
• w h e n Contractor chooses
• at interval stated in Contract Data (32.2)
Stopping and starting work

PM can instruct Contractor to stop or not start work (34.1)

PM must then give instruction to

• re-starting or start work or
• remove work from Scope

Compensation event (60.1(4)) and termination event (91 .6). Consider

whether fault of Contractor
3.4 Quality management

Quality management system

Tests and inspections

Defects
Quality management system

Con tractor has a quality management system (40.1)

Contractor provides a quality policy statement and quality plan (40.2)

PM accepts quality policy statement and quality plan

An instruction to correct a failure in the plan is not a compensation

event (40.3)
Tests and inspections

Contractor and Supervisor notify each other of tests (41 .3)

Contractor pays the cost of any repeat test or inspection required

because a Defect was found (41.6)
Defects

Searching for and notifying Defects (43)

• search provisions (43.1)

• Supervisor and Contractor notify each other as soon as they find
Defects (43.2)

Correcting Defects (44)

• Contractor corrects notified Defects before end of defect correction

period (44.2)

• access required after take over to correct a Defect (44.4)

Defects timetable
Delivery defects date

defect
Defects notified correction
period
before Delivery defect
correction
defect period
after Delivery access defect
correction
period period
before defects date

Latest issue of
Defects Certificate
Defects

Uncorrected Defects (46)

X
• if not corrected within defect correction period the PM assesses cost to Client of
correcting it and Contractor pays amount (46.1)

Accepting Defects (45)

• proposals that Defect not corrected (45.1)
• quotation for reduced Prices and/or earlier Completion Date (45.2)
• if accepted, PM changes Scope, Prices and dates accordingly
3.5 Payment

Assessing the a m o u n t due

Times for assessment a n d payment

Schedule of Cost Components (SCC)

Assessment timetable

Assessments made by the PM (50.1)

First assessment n o later t h a n t h e assessment interval after t h e

starting date

Normal assessments made at assessment interval until

• t h e Supervisor issues t h e Defects Certificate o r
• the PM issues a termination certificate

Final assessment n o later than

• four weeks after Defects Certificate o r
• thirteen weeks after termination certificate (53.1)
Payment process - assessment timetable

starting Completion Defects

date Certificate

continues until
Defects Certificate

w i t h i n 4 weeks

assessment assessment
interval interval

assessments final assessment

Assessment

PM assesses Contractor submits Application includes PM considers the

amount due at an application for details of how application when
each assessment payment before each amount has been assessing the
date (50.1) assessment date assessed, in form amount due (50.2)
stated i n Scope
Assessment
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If Contractor submits application, amount due is:

• Price for Work Done to Date (PWDD) pl us/less other amounts e.g.
retention, delay damages, KPIs (50.3)

If Contractor does not submit an application, amount due is lesser of

• amount PM assesses and
• amount due at the previous assessment date (50.4)

One quarter (25%) of PWDD retained if there is no first programme (50.5)

Price for Work Done to Date

Option Option Option

A B C to F

Total of Prices Quantities of completed Defined Cost forecast

for completed work at Bill of Quantities to be paid before
activities 1 1 .2(29) rates and proportions of next assessment date
lump sums 1 1 .2(30) + Fee 11.2(31)
Defined Cost for PWDD

Option Option
F

Cost of components in SCC, less Payments due to Subcontractors for

Disallowed Cost (1 1 .2(24)) work subcontracted and prices for
work done by Contractor, less
Disallowed Cost (1 1 .2(25))
Disallowed Cost

___ Option C to E 11.2(26)

Cost which, for example,
WjCSjW • is not justified by the Contractor's accounts
• should not have been paid to Subcontractor
• was incurred only because Contractor did not give early warning
• correcting Defects after Completion

Option F 11.2(27)
BRk As C to E plus
• payment to Subcontractor for work which Contract Data states
ContractorwiW do itself or
• Contractor's management
Defined Cost

Defined Cost includes only amounts

WXMJ

• calculated using rates and percentages stated in the Contract Data

• other amounts at open market or competitively tendered prices with
deductions for all discounts, rebates and taxes (52.1)

Defined Cost can be "finalised" so it is not revisited (50.9)

Fee

All Con tractor's costs not The Fee is calculated by

included in Defined Cost are applying the fee percentage
1 treated as included in Fee to the amount of Defined
k. (52.1) A Cost (11.2(10))
Payment - times without Y(UK)2
assessment PM certifies Certified payment is
date payment made
1 week

3 weeks or other period stated in CD

interest 51 .2

Note t h a t for final assessment, t h e Contractor may issue t h e assessment

Payment - times with Y(UK)2

assessment Y2.2 due date Y2.2 final date

date for payment for payment

PM certificate -Y2.2 Y2.3 notice to pay

notice of payment less than PM's
assessment

Y2.5 suspension of
performance of all or
part of works

Note that for final assessment, the Contractor may issue the assessment
Final Assessment

PM assesses final amount due and certifies final payment n o later than
• four weeks after Defects Certificate or
• thirteen weeks after termination certificate (53.1)

anaa

If PM does not make assessment, Contractor may make assessment (53.2)

Assessment of final amount is final unless a Party disputes it (53.3)

Schedule of Cost Components
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Only used in Options C to E

Used for assessing both

• compensation events and
• Price for Work Done to Date (PWDD)

An amount is included only in one cost component and only if incurred to

Provide the Works
Schedule of Cost Components
• Components

Click each number t o reveal People

Schedule of Cost Components
• Components

Click each number t o reveal Equipment

Schedule of Cost Components
• Components

Click each number t o reveal Plant and Materials

Schedule of Cost Components
• Components

Click each number to reveal Subcontractors

Schedule of Cost Components
• Components

Click each number to reveal Charges

Schedule of Cost Components
• Components

Click each number to reveal Manufacture and

fabrication
Schedule of Cost Components
• Components

Click each number t o reveal Design

DDDF 8
Schedule of Cost Components
• Components

• Data completed in Contract Data part two

Click each number to reveal Insurance

3.6 Compensation events

Definition

2 Process

3 Method of assessment

4 Short Schedule of Cost Components (SSCC)

5 Sanctions for non-compliance

Definition

Compensation events are

• events which, if they do not arise from Contractor's
fault, entitle Contractor to be compensated for effect
on the Prices, Key Dates and Completion Date

Therefore it is important to remember that compensation

events deal with both time and money
Definition

COMPB
Where are compensation events stated?
TI®N
21 in clause 60.1
3 in main Options B and D, in clauses 60.4 to 60.6

also in secondary Options X2, X1 2.3(6) & (7), X1 4.2, X1 5.2 and Y2.5

may be in Contract Data part one

• may be additional compensation events in secondary Option Z

Some decisions/instructions specifically not compensation events - for example whole life
cost changes to Scope (X21 .5)
Compensation events
Compensation events, examples 60.1

13

(1) PM gives instruction changing the Scope

Compensation events
Compensation events, examples 60.1

5 12 13

(2) Client does not allow access to and use

of part of the Site
Compensation events
Compensation events, examples 60.1

13

(3) C/ient does not provide something

Compensation events
Compensation events, examples 60.1

12 13

(5) Default by Client or Others

Compensation events
Compensation events, examples 60.1

(12) Contractor encounters certain physical

conditions
Compensation events
Compensation events, examples 60.1

(13) A weather measurement is recorded,

less frequently than once in ten years
Process

There is a defined process to agree (or impose) the effects of a

compensation event within defined time limits

Both PM and Contractor can make sure that process and time
scales are adhered to

A separate process for proposed quotations (65)

Notification

If the compensation event arises PM includes in notification Otherwise Contractor

from PM or Supervisor instruction to Contractor to notifies (61 .3)
provide quotation (61.2)
• giving instruction or notification
• issuing certificate or
• changing earlier decision
then PM notifies at time of
communication (61 .1)
Notification
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When Contractor notifies, PM replies within one week with "yes" or " n o "

Answer is " n o " if PM decides event

• is Contractor's fault
• has not happened/is not expected to happen
• is not notified in time
• has no effect on Defined Cost or time, or
• is not a listed compensation event (61 .4)

Otherwise answer is "yes" and includes PM instruction to Contractor

to provide a quotation (61 .4)
Sanctions (1)

Contractor inaction PM inaction

If Contractor does not notify of • If PM fails to reply to Contractor's

compensation event it is supposed to notification of compensation event
(not one to be notified by PM) within within 1 week. Contractor may give PM
8 weeks of becoming aware of event, a reminder (61.4)
it loses rights to any additional time • If failure continues for a further 2
or money (61.3) weeks after reminder, deemed that PM
has accepted it is a compensation event
and has instructed a quotation to be
provided (61.4)
Quotation

When PM notifies the event When instructing a Contractor provides

as a compensation event, quotation PM may quotation within 3 weeks
included in notification is an • instruct alternative (62.3), which can be extended
instruction to Contractor to quotations (after by agreement (62.5)
provide quotation discussion with
Contractor) (62.1) and/or
• state assumptions on
which quotation is to be
based (61 .6), if effects
are unclear
Assessment

Change to the Prices

• actual Defined Cost of work done by dividing date
• forecast Defined Cost of work not yet done by dividing date
• resulting Fee (63.1)

Dividing date
• if arising from instruction or notification, certificate, or changed decision,
then date of communication by PM or Supervisor
• otherwise date of notification of compensation event (63.1)

Which Schedule of Cost Components for Defined Cost?

Calculating Defined Cost for compensation events

Short Schedule of Cost SCC used in Options C to E

Components (SSCC)
• only used in Options A and B
• amount is included only in one
cost component and only if
incurred to Provide the Works
• same headings as SCC
Assessment

If ?/Wand Contractor both agree, rates and lump sums may be used as a
basis for assessment (63.2)

Otherwise Prices or rates in the Bill of Quantities or Activity Schedule are

A J02 NOT used

Prices are not reduced for a compensation event that reduces Defined
Cost unless specifically stated (63.3)
Assessment

Delay to the Completion Date

• length of time that, due to compensation event, planned Completion is later than
planned Completion shown on Accepted Programme current at dividing date (63.5)

Delay to a Key Date

• length of time that, due to compensation event, planned date when Condition will be
met is later than date shown on Accepted Programme current at dividing date (63.5)
Decision by PM

X
PM replies within 2 weeks The reply is one of following If reply is rejection, the PM
of receipt of quotation (62.3) must
(62.3)) • accept quotation • ask Con tra ctor to provide
• reject quotation, because it revised quotation (with
has not been prepared in reasons) or
accordance with contract • t e l l Contractor it will make
own assessment

Note PM cannot just reject

Sanctions (2)

If PM fails within allowed If there was more than If failure continues for a
time to reply to quotation one quotation, notification further 2 weeks after
Contractor may notify identifies the preferred reminder, the Contractor's
reminder (62.6) quotation quotation is treated as having
been accepted (62.6)
PM'S assessment

PM makes assessment if

• Contractor has not responded within time

• PM decides Contractor has not assessed compensation event correctly

• No programme or alterations to programme submitted by Contractor with quotation

• PM has not accepted Contractor's latest programme (64.1 )

PM makes own assessment within the time allowed for Con tractor (64.3)
PM's assessment
PM assesses the programme for the remaining work in assessment of compensation event if

There is no Accepted Programme

The Con tractor has not submitted a programme or alteration to the

programme for acceptance

PM has not accepted Contractor's latest programme (64.2)

Sanctions (3)

If PM fails within allowed If there was more than If failure continues for a
time to assess quotation one original quotation further 2 weeks after
Contractor may notify from Contractor, reminder, the Contractor's
reminder (64.4) notification identifies the original quotation is
preferred quotation treated as having been
accepted (64.4)
Implementation

Compensation event is implemented when

• PM accepts Contractor 's quotation
• PM notifies Contractor of own assessment or
• Contractor's quotation is treated as having been accepted (66.1)

Once implemented
• the Prices and Completion Date and Key Dates are changed accordingly (66.2)
• the assessment is not revised (even if wrong) except as permitted by the contract (66.3)
• only the Adjudicator or tribunal can change the assessment if one Party still disagrees
(W1/W2/W3). The Dispute Avoidance Board cannot change the assessment
 C notifies CE
IS THERE A CE? PM notifies CE 8 Week time bar - for
Deemed acceptance after two certain CEs (61 .3)
weeks from Con tractor advising
<1 week
no decision received (61 .4)

PM states if any assumptions to Instruct quote Should early warning have been given?
be used (61.6) (61.2/4) (61.5/63.7)
PM can request alternative quotes INSTRUCT QUOTATION
(62.1)

CONTRACTOR ASSESSMENT <3 Weeks

PM DECISION
Deemed acceptance after two weeks PM reply (62.3)
from Con tractor advising no decision accept/reject/self-assess <2 Weeks
received (62.6)

Deemed acceptance after two weeks PM ASSESSMENT

from Contractor advising no decision PM assessment (64. 1) <3 Weeks
received (64.4) (if required)

IMPLEMENTATION

Time/cost freeze as long as no further

New CE if assumptions change Implementation
CE affects works
Proposed quotations
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PM may instruct for a quotation Contractor submits quotation Quotation assessed as

for proposed instruction (65.1) within three weeks (65.2) compensation event

PM If not accepted
• accepts quotation and • notification is a compensation
notifies instruction event, so Contractor gets paid
• instructs a revised for quotation (60.1(20))
quotation or • PM may still issue instruction and
• notifies quotation not normal compensation event
accepted process is followed (65.3)
3.7 Title

Title

2 Use of material
Title and use of material
Whatever title Contractor has to Plant and Materials passes to Client
• when brought into Working Areas (70.2) or
• if they are outside the Working Areas, when they are marked by Supervisor (70.1)

Objects and materials within Site

• PM instructs how to deal with object of value or historic or other interest (73.1)
• Contractor has title to materials from excavation and demolition unless stated
otherwise in the Scope (73.2)

Contractor only has restricted use of material supplied by Client (74. 1)

3.8 Liabilities and insurance

Liabilities and insurance

insurance

8 0 Client's liabilities (damage and 3rd party claims)

81 Contractor's liabilities unless stated as being the Client's

82 Recovery of costs
• each Party pays for events for which they are liable
• net contribution

83 Insurance cover - 4 types

Liabilities and insurance

84 Insurance policies
0
86 Insurance by Client

X18 Limitation of liability

Bo
3.9 Termination and dispute resolution

Termination

2 Resolving disputes
 Termination

F di*
L _______
Termination is of Contractor's obligation to Provide the kVor s(90.1)

A Party may terminate only for reasons in Termination Table (90.2)

Client may terminate for any reason with Option X1 1

Stated reasons for termination (91)

???
* V

Procedures on termination (92)

Payment o n termination (93)

Dispute resolution

• 3 options, W 1, W2 and W3

• Choice is entered in Contract Data part one

• W 1 or W3 used unless HGCRA applies

• W2 used if HGCRA applies

• W 1 and W2 use adjudication as the primary means of dispute resolution

• W3 uses a Dispute Avoidance Board established at the start of the contract

Key points of W2

Adjudication can be "at any time"

(W2.2(1»
Key points of W2

Parties may refer dispute to the Senior

Representatives f irst, by agreement
(W2.1(1))
Key points of W2

Adjudicators an independent 3rd party

who can be named in the contract, or
agreed or appointed when the dispute
arises (W2.2)
Key points of W2

Adjudicator is employed by both Parties

using the NEC Dispute Resolution Service
Contract
Key points of W2

Adjudicator has 28 days to make decision,

which can be extended by agreement
(W2.3(8))
Key points of W2

Adjudicator's decision is binding but not

necessarily final (W2.3(1 1))
Key points of W2

Subcontract joinder possible by agreement

(W2.3(3))
Tribunal
In W1, W2 and W3, final decision is made by tribunal
named in Contract Data part one
• Arbitration, or
• the courts (W2.4)

Can't use tribunal until after Adjudicator

makes decision (W2.4(1))

Parties have 4 weeks after decision to notify

disagreement with it, otherwise becomes final
as well as binding (W2.4(2))