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Has the NEC4 made material changes?

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Posted by Michael Hiscock on 03 August 2017

Michael Hiscock Partner - Head of Construction

A question that is arising frequently now is "Has the NEC4 made material changes?"

The following is a selection of key issues to consider in the NEC4 contract:

  • the inclusion of option X10 for BIM use which reflects the fact that this type of construction information modelling is not just restricted to conventional buildings but can be used in a wide variety of contexts – note however that the option X10 is not tied to a specific BIM protocol, and therefore the parties need to define the process and procedure that is required – the contractor is only liable for a fault or error in its information if it failed to use skill and care; 

  • new secondary option X22 allowing early contractor involvement – this allows the employer to obtain the benefit of a contractors specialist knowledge to benefit the design and costing process and fits into Option C (target cost with activity schedule) and Option E 9cost reimbursable)

  • new core clause 16 introducing a formal value engineering process – the contractor may propose a change to the scope of works that reduces the cost of the works and is linked to Option X21 which brings in the concept of whole life cost – the project manager instructs as applicable.

  • new core clause 29 dealing with confidentiality and restricted disclosure of project information.

  • deemed acceptance of the programme if the project manager fails to respond (clause 31) – in NEc3 there was no remedy in this situation.

  • new quality management provisions in clause 40 – requiring the contractor to operate a formal system, with a plan and policy statement.

  • new compensation events – firstly to pay for the cost of responding to variation quote requests that are not taken forward, and secondly to allow a sweeper clause to pick up other specific risks listed in the Contract Data – and also note at this point that the 8 week time bar to claiming has changed slightly, moving from 8 weeks of becoming aware, to 8 weeks after the event happened.

  • new option X15 dealing with design liability – NEC3 simply referred to reasonable skill and care – NEC4 has been rewritten to support design and build procurement, including PI insurance obligations, and importantly switching the emphasis round to say that the contractor is not liable for design defects unless it is shown that the contractor did not use reasonable skill land care for design.

  • option X8 to deliver collateral warranties – reflecting wide market practice, but the parties must specify the required form.

  • clause 53 provides for a final certificate and final assessment mechanism, which initially seems to contradict the NEC ethos of monitoring during the job but is reflective of market desire to wrap up projects so that the project manager makes a decision and certifies a final payment, so the NEC authors have reverted to tier preferred style of using time bars, requiring the challenge to that certification within 4 weeks.

About the author

Michael Hiscock

Partner - Head of Construction

Michael is a specialist in construction and engineering procurement, advising on a wide variety of works contracts.

Michael Hiscock

Michael is a specialist in construction and engineering procurement, advising on a wide variety of works contracts.

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