Email: davidhunter@danielcms.co.uk

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What Are NEC Contracts?

Introduction

NEC contracts are modern forms of contract used for procuring works and services in the engineering and construction sector. The NEC forms are designed for the collaborative management of project risks within a legally binding agreement.  Originally designed and written by Dr Martin Barnes, the first edition of the New Engineering Contract was published by the Institution of Civil Engineers in 1993. The fourth edition of the contracts (NEC4), launched in 2017, is now one of the most widely used standard forms of contract in the UK and its use is growing internationally. If you would like to know more about the history of NEC contracts please click here.

NEC Philosophy

NEC contracts are drafted around three principal objectives of flexibility, clarity and stimulus to good project management. If you would like to know more about the NEC philosophy and its main objectives please click here.

NEC3 Contracts

The third edition (NEC3) of the contracts was published in June 2005 and was amended in June 2006 and April 2013.  Building on the success of the first and second editions, its original title “New Engineering Contract” was replaced by the brand name “NEC3”.  There are twelve forms of contract in the NEC3 family which included for the first time a term service contract and framework contract. Despite the latest version of NEC3 being over ten years old, it is still in current use particularly where long term framework agreements remain in place.

The NEC3 suite of contracts comprise:

  • Engineering and Construction Contract (ECC)
  • Engineering and Construction Short Contract (ECSC)
  • Engineering and Construction Subcontract (ECS)
  • Engineering and Construction Short Subcontract (ECSS)
  • Professional Services Contract (PSC)
  • Professional Services Short Contract (PSSC)
  • Term Service Contract (TSC)
  • Term Service Subcontract (TSS)
  • Supply Contract (SC)
  • Supply Short Contract (SSC)
  • Framework Contract (FC)
  • Adjudicators Contract (AC)

Daniel contract management services are able to provide consultancy and training on all the contracts in the NEC3 suite.

NEC4 Contracts

The NEC4 suite of contracts was published in June 2017 with amendments in January 2019, October 2020 and January 2023.  The publishers described the fourth edition as 'an evolution not a revolution'. Feedback from NEC3 users, best practice and the latest legal developments formed the basis of changes made.   There are currently twenty different forms of contract in the NEC4 suite including new contracts for multi-party alliancing, design build and operate, and facilities management.

The NEC4 suite of contracts comprise:

  • Engineering and Construction Contract (ECC)
  • Engineering and Construction Short Contract (ECSC)
  • Engineering and Construction Subcontract (ECS)
  • Engineering and Construction Short Subcontract (ECSS)
  • Professional Service Contract (PSC)
  • Professional Service Short Contract (PSSC)
  • Professional Service Subcontract (PSS)
  • Term Service Contract (TSC)
  • Term Service Short Contract (TSSC)
  • Term Service Subcontract (TSS)
  • Supply Contract (SC)
  • Supply Short Contract (SSC)
  • Framework Contract (FC)
  • Dispute Resolution Service Contract (DRSC)
  • Design Build and Operate Contract (DBO)
  • Alliance Contract (ALC)
  • Facilities Management Contract (FMC)
  • Facilities Management Subcontract (FMS)
  • Facilities Management Short Contract (FMSC)
  • Facilities Management Short Subcontract (FMSS)

 Daniel contract management services are able to provide consultancy and training on all the contracts in the NEC4 suite.

Use of NEC Contracts by the UK Public Sector

The catalyst for the UK Government’s endorsement of NEC contracts was the findings of Sir Michael Latham in his review of procurement and contractual arrangements published in the 1994 report “Constructing the Team”. The report commended the principles behind the NEC contract and recommended its use in the public and private sectors. The UK Government Construction Board now recommends the use of NEC3/4 contracts. 

Since 1994 the NEC forms have become the first choice for many parts of the public sector including central government, county and local councils.

Daniel Contract Management Services have provided training and consultancy services across the public sector including the DfT (HS2), FCDO, National Highways (formerly Highways England), the NHS, Ealing Council, Salford City Council, Stockport Council, Pembrokeshire County Council, North Tyneside Council, West Midlands Combined Authority and the Isle of Man Government.

International Use of NEC Contracts

NEC contracts are becoming an increasingly popular choice for clients outside the UK. According to the Hong Kong Government Development Bureau the value of works and services using NEC contracts between 2009 and 2021 was £16 billion. Other notable users include sporting venues for the Lima Pan America Games and Sydney Water’s £2.2 billion P4S investment programme for its water and wastewater assets. 

Daniel Contract Management Services has provided training and consultancy for clients using NEC contracts in the Channel Islands, Europe, Australia, Hong Kong, Mexico and South Africa.  In 2021 we were commissioned by the Square Kilometre Array Observatory (SKAO) to provide advice and training for its £1 billion project to build the world’s largest radio telescope.

David Hunter
Daniel Contract Management Services Ltd

February 2024

1. The date when the articles on the website were first written and published are given with each blog. Readers should note these dates and take account of any future changes to the NEC forms, other contracts and the law generally when reading the blogs.

2. As users of the NEC will know the contract adopts a particular drafting convention for defined and identified terms. Since many of our blogs also appear in other publications all NEC contract terms are set in lower-case, non-italic type and their meanings are intended to be as defined and or as identified in the relevant NEC contract.