Tutorial Schedule

Tutorial Group A Group B Group C

28-Feb 7:00pm [Fri] 1-Mar 2:00pm [Sat] 1-Mar 5:00pm [Sat]
1st
CP 305 LI 2301 LI 2301

7-Mar 7:00pm [Fri] 8-Mar 2:00pm [Sat] 8-Mar 5:00pm [Sat]

2nd
CP 305 LI 2301 LI 2301
Remark: no lesson on 15 Mar Remark: no lesson on 15 Mar

CONTRACT ADMINISTRATION 3rd 14-Mar 7:00pm [Fri]

CP 305
22-Mar 2:00pm [Sat]
LI 2301
22-Mar 5:00pm [Sat]
LI 2301
& DISPUTE RESOLUTION (Group A ahead one week)

21-Mar 7:00pm [Fri] 29-Mar 2:00pm [Sat] 29-Mar 5:00pm [Sat]

4th
CP 305 LI 2301 LI 2301
(Group A ahead one week)

6CN011HK Tutorial 2

Assignment 1
 Task 1 - Identify the necessary contract documents for
procuring a building using the NEC4 Engineering and
Construction Contract (Option B), and explain the purpose of
each document. (Word limit: 1000)

 Task 2 - Under the Hong Kong Standard Form of Building

Contract 2005 edition or the JCT Standard Form of Building
PREPARING THE TENDER Contract 2016, the parties have to complete and sign the
DOCUMENT FOR NEC CONTRACT Agreement to create a contractual relationship. What is the
equivalent document applicable to the NEC 4 ECC? Comment
on the data/information that must be incorporated in the
project for the contract to be formed appropriately. (Word
limit: 1000).

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Tender Document component Tender Document component
HK Practice HK Practice

The typical tender documents to be issued with invitations to tender After award of contract, the contract document will be :
include the following:
1. Instructions to tenderer (Conditions of Tender)
 The above item 1 to 10 (i.e. the tender document with priced BQ)
2. Form of tender
3. Conditions of Contract (refer to the Standard Form of Contract)
 Agreement of Schedule of Conditions of Building Contract
4. Special Conditions of Contract
5. Specification Preliminaries
 Letter of Award
6. General Specification
7. Particular Specification
 Contract Correspondences
8. Preambles
9. Bill of quantities / Schedule of Rates
10. Schedule of tender drawings

NEC 4 Tender Document Formation NEC4 ECC – Choosing the strategy

Whatever Options in strategy are adopted, most of the procedures, based upon Whatever Options in strategy are adopted, most of the procedures, based upon the
the core clauses of the ECC, will be common to all contracts core clauses of the ECC, will be common to all contracts

At the heart of contract Option Feature

conditions are the core Priced Contract • The Contractor is paid at tendered prices (and rates with
clauses, which will determine Option A and B Option A/B) for the work he has done
the essential common terms • The Contractor carries all risks other than the Employer’s risks
and define contractual stated in the Contract and the financial and time effects of
relationship, they apply to compensation events
each of the six Options Target Contract • The target permit the cost risk to be shared between the
Option C and D
Contractor’s
Employer and the Contract
Main option should be financial risk
Management • It is essentially cost reimbursable but risk allocation can be
selected and it will determine Option F varied by choosing appropriate main options in the subcontract
the particular payment
mechanism and risk allocation
between the Employer and Reimbursable • In the reimbursable contract, the Contractor is paid the Defined
the Contractor Contract Cost, as defined in the chosen main Option
Option E

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NEC 4 Contents NEC 4 : Core Clause
1. Core Clauses – are used for definition of the contractual relationship. NEC 4 Core Clause No. HK Standard Form
They apply to each of the six main Options 1. General
e.g. defined terms, communications, PM and supervisor, early warning, corrupt
2. Resolving and Avoiding Disputes acts, prevention, contractor’s proposal, requirements for instructions

Option W1, W2, W3 2. The Contractor’s main responsibilities Clause 2

Either Adjudication or Dispute Avoidance Board is used

3. Time Clause 17, Clause 23
4. Quality management Clause 8, Clause 17.3 Rectifying defect
3. Secondary option clauses 5. Payment Clause 32

Option X1 to X21 (free to choose) 6. Compensation events Clause 25 (EOT), Clause 26 (Delay
recovery measures), Clause 27
4. Contract Data ; consists of two key parts : 7. Titles Clause 9
e.g. Client’s title to plant and materials

the Contract Data part one (Data provided by the Employer) and
8. Liabilities and insurance Clause 20, Clause 21, Clause 22

The contract Data part two (Data provided by the Contractor)
9. Termination Clause 36 (determination by contractor)

NEC 4 : Option Clauses NEC 4 : Option Clauses

NEC 4 Option Clauses HK Standard Form  Option Y1 to Y3 (apply to UK )
Option X1: Price adjustment for inflation Clause 38
Option Y1: Project bank account
Option X5: Sectional completion Clause 18
Option Y2: The housing grants, construction and regeneration Act
Option X6: Bonus for early completion N.A. 1996
Option X7: Delay damages Clause 24 (damages for non-completion)
Option Y3: The Contracts (Rights of Third Parties)Act 1999
Option X11: Termination by the Client Clause 35 (determination by employer)
Option X13: Performance bond Clause 33 (surety bond)  Option Z : Additional conditions of contract
Option X14: Advanced payment to N.A.

This similar to “Special Conditions of Contract” as use in HK
contractor
Option X15: Contractor’s design N.A.
Option X16: Retention Clause 32.4 and 32.5

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Comparison of
Comparison of common terminologies
tender document components
NEC Engineering and construction Traditional HKIA/ GCC tender
contract (ECC) document
General Condition of Tender General Condition of Tender
Special Conditions of Tender Special Conditions of Tender
Form of Tender Form of Tender
Articles of Agreement and its Schedule Articles of Agreement
Contract Data Part 1 & Part 2 Conditions of Contract / Appendix
Conditions of Contract / Additional conditions of contract
Additional conditions of contract
The Scope Specification, Particular Specification
Site Information Drawings
Activity Schedule/Bill of Quantities/ Bills of Quantities / Schedule of Rates
Price list

Tender Document component

NEC 4
The documents to be issued with invitations to tender include the
following:
1. Conditions of Tender / Notes to Tenderers
2. Form of Tender
3. Articles of Agreement
4. Contract Data Part One
5. Contract Data Part Two (pro-forma for completion by tenderers)

PREPARING THE TENDER 6. Bills of quantities (Option B and D) OR Activity Schedules (Option A and C)
7. General preambles to the bills of quantities
DOCUMENT FOR NEC CONTRACT 8. Scope
9. General particulars and preambles to Specification for the Works
Information
10. Site information
11. A pre-tender health and safety plan is normally required in UK contracts

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Tender Document component Tender Document component
1. Instructions to tenderers (HK practice)  For NEC ECC, the documents which tenderers will be required to submit
 In HK practice, some may refer to “Conditions of Tender” will depend on which of the main options A to F and of the secondary
The Invitation to Tender Letters are short and simple, and all information relating options have been incorporated
to the tender should be included in the separate Instructions to Tenderers

a completed Form of Tender will be required together with part 2 of
the Contract Data
 For example, the instruction to tenderers will stated which documents are
required to be submitted by tenderers
 When it is intended that the Contractor will carry out design work (D&B), the
Employer may wish tendering contractors to submit information about their
 For example, the instruction to tenderers will stated that no unauthorized
proposed design with their tenders
alteration or erasure to the text of the tender documents will be permitted.

It is then included in part 2 of the Contract Data
 For example, the instruction to tenderers will stated that the Employer reserves
If they do, the Notes to Tenderers must include particulars of the information
the right to reject any tender where these Conditions of Tender are not complied required
with
 The Notes to Tenderers must also state which management functions are to be
 For example, the instruction to tenderers will stated the Employer is not bound to covered by the people who are to be identified in the Contract Data as “key
accept the lowest or any tender which may be received people”

Tender Document component Tender Document component

2. Form of Tender

2. Form of Tender
Project title
 No standard form of tender has been included in the NEC ECC
Employer’s name
as many employer have standard forms containing their own We offer to Provide the Works in accordance
with the Contract Data part one and the
requirements attached Contract Data Part Two for a sum
to be determined in accordance with the
conditions of contract.
 Formalization of contract
You may accept this offer on or before [date

Tender (a Form of Tender) submitted by a contractor constitutes an of last day for acceptance]
offer

In practice, the Employer/consultant will issue tender queries/ tender
clarification / post-tender addendum to tenderers (contract Contractor’s info
correspondence)

Employer will issue Letter of Award/ Letter of Acceptance to

contractor which form a legally binding contract

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Tender Document: Tender Document component
2. Contract Data Part Two

3&4. Contract Data (Part One and Part Two)

 The Contract Data define the details of the agreement which is the
Contract

 The Contract Data is a key document in any contract using the ECC

 The purpose of the Contract Data is to provide data as required by the

Y conditions of contract specific to a particular contract
 In accordance with Clause 11.1, the terms in italics in the ECC conditions of
contract are identified in the Contract Data and defined terms have capital
initials
“the Prices” = “Tender Sum”
For example Clause 11.2 (7) below :
 “The Defects Certificate is either a list of Defects that the Supervisor has
notified before the defects date which the Contractor has not corrected or,
if there are no such Defects, a statement that there are none.”

Tender Document component Tender Document component

3&4. Contract Data (Part One and Part Two) 3&4. Contract Data (Part One and Part Two)
1. Contract Data Part One :
 These are not necessarily those originally issued by the Employer (Contract
 This is completed by the Employer for each contract
Data Part 1) or returned as part of the successful tenderer’s offer (Contract
Data Part 2)
2. Contract Date Part Two :
 This part contains a list of data to be supplied by tenderers as part of
 They are sometimes changed during negotiations between the Employer
their offer
and the potential contractor
 The tendered total of the Prices must be entered where Option A, B,
C or D is used
 The conditions of contract make provision for certain changes, such as
replacement of key people, change of completion date, etc.  This will be transferred from the grand total of the Bill of Quantities
as the case may be
 In assessing tender, it is most important that the total entered in the
Contract Data is checked against the total of the BQ

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Tender Document component Tender Document component
5. Bill of quantities (option B) 5. Bill of quantities (option B)

 Bill of quantities: This document provides a detailed  The bill of quantities is to be priced and extended by tenderers, to
breakdown of the quantities of work that the contractor is produce the tendered total of the Prices
required to carry out. It is used to manage the contractor's
payments and to monitor progress.  The method of measurement, on which the bill of quantities is
based, is identified in part one of the Contract Data (e.g. using
SMM7 or NRM2). This should also include identification of any
amendment or additions to the standard method of measurement
(similar to special preambles)

Tender Document component Tender Document component

6. Scope 6. Scope

 In accordance with NEC clause 11.2(16), Scope is “information  The document contain the Scope provided by the Employer are
which either specifics and describes the works or states any identified in Part 1 of the Contract Data
constraints on how the Contractor provides the Works”
 Any Scope for the Contractor’s design submitted by tenderers with
their tenders is to be identified in Part 2 of the Contract Data
 It should represent a complete and precise Employer’s
requirements on the works to be provided  Most of this information will be given in a specification and on
drawings in the traditional manner

 Where information is provided by non-documentary means such as

models, they should be identified and their availability and location
stated

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 Tender Document component
Clause 20.1 – Providing the Works 6. Scope

The Scope in Part 1 of the Contract Data (to be incorporated into tender
Clause 20.1 - “The Contractor Provides the Works in document) should include the following item:
accordance with the Scope.”
a) Description of works

A general description of the works, including general arrangement and

location drawings

Working/production and other detailed drawings, specification, models

and other means used to describe the parts of the works designed by the
Employer

A statement of any constraints on how the Contractor provides the works

e.g. restriction on access, sequence of construction

Tender Document component Tender Document component

6. Scope 6. Scope

The Scope in Part 1 of the Contract Data (to be incorporated into tender document) The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item: should include the following item:

b) Plant & materials c) Health and safety [Clause 27.4]

 Material and workmanship specification Core Clause 27.4 – “The Contractor acts in accordance with the health
and safety requirements stated in the Scope”
 Requirement for delivery and storage before the incorporation of  Any particular health and safety requirements, such as the safety
plan and materials in the works, provision of spares and the regulations for the factory within which the Site is located
specification of the vendor data required.
 Any health and safety plan for the project (as may be required by
 This can be included in the specification statute)

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Tender Document component Tender Document component
6. Scope 6. Scope

The Scope in Part 1 of the Contract Data (to be incorporated into tender The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
document) should include the following item: should include the following item:

d) Contractor’s Design [Clause 21.1] d) Contractor’s Design [Clause 21.1]

Core Clause 21.1 – “The Contractor designs the parts of the works which the Scope
states the Contractor is to design.”  A statement of those parts of the works which the Contractor is to design

Core Clause 21.2 – “The Contractor submits the particulars of its design as the Scope  The form of this statement will depend on the extent of the Contractor’s
requires to the Project Manager for acceptance. A reason for not accepting the design responsibility
Contractor’s design is that it does not comply with either the Scope or the applicable
law.  For contract with little contractor’s design, a list of what is left to be designed by the
The Contractor does not proceed with the relevant work until the Project Manager has Contractor should be provided
accepted its design”
 For more comprehensive design & build contract, a list of what has been designed
Core Clause 21.3 – “The Contractor may submit its design for acceptance in parts if by the Employer should be given, with the Contractor being made responsible for
the design of each part can be assessed fully” designing the remainder

Tender Document component Tender Document component

6. Scope 6. Scope

The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
The Scope in Part 1 of the Contract Data (to be incorporated into tender document) should include the following item:
should include the following item:
e) Completion [Core Clause 11.2(2)]
d) Contractor’s Design [Clause 21.1]
 “Completion is when the Contractor has
 A design brief / performance specification for those works to be designed by the
Contractor:
Done all the work which the Scope states is to be done by the Completion Date
and

Size or space limitation

Design standards and code of practice
Corrected notified defects which would have prevented the Client from using the
works or Others from doing their work

Material and workmanship specification (include reference to relevant standards, e.g. B.S.)

 Procedures which the Contractor is to follow in carrying out his design  If the work which the Contractor is to do by the Completion Date is not stated in the
Scope, Completion is when the Contractor has done all the work necessary for the
Client to use the works and for Others to do their work
 The purpose for which the Employer may require to use and copy the Contractor’s
design

9
Tender Document component Tender Document component
6. Scope 6. Scope

The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item:
should include the following item:

e) Completion [Clause 11.2(2)] f) Working with the Employer and Others [Clause 25.1 & 25.2]
 The work required to be done by the Completion Date for the whole of the  Core Clause 25.1 -“The Contractor co-operates with Others, including in
works and, if Option X5 [Sectional Completion] is used, for each of the obtaining and providing information which they need in connection with the
sections works. The Contractor shares the Working Areas with Others as stated in the
Scope”
 Alternatively, this could be in the form of a list of work which can remain
undone at the Completion Date  Core Clause 25.2 -“The Client and the Contractor provide services and other
things as stated in the Scope. Any cost incurred by the Client as a result of
the Contractor not providing the services and other things which it is to
provide is assessed by the Project Manager and paid by the Contractor”

Tender Document component Tender Document component

6. Scope 6. Scope
The Scope in Part 1 of the Contract Data (to be incorporated into tender document) The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item: should include the following item:

f) Working with the Employer and Others [Clause 25.1 & 25.2] g) Subcontracting [Clause 26]
Core Clause 26 – “The Contractor submits the name of each proposed Subcontractor to
 Details of Others who will be occupying the Working Areas during the the Project Manager for acceptance. A reason for not accepting the Subcontractor is
contract period indicating which parts they will occupy and for what periods that the appointment will not allow the Contractor to Provide the Works. The
Contractor does not appoint a proposed Subcontractor until the Project Manager has
 The services and other things which the Employer and the Contractor are to
accepted the Subcontractor and, to the extent these conditions of contract

provide to each other and to Others while the Contractor has access to and requires,
use of the Site
accepted the subcontract documents

 List of acceptable subcontractors for particular tasks

 Statement of any work which should not be subcontracted
 Statement of any work which is required to be subcontracted

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Tender Document component Tender Document component
6. Scope 6. Scope
The Scope in Part 1 of the Contract Data (to be incorporated into tender document) The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item: should include the following item:
h) Programme [Clause 31.2]
h) Programme [Clause 31.2]
Core Clause 31.2 – The Contractor shows on each programme submitted for acceptance

The starting date, access dates, Key Dates and Completion Date,  Any information which the Contractor is required to include in the

Planned Completion,
programme in addition to that already stated in Clause 31.2

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 Client and Others as last agreed with them by the  On multi-contract projects, it will probably be necessary for the Contractor
Contractor or, if not so agreed, as stated in the Scope, to provide boundary data, foundation design data and similar information

The dates when the Contractor plans to meet each Condition stated for the Key Dates and to relating to his design for the use of the Employer and other contractors
complete other work needed to allow the Client and Others to do their work,

Provision for
 Float,  The times when this information is to be submitted should be stated in
 Time risk allowances, accordance with the overall programme for the project
 Health and safety requirements and
 The procedures set out in the contract  Alternatively this can be achieved by the use of the Key Dates

Tender Document component

Tender Document component 6. Scope
Programme The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item:
 If the Project Manager wish to understand more on whether the tenderers
have fully understood their obligations and whether they are likely to be able
i) Test [Clause 40]
to complete the work within the state time, they should consider requiring
tenderers to submit a programme by adopting the special conditions of  Descriptions of the tests to be carried out by the Contractor, the Supplier
tender and Others, including those which must be done before Completion

 The accepted programme is a crucial document for managing the contract  Details of materials, facilities and samples to be provided by the Contractor
and enabling the Project Manager and the Contractor to monitor the progress and the Employer for tests
of the project and assess the effect of compensation events under the NEC
 Details of plants and materials which are to be inspected or tested before
delivery to the Working Areas, including details of the inspection or test
 The programme submitted by tenderers, or information related to sequencing
of the work, will form part of the tender submission
 Definition of tests of Equipment, Plant and Materials outside the Working
Areas which have to be passed before marking by the Supervisor

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Tender Document component Tender Document component
6. Scope 6. Scope
The Scope in Part 1 of the Contract Data (to be incorporated into tender document) The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item: should include the following item:

j) Title [Clause 73.2] k) Parent company guarantee [Clause X4.1]

If Option X4.1 is used – the form of the guarantee
Core Clause 73.2 – The Contractor has title to material from excavation and
demolition unless the Scope states otherwise
Core Clause X4 – If the Contractor is a subsidiary of another company, the Contractor
gives to the Client a guarantee of the Contractor’s performance from the ultimate
 Statement of any materials from excavation and demolition to which the holding company of the Contractor in the form set out in the Scope. If the guarantee
was not given by the Contract Date, it is given to the Client within four week of the
Contractor will have title
Contract Date.

The Contractor may propose an alternative guarantor who is also owned by the ultimate
holding company for acceptance by the Project Manager. A reason for not accepting the
guarantor is that its commercial position is not strong enough to carry the guarantee.

Tender Document component Tender Document component

6. Scope 6. Scope
The Scope in Part 1 of the Contract Data (to be incorporated into tender document) The Scope in Part 1 of the Contract Data (to be incorporated into tender document)
should include the following item: should include the following item:
m) Advanced payment bond [Clause X14.2]
l) Performance bond [Clause X13.1]
If Option X14.1 is used – the form of the advanced payment bond (if required)

If Option X13.1 is used – the form of the performance bond

Core Clause X13.1 – The Contractor gives the Client a performance bond, provided by a
bank or insurer which the Project Manager has accepted, for the amount stated in the
Contract Data and in the form set out in the Scope. A reason for not accepting the bank
or insurer is that its commercial position is not strong enough to carry the bond. If the
bond was not given by the Contract Date, it is given to the Client within four weeks of n) Performance test [Clause 31.2]
the Contract Date.

If Option X17.1 is used – details of any test to be used to measure the performance of the
works or an item of Plant for which low performance damages are specified

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Tender Document component
6. Scope Tender Document component
When prepare the Scope, some of the important points to note : 7. Site Information
 Clarity and effective project management
 Site Information forms part of the contract under the ECC

To state the requirements as clear as possible to avoid misinterpretation
and unnecessary disputes.
 In accordance with NEC clause 11.2(18), Site Information is

For example, the expression such as “in the opinion of the project
manager” or “to the satisfaction of the Supervisor” should be replaced
“information which describes the Site and its surroundings”
by more definitive standards
 NEC Clause 60.2 lists the information, including the Site
Information, which the Contractor is assumed to have taken into
 Time for reply
account for the physical conditions within the Site for the purpose

As the project manager, the Supervisor and the Contractor are required of assessing a compensation event. As such, the Employer cannot
to reply within the period of reply unless otherwise stated in the contract specify in the Site Information that the information is provided “for
according to NEC clause 13.3, the use of expressions such as “…within a
information only”
reasonable time…” should be avoided

Tender Document component Tender Document component

7. Site Information 7. Site Information

 The documents in which the Site Information is contained are  Clause 60.3 states the inconsistencies in the Site Information, for which
identified in Part 1 of the Contract Data the Employer is responsible”

 Site Information may include the following:  The Site Information plays an important role in assessing compensation
1. Subsoil investigation borehole records and test results events. In preparing tender documents, the Employer are reminded to
2. Reports obtained by the Employer concerning the physical conditions within the include as much relevant information as possible, including geotechnical
Site or its surroundings. This may include mapping, hydro-graphic data and baseline report, site investigation records, existing utilities records, etc.
hydrological information for tenderers to prepare their tender submissions.
3. Reference to publicly available information about the Site and its surroundings,
such as published papers and interpretations of the Geological Survey
4. Information about plant and services below the surface of the Site  The Site Information will form one of the basis in judging the physical
5. Information about piped and other services (existing utilities records)
conditions for the purpose of assessing a compensation event
6. Information about buildings, structures, plant adjacent to and on the Site

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Tender Document component Tender Document component

7. Site Information 8. Pre-tender health and safety plan

 The purpose of listing these reference is to help a tenderer to prepare his

tender, to decide his method of working and programme and prepare any Core Clause 27.4 – “The Contractor acts in accordance with the health
designs for which he would be responsible and safety requirements stated in the Scope”

 Normally only factual information (e.g. about physical conditions on the Site  Any particular health and safety requirements, such as the safety
and its surroundings) is included in the Site Information regulations for the factory within which the Site is located
 Interpretation is a matter for the Contractor
 Any health and safety plan for the project (as may be required by
 Some documents may contain both the Scope and Site Information. For
statute)
example, a drawing show a foundation and related borehole information.
Such a document should be identified in the Contract Data both as a
document containing the Scope and as a document containing Site
Information

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