NEC4: Keeping up to date for 2023

In January of this year, NEC published a further set of amendments to the NEC4 suite of contracts to reflect industry feedback and developments. The following sets out the main changes:

Climate change – Introduction of Secondary Option X29

The new secondary option X29 is available for the whole suite of NEC4 contracts. The purpose is to provide a contractual mechanism to assist clients in securing their net zero goals for the delivery of projects. Under Clause X29, the climate change requirements of the client (with targets and incentives) will be set out in the Scope. The Contractor then has to comply with these requirements in order to successfully Provide the Works and/or earn any incentives and avoid penalties.

Early Contractor Involvement – Amendment of Secondary Option X22 (ECC)

The amendments to Option X22 provide clarity with regard to the risk allocation between the parties for Stage One and Stage Two.

The notice to proceed to Stage Two will now capture compensation events occurring in Stage One in the changes to the Prices, Completion Dates and Key Dates contained in the notice.

Where a project proceeds to Stage Two, compensation events will be judged against the notice to proceed to Stage Two rather than the Contract Date (deemed knowledge of an “experienced contractor” will know include information accumulated throughout Stage One).

Amounts due on termination will only apply to works in Stage One where works do not proceed to Stage Two and no incentive payment will be due if the works do not proceed to Stage Two.

Using the Supplier’s Design (ALC, DBOC, ECC, ESC, FMC, FMS, and SC)

The ability of the client to use and copy the contractor’s design has now been extended to include documents prepared for design.

Working from home (ALC, DBOC, ECC, ESC, FMC, FMS, TSC and TSS)

Changes have been made to Defined Cost (Schedule of Cost Components) to allow for people identified in the Contract Data whose normal place of working is not the working/service areas. This reflects the increased number of people working from home following COVID-19.

Adjudication (all contracts featuring Y(UK)2)

Option W2 is amended to confirm (in compliance with the HGCRA 1996) that it is the adjudicator who decides the procedure and timetable for an adjudication under the contract.

Contractor’s Liability for Design – (ECSC and ECSS)

The NEC4 Engineering and Construction Short Contract and Short Subcontract have now been amended to include an option which allows for the Contractor’s obligation for any design to be reduced to “reasonable skill and care” rather than the current fitness for purpose standard.

Limitation of Liability- change to the short form contracts (ECSC, ECSS, FMSC, FMSS, SSC, TSSC and TSSS)

An optional provision has been introduced which will allow a total limit of liability to be set out on the Contract Data/Subcontract Data. This aligns the short contracts with the main contracts.

Damage to the Client’s property (FMSC, FMSS)

It is clarified that the Service Provider is liable for loss or damage to the Client’s Property arising from providing the service.

Payment on termination (SSC)

The Short Supply Contract is brought into line with other NEC4 Contracts so that the Supplier is compensated where the contract is terminated for Purchaser’s default or convenience.

If you wish to discuss any of these changes and the impact for your contracts, please get in touch with a member of our construction and engineering team.