Chapter 2

Changes from ECC3

2.1 Evolution
ECC4 uses as a marketing slogan the catchy phrase ‘evolution not revolution’.
And, as will be seen from the detail which follows in this chapter, that is gen-
erally a fair statement of what was intended and what has been achieved.
The underlying principles, the drafting style, and the option structure
format of ECC4 remain as in previous editions of ECC. However, ECC4 has an
increased range of Secondary Option clauses and a completely new approach
to avoiding and resolving disputes. Apart from this, there are few great sur-
prises. However, there are a good number of minor improvements drafted to
clarify clauses which, in previous editions, have been sources of concern. And,
strikingly, there are a great many textual changes between ECC4 and its prede-
cessors, which may prove troublesome if users of ECC4 do not adjust rapidly
to the new order.

2.2 Features and enhancements

The preface to ECC4 lists as ‘features’ and ‘enhancements’:
r a new design, build and operate contract
r a new multiparty alliance contract
r new forms of subcontract
r finalisation of cost elements during the contract
r party-led dispute avoidance
r increased standardisation between contracts
r enhanced guidance to users.

These are, however, high-level changes applicable to the suite of NEC4

contracts, and although some items in the list may impact indirectly on ECC4,
only two items in the above list impact directly on ECC4. These items are:
finalisation of cost elements and party-led dispute avoidance.
Important as these two items are, it would be imprudent to assume that
they are indicative of the full amount of change between ECC3 and ECC4. The
reality is that the majority of clauses in ECC4 differ, albeit in the main slightly,
from the wording of the corresponding clauses in ECC3.
The NEC4 Engineering and Construction Contract: A Commentary, Third Edition. Brian Eggleston.
© 2019 John Wiley & Sons Ltd. Published 2019 by John Wiley & Sons Ltd.
12 2.4 Changes to core clauses

2.3 Terminological changes

The majority of the textual changes are no more than terminological, thus:

r ‘the Employer’ is changed to ‘the Client’

r ‘Works Information’ is changed to ‘Scope’
r ‘risk reduction meeting’ is changed to ‘early warning meeting’
r ‘Risk Register’ is changed to ‘early warning register’
r ‘notifies’ is changed to ‘informs’.

Additionally, all gender-specific terms in ECC3, such as ‘he’ and ‘his’ are
replaced in ECC4 with gender-neutral wording.
Few, if any, of these terminological text changes are likely to have signifi-
cant impact on the Parties’ contractual obligations and liabilities but, given the
importance that NEC contracts place on written notices and communications,
it is essential that the new terminology is adopted and put into use from the
outset. And similarly it needs to be recognised from the outset that a certain
amount of clause renumbering and rearrangement has taken place.
The ECC4 changes which do have the capacity to create contractual change
are to be found in the Core clauses, the Dispute Resolution clauses, and the
Secondary Option clauses of the contract.

2.4 Changes to core clauses

The grouping of the nine sets of core clauses in ECC4 (the Sections, as hereafter
referred to) is the same as the grouping in ECC3. But, two of the Sections are
retitled in ECC4. Thus, in ECC4, section 4 is titled ‘Quality Management’ and
section 8 is titled ‘Liabilities and Insurance’. In ECC3 those titles were ‘Testing
and Defects’ and ‘Risks and Insurance’.
In ECC4, the Sections and the clauses therein are numbered and listed as
follows:

1. General: clauses 10.1–19.1

2. The Contractor’s Main Responsibilities: clauses 20.1–29.2
3. Time: clauses 30.1–36.3
4. Quality Management: clauses 40.1–46.2
5. Payment: clauses 50.1–53.4
6. Compensation Events: clauses 60.1–66.3
7. Title: clauses 70.1–74.1
8. Liabilities and Insurance: clauses 80.1–86.3
9. Termination: clauses 90.1–93.2.

The significant changes in the core clauses from ECC3 to ECC4, taking
them section by section, and without at this stage any commentary, are as
follows.
 2.4 Changes to core clauses 13

General

Clause 10.1 of ECC3 stated, in a single sentence, that the Employer, the Contrac-
tor, the Project Manager and the Supervisor ‘shall act’ as stated in the contract,
and in a spirit of mutual trust and co-operation. In ECC4 those obligations, if
they are such, are redrafted and split between clauses 10.1 and 10.2. Clause 10.1
states that the Parties, the Project Manager and the Supervisor ‘shall act’ as
stated in the contract. Clause 10.2 states that the Parties, the Project Manager
and the Supervisor shall ‘act’ in a spirit of mutual trust and co-operation. More
is said on this interesting change in Chapter 6.
Clause 11.2, listing ‘Identified and defined terms’ has, in ECC4, a new
subclause defining ‘a Corrupt Act’. Additionally, ECC4 clauses 15.1 and 15.2
replace the ECC3 references to ‘the Risk Register’ and ‘risk reduction meetings’
with references to ‘the Early Warning Register’ and ‘early warning meetings’.
Further changes appear in the definitions of ‘The fee’ and of ‘A Subcontractor’.
Clause 14.2 of ECC4, relating to delegation, has considerably more points of
detail than the corresponding clause of ECC3.
Clauses 15, 16, 17, 18 and 19 of ECC3 deal in turn with ‘Adding to the
Working Areas’, ‘Early warning’, ‘Ambiguities and inconsistencies’, ‘Illegal
and impossible requirements’, and ‘Prevention’. ECC4 rearranges and changes
clauses 15–19 such that they deal in turn with: Early warning, Contractor’s pro-
posals, Requirements for instructions, Corrupt Acts, and Prevention. Each of
these clauses relates to matters of potential importance.

The Contractor’s Main Responsibilities

For the most part, clauses 20.1–29.2 of ECC4 match the corresponding section
clauses of ECC3. However, clauses 28 and 29 of ECC4, dealing respectively
with Assignment and Disclosure have no ECC3 equivalents. And, although
both concern legalistic matters rather than day-to-day construction matters,
these clauses also relate to matters of potential importance.

Time

Clauses 30–36 of ECC4 cover, under the section heading ‘Time’, such matters as
starting, completion, programmes, access, suspensions, take over and acceler-
ation. There are a few textual changes from ECC3 but none are of any great sig-
nificance. There are, however, some important new provisions within the ECC4
batch of clauses. Thus, clause 31.3 of ECC4 now provides for deemed accep-
tance of a programme if the Project Manager does not notify acceptance or
non-acceptance within a stipulated time-limit. Clause 34.1 requires that if the
Project Manager has given instructions to stop or not to start work, instructions
must subsequently be given to restart or remove the work. And clause 36.1 of
ECC4 now permits the Contractor as well as the Project Manager to propose
acceleration to achieve completion before the completion date.
14 2.4 Changes to core clauses

Quality Management

In ECC3, section 4 clauses 40.1–45.2 came under the heading ‘Testing and
Defects’. In ECC4, the section is retitled ‘Quality Management’. The ECC3
clauses are retained in ECC4 without any significant change as clauses 41.1–
46.2. However, in ECC4, section 4 commences with three new clauses (40.1–
40.3) subtitled ‘Quality Management System’. These clauses contain contrac-
tual provisions, new to ECC contracts, that the Contractor should operate such
a system, and should do so in compliance with stipulated requirements.

Payment

The ten clauses 50.1–52.1 in the ‘Payment’ section of ECC3 principally con-
cerned the mechanism and rules for interim payments. The sixteen clauses in
the ‘Payment’ section of ECC4 cover both interim payments and rules for mak-
ing assessments of the final amount due. Most of the ECC3 clauses which are
retained in ECC4 are modified in some respect, but these changes are points
of detail rather than substantive change. The big change between ECC3 and
ECC4 comes in the new group of clauses, 53.1–53.4, which provide in ECC4 a
comprehensive and extensive set of provisions for making, and dealing with,
the assessment and payment of the final amount due to the Contractor.

Compensation Events

Section 6 of ECC3 contained thirty-one numbered clauses, excluding the

nineteen numbered compensation events. It was, by far, the largest group of
clauses in the contract. That remains the case in ECC4, which has thirty-seven
numbered clauses, excluding twenty-one numbered compensation events.
The two additional compensation events in ECC4 concern quotations for
proposed instructions which are not instructed, and additional compensation
events stated in the Contract Data.
However, there has also been a considerable amount of redrafting through-
out the ECC4 compensation event clauses, most of which is inconsequential,
but some of which, in certain circumstances, could be important.

Title

The ECC3 clauses 70.1–73.2 covering matters relating to plant, materials, and
objects on the site are replicated in ECC4 with terminological changes and
only two changes worthy of note. The first of those changes is that whereas
by clause 73.2 of ECC3 the Contractor has title to materials from excavation
and demolition only as stated in the Works Information, under clause 73.2
of ECC4 the Contractor has title unless the Scope states otherwise. The sec-
ond change is that ECC4 has an additional clause, 74.1, which states that the
 2.5 Changes to dispute resolution procedures 15

Contractor has the right to use material provided by the Client only to provide
the Works, and that this right may be made available to a Subcontractor.

Liabilities and Insurance

The fifteen clauses of ECC3 covering ‘Risks and Insurance’ have been rear-
ranged, renumbered and reworded in the corresponding fifteen clauses of
ECC4. Apart from that, there are few changes of substance. The only change
which stands out is that in ECC4 a fault in the design contained in an instruc-
tion from the Project Manager changing the Scope expressly becomes a Client’s
liability.

Termination

Similarly there are only a few changes of substance between EEC3 and ECC4
in the fifteen numbered clauses relating to termination. The most striking
change is that in ECC3, whilst the Contractor could only terminate for a rea-
son in the Termination Table and the Employer could terminate for any reason
(clause 90.2), in ECC4 the phrase ‘the Employer may terminate for any reason’
is omitted, with clause 90.2 now stating ‘A Party may terminate for a reason
identified in the Termination Table.’ Three other changes are worthy of note.
Firstly, the provisions in clause 90.4 of ECC3 regarding certification and pay-
ment after termination are changed in ECC4 such that for most of the listed
reasons the Client is not obliged to pay after the termination date. Secondly,
there is a new clause 91.8 in ECC4 concerning termination on the grounds of
corruption, and thirdly, the default period activating the Contractor’s right to
terminate on the grounds of non-payment (clause 91.4) is extended in ECC4 to
thirteen weeks, from the eleven weeks allowed in ECC3.

2.5 Changes to dispute resolution procedures

The dispute resolution procedures of ECC3 were contained in Options W1 and
W2, one of which had to be included in the contract as a Main Option. In ECC4
there are three such Main Options: W1, W2 and W3.
The use of any one of these three options provides an entirely new approach
to dispute avoidance and resolution. For whereas both ECC3 Options W1 and
W2 went no further than providing rules and procedures for adjudication and
tribunal review, within Options W1, W2 and W3 of ECC4 there are provisions
not only for adjudication but also for involvement of Senior Representatives,
and the formation of Dispute Avoidance Boards.
So revolutionary and extensive are the changes that there is little point in
attempting to identify, in this chapter, point-by-point changes between ECC3
and ECC4.
16 2.7 Data sheet changes

2.6 Changes to Secondary Option clauses

As noted in Chapter 1, ECC4 has twenty-one ‘X’-labelled Secondary Option
clauses, excluding the unused X19. It also has three ’Y’-labelled clauses and
one ‘Z’-labelled clause, in total twenty-five clauses. In total, ECC3 had nineteen
Secondary Option clauses. The changes accounting for this difference are that
there has been a certain amount of renumbering and relabelling, but, more
importantly, there are six additional Secondary Option clauses in ECC4:

r Option X8 – Undertakings to the Client or Others

r Option X9 – Transfer of Rights Option
r Option X10 – Information Modelling
r Option X11 – Termination by the Client
r Option X21 – Whole Life Cost
r Option X22 – Early Contractor Involvement.
There are some drafting changes in ECC4 in those Secondary Option ‘X’ clauses
which have matching ECC3 Secondary Option ‘X’ clauses, but these are mainly
points of detail.

2.7 Data sheet changes

Finally, as regards changes, it should be noted that the ECC4 Contract Data
sheets (Part one – Data provided by the Client) and (Part two – Data provided
by the Contractor) differ slightly from the ECC3 Contract Data sheets. Most of
the changes simply reflect Primary and Secondary Option changes, but since
both data sheets commence with a warning that completion in full is essential
to create a ‘complete contract’ every required entry is of potential importance.
Moreover, some of the entries go beyond simply listing ‘data’ by stating, in
terms, contractual obligations. See, for example, the entry required at Part X15
of the Client’s data sheet, which refers to insurance cover for claims made
against the Contractor for failing to use the skill and care ‘normally used by
professionals’ designing works of a similar nature, and the comment thereon
in Chapter 8.