Course Notes

These notes provide an overview of the various

elements of the ECC to enable delegates to gain
an understanding of its philosophy and content.

Also included in this booklet are ECC

communication forms, ECC case studies and
ECC case study answers.

NEC4: Introduction to the ECC (V4 01/18) 1 © NEC Contracts 2017

Contents
SESSION 1 Overview of the NEC and the Engineering and Construction Contract (ECC) ....... 3
1.1 Flexibility............................................................................................................................ 3
1.2 Clarity and simplicity ......................................................................................................... 3
1.3 Stimulus to good management ......................................................................................... 4
1.4 The NEC family of contracts ............................................................................................. 4
SESSION 2 Using the ECC: the contract strategy ...................................................................... 7
2.1 The ECC system ............................................................................................................... 7
2.2 The core clauses ............................................................................................................... 7
2.3 The main Options .............................................................................................................. 7
2.4 Contractor design .............................................................................................................. 8
2.4 Resolving and avoiding disputes Options ....................................................................... 11
2.5 Secondary Options .......................................................................................................... 11
2.6 Preparing the tender documents ..................................................................................... 15
2.7 Assessing tenders ........................................................................................................... 15
SESSION 3 Managing the contract: the ECC processes .......................................................... 17
3.1 General provisions .......................................................................................................... 17
3.2 The Contractor’s main responsibilities ............................................................................ 22
3.3 Time ................................................................................................................................ 23
3.4 Quality management ....................................................................................................... 25
3.5 Payment .......................................................................................................................... 27
3.6 Compensation events ..................................................................................................... 31
3.7 Title .................................................................................................................................. 38
3.8 Liabilities and Insurance.................................................................................................. 39
3.9 Termination and dispute resolution ................................................................................. 40
CASE STUDY QUESTIONS ..................................................................................................... 42
Case Study One .................................................................................................................... 42
Case Study Two .................................................................................................................... 43
Case Study Three ................................................................................................................. 44
Case Study Four ................................................................................................................... 45
Case Study Five .................................................................................................................... 46
Case Study Six ...................................................................................................................... 47
Case Study Seven ................................................................................................................ 48
CASE STUDY ANSWERS ........................................................................................................ 49
Case Study One .................................................................................................................... 49
Case Study Two .................................................................................................................... 50
Case Study Three ................................................................................................................. 51
Case Study Four ................................................................................................................... 53
Case Study Five .................................................................................................................... 54
Case Study Six ...................................................................................................................... 55
Case Study Seven ................................................................................................................ 56
CONTRACT DATA AND EXAMPLE COMMUNICATION FORMS ........................................... 57

NEC4: Introduction to the ECC (V4 01/18) 2 © NEC Contracts 2017

SESSION 1
Overview of the NEC and the Engineering and Construction Contract (ECC)
In September 1985, the Council of the Institution of Civil Engineers (ICE) approved a
recommendation from its Legal Affairs Committee “to lead a fundamental review of alternative
contract strategies for civil engineering design and construction with the objective of identifying
the needs for good practice”. From this initiative emerged, in 1993, the New Engineering
Contract (NEC), which was a contract between a Client and a Contractor specifically designed
for works on an engineering or construction project.

In July 1994 Sir Michael Latham in his report “Constructing the Team” recommended that the
NEC should be adopted by clients in both the private and public sectors and suggested that it
should become a national standard contract across the whole of engineering and construction
work generally. Following that recommendation use of the NEC increased as did demand for
contracts to cover other contractual relationships. This led to new contracts being issued,
including ones covering professional services and subcontracting. Therefore the name “NEC”
became that used by this family of contracts, and the original NEC contract was renamed the
Engineering and Construction Contract (ECC).

By 2004 use of the NEC forms of contract had grown considerably, with employers from both
the private and public sectors reporting that it gave them better control of time, cost and quality
issues, as well as greatly improving the working relationship between the parties. Use in the
UK had grown to the extent that it had become the most popular form of contract in the civil
engineering sector and was beginning to make inroads into other sectors. In addition it was
being used in many other areas around the world.

In July 2005, NEC3 was launched as a complete review and update of the whole NEC family,
including the introduction of two new contracts, the Term Service Contract and the Framework
Contract.

In June 2017, NEC4 was launched, again as a complete review and update of the whole NEC
family, which in the intervening years had been extended by the introduction of the Supply
contracts and the Professional Services Short Contract. This update included a new Design
Build Operate contract and a consultative version of the Alliancing Contract, together with new
subcontract forms.

The objectives of the NEC contracts, including the Engineering and Construction Contract
(ECC) which we are considering, were to make improvements under three headings:

1.1 Flexibility
The Engineering and Construction Contract is intended, and is used
 for engineering and construction work containing any or all of the traditional disciplines
such as civil, building, electrical and mechanical work, and process engineering,
 whether the Contractor has full, some or no design responsibility,
 to provide a wide variety of options for types of payment mechanisms such as priced,
target, cost reimbursable and management contracts,
 to allocate risks to suit the particular project and
 in the United Kingdom and abroad.

This flexibility enables the Client to choose a variety of options that best suits its specific
project and priorities.

1.2 Clarity and simplicity

Although a legal document the ECC is written in ordinary language and in the present tense.
As far as possible it only uses words which are in common use so that it is easily understood,
particularly where the user’s first language is not English. It has few sentences that contain
more than 40 words and uses bullet points to subdivide longer clauses. The number of

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clauses and the amount of text are also less than in most other standard forms of contract and
there is an avoidance of cross referencing found in more traditional standard forms.

It is arranged in a format which allows the user to gain familiarity with its contents, with a
separate numbered section of the contract to cover each of the main processes and the clause
numbering reflecting those sections. This format has been retained for all of the contracts in
the NEC family.

Clarity is further enhanced because the required actions for each process, who is to take them
and within what timescale, are all defined precisely thereby reducing the likelihood of disputes.
These processes have been drawn out as flow charts, which acted as a logistical check during
the drafting process.

Finally, subjective words like “fair”, “reasonable” and “opinion” have been used as little as
possible when dealing with decisions. Instead reasons for all decisions have to be stated.

1.3 Stimulus to good management

This is the most important objective of the NEC in that every procedure has been designed so
that its implementation should contribute to, rather than detract from, the effective
management of the work.

This is founded on two simple but effective management principles:

 Foresight applied collaboratively mitigates problems and shrinks risk.
 Clear division of function and responsibility helps accountability and motivates people
to play their part.

The processes in the NEC concentrate on encouraging the parties to share their knowledge to
prevent problems occurring in the first place, unlike more traditional contracts which tend to
concentrate on allocating blame once they have gone wrong.

An example of foresight within the ECC is the early warning procedure and the management of
compensation events. Under the early warnings provision, the Project Manager and
Contractor notify each other upon becoming aware of any matter which could have an impact
on cost, time or quality. The compensation event procedure requires the Contractor within 3
weeks to submit a quotation(s) showing the time and cost effect of the event. The Project
Manager then responds to the quotation within 2 weeks enabling the matter to be resolved
properly close to the time of the event rather than many months or even years later.

The programme is also an important management document, and is much more than just the
traditional bar chart. It must also be regularly updated as work progresses and when changes
are made.

In total the ECC is designed to provide a modern method for Clients, Designers, Contractors
and Project Managers to work collaboratively and to achieve their objectives more consistently
than has been possible using other traditional forms of contract. People will be motivated to
play their part in collaborative management if it is in their commercial and professional interest
to do so.

Uncertainty about what is to be done and the inherent risks and liabilities can often lead to
disputes and confrontation but the ECC clearly allocates risks and liabilities and the
collaborative approach will reduce those for all the parties so that uncertainty will not arise.

1.4 The NEC family of contracts

NEC is a family of contracts covering most of the contractual arrangements normally found in
engineering and construction works. Each of them has the same basic layout and modular
form, as described in more detail in the next session.

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The NEC4 family consists of the following contracts.

Engineering and Construction Contract (ECC)

This is a contract between a Client and a Contractor for physical engineering or construction
works on a project, including any level of design responsibility.

Engineering and Construction Short Contracts (ECSC)

This is similar to the ECC, but is for low risk, straightforward works. It is shorter because many
of the management techniques and options in the ECC have been removed.

Term Service Contract (TSC)

As its title implies, it is designed for providing a service of some kind (but not a professional
consultant type service) over a fixed period of time. The TSC is not a contract to provide a
project. The principle of the TSC is based on providing a service ie. maintaining an existing
asset for a period of time to permit the Client’s continuing use of that asset. It does not
normally include the improvement of the existing condition of the asset – that would comprise a
project. However, a modest amount of improving the condition of an asset may sometimes be
sensibly included in a TSC. For the purposes of the TSC, maintenance includes renewal and
replacement of things which have become worn out or otherwise reached the end of their
useful lives.

Term Service Short Contract (TSSC)

This is an alternative to the TSC, but is for low risk, straightforward services. It is shorter
because many of the management techniques and options in the TSC have been removed.

Framework Contract (FC)

This is a fixed period contract used to engage suppliers (contractors or consultants) to carry
out future works and/or services. This contract defines how a quotation for a new element of
work is calculated and agreed between the parties. The work itself is carried out under one of
the other NEC forms of contract, e.g. the ECC or PSC, as defined in the FC.

Engineering and Construction Subcontract (ECS)

This is a contract between a Contractor and Subcontractor for physical engineering or
construction works on a project where the ECC is being used as the main contract. It is, as far
as is possible, back to back with the ECC main contract.

Engineering and Construction Short Subcontract (ECSS)

This is similar to the ECS, but is for low risk straightforward subcontract works. It is shorter
because many of the management techniques and options in the ECS have been removed. It
can also be used where the ECSC is used for the main contract.

Term Service Subcontract (TSS)

This is a contract between a Contractor and Subcontractor for providing a service where the
TSC is being used as the main contract. It is, as far as is possible, back to back with the TSC
main contract.

Professional Service Contract (PSC)

This is a contract for the provision of intellectual works, such as professional services, by a
consultant or other professionals.

Professional Service Short Contract (PSSC)

This is similar to the PSC, but is for low risk straightforward professional services. It is shorter
because many of the management techniques and options in the PSC have been removed.

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Professional Service Subcontract (PSS)
This is a contract between a Contractor and Subcontractor (the NEC language for consultant
and subconsultant) for providing a professional service where the PSC is being used as the
main contract. It is, as far as is possible, back to back with the PSC main contract.

Supply Contract (SC)

This contract should be used for local and international procurement of high-value goods and
related services including design.

Supply Short Contract (SSC)

This contract should be used for local and international procurement of goods under a single
order or on a batch order basis where the procurement does not require sophisticated
management techniques and imposes only low risks on both client and a supplier.

Dispute Resolution Service Contract (DRSC)

This is used by both parties to engage the Adjudicator or member of the Dispute Avoidance
Board who is named in one of the other NEC contracts. The Adjudicator decides any disputes
between the parties, the Dispute Avoidance Board can only assist in the resolution of a
dispute.

Design Build and Operate Contract (DBOC)

Like the TSC, this contract is a contract to provide an operational service (but not a
professional consultant type service) over a fixed period of time. Unlike the TSC, and like the
ECC, it is also written to include within this period of time the design and build, rebuild or
upgrade of the asset to be operated, or part of the overall asset being maintained.

Alliance Contract (ALC)

This is a multiparty contract, where all the parties (Client, Contractors, Designers, etc) work
together to achieve a common objective – usually a physical engineering or construction
works. The contract is set up so that all the parties share in the success or failure of the
project. This was issued as a consultative document in June 2017 and is planned for full issue
in 2018.

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SESSION 2
Using the ECC: the contract strategy

2.1 The ECC system

The ECC conditions of contract are modular in form with 5 main modules as follows
 The core clauses and Schedules of Cost Components
 The main Options (A to F)
 The dispute resolution Options (W1, W2 or W3)
 The secondary Options: these are numbered and prefixed with either X or Y
 Any other additional clauses (prefixed Z)

The Client usually chooses which of the various modules to use, as follows
 The core clauses and Schedule of Cost Components (appropriate to the main Option
chosen) are always used. These are not changed by any of the other NEC standard
options chosen.
 One main Option is chosen, which determines the mechanism for payment of the
Contractor.
 One dispute resolution Option is chosen.
 Any secondary Options may be added as required in order to suit the project or the
Client’s objectives. Clauses prefixed with an X can be used in any legal jurisdiction
whereas those prefixed with a Y are for use in specific (stated) legal jurisdiction.
 Any number of Z clauses may be added. However great care must be taken to ensure
that these are not inconsistent with any of the other clauses in the contract. In
addition, clauses that attempt to remove other standard NEC clauses should be very
carefully drafted to ensure that they do not have unintended effects on the contract.

In addition to these modules the contract will also require the preparation and inclusion of
certain other documents, including the Scope and Site Information. The extent of these
documents will depend upon the main and secondary Options chosen.

2.2 The core clauses

The core clauses are set out in the following numbered sections
1. General
2. The Contractor’s main responsibilities
3. Time
4. Quality management
5. Payment
6. Compensation events
7. Title
8. Liabilities and insurance
9. Termination

The clause numbers follow the section numbers. Thus the clauses in Section 1 are numbered
from 10 to 19, Section 2 from 20 to 29 and so on. This means that there are gaps in the clause
numbering, the most obvious of which is that there are no clause numbers 1 to 9.

In addition, there are also the following Schedules of Cost Components

 the Schedule of Cost Components, which is used only in main Options C to F and
 the Short Schedule of Cost Components, which is used only in main Options A and B.

2.3 The main Options

The six main Options enable Clients to select a contract strategy and payment mechanism
most appropriate to the project and the various risks involved.

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Whilst many traditional contracts are based on bills of quantities, there has been a movement
away from the use of traditional bills and towards payment mechanisms such as milestone
payments and activity schedules, with payment based on progress achieved, rather than
quantity of work done. There is also an increasing use of target cost contracts which has been
encouraged by the increasing use of collaborative arrangements, and the better sharing of risk.

There is also an increasing tendency for greater Contractor involvement in design, with the
increasing use of various design and build contracts, performance specifications and design,
early contractor involvement, and build, finance and operate projects.

Factors to take into account in deciding which of the main options to use from within the
Engineering and Construction Contract system include the following
 Which party is to be responsible for design and/or which party has the necessary
design expertise?
 How important is early commencement and/or rapid completion?
 How important to the Client is certainty of price?
 How clearly defined are the Client’s requirements, the Scope and Site Information?
 What is the likelihood of change to those defined requirements?
 What views prevail on the allocation of risk and where can risk be best managed?

Once the contract strategy has been decided, the main and secondary options can be selected
to suit that strategy.

2.4 Contractor design

There are a number of reasons for allocating some or most of the design to the Contractor.
 The design and construction periods can overlap, leading to faster delivery of the
project.
 The Contractor can utilise its particular experience and preferred methods of
construction to minimise costs and price.
 The temporary works/permanent works interface and influence of design is rationalised
and the permanent works should be more “buildable”.
 The traditional design/construction interface and the risks associated with it are
transferred to the Contractor.
 The management of the design risk by the Contractor can result in greater certainty of
the time, cost and performance and project objectives being met.

Within the ECC, the Scope provides a statement of any part(s) of the work to be designed by
the Contractor. This can include:
 Size or space limitations
 Design standards and procedures
 Loading and capacity requirements
 Performance specifications

The six main Options are:

Option A Priced contract with activity schedule
Option B Priced contract with bill of quantities
Option C Target contract with activity schedule
Option D Target contract with bill of quantities
Option E Cost reimbursable contract
Option F Management contract
 Options A and B are priced contracts in which most of the risks of being able to carry
out the work at the agreed prices are borne by the Contractor.
 Options C and D are target contracts in which the Client and Contractor share most of
the financial risks in an agreed proportion.

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  Options E and F are two types of cost reimbursable contract in which the financial risk
is largely borne by the Client.

Option A – Priced contract with activity schedule

Option A is normally used where the Client is able to define accurately what it requires. This
will normally be in the form of drawings and specifications, but can alternatively be a
performance specification, where the Contractor is to design the works to meet specific
performance objectives.

An Activity Schedule is a list of activities, usually prepared by the Contractor, which it expects
to carry out in Providing the Works. When the Contractor has priced it, the lump sum for each
activity is the Price to be paid by the Client in the assessment following completion of that
activity.

It is important to note that the Contractor gets paid nothing for each activity until it is complete.
Therefore the choice of activities to be listed will influence the Contractor’s cash flow. It is for
this reason that normally the Contractor, rather than the Client, chooses the activities.

Establishing and taking off the quantities of work involved to achieve the completion of each
activity is the responsibility of the tendering Contractors. The price for each activity is in effect
a lump sum for that activity and must include for everything necessary to complete the activity.
The sum of the tendered lump sums for each of the activities is the tendered price (the total of
the Prices) for the whole of the Works.

Option A is ideally suited to Contractor’s design but can be used for Client’s design or divided
design responsibility.

The contract requires that the Activity Schedule should relate to the operations on the
programme.

Option B – Priced contract with bill of quantities

This is the ECC equivalent to a traditional remeasurement contract. A Bill of Quantities
comprises a list of work items and quantities prepared by the Client and priced by the
Contractor. Standard methods of measurement are published (e.g. SMM7 & CESMM3) which
state the items to be included and how the quantities are calculated. However, unlike other
contracts, the Bill of Quantities is not used to value changes to the contract (compensation
events) unless both parties agree to use it.

Where there is a significant amount of Contractor’s design, Option A should be used rather
than Option B, as it allows the Contractor to price the work and include the various design
stages within the Contractor’s Activity Schedule rather than the Client measuring the work
which would not be practical.

Most standard methods of measurement assume the work is fully detailed with no provision for
payment for the design activity. The tender bill of quantities require the design to be finalised
at tender enquiry.

When selecting Option B one should consider the merits of preparing and using bills of
quantities against other procurement methods. Do not select Option B just because in the
past, with other forms of contract, one has always begun the procurement process by
measuring the work!

Option C – Target contract with activity schedule and

Option D – Target contract with bill of quantities
Target contracts are a development of cost reimbursable contracts and are used where the
extent of work to be done may not be fully defined (although the target is to be based on
assumed work), where anticipated risks are greater or where the Client sees a direct and

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significant benefit in encouraging collaboration through the target mechanism itself. Most
financial risks are shared, proportionally through the Contractor’s share percentages, between
the Client and the Contractor.

The Contractor tenders a “target” price, called in the contract the total of the Prices, using
either an Activity Schedule (Option C) which the Contractor prepares, or a Bill of Quantities
(Option D) normally prepared by the Client. The Contractor also tenders its Fee in terms of a
percentage to be applied to Defined Cost. This Fee should include profit and all other costs
and overheads not covered by the Defined Cost.

During the course of the contract, the Activity Schedule or Bill of Quantities is not used to pay
the Contractor. Instead the Contractor is paid the Defined Cost plus the Fee, which is called
the Price for Work Done to Date (PWDD).

Under Option C the target is adjusted for compensation events, whilst under Option D, the
target is adjusted for compensation events and remeasurement.

At the end of the contract, the adjusted “target” is compared with the PWDD, and the
Contractor is paid (or pays) a share of the difference between the two according to a formula
stated in the Contract Data. If the final PWDD is less than the final target, the Contractor is
paid a share by the Client, if it is greater the Contractor has to pay a share to the Client. This
mechanism ensures that both parties share most financial risks and motivates them both to
reduce costs.

Option E – Cost reimbursable contract

A cost reimbursable contract should be used where the definition of the work to be done is
inadequate even as a basis for a target price and yet an early start is required. In such
circumstances the Contractor cannot be expected to price this uncertainty, even to set a target
price. The Contractor carries minimum risk and is reimbursed the Defined Cost plus tendered
Fee (basically covering the Contractor’s off site overheads and profit), subject only to a number
of constraints designed to motivate efficient working.

It therefore gives little incentive for the Contractor to minimise costs during construction, but
this particular strategy may be appropriate where time or quality are overriding priorities or
where the scope is not known. For instance
 where scope of work is uncertain e.g. refurbishment
 where extreme flexibility is required e.g. for enabling work
 where a high level of Client involvement is envisaged
 in emergency work (time driven)
 where trials or work of an experimental nature is carried out.

The Option allows development of the design as the works proceed and permits maximum
flexibility in allocation of design responsibility.

Option F – Management contract

Under a management contract, the Contractor’s responsibilities for the construction work are
the same as those under the other main Options although most works will be carried out by
trade subcontractors working for the Contractor. If the Contractor intends to carry out any
works itself, it can also provide a lump sum price for that work.

The Contractor tenders its Fee and its lump sum price for the work the Contractor will carry out
itself.

The Contractor is then paid its tendered lump sum price for the work that the Contractor has
stated it will carry out itself plus the amounts paid to Subcontractors for all other work, plus the
Fee.

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The Contractor is responsible for supplying management services and completing or advising
on design if required. If the Contractor is responsible for design it will be appointed on a
design and manage basis.

Management based contracts are generally suitable

 where there is a need to co-ordinate a number of works contractors and suppliers,
 when the Client does not have sufficient capability to manage the project and/or
 when the time scale of the project is tight requiring an early start of construction.

At this point the scope of the project is not fully developed. As the scope is developed and
construction progresses, successive works contracts can be awarded, but the interfaces
between these successive packages must be managed.

2.4 Resolving and avoiding disputes Options

Option W1: Adjudication
This Option provides the procedures and timetable for the involvement of an independent, third
party Adjudicator to resolve disputes.

There is a procedure to refer a dispute to the Senior Representatives before it is referred to the
Adjudicator to attempt to resolve the dispute more informally.

The Senior Representatives are stated in the Contract Data; the Adjudicator, or the
organisation from which the Adjudicator is provided is also stated in the Contract Data.

Option W2: Adjudication, used when the United Kingdom Housing Grants, Construction
and Regeneration Act 1996 applies
This Option is essentially the same as W1 except that it conforms with the United Kingdom
Housing Grants, Construction and Regeneration Act 1996, as subsequently amended by the
Local Democracy, Economic Development and Construction Act 2009 (the Construction Act).
Time periods are therefore changed, and the ability to refer a dispute to the Senior
Representatives is optional, since an adjudication can be referred “at any time”. There are
other changes such as the decision on which Party pays for the adjudication.

Option W3: Dispute Avoidance Board

Option W3 replaces the Senior Representatives and Adjudicator with a Dispute Avoidance
Board. The Dispute Avoidance Board is appointed for the duration of the contract, visits the
Site occasionally and is available to assist the Parties to resolve disputes. A dispute where the
Parties cannot resolve their differences, even with the assistance of the Dispute Avoidance
Board, is referred to the tribunal.

2.5 Secondary Options

Option X1: Price adjustment for inflation (used only with Options A, B, C and D)
Where Option X1 is not used then with Options A and B the Contractor carries the risk of
inflation, whereas in Options C and D it is shared through the share mechanism. In either case
the Contractor should price for the risk within its tender. If Option X1 is used the Client carries
all or part of the risk (depending on the indices used) and the Contractor is not required to price
for the risk the Client is carrying.

Option X1 uses the formula method to allow for inflation. The indices to be used and the ratios
in which they are to be used are defined by the Client and included in the Contract Data part
one. With Options A and B these indices are applied to the amount that the Contractor is paid,
whereas with Options C and D they are applied to the “target” for the works.

Option X2: Changes in the law

This clause removes from the Contractor the risk of changes in the law that occur after the
Contract Date. If Option X2 is selected, these changes are dealt with as compensation events,
which can lead to the Prices being reduced as well as increased.

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Option X3: Multiple currencies (used only with Options A and B)
This is for priced contracts where the Contractor is to be paid in more than one currency. Cost
reimbursable and management contracts have specific arrangements to deal with this matter.

Option X4: Ultimate holding company guarantee

Option X4 is used if a guarantee is required from the Contractor’s ultimate holding company
(often known as the parent company). This is often as an alternative to a performance bond.
If the Client requires this guarantee to be in any particular form it must include that information
in the Scope. The guarantee must be provided no later than 4 weeks after the Contract Date.
Core clause 91.2 enables the Client to terminate the Contractor’s obligation to Provide the
Works if the guarantee is not provided.

The Contractor can propose another alternative guarantor, owned by the Contractor’s ultimate
holding company

Option X5: Sectional completion

Option X5 should be included when the Client requires parts of the works (sections) to be
completed before the whole of the works. The Client then sets out in the Contract Data part
one what work is to be completed in each section and the date by which completion is required
to be achieved.

Option X6: Bonus for early Completion

Where an early Completion would benefit the Client, this Option allows the Client to motivate
and reward the Contractor for achieving the early Completion.

Option X7: Delay damages

Delay damages are liquidated and ascertained damages paid by the Contractor in the event
that the Contractor breaches the contract by failing to complete the works by the Completion
Date.

In the ECC these damages are referred to as delay damages, rather than liquidated and
ascertained damages, as there are other damages applicable with respect to low performance
(Option X17) and interest on late payments (clause 51.2).

Option X8: Undertakings to the Client or Others

Undertakings, in the UK often known as collateral warranties, may be required between the
Client and Subcontractors, Others and the Contractor, or Others and the Subcontractors. This
Option allows these to be provided and the form of undertakings should be given in the Scope.

Option X9: Transfer of rights

Option X9 is used when the Client wishes to own the Contractor’s rights over material prepared
for the design of the works, and also wants the Subcontractors to pass their rights to the Client.

Option X10: Information modelling

Option X10 is used when the Client wishes to develop and use an integrated information model
for the project, where information may also be provided and used by other Information
Providers. In the UK, this is commonly known as Building Information Modelling (BIM).

The Option also determines who owns the rights over the Project Information in the Information
Model.

Option X11: Termination by the Client

This Option allows the Client to terminate the contract for any reason that has not already been
defined in the Termination Table. Termination under this Option has a cost attached to it for
the Client.

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Option X12: Multiparty collaboration
The ECC contract is a bi-party partnering based contract at its core and therefore Option X12
is not needed in order to set up a partnership between the two Parties to the contract. Instead
Option X12 enables a multi-party partnering arrangement to be implemented. In that case
Option X12 is used as a secondary Option common to the contract which each party has with
the body which is paying for the work. The parties together make up the Partners and each
Partner works with the other Partners to achieve the Promoter’s objective stated in the
Contract Data and the objectives of every other Partner stated in the Schedule of Partners.

The content of Option X12 is derived from the “Guide to Project Team Partnering” published by
the Construction Industry Council (CIC).

Option X13: Performance bond

Option X13 is used if the Client requires a performance bond from the Contractor. The
Contractor must provide this bond no later than 4 weeks after the Contract Date. Core clause
91.2 enables the Client to terminate the contract if the guarantee is not provided.
The amount of the bond must be stated in the Contract Data part one. In addition, if the Client
requires this bond to be in a particular form it should include that in the Scope.

Option X14: Advanced payment to the Contractor

This is appropriate when the Contractor will incur significant “up front” costs before the start of
income generating work for example in pre ordering specialist Plant and Materials or
Equipment.

The amount of the payments is stated in the Contract Data part one together with any
requirements for a bond or security. The form of that bond or security is set out in the Scope.

Option X15: The Contractor's design

Without this clause, the standard of liability for Contractor’s design in the UK is generally
“fitness for purpose”. Option X15 reduces the liability to that of using “the skill and care
normally used by professionals designing works similar to the works.” which is the standard
required of a consultant designing direct for a Client under the NEC PSC contract. If a Defect
in the Contractor’s design occurs the onus is on the Contractor to show that it used the
required skill and care in that design, rather than the Client to show that the Contractor did not.

If this clause is used and the Contractor corrects a Defect, which it is subsequently found not to
be liable for because it used the required standard of skill and care, that correction becomes a
compensation event.

Option X16: Retention (used only with Options A, B, C, D and E)

Option X16 allows the Client to retain a proportion of the Price for Work Done to Date as
retention. Half of this retention is released at Completion with the other half being released
upon the issue of the Defects Certificate.

If this Option is used, the retention percentage and any retention free amount must be stated in
Contract Data part one.

Option X17: Low performance damages

Option X17 is another form of liquidated and ascertained damages that can be pre-estimated
for a particular breach of the contract. In this case the breach is that the works do not perform
in the way specified in the Scope.

In the event that the Contractor produces defective work, the Client has three options
1. The Contractor corrects the Defect (clause 43.1).
2. If the Contractor does not correct the Defect, the Project Manager assesses the cost to
the Client of having the Defect corrected by Others and the Contractor pays this
amount (clause 45.1).

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 3. The Client can accept the Defect and a quotation from the Contractor for reduced
Prices and/or an earlier Completion Date (clause 44).

Where the performance in use fails to reach the specified level within the contract, the Client
can take action against the Contractor to recover any damages suffered as a result of the
breach. As an alternative, the Client recovers liquidated damages under Option X17 if it has
been selected.

Option X18: Limitation of liability

This Option can be used to place financial and/or time limits on the various liabilities the
Contractor has to the Client. The limits in the various clauses can be used in any combination
and the amounts or times to be limited are set out in the Contract Data part one.

Option X19 is not used in the ECC; it is used in the TSC.

Option X20: Key Performance Indicators

Performance of the Contractor can be monitored and measured against Key Performance
Indicators (KPIs) using this Option. This Option is not used if X12 is chosen, because that
already includes KPIs.

Option X21: Whole life costs

The contract has procedures in place to take advantage of proposals by the Contractor which
may reduce the cost to the Client of the asset being constructed, and share this saving with the
Contractor. Option X21 adopts this concept for the whole life cost of the asset.

If this Option is used, the Contractor may suggest proposals which reduce the whole life cost.
These may increase the project cost and/or duration.

Option X22: Early Contractor involvement

This Option is used when the Client wishes to involve the Contractor in early design and
costing analysis, where the work is not fully detailed and the Client wants to have a more fully
detailed and agreed scope of work before starting construction.

The Option allows this pre-construction phase, a setting of the proposed forecast cost, and a
break point in the contract if agreement cannot be reached on scope and budget.

Options X23 and 24 are not used in the ECC; they are used in the TSC

Option X25 is not used in the PSC; it is used in the SC

Option Y(UK)1: Project Bank Account

This Option applies in the UK only where the parties wish to create a Project Bank Account.
The clause deals with payments into and out of the account, and its effect on other contract
obligations.

Option Y(UK)2: The Housing Grants, Construction and Regeneration Act 1996
This Option applies in the UK only where the Act, as subsequently amended by the Local
Democracy, Economic Development and Construction Act 2009, applies and deals only with
payment aspects. Adjudication under the Act is covered by Option W2.

Option Y(UK)3: Contracts (Rights of Third Parties) Act 1999

This Option should be used only in the UK. If used it limits third parties’ rights under the
Contracts (Rights of Third Parties) Act 1999 to only those parties and rights stated in the
Contract Data part one.

If the Parties do not want any third parties to have rights, this Option needs to be used, and all
rights and third parties precluded.

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Option Z: Additional conditions of contract
This allows additional conditions to be added to further tailor the contract strategy. This may
include adding or deleting compensation events. The flexibility inherent in the NEC system is
designed so that amendments to the contract are kept to a minimum.

Should it be necessary to amend standard clauses, all the changes should be shown under
Option Z. This ensures that all the changes are collated and highlighted in one area of the
contract. Any amendments or additions should be carefully drafted to avoid inconsistencies
with standard clauses. Use of the flow charts for this purpose is recommended.

2.6 Preparing the tender documents

When preparing tender documents, the first action is for the Client to decide the contract
strategy (see above notes); this will then enable the correct main and secondary Options to be
chosen to suit the Client’s requirements.

As a minimum, the Client should provide the following tender documents

 The Contract Data part one completed with the information necessary for the various
options chosen
 An uncompleted Contract Data part two for the Contractor to complete as part of its
tender.
 Scope, which specifies and describes the work that the Contractor has to carry out and
any constraints upon it doing so.
 Site information, which describes the Site and its surroundings.
 The bill of quantities for the Contractor to price if Options B or D are chosen.
 Any other information required by any of the Options chosen, for example
 the Partnering Information is Option X12 if chosen or
 the incentive schedule if Option X20 is chosen.

In addition other documents can also be included such as

 Instructions to tenderers (which are not usually incorporated into the contract). This
will include any additional requirements that the Contractor is to produce with its
tender, such as details of specific key persons, programme, etc.
 Form of tender to be completed by the Contractor.
 Pre tender Health & Safety Plan (for UK work to which the CDM Regulations apply).

The Contractor completes the information set out in the Contract Data part two, including the
pricing information, details of which will depend upon the main and secondary Options included
by the Client. In addition, the Contractor will also provide other information such as
 Scope for any of the design it is to be responsible for,
 priced activity schedule if Options A or C are used,
 priced bill of quantities if Options B or D are used and
 a programme.

2.7 Assessing tenders

It is critical that tenders are properly assessed prior to appointing the Contractor, not only with
respect to the Contractor’s ability to carry out the works, but also the price it offers.

The method of financial evaluation of the tender will depend upon the main Option chosen. It
should concentrate on likely out-turn costs rather than the initial price in the tender. For
Options A and B this may include an assessment of the costs of any compensation events and
the impact of the percentages and rates the Contractor has tendered for Fee and Defined Cost
in Contract Data part two.

For Options C and D, the financial assessment becomes more complicated. The price quoted
by the Contractor in its tender is only the “target” for the works. The Contractor will be paid its

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Defined Cost plus Fee to carry out the works and therefore the rates and percentages
tendered become much more critical. Usually it will be necessary to set up a sensitivity model
of the possible Defined Cost out-turn and apply these various rates and percentages to that
model, along with the “target”, to find the most financially advantageous tender.

Once a tender has been chosen the contract can be made by various means, either by way of
a formal Deed or by way of a simple letter accepting the Contractor’s tender. In either event
care must be taken to ensure that only those documents the parties want to be bound by are
included in the contract. In addition great care must be taken to properly record any agreed
changes made between the Parties in the post tender period.

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SESSION 3
Managing the contract: the ECC processes

3.1 General provisions

Clause 10 – Mutual trust and co-operation

The Client, the Contractor, the Project Manager and the Supervisor have an obligation, not
only to comply with the contract but to act in a spirit of mutual trust and co-operation.

Clause 11 – Identified and defined terms

Defined terms have capital initials and are defined in alphabetical order under clause 11.
Terms identified in the Contract Data are in italics.

Some of the more important identified and defined terms are considered below. Others are
explained in the relevant section.

Clause 11.2(9) and (14) – Equipment and Plant and Materials

The ECC defines Plant differently from some other contracts. Any temporary works provided
by the Contractor to carry out the works, including items of contractor’s plant such as dumpers,
excavators etc, as well as accommodation, scaffolding, etc is called Equipment.

Plant and Materials are what other contracts call the permanent works, i.e. that which is
specified in the Scope to be included in the works, for example permanent mechanical and
electrical installations.

Clause 11.2(11) – Key Dates

Key Dates are used, for example, to manage the interface between different contractors on a
project where the Client has let more than one contract to different contractors. A Key Date is
a date by which work has to reach a stated condition such that another contractor, or the Client
themselves, can start work.

Care should be taken to use Key Dates only for this reason. If the Client requires that a
geographical section of the works should be completed (as opposed to having reached a state
short of Completion) and handed over early then it is better to use Option X5.

If the Project Manager decides that the works have not met the stated condition for a Key Date
by that Key Date, and as a result the Client incurs additional cost on the project, that cost is
assessed by the Project Manager and paid by the Contractor (clause 25.3).

Key Dates are managed through the contract. They may be extended if they are affected by
compensation events. In addition, the Project Manager may instruct a change to a Key Date,
and in which case it is a compensation event (clause 60.1(4)).

Clause 11.2(16) – Scope

Scope specifies and describes the works the Contractor is to carry out and states any
constraints the Client wishes to impose on the Contractor when doing so. The Client identifies
in the Contract Data part one where the Scope it provides is to be found. If the Contractor
provides Scope e.g. for its own design, the Contractor specifies in the Contract Data part two
where it can be found.

The Scope should include the following information (Ref. Volume 2 “Preparing the ECC” for
more details):

Description of the works

 A general description of the works including general arrangement and location
drawings
 Detailed working and/or production drawings, specifications, models, etc.

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  A statement of any constraints on how the Contractor Provides the Works e.g.
restrictions on access, construction sequence, security issues.

Plant and Materials

 Materials and workmanship specifications
 Requirements for delivery and storage, provision of spares, etc.

Health and safety

The particular health and safety requirements for the site. Any health and safety plan for the
project should also be included.

Contractor’s design
A statement of those parts of the works which the Contractor is to design. On design and build
contracts the Client may have designed part of the works; the Contractor will then be
responsible for designing the remainder. Design criteria should also be included.

Completion
The work required to be done by the Completion Date for the whole of the works and if Option
X5 is used for each of the sections.

Working with the Client and Others

Details of other Others who will be occupying the Working Areas during the contract period.
Details of services and other things the Client and the Contractor provide to each other.

Subcontracting
 Lists of acceptable subcontractors for specific tasks
 Statement of any work which should not be subcontracted
 Statement of any work which is required to be subcontracted

Programme
Any information which the Contractor is required to include in the programme in addition to
the information shown in clause 31.2.

Tests
 Description of tests to be carried out by the Contractor, the Supervisor and others
including those which must be done before Completion.
 Specification of materials, facilities and samples to be provided by the Contractor and
the Client for tests.
 Specification of Plant and Materials which are to be inspected or tested before delivery
to the Working Areas.
 Definition of tests of Plant and Materials outside the Working Areas which have to be
passed before marking by the Supervisor.

Title
Statement of any materials arising from excavation and demolition to which the Contractor
will not have title. (clause 73.2)

Others
There are also certain specific requirements for statements to be made in the Scope from
certain main and secondary Options in the conditions of contract. (Ref. Volume 2 -
“Preparing the ECC” for more details).
Clause 11.2(18) – Site Information

The documents in which the Site Information is contained are identified in the Contract Data
part one.

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Site Information may include
1. Subsoil investigations, borehole records and test results.
2. Reports obtained by the Client concerning the physical conditions within the Site or its
surroundings. This may include mapping, hydrographical and hydrological information.
3. References to publicly available information.
4. Information about plant and services below the surface of the site.
5. Information about piped or other services.
6. Information about existing buildings, structures and plant on or adjacent to the Site.

The Contractor is assumed to have taken the Site Information (amongst other things) into
account when judging what physical conditions it may encounter on the Site – see clause 60.2.
Therefore the more comprehensive and accurate the Site Information is the less likely it will be
that a compensation event under clause 60.1(12) will occur.

Clause 11.2(20) – Working Areas

This is the Site (clause 11.2(17); the area affected by the work in the contract) and other areas
stated by the Contractor in Contract Data part two necessary to Provide the Work and used
only for work in the contract (for example, storage areas).

Clause 13 – Communications
Under clause 13.1, each communication which the contract requires is communicated in a form
which can be read, copied and recorded i.e. non verbal. The contract does not have provision
for verbal instructions, or confirmation of verbal instructions by the Contractor. The Project
Manager must ensure that instructions are given in the correct form.

Clause 13 also allows for the use of (electronic) communication systems.

Clause 14 – The Project Manager and the Supervisor

Clear division of function and responsibility helps accountability and motivates people to play
their part. The Project Manager is appointed by the Client, either from its own staff, or from an
outside body. The Project Manager’s role is to manage the contract for the Client to achieve
the Client’s objectives for the completed project. The Project Manager is often appointed at
the feasibility stage of the project, its duties then including advising on design, procurement,
cost planning and programme matters.

The ECC places a great deal of authority in the hands of the Project Manager and assumes
that it has the full authority to carry out its actions on the Client’s behalf. If the Client has set
limits upon the Project Manager’s level of authority, for instance agreeing the value of
compensation events, the Client must ensure that there is an efficient and speedy
authorisation procedure to allow the Project Manager to respond to the Contractor within the
time scales set by the contract.

The Project Manager is not independent but has to administer the contract in accordance with
its provisions. The Project Manager has to give reasons for any decision the contract requires
it to make. This acts as a constraint, because if the reasons are not listed in the contract then
the Contractor is compensated for the additional time and costs the Contractor incurs in
complying with that decision.

The Supervisor is also appointed by the Client. The Supervisor can be either from the Client’s
own staff, or from an outside body. Essentially, the Supervisor’s role is to check that the works
are carried out in accordance with the contract. This role is similar to that of a Clerk of Works
or Resident Engineer in other contracts but the Supervisor holds its own authorities which are
not delegated to it by others e.g. the right to instruct a search for a Defect, and the
responsibility to issue the Defects Certificate.

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Under clause 14.1, the Project Manager’s or the Supervisor’s acceptance of a communication
from the Contractor or of the Contractor’s work does not change the Contractor’s responsibility
to Provide the Works or its liability for design.

It is important that whoever carries out the role of Project Manager and Supervisor is close to
the works. The contract imposes time limits on them for their actions and failure to meet those
time limits can have serious consequences. Under clause 14.2, the Project Manager and the
Supervisor may delegate any of their actions, but must inform the Contractor (in a form which
can be read, copied and recorded) before doing so. This delegation will be essential on larger
projects.

Clause 15 – Early Warning

Early warnings are a very important part of the NEC contracts. They are about identifying
potential problems before they occur, so that they can either be avoided or their affects
mitigated, rather than waiting until after they have occurred and seeking who is to blame. No
entitlement to additional monies or time attaches to the early warning mechanism, and they
should not be considered to be “claims”. However if they are not given, or if they are given but
ignored, money and time may be expended by either or both parties that could have been
avoided.

Under clause 15.1 "the Contractor and Project Manager each give an early warning by
notifying the other as soon as either becomes aware of any 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.

Note a further reason may arise from Option X10, clause X10.3
 adversely affect the creation or use of the Information Model.

In addition, the Project Manager or the Contractor may, if either choose, give an early warning
for any other matter that could increase the Contractor’s total cost for carrying out the works.

There are considerable financial consequences if the Contractor does not give an early
warning when it should have. For example
 Any resulting compensation event may be assessed as if the Contractor had given
early warning (clause 61.5 and 63.7).
 For Options C to F any cost that was incurred solely as a result of the failure may be
treated a Disallowed Cost and deducted from the amount due to the Contractor.

Clause 15.2 gives the Project Manager or the Contractor the right to instruct the other to attend
an early warning meeting. Others may attend if their presence is likely to assist, in particular
Subcontractors.

At the early warning meeting those who attend co-operate in

 making and considering proposals for how the effects of each matter in the Early
Warning Register can be avoided or reduced,
 seeking solutions that will bring advantage to all those who will be affected,
 deciding on the actions which will be taken and who, in accordance with the contract,
will take them and
 deciding which matters can be removed from the Early Warning Register and
 reviewing actions recorded in the Early Warning Register and deciding if different
actions need to be taken and who, in accordance with the contract, will take them.

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When an early warning is given, the Project Manager must update the Early Warning Register
to include the matter referred to and must also record on it any actions that are agreed to be
taken in the subsequent early warning meeting.

The early warning procedure forces people into being proactive, rather than reactive,
encourages the early identification of problems by both parties and puts emphasis on joint
solution finding. It is the starting point for the development of mutual trust and co-operation.

Clause 16 – Contractor’s proposals

This clause allows the Contractor to propose changes to the Client’s Scope that may reduce
the outturn cost to the Client. If these proposals are accepted, the Scope is changed and the
saving to the Client is split between the Client and Contractor. Options A and B have a share
percentage stated (clause 63.12), Options C and D share this saving through the Contractor
share mechanism.

Clause 16 also allows the Contractor to propose a change to the Working Areas

Clause 17 - Requirements for instructions

Under clause 17.1, the Project Manager or Contractor notifies the other as soon as either
becomes aware of an ambiguity or inconsistency. The Project Manager states how the
ambiguity or inconsistency should be resolved.

Under clause 17.2, the Project Manager or Contractor notifies the other as soon as either
becomes aware of an illegal or impossible requirement. The Project Manager gives an
instruction to change the Scope as appropriate.

Under clause 63.10, a compensation event which is an instruction to change the Scope in
order to resolve an ambiguity or inconsistency is assessed as if the Prices, the Completion
Date and the Key Dates were for the interpretation most favorable to the Party which did not
provide the Scope.

Clause 19 – Prevention
This deals with an event that
 stops the Contractor completing the whole of the works or
 stops the Contractor completing the whole of the works by the date for planned
Completion shown on the Accepted Programme,

and which
 neither Party could prevent and
 an experienced contractor would have judged at the Contract Date to have such a
small chance of occurring that it would have been unreasonable to have allowed for it.

It should be noted that the requirement for “stopping” is absolute. It only covers situations
where it is impossible to complete the works at all, or by the date on the Accepted Programme,
no matter what actions the Contractor takes.

Clause 60.1(19) now makes such an event a compensation event, thus making it a Client’s
risk. For this reason, clause 19 enables the Project Manager to take over the management of
the consequences of the event from the Contractor. In addition, if this event is forecast to lead
to a delay of more than 13 weeks the Client is able to terminate the contract without having to
pay the Contractor compensation for the works not yet carried out, in the form of the Fee for
those works (Reason 21 in clause 91.7).

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3.2 The Contractor’s main responsibilities

Clause 20 – Providing the Works

Clause 20 is one of the shortest and yet most important clauses in the contract. It requires the
Contractor to Provide the Works (a defined term) in accordance with the Scope. It is therefore
clear that the Scope is an important document (or series of documents) that has to be put
together carefully.

Clause 21 – The Contractor’s design

The Contractor is required by this clause to design any part of the works which the Scope
states the Contractor is to design. The fall back position, if the Scope is silent about design, is
therefore that the Client is responsible for the design of all of the works.

Under clause 21.2, particulars of the design as stated in the Scope have to be submitted to the
Project Manager for acceptance, and the Contractor cannot proceed with the relevant part of
the works until the design has been accepted.

The Contractor remains responsible for the work or any design and is liable for any failure,
despite it having been accepted by either the Project Manager or Supervisor (clause 14.1).

Clause 24 – People
The Contractor is required to employ those key persons as listed in the Contract Data part two.
If the Contractor cannot do so it must provide details of alternatives to the Project Manager for
acceptance. The Project Manager must give reasons for not accepting. This will be a
compensation event unless the reason given is that the relevant qualifications and experience
of the new person are not as good as those of the person being replaced.

Clause 26 – Subcontracting
Under clause 26.2, the Contractor submits the name of each proposed Subcontractor to the
Project Manager for acceptance. In addition, the Contractor should also submit the proposed
conditions of contract for each subcontract that is intended to be used unless

 the proposed subcontract is an NEC contract which has not been amended other than
in accordance with the additional conditions of contract or
 the Project Manager has agreed that no submission is necessary.

As usual the Project Manager must give reasons for rejecting a subcontractor or the
subcontract conditions. One of the reasons stated in the contract is that they will not allow the
Contractor to Provide the Works (in accordance with the contract). Any constraints on how or
to whom the Contractor is to subcontract that the Client wishes to apply should be included in
the Scope, in which case if they are not met a refusal to accept will not be a compensation
event.

In any event the Contractor is responsible for Providing the Work as if the work had not been
subcontracted (clause 26.1).

Clause 27 – Assignment
This clause allows assignment of the benefits of the contract (but not novation of the benefits
and burdens). The only requirements are that
 the Party transferring the benefit or any rights notifies the other Party before doing so
and
 the Client does not assign the benefits or right to a new Party which does not intend to
act in accordance with the clause 10.2 obligation to act in a spirit of mutual trust and
co-operation.

Clause 29 – Disclosure
This clause is a brief confidentiality and publicity clause.

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3.3 Time

Clause 30 – Starting, Completion and Key Dates

In contrast with most forms of contract, the period of time within which the Contractor is
required to Provide the Works is not stated. Instead, the starting date is decided and set down
by the Client in the Contract Data together with the completion date. This has the advantage
that tenderers know exactly when the works are required to commence.

The starting date and the access dates are stated in the Contract Data. The Contractor carries
risks from the starting date and so has to provide stated insurances prior to that date. The
Contractor cannot physically start on Site before the first access date.

The Contractor's obligation is to complete the works on or before the Completion Date as
stated in the Contract Data or as may be revised in accordance with the contract. Failure to
complete on time constitutes a breach of the Contractor's obligation. If the secondary Option
X7 (Delay damages) is included, the Client is then entitled to pre-defined damages for that
delay. If it is not then unliquidated damages may apply but will need to be pursued separately
as a breach of contract.

The Project Manager is responsible for certifying Completion, as defined in clause 11.2(2),
within one week of the date of Completion. Normally, the Contractor will request the certificate
as soon as the Contractor considers it is entitled to it, but such a request is not essential.

In addition Key Dates may be used to manage the interface between different contractors on a
project where the Client has let more than one contract to different contractors. A Key Date is
a date by which work has to reach a stated condition such that another contractor, or the
Client, can start work.

Care should be taken to use Key Dates only for this reason. If the Client requires that a
geographical section of the works should be completed (as opposed to having reached state
short of Completion) and handed over early then it is better to use Option X5.

If the Project Manager decides that the works have not met the stated condition for a Key Date
by that Key Date, and as a result the Client incurs additional cost on the project, that cost is
assessed by the Project Manager and paid by the Contractor (clause 25.3).

Key Dates are managed through the contract. They may be extended if they are affected by
compensation events. In addition, the Project Manager may instruct a change to a Key Date,
in which case it is a compensation event (clause 60.1(4)).

Clause 31 – The programme

In the ECC the programme is an important document for administering the contract. It enables
progress to be monitored and the time effects of compensation events to be assessed properly
including changes to the Completion Date.

Provision is made for a programme either to be identified in the Contract Data part two at the
Contract Date or to be submitted by the Contractor within a period stated in the Contract Data
part one. In certain types of project, Clients may wish to have programmes submitted with
tenders and to take account of them in the tender assessment. Reasons for this include the
wish of the Client to judge whether a tenderer has fully understood its obligations and whether
it is likely to be able to carry out the work within the stated times.

Any programme submitted for acceptance is required to include, amongst other things (see
clause 31.2)
 dates which are stated in the Contract Data or the Scope
 dates decided by the Contractor such as planned Completion
 order and timing

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  float and, separately, time risk allowances
 health and safety requirements
 dates when the Contractor requires information, facilities, access, etc. which are to be
provided to the Contractor by the Client
 for each operation, a statement of how the Contractor plans to do the work identifying
the principal Equipment and other resources which will be used
 other information required in the Scope.

It is therefore likely that a programme will be much more than just a simple bar chart. It will be
a collection of documents that may include method statements, histograms, and network
diagrams. If the Client requires the programme to be presented in a particular way, or to show
information that is additional to that listed in clause 31.2 then those requirements should be
included in the Scope.

Within two weeks of the Contractor submitting a programme, or a revised programme, the
Project Manager either accepts it or notifies the Contractor of the \project Manager’s reasons
for not accepting it. The reasons why the Project Manager may not accept a programme may
include subjective judgement as to what is practicable or realistic. The reasons listed in the
contract for not accepting a programme are that
 the Contractor’s plans are not practicable
 it does not show the information which the contract requires
 it does not represent the Contractor’s plans realistically or
 it does not comply with the Scope.

The Project Manager can give reasons other than these, but that will lead to a compensation
event (clause 60.1(9)).

The Project Manager should be prepared to accept a programme with earlier dates if this is
acceptable to the Client. After acceptance, any subsequent failure by the Client to meet these
earlier dates is a compensation event.

If the Project Manager neither accepts nor rejects the programme, but takes no action, the
Contractor may notify the Project Manager of this inaction. If the failure continues for a further
week after the notification, the programme is treated as having been accepted (clause 31.3).

Clause 32 – Revising the programme

The ECC requires that the programme is a management tool that is updated at regular
intervals. Revisions should record the actual progress achieved on each operation and the
reprogramming of future operations. They should also show the effects of implemented
compensation events.

Revised programmes should be submitted

 when instructed by the Project Manager,
 when the Contractor chooses and, in any case,
 no longer than the intervals stated in the Contract Data from the starting date until
Completion of the whole of the works.

A quotation for any compensation event that has an effect upon the programme will require
evidence of that effect. This may be a complete revision of the programme or just a part
change. The documents provided with the quotation will not be a formal submission of a new
programme unless it is stated to be one.

Clause 33 – Access to and use of the Site

The Client allows the Contractor access to and use of the Site from the relevant access dates
shown in the Contract Data. This is not sole possession and others may work on the Site.
However this may lead to a compensation event.

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The Contractor may not require access on the dates stated in the Contract Data, in which case
the later dates should be shown on the Contractor’s programme. These dates then supersede
those in the Contract Data and become obligatory on the Client.

Clause 34 – Instructions to stop or not to start work

The Project Manager has the authority to stop or restart work for any reason, for example
where there is a risk of injury or damage to property. The instruction would constitute a
compensation event unless it was due to a fault of the Contractor.

A failure to instruct a start or re-start of a substantial part or all or the work, or remove work
from the Scope, is a reason for termination after 13 weeks of the original instruction to stop
work (clause 91.6).

Clause 35 – Take over

If the Contract Data is silent on this, the Client is required to take over the works within two
weeks of Completion. Any particular requirement should be stated in the Contract Data. The
Client may take over any part of the Site at any time before Completion is achieved. This
would constitute a compensation event unless it occurred after the Completion Date.

Clause 36 – Acceleration
Acceleration means bringing the Completion Date forward which differs from usage in many
contracts where “acceleration” means speeding up the work to ensure that the Completion
Date is achieved.

The Project Manager can instruct the Contractor to submit a quotation for acceleration. There
is no remedy, however, if it is not produced, or if the Contractor's quotation is unacceptable.
Acceleration can only be undertaken by agreement between the Project Manager and the
Contractor and cannot be imposed on the Contractor without the Contractor’s agreement. If
the quotation is accepted, the Project Manager changes the Prices, Completion Date and Key
Dates accordingly.

If a compensation event would normally lead to the Completion Date being extended the
Project Manager may ask the Contractor to provide an alternative quotation assuming that the
Contractor takes measures to complete within the original period. That is not “acceleration” as
defined by this clause.

3.4 Quality management

Clause 40 – Quality management system

The Contractor is expected to operate a quality management system complying with
requirements stated in the Scope. The Contractor provides a quality policy statement and a
quality plan for acceptance and if any changes are made to the quality plan, the Contractor
provides a changed quality plan for acceptance.

Clause 41 – Tests and inspections

Clause 41.1 states " this clause only applies to tests and inspections required by the Scope or
the applicable law.”

It is imperative that the Scope, produced at tender stage and referred to in Contract Data part
one, defines the full extent and timing of tests required.

Clause 42 – Testing and inspection before delivery

If any Plant and Materials should be tested or inspected before delivery, the Supervisor must
notify the Contractor they have passed the test or inspection before they are delivered into the
Working Areas.

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Clause 43 – Searching for and notifying Defects
The term Defect is a defined term of the contract – see clause 11.2(6)

Up until the defects date the Supervisor (not the Project Manager) has the authority to instruct
the Contractor to search for a Defect. This action is normally defined as “uncovering” or
“opening up” in other contracts. It is normally required to investigate the cause of a defect. If
following the search no Defect is found, a compensation event arises under clause 60.1 (10),
unless the search is needed only because the Contractor gave insufficient notice of carrying
out work that obstructed a test or inspection required by the contract.

Whether or not a search is instructed, up until the defects date the Supervisor and Contractor
each have a duty to notify the other as soon as they find any Defect.

Clause 44 – Correcting Defects

Following notification, the Contractor must correct the Defect within the defect correction
period. It is not necessary for either the Project Manager or Supervisor to instruct the
Contractor to correct the Defect.

The Contractor’s obligation to deal with Defects is governed by two periods, which are
identified in the Contract Data part one. These are
 The defects date. This is the date up until which the Contractor is required to correct
any Defects found and the Client is required to allow the Contractor to do so and to
provide access. This date is expressed as a period after Completion (normally 52
weeks).
 The defect correction period. This is the period that the Contractor has to correct each
Defect. Different defect correction periods may be specified in the Contract Data for
different types of Defect. For Defects found or notified before Completion this period
starts at Completion. For the period between Completion and the defects date it starts
on the later of
 when the Contractor either finds or is notified by the Supervisor of the Defect and
 when the Client provides access to any parts of the works that is necessary to
correct the Defect.

After the Client has taken over any part of the works it is required to provide the Contractor
access to enable the Contractor to correct any Defect. As stated above the defect correction
period for that Defect does not start until the Client does so.

In any event it should be noted that Defects that prevent the Client from using the work must
be corrected before a Completion Certificate can be issued (clause 11.2(2)).

Clause 45 – Accepting Defects

Under clause 45.1 the Contractor and Project Manager may each propose to the other that the
Scope should be changed so that a Defect does not have to be corrected.

If the Contractor and Project Manager are prepared to consider this change, the Contractor
submits a quotation for reduced Prices or an earlier Completion Date, or both. If the Project
Manager accepts the quotation the Project Manager gives an instruction to change the Scope,
the Prices, the Completion Date and the Key Dates accordingly and accepts the revised
programme.

Clause 46 – Uncorrected Defects

These are dealt with as follows
 If the Contractor does not correct a Defect within its defect correction period the
Project Manager assesses the cost to the Client of having it corrected by other people
and the Contractor pays that amount.

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  If the Client does not provide access to the works to correct a notified Defect before
the defects date the Project Manager assesses the costs to the Contractor of
correcting it and the Contractor pays that amount.

In either event the Scope is treated as having been changed to accept the Defect.

3.5 Payment
The payment mechanisms for the six main Options are distinguished mainly by the use of
three key terms
 The Prices
 The Price for Work Done to Date (PWDD) – this is what the Contractor is paid for each
assessment
 Defined Cost

These terms, as defined in clause 11.2 of each main Option, are used to generate the payment
mechanisms, which are summarised below.

For contracts which are subject to the provisions of Housing Grants, Construction and
Regeneration Act 1996, as subsequently amended by the Local Democracy, Economic
Development and Construction Act 2009 (“the Act”), the requirements set down in Section 5
are extended by Option Y(UK)2.

Option A – Priced contract with activity schedule

The Price for Work Done to Date (PWDD) is the total of the activities completed at the lump
sum Prices for each of the activities in the Activity Schedule. The Contractor is paid for only
those activities or groups of activities which have been completed. There is no provision for
payment of partly completed activities. It is important that the Contractor, when compiling the
Activity Schedule, defines activities completion of which can be clearly recognised.

The Activity Schedule is only a payment document, used to determine payments to the
Contractor for what it designs and builds. However it is important that it should relate directly
to the programme and be compatible with it.

Option B – Priced contract with bill of quantities

The Bill of Quantities is only a payment document used to determine payments to the
Contractor for what it designs and/or builds.

The Price for Work Done to Date is calculated using the Bill of Quantities’ rates and lump sums
and the total quantity of the work completed.

Options C and D – Target contracts

The Price for Work Done to Date is the Defined Cost which the Project Manager forecasts will
have been paid by the Contractor before the next assessment date, plus the Fee calculated
from the fee percentage.

Defined Cost is
 the cost of components in the Schedule of Cost Components for all work (including the
sums paid to Subcontractors for work which is subcontracted) less
 Disallowed Cost.

The total of the Prices from the Activity Schedule or Bill of Quantities (adjusted for
compensation events) is the “target” and is compared with the PWDD to determine the
Contractor's share in accordance with the share percentages set down in the Contract Data.

Defined Cost is also used in the assessment of compensation events.

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The Contractor is then paid, or has to pay, a share of the difference between the “target” and
the PWDD. If the “target” is greater than the PWDD the Client pays the Contractor the share.
If it is smaller the Contractor pays the Client the share.

A preliminary assessment of the share is made and paid following Completion, using forecasts
of the final PWDD and “target”. A final assessment is made and paid as soon as the final
assessment of the PWDD and “target” has been made.

The Contractor is required to keep the following accounts and records (clause 52.2) to
calculate Defined Cost
 accounts of payments of Defined Cost
 records which show that the payments have been made
 communications about and assessments of compensation events for Subcontractors
and
 other records as stated in the Scope.

In assessing the amount due the Contractor is paid Defined Cost in the same currency as the
Contractor made payments. The Fee and the Contractor's share are paid in the currency of
the contract based on the exchange rate identified in the Contract Data part one.

Option E – Cost reimbursable contract

The Price for Work Done to Date and the Defined Cost is the same as in Options C and D, as
is
 the requirement to keep records and
 the payment mechanisms for payments made in different currencies.

Unlike Options C and D, there is no target and therefore no share mechanism.

Option F – Management contract

The Price for Work Done to Date is the same as Options C to E. However Defined Cost is
different, being
 the sums due to Subcontractors for work which is subcontracted plus
 the (lump sum) prices tendered by the Contractor for work the Contractor does, less
 Disallowed Costs

The requirements to keep records and the payment mechanism for payments made in different
currencies are the same as Options C to E.

Clause 50 – Assessing the amount due

This clause defines the “assessment date” for each payment, from which the dates of both
certification and payment are calculated. The first assessment date is determined by the
Project Manager, preferably after discussion with both Client and Contractor, with a view to
satisfying the accounting procedure of both Parties. Thereafter, further assessment dates
occur at the end of each assessment interval until
 the Supervisor issues the Defects Certificate or
 the Project Manager issues a termination certificate.

The contract requires the Contractor to submit an application for payment before each
assessment date, in a form set out in the Scope. The Project Manager is required to take this
application into consideration when making the assessment. If the application is submitted in
advance of the assessment date, the amount due to the Contractor is
 the Price for Work Done to Date (PWDD),
 plus other amounts to be paid to the Contractor,
 less amounts to be paid by or retained from the Contractor.

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

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  the amount assessed by the Project Manager and
 the amount due at the previous assessment date.

The payment certificate can therefore be “negative”, a payment from the Contractor to the
Client, or zero.

Such is the importance of the programme in the administration of the contract, that failure by
the Contractor to submit a first programme in accordance with the contract requires the Project
Manager to withhold from the Contractor one quarter of the Price for Work Done to Date
(clause 50.5) until the Contractor has submitted a programme showing the information which
the contract requires.

Clause 51 – Payment
The Project Manager certifies payment within one week of each assessment date (see also
Option Y(UK)2). Each certified payment is made within three weeks of each assessment date
or, if a different period is stated in the Contract Data, within the period stated.

Interest is paid if a payment is not made within the stated period.

Interest is also paid in later certificates if the amount due is corrected

 in relation to a mistake or a compensation event,
 because payment was delayed by an unnecessary delay in a test or inspection done
by the Supervisor or
 following a decision of the Adjudicator or tribunal.

The interest rate is stated in part one of the Contract Data.

Clause 52 – Defined Cost

The term Defined Cost is used for two different activities in the contract
 for all Options – to assess the value of compensation events and
 for Options C to F only – to calculate the PWDD (see above on main options).

The definition of Defined Cost varies according to each main option. The definitions for
Options C to E are set out in the previous explanations of those Options.

For Options A and B – clause 11.2(23) Defined Cost is the cost of the components in the Short
Schedule of Cost Components, including work which is subcontracted. It can include the cost
of preparing quotations for compensation events.

Therefore the ECC contract defines what and how the Contractor is to be paid by way of
Defined Cost. With the exception of Option F it does this by using the Schedule of Cost
Components (SCC) or Short Schedule of Cost Components (SSCC).

Note that the contract does not specify what is not included in Defined Cost. Any other costs
the Contractor incurs or any profits or overheads the Contractor wishes to recover is deemed
to be included in the Fee that the Contractor quotes in its tender. In addition, costs are only
allowed to the extent that they are at open market or competitively tendered prices. They are
also paid net of all deductions, discounts, rebates and taxes that the Contractor can recover.

The Schedule of Cost Components (SCC) is used in Options C to E to

 define what the Contractor gets paid (see previous notes on the main Options) and
 value compensation events.

The SCC is not used in Options A, B or F.

The Short Schedule of Cost Components (SSCC) is used in Options A and B only, to value
compensation events. Neither the SCC nor the SSCC is used in Option F.

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Disallowed Costs
The inclusion of a cost element in the SCC or SSCC does not necessarily entitle the
Contractor to payment of all costs incurred. The Disallowed Costs clauses for Options C, D, E
and F identify the circumstances in which costs will be excluded from Defined Cost.

Under Options C, D, and E Disallowed Cost is cost which

 is not justified by the Contractor’s accounts and records
 should not have been paid to a Subcontractor or supplier in accordance with its
contract
 was incurred only because the Contractor did not
 follow an acceptance or procurement procedure stated in the Scope,
 give an early warning which the contract required the Contractor to give or
 give notification to the Project Manager of the preparation for and conduct of an
adjudication or proceedings of a tribunal between the Contractor and a
Subcontractor or supplier

and the cost of

 correcting Defects after Completion,
 correcting Defects caused by the Contractor not complying with a constraint on how it
is to Provide the Works stated in the Scope,
 Plant and Materials not used to Provide the Works (after allowing for reasonable
wastage) unless resulting from a change to the Scope
 resources not used to Provide the Works (after allowing for reasonable availability and
utilisation) or not taken away from the Working Areas when the Project Manager
requested and
 preparation for and conduct of an adjudication, payments to a member of the Dispute
Avoidance Board or proceedings of the tribunal between the Parties

Working Areas
People and Equipment are only included in the SCC and SSCC if they are working or used
within the Working Areas. The only exceptions to this is for people employed elsewhere on

 manufacturing or fabricating Plant and Materials which is wholly or partly designed

specifically for the works or
 designing the works or Equipment.

The Working Areas are

 the Site, access and use of which is arranged by the Client,
 any other areas that the Contractor defines as part of its tender in the Contract Data
part two, but only if those areas are
 necessary for Providing the Works and
 used only for work on the contract (clause 11.2(20) and
 any area added to this after being proposed by the Contractor and accepted by the
Project Manager (clause 16.3).

Schedule of Cost Components (SCC)

(Only applies to Options C, D and E)

Section 1 – People
This relates to components of cost of people who are directly employed by the Contractor and
includes, in addition to wages and salaries, all costs related to their employment that are listed.
It specifically excludes Contractor’s staff who are working outside the Working Areas. It
includes labour only subcontractors, who are excluded from the definition of Subcontractors.

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Section 2 – Equipment
This provides a mechanism for reimbursement of costs for Equipment hired or owned by the
Contractor, including accommodation.

Section 3 – Plant and Materials

This deals with purchasing, delivery, packaging and samples and tests. Cost of disposal is
credited unless the cost of the Plant and Materials was disallowed.

Section 4 – Subcontractors
This includes the payments to Subcontractors for work which is subcontracted without taking
into account any amounts paid to or retained from the Subcontractor by the Contractor, which
would result in the Client paying or retaining the amount twice.

Section 5 – Charges
This covers miscellaneous costs incurred by the Contractor as direct cost.

Section 6 – Manufacture and fabrication

This relates to the components of cost of manufacture or fabrication of Plant and Materials
outside the Working Areas that has been wholly or partly designed for the works. It includes
the cost of employees working outside the working areas on this fabrication, at rates quoted by
the Contractor in the Contract Data part two as part of its tender.

Section 7 – Design
This deals with the cost of design outside the Working Areas in the same way as Section 6. It
includes the cost of employees working outside the Working Areas on design, at rates quoted
by the Contractor in the Contract Data part two as part of its tender, and the cost of travel to
and from the Working Areas.

Section 8 – Insurance
Insurer's payment of claims is deducted from cost.

The Short Schedule of Cost Components

The Short Schedule of Cost Components is used for the assessment of compensation events
under Options A and B. It is laid out similarly to the SCC but with People Rates quoted
additionally in Contract Data part two for Section 1 – People.

3.6 Compensation events

Compensation events are events which are at the Client’s risk. If they occur, and do not arise
from the Contractor’s fault, they entitle the Contractor to be compensated for any effect the
event has on the Prices, the Completion Date, and any Key Dates.

The assessment of a Compensation Event therefore deals with both time and money. It may
lead to the total of the Prices being increased as well as the Contractor being given additional
time to carry out the works. In some cases, specified in the contract, it may result in the total of
the Prices being reduced.

What effect the value of compensation events has upon payments made to the Contractor
depends upon the main Option chosen
 In Options A and B the value of the compensation event is added to the PWDD, i.e. the
amount the Contractor is paid.
 In Options C and D the value of the compensation event is added to the “target” for the
works and therefore only affects the Contractor’s share payment.
 In Options E and F it has no effect on what the Contractor is paid.

Compensation events are listed

 in core clause, 60.1 which includes events types (1) to (21).

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  in main Options B and D
 in secondary Options X2, X12, X14, X15 and Y(UK)2
 maybe in Contract Data part one as extra events specified by the Client and
 maybe in Option Z clauses added by the Client.

The basic principles of assessing compensation events are as follows

 Their effect on the Contractor should be, as far as is possible, entirely neutral. The
Contractor should neither gain nor lose from them.
 They should be dealt with individually as they occur rather than being left to be sorted
out “later”. The contract therefore sets out a defined timetable for the assessment to
take place. Either party has the ability to be able to force the other to comply with that
timetable or suffer adverse consequences if it fails to do so.

Clause 60 – Compensation Events

The following are compensation events

Clause 60.1(1) – Changing the Scope

The Project Manager may require variations to the works, which may comprise deletion or
addition of work or alteration to work and are effected by a Project Manager's instruction to
change the Scope. Included would be changes made in order to eliminate an illegality or
impossibility or, where possible within the contract, resolve an ambiguity or inconsistency
(clause 17). The contract allows that changes to the Scope that leads to a reduction of the
Defined Cost of carrying out the work may lead to a reduction in the Prices.

The effect of the second bullet of this clause is to give precedence to the Scope provided by
the Client in part one of the Contract Data over the Scope for the Contractor’s design provided
by the Contractor in part two of the Contract Data.

Clause 60.1(2) – Access to the Site

The Client does not allow access to a part of the Site by the later of its access date in the
Contract Data and the date shown on the Accepted Programme. If the Accepted Programme
shows a date later than that in the Contract Data the Client only has to provide access by that
later date.

Clause 60.1(3) – Provision by the Client

Something that the contract requires the Client to provide is not provided by the date shown on
the Accepted Programme.

Clause 60.1(4) – Stopping work

The Project Manager gives an instruction to stop or not to start any work or to change a Key
Date.

Clause 60.1(5) – Work of the Client or Others

The Client or Others
 do not work within the times shown on the Accepted Programme,
 do not work within the conditions stated in the Scope, or
 carry out work on the Site that is not stated in the Scope.

Clause 60.1(6) – Reply to a communication

The Project Manager or the Supervisor do not reply to a communication within the period
required by the contract.

Clause 60.1(7) – Object of value or historical interest

The Project Manager gives an instruction to deal with an object of value, or historical or other
interest.

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Clause 60.1(8) – Change of decision
The Project Manager or the Supervisor changes a decision previously communicated to the
Contractor.

Clause 60.1(9) – Withholding an acceptance

The Project Manager withholds an acceptance for a reason not stated in the contract.

Clause 60.1(10) – Instruction to search

The Supervisor instructs the Contractor to search for a Defect and no Defect is found, unless
the search was needed only because the Contractor gave insufficient notice of doing work
obstruction a test or inspection.

Clause 60.1(11) – Tests or inspections

A test or inspection done by the Supervisor causes unnecessary delay.

Clause 60.1(12) – Physical conditions

The Contractor encounters physical conditions which
 are within the Site
 are not weather conditions
 an experienced Contractor would have judged to have such a small chance of
occurring that it would have been unreasonable to have allowed for them.

Only the difference between the physical conditions encountered and those for which it would
have been reasonable to have allowed is taken into account in assessing a compensation
event.

The criteria for judging the physical conditions are given in clause 60.2. The Contractor is
considered to have taken into account
 the Site Information
 publicly available information referred to in the Site Information.
 information obtainable from a visual inspection of the Site.
 other information which an experienced contractor could reasonably be expected to
have or to obtain.

Clause 60.3 states the rule regarding inconsistencies in the Site Information, for which the
Client is responsible whereby the Contractor is assumed to have taken into account the
physical conditions more favourable to carrying out the work.

Clause 60.1(13) – Adverse weather

Rather than rely on subjective generalisations about “exceptionally inclement weather”
normally included in standard forms of contract, the ECC includes a more objective and
measurable approach. Weather data is made available for each contract, compiled by an
independent authority and agreed by both Parties beforehand, establishing the levels of
selected relevant weather conditions for the Site for each calendar month, which have had an
average period of return of less than once in every ten years. If weather conditions more
adverse than these levels do occur it is a compensation event.

Only the difference between the weather measurement and the weather which the weather
data show to occur less frequently than once in ten years is taken into account in assessing a
compensation event.

Part one of the Contract Data includes the place (which may be outside the Working Areas) at
which weather measurements are recorded. It also lists four measurements (as a minimum)
for which 10 year 'return period statistics' for each calendar month may be required. These four
measurements are
 the cumulative rainfall (mm) (this includes the equivalent rainfall corresponding to falls
of snow),

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  number of days in the month with rainfall more than 5mm (a measure of the days when
outside work may be interrupted by rain),
 number of days in the month with minimum air temperature less than 0 degrees
Celsius, and
 number of days in the month with snow lying at a stated time GMT (in the United
Kingdom, Met Office readings are taken at 0900 hours GMT; the time may vary in
other countries).

Space is left in the Contract Data for adding other measurements pertinent to the Site in
question or the operations to be carried out.

Clause 60.1(14) – Client’s liability event occurs

The Client’s liabilities are stated in clause 80.1 and in the Contract Data part one.

Clause 60.1(15) – Client's take over of the works

The Client may use part of the works before Completion and, unless it is for the reasons stated
in clause 35.2, when the Client does so it takes over that part. If this take over occurs before
both Completion and the Completion Date, it is a compensation event.

Clause 60.1(16) – Materials etc. for tests

If the Client does not provide materials etc for tests as stated in the Scope.

Clause 60.1(17) – Assumptions about compensation events

If the Project Manager later changes any stated assumption about a previous compensation
event (clause 61.6).

Clause 60.1(18) – Client’s breach of contract

This is an “umbrella” clause to include breaches of contract by the Client other than those
covered elsewhere by compensation events.

Clause 60.1(19) – Stopping the Contractor

Often known as prevention, this deals with an event that
 stops the Contractor completing the whole of the works or
 stops the Contractor completing the whole of the works by the date shown on the
Accepted Programme,

and which
 neither Party could prevent,
 an experienced contractor would have judged the Contract Date to have had such a
small chance of occurring that it would have been unreasonable for the Contractor to
have allowed for it and
 is not one of the other compensation events.

It should be noted that the requirement for “stopping” is absolute. It only covers situations
where it is impossible to complete the works at all, or by the date on the Accepted Programme,
no matter what actions the Contractor takes.

This is now at the Client’s risk. For this reason, the Project Manager is able to take over the
management of the consequences of the event from the Contractor by the use of clause 19. In
addition, if this event is forecast to lead to a delay of more than 13 weeks the Client is able to
terminate the contract without having to pay the Contractor compensation for the works not yet
carried out, in the form of the Fee for those works (Reason 21 in clause 91.7).

Clause 60.1(20) – Quotation not accepted

The Project Manager notifies the Contractor that a quotation for a proposed instruction is not
accepted.

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Clause 60.1(21) – Additional compensation events
Additional compensation events may be stated in Contract Data part one, and this recognises
that.

Other compensation events

Under Options B and D, there are additional compensation events:

1. Under clause 60.4 a difference between the final total quantity of work done and the
quantity for an item on the Bill of Quantities is a compensation event if it satisfies the
three tests stated in the clause.

2. Under clause 60.5, a difference between the final total quantity of work done and the
quantity for an item on the Bill of Quantities that delays Completion or the meeting of a
Condition stated for a Key Date by that Key Date.

3. Under clause 60.6, correction of mistakes in the Bill of Quantities which are due to
departures from the rules for item descriptions and for division of the work into items in
the method of measurement or are due to ambiguities or inconsistencies.

There is a compensation event for changes in the law (Option X2) and others within the
multiparty collaboration Option (X12). Advance payment Option X14 and the Contractor’s
design Option X15 have further compensation events, and finally, under Option Y(UK)2, clause
Y2.5, if the Contractor exercises its right under the Act to suspend performance it is a
compensation event.

Clause 61 – Notifying compensation events

If the compensation event arises from the Project Manager or the Supervisor giving an
instruction or notification, issuing a certificate or changing an earlier decision, then the Project
Manager is required to notify the Contractor of the compensation event. The Project Manager
includes in the notification an instruction to the Contractor to provide a quotation unless

 the event arises from a fault of the Contractor or

 the event has no effect upon Defined Cost, Completion or meeting a Key Date.

Therefore when, for example, the Project Manager issues a new drawing showing a change to
the Scope, the Project Manager should also notify the Contractor of the compensation event.

It is the Contractor’s responsibility to notify all other compensation events. The Contractor has
to notify a compensation event within 8 weeks of becoming aware of the event otherwise it is
not entitled to a change in the Prices, the Completion Date or a Key Date.

In addition, the Contractor may notify any event that the Project Manager should have notified
but failed to do so. In this case the 8 week period time bar does not apply. It is not applied to
compensation events that the Project Manager should have notified, in which case the
Contractor has as long as it wishes to notify, up to the defects date. For that reason it is in the
Client’s best interests for the Project Manager to notify compensation events in order to start
the procedural clock ticking.

In addition the Project Manager may, under clause 65, instruct the Contractor to provide a
quotation for a proposed instruction (see below).

The Project Manager has one week to reply to the Contractor’s notification of a compensation
event. The Project Manager can reject it under the contract only for one of the following
reasons
 it arises from a fault of the Contractor,
 the event has not happened and is not expected to happen,
 has not been notified within the timescales set out in the conditions of contract,

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  it has no effect upon Defined Cost, Completion or meeting a Key Date or
 it is not one of the compensation events stated in the contract.

If the Project Manager believes that none of these apply, the Project Manager notifies the
Contractor that the event is a compensation event and includes in the notification an instruction
for the Contractor to provide a quotation.

If the Project Manager fails to reply within one week to the Contractor’s notification the
Contractor may, if and when it wishes, notify the Project Manager to that affect. If the failure
continues for a further two weeks after this notice then that is treated as the Project Manager
having accepted the event as a compensation event and instructed a quotation. The only way
that can be changed is if the Client takes the matter to adjudication.

If the Project Manager decides that the effects of a compensation event are too uncertain to be
reasonably forecast, the Project Manager states in the instruction assumptions about the event
which the Contractor should make in its quotation. If any of these later prove to be wrong, the
Project Manager notifies a correction and that correction becomes another compensation
event (clause 60.1(17)). So, for example, if information or access to be provided by the Client
is late and the Project Manager does not know when it will be available, the instruction should
include detail on how long the Contractor should assume the delay will be when producing the
quotation.

If the Project Manager decides that the Contractor did not give an early warning of the event
that an experienced contractor should have, then the Project Manager notifies the Contractor
of that when it instructs the Contractor to provide a quotation.

Clause 62 – Quotations for compensation events

A quotation for a compensation event deals with both time and money, as set out in more
detail in the notes on clause 63. The Contractor should include details of calculations within
any quotation as well as a revised programme or alterations to a programme if the
compensation event alters the timing or sequence of the remaining work.

If a compensation event occurs the Project Manager may, after consulting the Contractor,
instruct alternative quotations based upon different ways of dealing with the event.

The Contractor has three weeks to submit a quotation from being instructed to do so. The
Project Manager then has two weeks after submission to reply. Either or both of these periods
may be extended with the agreement of both the Project Manager and Contractor.

The Project Manager's reply (clause 62.3) is

 an acceptance of a quotation,
 an instruction to submit a revised quotation (this should give reasons) or
 a notification that the Project Manager will be making the assessment

If the Contractor does not provide a quotation within the time set out in the contract, or agreed
between the parties, the Project Manager may make the assessment.

If the Project Manager fails to reply to a quotation within the time allowed the Contractor may, if
and when it wishes, notify the Project Manager to that effect. If the failure continues for a
further two weeks after notification it is treated as acceptance of the quotation by the Project
Manager. The only way that the Client can change that is by taking the matter to the
Adjudicator.

Clause 63 – Assessing compensation events

The changes to the Prices are assessed as the effect of the compensation event upon
 the actual Defined Cost of work already done by the dividing date,
 the forecast Defined Cost of the work not done by the dividing date and

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  the resulting Fee.

The date when the switch is made between actual and forecast Defined Cost is called the
dividing date. For a compensation event that arises from the Project Manager or the
Supervisor giving an instruction or notification, issuing a certificate or changing an earlier
decision, the dividing date is the date of that communication. For other compensation events,
the dividing date is the date of the notification of the compensation event (clause 63.1).

It should be noted that this quotation should include all of the costs associated with a
compensation event, including any costs for prolongation of the time on Site. There is no such
thing in the ECC as the separate entitlement to a “loss and expense” claim found in other,
more traditional contracts.

Assessment of compensation events is therefore based on their effect on Defined Cost. This
is different from most standard forms where variations are valued using the rates and prices in
the contract as a basis. The reason for this policy is that no compensation event which is the
subject of a quotation is due to the fault of the Contractor or relates to a matter which is at the
Contractor’s risk under the contract. It is, therefore, appropriate to reimburse the Contractor
the forecast additional costs arising from the compensation event.

However, in all Options, rates and lump sums may be used to assess a compensation event,
but only if both the Project Manager and Contractor agree to do so (clause 63.2).

If the compensation event changes the timing or sequence of subsequent work from that
shown in the Accepted Programme, the Contractor must submit a revised programme or
alterations to the programme. Any delay to the Completion Date is assessed as the length of
time that, due to the compensation event, planned Completion is later than planned
Completion as shown on the Accepted Programme current at the dividing date. A delay to a
Key Date is assessed as the length of time that, due to the compensation event, the planned
date when the Condition stated for a Key Date will be met is later than that shown on the
Accepted Programme current at the dividing date (clause 63.5).

Any time risk allowances which the Contractor has allowed are preserved by this clause, as
assessment of the compensation event is based on entitlement rather than need. Allowances
for risk must be included in forecasts of Defined Cost and Completion in the same way that the
Contractor allows for risks when pricing its tender. Unlike terminal float, free float or project
float within the Accepted Programme is available to mitigate or avoid any consequential delay
to the Completion Date.

No compensation event can result in a reduction in the time for carrying out the works, i.e. an
earlier Completion Date. Acceleration as agreed under clause 36 is the normal way to achieve
an earlier Completion Date.

Clause 64 – The Project Manager's assessments

The Project Manager may assess a compensation event, but only for the following reasons
 if the Contractor has not submitted a required quotation and details of its assessment
within the time allowed
 if the Project Manager decides that the Contractor has not assessed the compensation
event correctly in a quotation and has not instructed the Contractor to submit a revised
quotation
 if, when the Contractor submits quotations for the compensation event, the Contractor
has not submitted a programme or alterations to a programme which the contract
requires it to submit or
 if, when the Contractor submits quotations for a compensation event, the Project
Manager has not accepted the Contractor’s latest programme for one of the reasons
stated in the contract.

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These are all derived from some failure of the Contractor. The Project Manager has to use the
same methods to assess the time and money implications of the compensation event as the
Contractor, i.e. the rules set out in clauses 63.1 to 63.5. The Project Manager will be
motivated to make a proper assessment in the knowledge that the Contractor may, if
dissatisfied, refer the matter to the Adjudicator who may change the assessment.

The Project Manager has the same time to complete the assessment of a compensation event
as the Contractor had to complete the assessment for the same event. When the Project
Manager’s assessment is completed it is notified, together with calculations and any revised
programme, to the Contractor.

If the Project Manager fails to assess a compensation event within the time allowed the
Contractor may, if and when it wishes, notify the Project Manager to that effect. If the failure
continues for a further two weeks after notification it is treated as acceptance of the
Contractor’s original quotation by the Project Manager. The only way that the Client can
change that is by taking the matter to adjudication.

Clause 65 – Proposed instructions

The Project Manager may instruct the Contractor to submit a quotation for a proposed
instruction. The timescale for this submission is the same as for a quotation for a
compensation event and the Service Manager replies by the date when the proposed
instruction may be given. This quotation is itself a compensation event if the quotation is not
accepted.

The Project Manager’s reply is

 an instruction to submit a revised quotation including the reasons for doing so,
 the issue of the instruction together with a notification of the instruction as a
compensation event and acceptance of the quotation or
 a notification that the quotation is not accepted.

If the Project Manager fails to reply in time, the reply is taken to be a notification that the
quotation is not accepted. The Project Manager may still issue an instruction, having not
accepted the quotation, in which case it is treated as a new instruction and managed as a new
compensation event.

Clause 66 – Implementing compensation events

A compensation event is implemented when the earliest of the following occurs
 the Project Manager notifies acceptance of the Contractor’s quotation,
 the Project Manager notifies the Contractor of an assessment made by the Project
Manager or
 the Contractor’s quotation is treated as having been accepted by the Project Manager.

Compensation events are not reviewed or revised after they are implemented. Even if the
records of resources on work actually carried out show that achieved Defined Cost and timing
are different from the forecasts included in the accepted quotation or in the Project Manager's
assessment, the assessment is not changed.
3.7 Title
Clauses 70, 71 and 73 detail
 the Client’s title to Plant and Materials inside and outside the Working Areas,
 the process for marking Equipment, Plant and Material outside the Working Areas so
that the Contractor can be paid for them,
 the Contractor’s title over objects of value or historical interest (the Contractor has
none) and
 the Contractor’s title over material from excavation or demolition (the Contractor has
full title unless the Scope states otherwise).

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Clause 72 requires the Contractor to remove its Equipment from the Site when it is no longer
needed.

The Contractor has the rights to use any material provided by the Client only to Provide the
Works (clause 74.1).

3.8 Liabilities and Insurance

Various Client’s liabilities are listed under clause 80.1. These and any others added in the
Contract Data will also give rise to compensation events under clause 60.1(14). There are
nine main categories of Client’s liability, related to
1. Claims and proceedings from Others and compensation and costs payable to Others
which are due to use or occupation of the Site by the works, or negligence, breach of
statutory duty or interference with any legal right by the Client and others.
2. A fault of the Client or any person employed by or contracted to it, except the
Contractor.
3. A fault in the design contained in the Scope provided by the Client.
4. Loss of or damage to Plant and Materials supplied to the Contractor by the Client, or
by Others on the Client’s behalf, until the Contractor has received and accepted them.
This would normally be covered by the Client’s own loss or damage policy.
5. Loss of or damage to the works, Plant and Materials, caused by matters outside the
control of the Parties.
6. Loss of or damage to the works taken over by the Client.
7. Loss of or damage to the works and any Equipment, Plant and Materials retained on
Site by the Client after a termination.
8. Loss of or damage to property owned by the Client other than the works.
9. Additional Client’s liabilities stated in the Contract Data.

Liabilities listed in clause 81.1 are the Contractor’s unless they are stated as being Client
liabilities
1. Claims and proceedings from Others and compensation and costs payable to Others
which arise from or in connection with the Contractor Providing the Works.
2. Loss of or damage to the works, Plant and Materials and Equipment.
3. Loss of or damage to property owned or occupied by the Client other than the works,
which arises from or in connection with the Contractor Providing the Works.
4. Death or bodily injury to the employees of the Contractor.

Whilst this section deals with liabilities as a whole it should be remembered that the time and
money risks associated with compensation events always remain with the Client. In addition,
the financial risks of events will also depend upon the main Option chosen.
 With Options A and B the remaining financial risks reside with the Contractor.
 With Options C and D they are shared between the Contractor and the Client using the
share mechanism, except for Disallowed Cost, which remain with the Contractor.
 With Option E they remain with the Client except for Disallowed Cost, which remain
with the Contractor.
 With Option F they remain with the Client except for Disallowed Cost and any (lump
sum) prices the Contractor has tendered for, which both remain with the Contractor.

The Contractor is required to take out insurances in the joint names of the Parties for events
which are at its risk under the following three headings in the Insurance Table
1. Loss of or damage to the works, Plant and Materials.
2. Loss of or damage to Equipment.
3. Loss of or damage to property (except the works, Plant and Materials and Equipment)
and liability for bodily injury to or death of a person (not an employee of the
Contractor), arising from or in connection with the Contractor Providing the Works.

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The Contractor is required to take out a further, fourth, insurance but not in joint names

4. Liability for death of or bodily injury to employees of the Contractor arising out of and in
the course of their employment in connection with the contract.

3.9 Termination and dispute resolution

Termination
If either Party wishes to terminate the Contractor’s obligation to Provide the Works it notifies
the Project Manager and the other Party giving details of its reason for terminating. If the
reason complies with the contract then the Project Manager promptly issues a termination
certificate to both Parties (clause 90.1).

There are 22 reasons to terminate stated in clause 91. Some reasons are available just to the
Client, some just to the Contractor and the rest available to either Party. There is a further
reason in Option X11, where the Client may terminate for any reason.

There are four procedures, P1 to P4, which apply as directed in the Termination Table (clause
90.2) depending upon which Party has terminated and for what reason. There are four
calculations detailed in clause 93 that are used to determine the amount due to the Contractor
(or the Client). The amount due on termination includes an amount assessed in accordance
with A1 (clause 93.1) and one or more of A2 to A4 (clause 93.2), again depending upon which
Party has terminated and for what reason.

Dispute Resolution
The ECC has three dispute resolution procedures and the Client chooses the one which it will
use in the Contract Data part one. Options W1 and W2 have many similarities. Both require
that

 the Adjudicator is employed by both Parties using the NEC Dispute Resolution Service
Contract
 a dispute is first considered by the Senior Representatives stated in the Contract Data
 the adjudicator’s decision is binding, in that the Parties have to put it into effect, and
 either Party may subsequently refer the dispute to the tribunal, which is identified in the
Contract Data part one for a final decision, but
 the Parties may not refer a dispute to the tribunal until it has been through an
adjudication and
 if they do not notify their intention to do so within 4 weeks of the Adjudicator’s
decision that decision becomes final as well as binding.

Option W3 does not adopt the Senior Representatives or an Adjudicator, but refers disputes
first to a Disputes Avoidance Board, and then directly to the tribunal. The Disputes Avoidance
Board has no power to impose a solution to the dispute.

Option W1
W1 is the standard NEC form of dispute resolution. It provides for adjudication by an
Adjudicator identified in the Contract Data or, if not identified, jointly chosen or chosen by an
Adjudicator nominating body. Under this Option the time scales for starting and completing an
adjudication are limited.

Prior to the adjudication it requires that a dispute arising under or in connection with the
contract is referred to the Senior Representatives in accordance with the Dispute Reference
Table. If the dispute is not resolved by the Senior Representatives, it is referred to and
decided by the Adjudicator.

The Dispute Reference Table identifies the reasons for the dispute, the name of the referring
Party, and the time scales for the Parties to notify the dispute to each other and to refer it to the

NEC4: Introduction to the ECC (V4 01/18) 40 © NEC Contracts 2017

Senior Representatives. Times for notifying and referring a dispute can be extended by the
Project Manager if the Contractor agrees.

Option W1 also allows a dispute under a subcontract which is also a dispute under the ECC to
be referred to the Adjudicator at the same time.

A dispute is not referred to the tribunal unless it has first been referred to the Adjudicator.

Option W2
This Option is only used in the UK when and if the Housing Grants, Construction and
Regeneration Act 1996, as subsequently amended by the Local Democracy, Economic
Development and Construction Act 2009 (the Construction Act), applies. It in drafted in such a
way as to comply fully with this legislation whilst still retaining as many features of W1 as
possible.

It still retains the option to refer a dispute to the Senior Representatives before the Adjudicator,
but because the Construction Act allows a Party to refer a dispute to an Adjudicator at any
time, the referral to the Senior Representatives cannot be obligatory.

The main features of Option W2 are

 As stated above, adjudication is allowed to commence at any time. There is no
constraint as to when a dispute has to be referred to the Adjudicator.
 As for W1, the dispute cannot be referred to the tribunal until it has first been decided
by the Adjudicator.
 There is a procedure to ensure that if the Adjudicator is unable to decide the dispute
another Adjudicator is appointed and the dispute is referred to the new Adjudicator
within seven days.
 A dispute under a subcontract which is also a dispute under the ECC may be referred
to the Adjudicator at the same time, but only with the agreement of the Subcontractor.
 The Adjudicator makes a decision within 28 days of the dispute being referred to the
Adjudicator. This period can be extended with the agreement of the referring Party
and the Adjudicator by up to 14 days and by any other period with the agreement of
both Parties and the Adjudicator.

Option W3
This Option replaces the Senior Representatives and Adjudicator with a Dispute Avoidance
Board. This Board is stated in the Contract Data, or chosen subsequently by the Parties or the
Dispute Avoidance Board nominating body. Its member(s) are involved throughout the
contract, making occasional site visits. Its objective is to assist the Parties in resolving
potential disputes before they become disputes.

The main features are

 An issue over which one Party has a potential dispute with the other must be notified
to the other Party in advance of the referral to the Disputes Avoidance Board.
 The potential dispute must be referred to the Disputes Avoidance Board within two to
four weeks of the notification.
 Any dispute must be referred to the Disputes Avoidance Board as a potential dispute
before being referred to the tribunal.
 The dispute can be referred to the tribunal only after the disputing Party has notified
the other that it intends to refer it to the tribunal, and must do so within four weeks of
the Dispute Avoidance Board’s recommendation.

NEC4: Introduction to the ECC (V4 01/18) 41 © NEC Contracts 2017

CASE STUDY QUESTIONS

Case Study One

On a highway contract under the ECC using Option A the Project Manager instructs the
Contractor to construct a pipe culvert under an existing side road as additional work. To
minimise disruption to traffic, the extra work has to be done in December during the night time.
The Contractor submits a quotation for £20,000 which includes an allowance for bad weather.
The Project Manager accepts the quotation.

In fact, the work is done during a spell of fine weather and the Defined Cost plus Fee based on
records is £15,000.

(a) How much is the Contractor paid for the work?

(b) How much would the Contractor be paid for this work if it were an Option C contract
instead?

NEC4: Introduction to the ECC (V4 01/18) 42 © NEC Contracts 2017

Case Study Two
The Contractor on an ECC Option A contract fails to submit an application for payment before
an assessment date.

What, if any, entitlement does he have to be paid for work carried out in that month?

NEC4: Introduction to the ECC (V4 01/18) 43 © NEC Contracts 2017

Case Study Three
The Contractor issues its first programme to the Project Manager for acceptance two weeks
before the stated starting date on an ECC Option A contract. In it the Contractor includes a
sheet headed "Method Statements" comprising a list of operations. For some of the early work
the Contractor refers to detailed method statements, which are attached. For later work the
Contractor lists the resources it intends to use in the way of numbers of people and types of
Equipment. Finally, for the work that is to be carried out at a much later dates the Contractor
uses simple phrase such as

 by conventional methods
 details to be determined
 to be decided after appointment of subcontractor.

(a) What action could the Project Manager take?

(b) When, if ever, should the Contractor submit a revised programme?

The Contractor’s work is delayed because a subcontractor it employs is unable to carry out any
other work and it takes 3 weeks to find a new subcontractor and for them to start work.
Following that delay the Contractor submits a revised programme to the Project Manager for
acceptance. This does not reflect any of the delays incurred because of this problem, and
therefore when it is issued it shows the works as being 3 weeks further ahead than they
actually are.

(c) What actions can the Project Manager take and what would be their consequences on
the assessment of future compensation events?

NEC4: Introduction to the ECC (V4 01/18) 44 © NEC Contracts 2017

Case Study Four
The Project Manager writes to the Contractor to advise that the Contractor cannot have access
to an area of the Site on the date stated in Contract Data part one. The contract is ECC
Option B.

(a) What should the Contractor do?

(b) How will the Contractor recover any cost and time effect of the delayed access?

NEC4: Introduction to the ECC (V4 01/18) 45 © NEC Contracts 2017

Case Study Five
On an ECC Option C project, the Project Manager decides to ask the Contractor if it can bring
forward the Completion Date.

Describe the process available to the Project Manager to put this into effect?

NEC4: Introduction to the ECC (V4 01/18) 46 © NEC Contracts 2017

Case Study Six
The Supervisor informs the Project Manager during the contract that it believes that drain pipes
to a new access road have been installed incorrectly.

In an ECC Option C project, what actions are available to the Project Manager in such a
situation?

NEC4: Introduction to the ECC (V4 01/18) 47 © NEC Contracts 2017

Case Study Seven
A contract is awarded for a new sewage treatment works under the ECC using Option A. One
week after the Contract Date, the Contractor submits the names of proposed Subcontractors
for the following work and asks for the Project Manager’s approval.

(a) Design of structural steelwork for the pumping station

(b) Design and supply of the pumping plant
(c) Supply of precast kerbs and paving flags
(d) Supply of prestressed concrete floor units for the office block
(e) Supply of standard ready mix concrete for the first 3 months of the contract
(f) External and internal painting of the buildings

How should the Project Manager respond to these?

NEC4: Introduction to the ECC (V4 01/18) 48 © NEC Contracts 2017

CASE STUDY ANSWERS
Case Study One
Suggested points to consider in italics

On a highway contract under the ECC using Option A the Project Manager instructs the
Contractor to construct a pipe culvert under an existing side road as additional work. To
minimise disruption to traffic, the extra work has to be done in December during the night time.
The Contractor submits a quotation for £20,000 which includes an allowance for bad weather.
The Project Manager accepts the quotation.

In fact, the work is done during a spell of fine weather and the Defined Cost plus Fee based on
records is £15,000.

(a) How much is the Contractor paid for the work?

 This is an Option A contract and therefore the Contractor gets paid the value of the
implemented compensation event. Since the Project Manager accepted the
Contractor’s quote of £20,000 that is its value and what the Contractor gets paid.

 Implemented compensation events are not reviewed later to see what that actual
Defined Cost of doing the work is.

(b) How much would the Contractor be paid for this work if it were an Option C
contract instead?

 With Option C contracts compensation events are valued in exactly the same way as
Option A and again are not changed once implemented.

 With Option C contracts, the values of implemented compensation events are added to
the total “target”. They have no immediate effect on what the Contractor gets paid.

 With Option C the Contractor is paid its Defined Cost plus the Fee. In this case it would
be £15,000.

 The Contractor will later get a share of the difference between the implemented value
of the Compensation event and the Defined Cost of doing it via the share mechanism
in the contract. That share may serve to increase the Contractor’s overall share it is
paid or decrease the overall share it is to repay, depending upon whether the total of
the Prices (target) is greater or smaller than the total of the PWDD.

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Case Study Two
Suggested points to consider in italics
The Contractor on an ECC Option A contract fails to submit an application for payment before
an assessment date.

What, if any, entitlement does he have to be paid for work carried out in that month?

 The Project Manager has to make an assessment of the Price for Work Done to Date
(PWDD) regardless of whether or not the Contractor has submitted any application for
payment. The Contractor is obliged to submit an application for payment (clause 50.2)
and if it does, clause 50.3 applies. If it does not, clause 50.4 applies.

 The amount due for an Option A contract is the total of the Prices for each completed
activity or each group of completed activities.

 In this case, since the Contractor has not submitted an application, the Contractor is
not entitled to any further payment, even though the amount due as calculated above
may be greater than the amount due at the previous assessment date. So the
Contractor would not be paid that assessment for work carried out in the month, but it
would be carried forward to the next assessment.

 The Project Manager must certify a payment within one week of each assessment
date (clause 51.1). In this case the certificate would be for £0 or a repayment by the
Contractor. The Project Manager should still certify a zero payment.

NEC4: Introduction to the ECC (V4 01/18) 50 © NEC Contracts 2017

Case Study Three
Suggested points to consider in italics
The Contractor issues its first programme to the Project Manager for acceptance two weeks
before the stated starting date on an ECC Option A contract. In it the Contractor includes a
sheet headed "Method Statements" comprising a list of operations. For some of the early work
the Contractor refers to detailed method statements, which are attached. For later work the
Contractor lists the resources it intends to use in the way of numbers of people and types of
Equipment. Finally, for the work that is to be carried out at a much later date the Contractor
uses simple phrase such as

 by conventional methods
 details to be determined
 to be decided after appointment of subcontractor.

(a) What action could the Project Manager take?

 The Contractor is not required to provide detailed method statements that it has not yet
produced for later works. However, it is required to provide for each operation a
statement of how it plans to do the work identifying the principal Equipment and
resources. That statement may be vague at the beginning of the work, but should be
firmed up as time goes by.

 At tender stage, the Contractor should have produced some form of plan as to how it
was to do the works in order to have priced them. At that stage it may be no more
than identifying a subcontractor whose price it has used. If that is the case the
Contractor should have obtained some basic information from that subcontractor about
how it intends to carry out the works. That tender information may be all that is
available and if so that is what should be included.

 As written some of the information is too vague, although at this stage it may be no
more than “we intend to use xxx as a subcontractor, further information will be
available as soon as a subcontract order is placed”.

 The Project Manager could reject the plan because it does not show the information
which the contract requires. Since that is a reason in the contract, that rejection would
not be a compensation event.

 Alternatively, the Project Manager could give the Contractor the opportunity to provide
further information before not accepting the programme.

(b) When, if ever, should the Contractor submit a revised programme?

 The Contractor is required to revise the programme regularly. The Contractor must do
so
 within the period for reply after being instructed to by the PM,
 when it chooses, and in any case
 at no longer an interval than that stated in the Contract Data.

 It is essential that the Client states a suitable period in the Contract Data in order to
ensure that the programme is regularly updated and submitted for acceptance. Most
Clients consider that a period of 4 to 6 weeks is the maximum and in some time and
resource intensive projects these periods are made even smaller.

 In addition, the Contractor is also required to produce a revised programme for

quotations for compensation events if the programme for the remaining work is altered

NEC4: Introduction to the ECC (V4 01/18) 51 © NEC Contracts 2017

 by the event. The quotation is based on the latest Accepted programme so it is in the
Contractor’s interest to re-issue programmes regularly.

The Contractor’s work is delayed because a subcontractor it employs is unable to carry out any
other work and it takes 3 weeks to find a new subcontractor and for them to start work.
Following that delay the Contractor submits a revised programme to the Project Manager for
acceptance. This does not reflect any of the delays incurred because of this problem, and
therefore when it is issued it shows the works as being 3 weeks further ahead than they
actually are.

(c) What actions can the Project Manager take and what would be their
consequences on the assessment of future compensation events?

 A revised programme must show the actual progress achieved on each operation and
its effect upon the timing of the remaining work. It must also show how the Contractor
intends to deal with any delays. This programme appears to fail both of these tests.

 The Project Manager can therefore not accept this programme because it does not
show the information required by the contract. The Project Manager could also not
accept it because it does not represent the Contractor’s plans realistically. Since both
of these are reasons given in the contract for not accepting, that rejection would not be
a compensation event.

 If, when the Contractor submits a quotation for a compensation event, the Project
Manager has not accepted the latest programme submitted, then the Project Manager
cannot accept the quotation and makes its own assessment using its assessment of
what the programme should be.

NEC4: Introduction to the ECC (V4 01/18) 52 © NEC Contracts 2017

Case Study Four
Suggested points to consider in italics
The Project Manager writes to the Contractor to advise that the Contractor cannot have access
to an area of the Site on the date stated in Contract Data part one. The contract is ECC
Option B.

(a) What should the Contractor do?

 This will depend upon the date shown on the Accepted Programme for access to the
area. If the date shown is the same as that in the Contract Data then this will be a
compensation event.

 If the date is still in the future then the Project Manager should have notified an early
warning notice for this event. If the Project Manager did not do so then the Contractor
should do so. The Contractor should then ask for an early warning meeting to discuss
this problem.

 If the date has passed the Contractor should notify the Project Manager of a
compensation event.

(b) How will the Contractor recover any cost and time effect of the delayed access?

 This will depend upon the date shown on the Accepted Programme for access to the
area. If the date shown is the same as that in the Contract Data then this will be a
compensation event for which the Contractor will be compensated.

 With an Option B contract, the Contractor will be paid for the effect of the
compensation event upon

 the actual Defined Cost of work done by the dividing date,

 the forecast Defined Cost of work not yet done by the dividing date and
 the resulting Fee.

In addition, the Completion Date will be extended by the length of time that, due to the
compensation event, planned Completion is later than planned Completion as shown on the
Accepted Programme current at the dividing date.

NEC4: Introduction to the ECC (V4 01/18) 53 © NEC Contracts 2017

Case Study Five
Suggested points to consider in italics
On an ECC Option C project, the Project Manager decides to ask the Contractor if it can bring
forward the Completion Date.

Describe the process available to the Project Manager to put this into effect?

 If the Project Manager and Contractor are prepared to consider the proposed change,
the Project Manager instructs the Contractor to provide a quotation for acceleration
(clause 36).

 The Contractor must submit the quotation within three weeks.

 If the Project Manager accepts the quotation, the Project Manager changes the Prices,
the Completion Date and the Key Dates accordingly and accepts the revised
programme.

 The Project Manager cannot impose a quotation for acceleration upon the Contractor.

 The Project Manager cannot instruct the Contractor to accelerate without first agreeing
a quotation.

NEC4: Introduction to the ECC (V4 01/18) 54 © NEC Contracts 2017

Case Study Six
Suggested points to consider in italics
The Supervisor informs the Project Manager during the contract that it believes that drain pipes
to a new access road have been installed incorrectly.

In an ECC Option C project, what actions are available to the Project Manager in such a
situation?

 The Supervisor rather than the Project Manager is responsible for ensuring that the
works comply with the Scope.

 If the Supervisor believes that the problem drain pipes may be the fault of the Client’s
design the Supervisor may instruct the Contractor to carry out further tests. Such an
instruction will normally be a compensation event unless these tests show that the
problem is the fault of the Contractor.

 If the Supervisor believes that the problem is due to the Contractor not complying with
the Scope, the Supervisor notifies the Contractor. The Supervisor has no need to
instruct the Contractor to correct the Defect since the contract already requires that.

 The Contractor has to correct the Defect within the defect correction period.

NEC4: Introduction to the ECC (V4 01/18) 55 © NEC Contracts 2017

Case Study Seven
Suggested points to consider in italics
A contract is awarded for a new sewage treatment works under the ECC using Option A. One
week after the Contract Date, the Contractor submits the names of proposed Subcontractors
for the following work and asks for the Project Manager’s approval.

(a) Design of structural steelwork for the pumping station

(b) Design and supply of the pumping plant
(c) Supply of precast kerbs and paving flags
(d) Supply of prestressed concrete floor units for the office block
(e) Supply of standard ready mix concrete for the first 3 months of the contract
(f) External and internal painting of the buildings

How should the Project Manager respond to these?

 It is important to realise that Subcontractor is a defined term under this contract – see
the definition in 11.2(19). The provisions of clause 26 on subcontracting only apply to
Subcontractors as defined by the contract.

 Items (c) and (e) are not Subcontractors as defined by the contract, they are suppliers.
As such the Project Manager’s powers of veto are very limited.

 In addition, item (d) is not a Subcontractor according to the definition in clause

11.2(19).

 The Contractor submits the proposed subcontract documents for acceptance unless
no submission is required or the proposed subcontract is an NEC contract which has
not been amended other than in accordance with the additional conditions of contract.

 Once the Project Manager is satisfied that clause 26 has been complied with, the
Project Manager should reply either accepting or not accepting each of the
Subcontractors within the period for reply in the Contract Data.

 If the Project Manager does not accept any Subcontractor it must give reasons.

NEC4: Introduction to the ECC (V4 01/18) 56 © NEC Contracts 2017

CONTRACT DATA AND EXAMPLE COMMUNICATION FORMS

The following pages show the Contract Data forms and examples of communication
forms from an Engineering and Construction Contract.

NEC4: Introduction to the ECC (V4 01/18) 57 © NEC Contracts 2017

NEC4 Engineering and
Construction Contract
Contract Data
TRUST DEED
This agreement is made between the Client, the Contractor and the Named Suppliers.

Terms in this deed have the meanings given to them in the contract between . . . . . . . . . . . . and . . . . . . .
. . . . for . . . . . . . . . . . . . (the works).

Background

The Client and the Contractor have entered into a contract for the works.

The Named Suppliers have entered into contracts with the Contractor or a Subcontractor in connection
with the works.

The Contractor has established a Project Bank Account to make provision for payment to the
Contractor and the Named Suppliers.

Agreement

The parties to this deed agree that

• sums due to the Contractor and Named Suppliers and set out in the Authorisation are held in
trust in the Project Bank Account by the Contractor for distribution to the Contractor and Named
Suppliers in accordance with the banking arrangements applicable to the Project Bank Account,

• further Named Suppliers may be added as parties to this deed with the agreement of the Client and
Contractor. The agreement of the Client and Contractor is treated as agreement by the Named
Suppliers who are parties to this deed,

• this deed is subject to the law of the contract for the works,

• the benefits under this deed may not be assigned.

Executed as a deed on . . . . . . . . . . . . . . . . . . . by

. . . . . . . . . . . . . . . . . . . . . . . (Client)

. . . . . . . . . . . . . . . . . . . . . . . (Contractor)

.......................

.......................

.......................

. . . . . . . . . . . . . . . . . . . . . . . (Named

Suppliers)
JOINING DEED
This agreement is made between the Client, the Contractor and . . . . . . . . . (the Additional
Supplier).

Terms in this deed have the meanings given to them in the contract between . . . . . . . . . . . . and . . . . .
. . . . . . . . . for . . . . . . . . . . . . . . (the works).

Background

The Client and the Contractor have entered into a contract for the works.

The Named Suppliers have entered into contracts with the Contractor or a Subcontractor in
connection with the works.

The Contractor has established a Project Bank Account to make provision for payment to the
Contractor and the Named Suppliers.

The Client, the Contractor and the Named Suppliers have entered into a deed as set out in
Annex 1 (the Trust Deed), and have agreed that the Additional Supplier may join that deed.

Agreement

The parties to this deed agree that

• the Additional Supplier becomes a party to the Trust Deed from the date set out below,

• this deed is subject to the law of the contract for the works,

• the benefits under this deed may not be assigned.

Executed as a deed on . . . . . . . . . . . . . . . . . . . by

. . . . . . . . . . . . . . . . . . . . . . . (Client)

. . . . . . . . . . . . . . . . . . . . . . . (Contractor)

. . . . . . . . . . . . . . . . . . . . . . . (Additional Supplier)
Contract Data
PART ONE – DATA PROVIDED BY THE CLIENT
Completion of the data in full, according to the Options chosen, is essential to create
a complete contract.

1 General
The conditions of contract are the core clauses and the clauses for the following main
Option, the Option for resolving and avoiding disputes and secondary Options of the
NEC4 Engineering and Construction Contract June 2017

Main Option Option for resolving and avoiding disputes

Secondary Options

The works are

The Client is

Name

Address for communications

Address for electronic communications

The Project Manager is

Name

Address for communications

Address for electronic communications

The Supervisor
is

Name

Address for communications

Address for electronic communications

 The Scope is in

The Site Information is in

The boundaries of the site are

The language of the contract is

The law of the contract is the law of

The period for reply is except that

• The period for reply for is

• The period for reply for is

The following matters will be included in the Early Warning Register

Early warning meetings are to be held at intervals no longer than

2 The Contractor’s main responsibilities

If the Client has identified The key dates and conditions to be met are
work which is set to meet a
stated condition by a key
date condition to be met key date
(1)

(2)

(3)

If Option C, D, E or F is The Contractor prepares forecasts of the total Defined Cost

used for the whole of the the works at intervals no longer than
 3 Time

The starting date is

The access dates are

part of the Site date

(1)

(2)

(3)

The Contractor submits revised programmes at intervals no

longer than

If the Client has decided The completion date for the whole of the works
the completion date for
the whole of the works

Taking over the works The Client is/is not willing to take over the works before the
before the Completion Date Completion Date (Delete as applicable)

If no programme is The period after the Contract Date within which the Contractor
identified in part two of is to submit a first programme for acceptance is
the Contract Data

4 Quality management

The period after the Contract Date within which the Contractor
is to submit a quality policy statement and quality plan is

The period between Completion of the whole of the works

and the defects date is

The defect correction period is except that

• The defect correction period for is

• The defect correction period for is

5 Payment

The currency of the contract is the

The assessment interval is

The interest rate is % per annum (not less than 2) above the

rate of the bank

If the period in which The period within which payments are made is
payments are made is not
three weeks and Y(UK)2 is
not used

If Option C or D is used The Contractor’s share percentages and the share ranges are

share range Contractor’s share percentage

less than % %

from % to % %

from % to % %

greater than % %

If Option C, D, E or F is used The exchange rates are those published in

on (date)

6 Compensation events

The place where weather is to be recorded is

The weather measurements to be recorded for each calendar month are

• the cumulative rainfall (mm)

• the number of days with rainfall more than 5 mm

• the number of days with minimum air temperature less than 0 degrees Celsius

• the number of days with snow lying at hours GMT

and these measurements:

The weather measurements are supplied by

The weather data are the records of past weather measurements for each calendar month
which were recorded at

and which are available from

 Where no recorded data Assumed values for the ten year weather return weather data for each weather
are available measurement for each calendar month are

If Option A or B is used The value engineering percentage is 50%, unless another

percentage is stated here, in which case it is %

If Option B or D is used The method of measurement is

If there are additional These are additional compensation events

compensation events

8 Liabilities and insurance

If there are additional These are additional Client’s liabilities

Client’s liabilities

(1)

(2)

(3)

The minimum amount of cover for insurance against loss of or damage to property (except
the works, Plant and Materials and Equipment) and liability for bodily injury to or death of a
person (not an employee of the Contractor) arising from or in connection with the Contractor
Providing the Works for any one event is

The minimum amount of cover for insurance against death of or bodily injury to employees
of the Contractor arising out of and in the course of their employment in connection with the
contract for any one event is
If the Client is to provide The insurance against loss of or damage to the works, Plant and Materials is to include
Plant and Materials cover for Plant and Materials provided by the Client for an amount of

If the Client is to provide The Client provides these insurances from the Insurance Table
any of the insurances stated
in the Insurance Table
(1) Insurance against

Minimum amount of cover is

The deductibles are

(2) Insurance against

Minimum amount of cover is

The deductibles are

(3) Insurance against

Minimum amount of cover is

The deductibles are

If additional insurances are The Client provides these additional insurances

to be provided

(1) Insurance against

Minimum amount of cover is

The deductibles are

(2) Insurance against

Minimum amount of cover is

The deductibles are

(3) Insurance against

Minimum amount of cover is

The deductibles are

The Contractor provides these additional insurances

(1) Insurance against

Minimum amount of cover is

The deductibles are

(2) Insurance against

Minimum amount of cover is

The deductibles are

(3) Insurance against

Minimum amount of cover is

The deductibles are

 Resolving and avoiding disputes

The tribunal is

If the tribunal is arbitration The arbitration procedure is

The place where arbitration

is to be held is
The person or organisation who will choose an arbitrator if the Parties cannot agree a
choice or if the arbitration procedure does not state who selects an arbitrator is

If Option W1 or W2 is used The Senior Representatives of the Client are

Name (1)

Address for communications

Address for electronic communications

Name (2)

Address for communications

Address for electronic communications

The Adjudicator is

Name

Address for communications

Address for electronic communications

The Adjudicator nominating body is

If Option W3 is used The number of members of the Dispute Avoidance Board is one/three (delete as
applicable)

If Option W3 is used The Client’s nomination for the Dispute Avoidance Board is
and the number of
members of the Dispute Name
Avoidance Board is
three Address for electronic communications

The Dispute Avoidance Board visit the Site at intervals no longer months
than

The Dispute Avoidance Board nominating

body is
 X1: Price adjustment for inflation (used only with Options A, B, C and D)
If Option X1 is used The proportions used to calculate the Price Adjustment Factor are

0. linked to the index for

0.

0.

0.

0.

0.

0. non-adjustable

1.00

The base date for indices is

These indices are

X3: Multiple currencies (used only with Options A and B)

If Option X3 is used The Client will pay for the items or activities listed below in the currencies stated

items and activities other currency total maximum

payment in the currency

The exchange rates are those published in

on (date)

X5: Sectional Completion

If Option X5 is used The completion date for each section of the works is

section description completion date

(1)

(2)

(3)

(4)

X6: Bonus for early Completion

If Option X6 is used The bonus for the whole of the works is per day
without Option X5
If Option X6 is used with The bonus for each section of the works is
Option X5
section description amount per day

(1)

(2)

(3)

(4)

The bonus for the remainder of the works is

X7: Delay damages

If Option X7 is used without Delay damages for Completion of the whole of the works per day
Option X5 are

If Option X7 is used with Delay damages for each section of the works are
Option X5
section description amount per day

(1)

(2)

(3)

(4)

The delay damages for the remainder of the works are

X8: Undertakings to the Client or Others

If Option X8 is used The undertakings to Others are

provided to

The Subcontractor undertaking to Others are

works provided to

The Subcontractor undertaking to the Client are

works
 X10: Information modelling
If Option X10 is used

If no information The period after the Contract Date within which the Contractor is to submit a first
execution plan is
identified in part two Information Execution Plan for acceptance is
of the Contract Data

The minimum amount of insurance cover for claims made against the Contractor arising
out of its failure to use the skill and care normally used by professionals providing
information similar to the Project Information is, in
respect of each claim

The period following Completion of the whole of the works or earlier termination for which
the Contractor maintains insurance for claims made against it arising out of its failure to
use the skill and care is

X12: Multiparty collaboration (not used with Option X20)

If Option X12 is used The Promoter is

The Schedule of Partners is in

The Promoter’s objective is

TThe Partnering Information is in

 X13: Performance bond

If Option X13 is used The amount of the performance bond is

X14: Advanced payment to the Contractor

If Option X14 is used The amount of the advanced payment is

The period after the Contract Date from which the Contractor
repays the instalments in assessments is
The instalments are (either an amount or a percentage of the
payment otherwise due)

Advanced payment bond An advanced payment bond is/is not required. (Delete as applicable)

X15: The Contractor’s design

If Option X15 is used The period for retention following Completion of the whole of the works or earlier
termination is

The minimum amount of insurance cover for claims made against the Contractor arising
out of its failure to use the skill and care normally used by professionals designing works
similar to the works is, in respect of each claim

The period following Completion of the whole of the works or earlier termination for which
the Contractor maintains insurance for claims made against it arising out of its failure to
use the skill and care is

X16: Retention (not used with Option F)

If Option X16 is used The retention free amount is

The retention free amount is %

Retention bond The Contractor may/may not give the Client a retention bond. (Delete as applicable)

X17: Low performance damages

If Option X17 is used The amounts for low performance damages are

amount performance level

for

for

for

for
 X18: Limitation of liability

If Option X18 is used The Contractor’s liability to the Client for indirect or
consequential loss is limited to

For any one event, the Contractor’s liability to the Client for
loss of or damage to the Client’s property is limited to

The Contractor’s liability for Defects due to its design which

are not listed on the Defects Certificate is limited to

The Contractor’s total liability to the Client for all matters

arising under or in connection with the contract, other than
excluded matters, is limited to

The end of liability date is years after the Completion of the whole of the works

X20: Key Performance Indicators (not used with Option X12)

If Option X20 is used The incentive schedule for Key Performance Indicators is in

A report of performance against each Key Performance

Indicator is provided at intervals of for months

X22: Early Contractor involvement (only used with Options C and E)

If Option X22 is used The Budget is

item description amount

(1)

(2)

(3)

(4)

Total

The Contractor prepares forecasts of the total Defined Cost

of the work to be done in Stage One at intervals no longer
than

The Contractor prepares forecasts of the total Project Cost

at intervals no longer than than

If there are additional These are additional events which could change the Budget
events which could
change the Budget

(1)

(2)

(3)

The budget incentive is % of the saving

 Y(UK)1: Project Bank Account

Charges made and The Contractor is/is not to pay any charges made and to be paid any interest paid by the
interest paid by the project bank (Delete as applicable)
project bank

Y(UK)3: The Contracts (Rights of Third Parties) Act 1999

If Option Y(UK)2 is used and The period for payment is days after the date on which payment becomes
the final date for payment is due
not fourteen days after the
date on which payment
becomes due

Y(UK)3: The Contracts (Rights of Third Parties) Act 1999

If Option Y(UK)3 is used term beneficiary

If Y(UK)3 is used with term beneficiary

Y(UK)1 the following entry is
The provisions of Named Suppliers
added to the table for
Options Y(UK)1
Y(UK)3

Z: Additional conditions of contract

If Option Z is used The additional conditions of contract are
PART TWO – DATA PROVIDED BY THE CONTRACTOR
Completion of the data in full, according to the Options chosen, is essential to create a
complete contract.

1 General
The Contractor is

Name

Address for communications

Address for electronic communications

The fee percentage is %

The working areas are

The key persons are

Name (1)

Job

Responsibilities

Qualifications

Experience

Name (2)

Job

Responsibilities

Qualifications

Experience

The following matters will be included in the Early Warning Register

 2 The Contractor’s main responsibilities

If the Contractor is to provide The Scope provided by the Contractor for its design is in
Scope for its design

3 Time

If a programme is to be The programme identified in the Contract Data is

identified in the Contract
Data

If the Contractor is to decide The completion date for the whole of the works is
the completion date for the
whole of the works

5 Payment

If Option A or C is used The activity schedule is

If Option B or D is used The bill of quantities is

If Option A, B, C or D is The tendered total of the Prices is

used

If Option F is used Work which the Contractor will do is

activity price

Resolving and avoiding disputes

If Option W1 or W2 is used The Senior Representatives of the Contractor are

Name (1)

Address for communications

Address for electronic communications

 Name (2)

Address for communications

Address for electronic communications

If Option W3 is used The Contractor’s nomination for the Dispute Avoidance Board is

Name

Address for electronic communications

X10: Information modelling

If Option X10 is used

If an information execution The information execution plan identified

plan is to be identified in in the Contract Data is
the Contract Data

X22: Early Contractor involvement (only used with Options C and E)

If Option X22 is used The Stage One key persons are

Name (1)

Job

Responsibilities

Qualifications

Experience

Name (2)

Job

Responsibilities

Qualifications

Experience

The Pricing Information is in

Y(UK)1: Project Bank Account

If Option Y(UK)1 is used The project bank is

named suppliers are

Data for the Schedule of Cost Components (only used with Options C, D or E)
The listed items of Equipment purchased for work on the contract, with
an on cost charge, are
Equipment time-related on cost charge per time period

The rates for special Equipment are

Equipment rate

The rates for Defined Cost of manufacture and fabrication outside the Workings Areas by
the Contractor are

category of person rate

The rates for Defined Cost of design outside the Workings Areas are

category of person rate

The categories of design people whose travelling expenses to and from the Working
Areas are included as a cost of design of the works and Equipment done outside the
Working Areas are
Data for the Short Schedule of Cost Components (only used with Options A or B)
The people rates are
category of person unit rate

The published list of Equipment is the edition current at the Contact Date of the list
published by

The percentage for adjustment for Equipment in the published list is

% (state plus or minus)

The rates for other Equipment are

Equipment rate

The rates for Defined Cost of manufacture and fabrication outside

the Workings Areas by the Contractor are

category of person rate

The rates for Defined Cost of design outside the Workings Areas are
category of person rate

The categories of design people whose traveling expenses to and

from the Working Areas are included in Defined Cost are
 APPENDIX 3

Example communication forms

Instruction

To: Address:

From: Address:

Project Name: Project ID:

Instruction No: Date:

Under clause I instruct you to:

Copy to:

Signed:

Managing an Engineering and Construction Contract | 112

 Notification

To: Address:

From: Address:

Project Name: Project ID:

Notification No: Date:

Under clause I notify you:

Copy to:

Signed:

Managing an Engineering and Construction Contract | 113

 Submission

To: Address:

From: Address:

Project Name: Project ID:

Submission No: Date:

Under clause I submit:

Copy to:

Signed:

Managing an Engineering and Construction Contract | 114

 Acceptance

To: Address:

From: Address:

Project Name: Project ID:

Acceptance No: Date:

Under clause I accept:

Copy to:

Signed:

Managing an Engineering and Construction Contract | 115

 Payment Certificate

To: Address:

From: Address:

Project Name: Project ID:

Payment Certificate
No: Date:

Under clause 51.1:

Price for Work Done to Date £

Plus other amounts to be paid to the £

Contractor

Sub-total £

Less amounts to be paid by or retained from £

the Contractor

Amount due £

Less amount due in the last payment £

Certificate

Sub-total £

Tax which the law requires the Client to pay £

to the Contractor

Change in the amount due since the last £

payment certificate which is certified for
payment

Copy to:

Signed:

Managing an Engineering and Construction Contract | 116

 Completion Certificate

To: Address:

From: Address:

Project Name: Project ID:

Completion Certificate No: Date:

Under clause 30.2:

the date of Completion of [insert either any section of the works or the whole
of the works] is [insert date]

Copy to:

Signed:

Managing an Engineering and Construction Contract | 117

 Take Over Certificate

To: Address:

From: Address:

Project Name: Project ID:

Take Over Certificate No: Date:

Under clause 35.3:

the Client took over [state which part of the works] on [insert date]

Copy to:

Signed:

Managing an Engineering and Construction Contract | 118

 Defects Certificate

To: Address:

From: Address:

Project Name: Project ID:

Take Over Certificate No: Date:

Under clause 35.3:

[either] there are no Defects.

[or] the following is a list of Defects notified before the defects date which the Contractor
has not corrected.

Copy to:

Signed:

Managing an Engineering and Construction Contract | 119