BXSURCOTraining BiAsiaPacific@ © NEC PRO Presented by Dr. Brenda Yip PRO MHI MS MRICS MCIOB MFKICM MCICES RPE Course Objectives » To learn about the collaborative philosophy and the terms of the NEC® contract. rorryne ai! ce) » To appreciate the key functional ciferences between the NEC and other forms of contr » Tobe trained in the management and administration of ‘an NEC ECC contract » To understand the application of the NEC contract in Hong Kong Certified NEC Professional Training Course (CNPC-190712) Mode 1 ‘©Cinigh ote nnn fhe ph fe hr lle an ini ‘edhe mey stb mre yal) apn wen PeBXSURCOTraining | SRE me RT TES Certified | =~”: fessional Training Course Before we start, some key points.. + NEC® is a registered trademark owned by Thomas Telford Ltd ~The publisher of the NEC contracts ‘This course is based on NEC4, the most recent version published in 2017 + This course provides instruction on the use of the NEC ECC, the set of contracts most commonly used for capital works + This course is certified by BK SURCO and the Chartered res. ; pensar OS | » DayOne | Module - Introduction, Roles, Responsibilities Module 2 - Tenders Documents Project Set Up » Day Two | Module 3 - Team Integration Module 4 - Project Administration > Day Three | Module 5 Risk and Programming ‘Module 6 - Lump Sum and Target Cost }» Day Four | Module 7 - Management of Change ‘Module 8 - Accounts and Project Closure BeAsiaracic OS (Certied NEC Profesional Training Course (CNPC-190712) Module 1 cy anos ay ay cd ay pe epi it tan eran of SURED LiBXSURCOTraining MODULE ONE - Introduction, Roles Responsi onsen syn ora ne | Module 1 ~ Introduction, Roles and Responsibilities Objectives » To introduce delegates to the NEC suite of contracts. To explain the origins and philosophy underpinning NEC. » To understand the component parts of an NEC contract and how they work To highlight some of the unique features of the ECC contract. » To understand the roles ofthe various parties and their responsibilities. BiAsiaPaatic OS Certified NEC Professional Training Course (CNPC-190712) Module 1 (capper mis ce ee ee nga, Ay BK URCOLBX ie 4 ei : bissiaacnc OS, CCertined NEC Professional Training Course (CNPC-I90712) Madile | ‘Soph fe sen ara eh tee nfo i em i ‘ite uy tern ny nym ae yw spinon of BE SURCD LiBXSURCOTraining Dos cacesteannIn ea SCS SL] ‘What is the NEC Philosophy? BerserenOS ET NEC Collaborative Philosophy » Seeks to encourage good working relationship and fair dealing between contracting parties: » The drafting of NEC Contracts provide an enabling platform and framework to facilitate project collaboration a BeAsiaraci: OS, (Cerifed NEC Professional Training Course (CNPC-190712) Module 1 ‘Stony nso vse i tte ne waned in et os, ed BK SUCO Lat ‘ott my beep ay wa fa nay pi phy ho tenon eran SURED LikBXSURCOTraining Five Key NEC Features + Flexibility of Procurement Route and Risk Profile Redefines Project Roles and Responsibilities Prospective Time and Risk Management ‘Timely information Flows and Decisions Seeks to provide a Platform for Collaboration : BKAsiapactic OE Primary NEC Characteristics 2. Flexibility: Muli Disciplinary -Engineering/Bulding Works » Employer or Contractor design or hybrid Choice of Pricing Options/Payment Method + Lump Sum, Target Cost, te + Modular Contract Form (Pick and mis “°* © + Core clause, primary/ secardary options, etc. + Choice of Risk Profile + Interlocking contracts throughout the supply chain : pensnnctc OF Certified NEC Professional Training Course (CNPC-I90712) Module 1 uBXSU RCOTraining Primary NEC Characteristics 2. Clarity and Simplicity: » Simple, concise and ‘pain’ English, common phraseology Modular format with options » Simple clause structure with no cross referencing » No provisional or pe sums /¥2 75 C = Elimination of sources of dispute ~ pre-agreed OHA, single method of evaluating change, programme float / Cepnnion Fewey + Guidance notes and flow charts Deethind Pac Beaserce OS Primary NEC Characteristics 2. Stimulus to Good Management: Clear allocation of function and responsibility ‘Timely and clear decision making ~ certainty Proactive risk management procedures/ meetings [ens non Effective management of project programme Prospective agreement of changes ~ reduced disputes Incentives for good performance - aligns objectives lee Fob) ) Best Certified NEC Profesional Training Course (CNPC-190712) Module 1 Cer te ms a eo the it fe es ae yk suRco LaBXSURCOTraining Module 1- AGENDA ¢ WR oh fips, an th fly . stn by BK UCD Lt on of BBXSURCOTraining Dn ED The ECC Contract, Structure and Key Documents + A contract for Capital Works + Default is design by client + No Engineer, Architect or QS + Contract is managed/administered for Client by PM + Werk Inspector isSupensor yi tre + Dispute Resolver is Adjudicator or BAB (NECA only) » Variations, EOT, Claims are all Compensation Events 7 Besant: OG | De se a NEC4 ECC Structure mandatory Core Clauses » Shc Main Contract Options » Three Dispute Resolution Options » Twenty-One pre-drafted Secondary Clause Options + Client-drafted Z Clauses Schedule of Cost Components “> Contract Data Besiaraci OF CCertifed NEC Professional Training Course (CNPC-190712) Module | ‘elt yt esse ay wa of cd nay pe apy wa tes emi FB SURED LnBXSURCOTraining NEC ECC Contract - Structure A Bensersc OE EE aH NEC4 ECC Core Clauses 1. General 2. ‘The Contractor's Main Responsibilities 3. Time ae 4. Quality Management (Testing and Defects) 5. Payment 6. Compensation events 7. Title (ECS eth) 8. Liabilities (Risks) and insurance 9, Termination : Biases OS Certified NEC Professional Training Course (CNPC-190712) Module 1 (Cipro ee noe eo a he i he ms hee Go nig reine BK URCBXSURCOTraining yw Poel on yoo bi cin of ten a eh "NEC ECC Contract - Structure ECC Option A - Lump Sum with Activity Schedule os. Priced contract where a lump-sum is agreed for ‘completion of the works the breakdown of which is set ‘out in an Activity Schedule. ‘The Contractor is paid the lump-sum, with interim payments being based upon completion of the various activities in the Schedule. This is similar in concept to many Design and Build contract formats. 16BXSURCOTraining ECC Option 8 - Lump Sum with Bills of Quantities Priced contract where a BQ is prepared. for pricing and payment purposes Similar to a traditional "re measurement” contract However treatment of change arising from CE'sis very different ECC Option C Target Cost with Activity Schedule Ns ‘A cost-reimbursable contract, incorporating a payment mechanism for sharing cost saving or cost overspend compared to a pre-agreed ‘Target sum based upon a priced Activity Schedule plus a Fee Perhaps the most significant of the NEC options which represents a radical shift in procurement thinking from business as usual Most popular with Contractors in Hong Kong, Why? : Birsarat OS | (Certified NEC Profesional Training Course (CNPC-190712) Mase | [copy ft mses ns a eri ofthe ta ened al igh iby BK SURED La {ay mm breed nny yd ay pa apy te spon o BE SURCO LiBXSURCOTraining ECC Option D-Target Cost with Bills of Quantities ‘A cost reimbursable contract with a pre- ‘agreed Target as with Option C Priced 8 prepared by Client used to formulate the Target instead of an Activity Schedule ‘The Target will be remeasured and will change ifthe actual quantities of work installed are different to BQ quantities bp Besa OE ECC Option E Cost Reimbursable Contract FF = » A flexible cost reimbursable contract arrangement under which costs and time to complete are not fixed and the Contractor is pad its Actual Cost of the works plus a fee. . BeAsiaracik OF Certified NEC Professional Traaing Course (CNPC-190712) Module | ‘api nae an i ft srs wind ne ot i, reed SURO adBXSURCOTraining ECC Option F Management Contract ' wv ‘A contract arrangement whereby the Contractor as agent of the Employer organises and manages the site and procures, and manages all of the separate subcontract packages of work comprising the project Reimbursement based upon defined cost plus fee Currently limited popularity in single-point responsibilty arrangements Benders OE CCertined NEC Professional Training Course (CNPC-190712) Module ‘Sconyh ft ae na ein et nig, td BK SIRCO La (esti aye eee ny ny ay pat egy wt in ein 0K SUROBXSURCOTraining The NEC4 Dispute Resolution Options ‘Two options for HK which concern rules and procedures for ‘Adjudication and review by tribunal » WA ~ Used where Adjudication is the method of DR and where HGCR Act* does not apply (includes stepped negotiation as a pre-requisite to Adj. notice) ie. 1. » W2 ~ Used where Adjudication is the method of DR and where the HGCR Act applies (includes stepped negotiation ea prerequiteto Aghia) Sor tte Aah pots » W3—Used where Dispute Avoidance Board isthe method of DRand the HGCR Act: does not apply hee does tote “+ “UK Housing Grants, Construction and Regeneration Act (1996) . penserc oS NEC ECC Contract - Structure (Cerifed NEC Profesional Training Course (CNPC-190712) Module | {conti oe, ae he i he ho rie in et nin reid BK SURCO it ‘elt mn even yy cel yey wie wen em of BK SURED LnBXSURCOTraining The ECC Secondary Options (1) Option X1 - Price Adjustment for Inflation Option x2 ~ Changes in Law Option X3 - Multiple Currencies Option X4 ~ Parent (Ultimate Holding) Company Guarantee Option XS ~ Sectional Completion Option X6 ~ Bonus for Early Completion Option X7 ~ Delay Damages Option X8 ~ Undertakings to the Client or Others Bensiapactic OE The ECC Secondary Options (2) ‘Option x9 - Transfer of Rights Option X10 - Information Modelling Option X11 ~ Termination By Client Option x12 Partnering / Multiparty Collabor: Option x13 ~ Performance Bond Option X14 — Advanced Payment Option X15 ~ Contractor's Design Option X16 ~ Retention BiAsiaPactic GS (Certtied NEC Profesional Training Course (CNPC-190712) Mosul 1 (cenit os oa hip they cee a at gd ri by BK SURCD La 2BXSURCOTraining Sc OTS TE oO DE ‘The ECC Secondary Options (3) » Option X17 — Low Performance Damages » Option X18 — Limitation of Contractor Li » Option X20 - Key Performance Indicators » Option X21 - Whole Life Cost » Option X22 - Early Contractor Involvement » Option Y(UK)1 ~ Project Bank Account Y(UK)2 -HGCAR Act ‘Y(UK)3 ~ Third Party Rights » Option Z~ Additional Conditions of Contract : BinsaeatOS | EEL aC aaa EE NEC ECC Contract - Structure 7 Beasarck OS CCerifed NEC Professional Training Course (CNPC:190712) Module | [Conifer me sw evi ot ton ainda tain eid y BA SURCO Lid ‘oly ay tcp ny wa adem pi St er en em BK SURED EiBXSURCOTraining ECC structure - Secondary Option Z Clauses _ t may wish to amend/augment standard provisions ef NNEC to sut project objectives by adding 2 clauses = Adtional contract terms required by the Client which are not covered by the NEC standard terms » Also used where amendments are required to suit particular Client requirements » Or where local law requires certain additional contract requirements imilar to GCC special conditions of contract (NB but no precedence over pre drafted secondary options) BeAsiaracic OF BeAsiapaciic O& CCerlied NEC Profesional Training Course (CNPC-190712) Module 1 ipo ese sn fr at fe mn ole aa wt ‘nde stb oot yay of ey egy we ipo of BK SURED Le sh seid y KURO agBxXSURCOTraining Schedules of Cost Components + Two sets of rules to define those components of Contractors cost which ae included in Defined Cost Certited NEC Professional Training Cou ‘copy ft sm a a (oxPe-190712) Module 1 et nig eine BK SURCO UdBXSURCOTraining ECC Structure Dra Coe Caer Cane Copa ae pC eee. - BiAsianactic@® Module 1 - AGENDA DO) wcesrai 2 mina nt >= - BeAsiaraciicOS Certied NEC Professional Training Course (CNPC-190712) Module 1 {Cami tm no athe oe ae anal ining dy BK RCO Lad tnd ey ternary ay a ye aay mot van pain BK SURED LaBXSURCOTraining eT Key NEC Features — Roles, Resrononiaes «» BiPArtiesrreferred to in ECC e ” Paporngaetaecapless Menegeie Spenser Perna eee enna Design, Inspection and Dispute Resolution + Designation of Project Manager as the Full Time ‘Manager/Administrator of the Project Supervisor as works inspector + No specified role for Designer in admin of Main Contract » Separate Role for Adjudicator/DAB to resolve disputes, a BeAsiarsci OF, EE a Client ECC Responsibilities » Employ PM, Supervisor and Designers as necessary to design and prepare documents for tender and execute the contract on the Contract Date (Clause 11.2(4)) +» Replaces the PM or Supervisor in accordance with Clause 144 + Provide services or things in accordance with Clause 252 + Notifies Contractor if it assign the benefit ofthe Contract (Clause 28) » Provides the site and access for the works in accordance with Clause 33.1 = BeAsiaract: OF ‘Certied NEC Professional Training Course (CNPC-190712) Module ‘copy fest 8 iit fe a anode tinge, rid BK SURCO Lit {ny uy ene an way odio Ps iy wh ewe ome of BK SURED LiBXSURCOTraining TTA Client ECC Responsibi » Take;over the Ware within two weeks after Completion a Clause 35:1 or use before Completion as Clause 35.2 » Provide material/fcilities for testing as Clause 41.2 » Make payments in accordance with Cause 51 » Provide insurances as set out in Clause 83 and CD1p83 » Terminate the Contract in accordance with Clause 90 » Refer a dispute/potential dispute to Senior Representatives, Adjudicator, Dispute Avoidance Board ( [| and Tribunal in accordance with Wand W3 If Option X14 is selected make Advance Payment to the Contractor : BeAsiarachc OE General Provisions - PM and Supervisor (Clause 14) Project Manager (PM) manages ECC for Client Responsible for communicating withthe Contractor in accordance with the contract provisions PM issue all instructions related tothe works issues approvals and acceptances( except defects), and deals with all financial ues PM must be even handed in matters such as assessing payment PM is only person who can instruct changes to Scope of key dates ‘Supervisor's responsibilty is checking compliance with the Scope inepecting and testing (‘sl 7 Besar OE Certified NEC Professional Training Course (CNPC-190712) Module 1 pio ttn rt i en na en ii ny LCDBXSURCOTraining SSE | The Project Manager's Role, Responsibility '» What isthe PM required to do ?Includ + Acting as stated inthe contract and in a sprit of mutual trust and cooperation (Clause 10) + Communicating with and replying to communications fram the Contractor (Clause 13) + Giving early warnings, managing erly warning meetings, registering and managing project rsk (Clause 15) + Resolving discrepancies between contract documents (Clause 17) + Reviewing/Accepting contractor's designs (Clause 21) + Reviewing/ Accepting Subcontractors and their contract ‘onions including MT&C provisions (Clause 26) + Centfying Completion (Clause 30) : Beasiaractic OS Pe a Ee] The Project Manager's Role, Responsibility » What is the PM required to do? Includes. + Revewing/Accepting Contactor programmes (21) + Providing acces to and use of the Ste (33) + Issuing instructions relating tothe timing ofthe Works. Including stop/start, takeover and acceleration (34-36) “ + Accepting and assessing costs of uncorrected defects (45) + Assessing/Certifying/Administering all time/money aspects of the project (50-53) Issuing instructions changing to the works (60) + Tovassess and certify changes to works information, prcesand completion date (65) - Beasiaract OS Certified NEC Profesional Training Course (CNPC-190712) Module 1 ‘Ocinyih fees ns at eri oe ut woop em et ig rand BK SURCOL ‘by my tein wy oly aap we en omit BK SURED Li 28BXSURCOTraining ‘Cert NEC Protesio General Contract Provisions Clause 14 - PM and Supervisor » Acceptance of any communication (programme, design ‘ete by the PM or Supervisor does not change the Contractor's responsibility to Provide the Works or liability for his design (Clause 14.1) — %.: \- » PM or Supervisor may delegate any actions in writing (Clause 14.2) » PM has the authority to issue instructions changing the Scope ora key date o BkAsiaractic OF Supervisor Role >» Appointed by Cent and identifed in CD > Duties of Supervisor are set outin core Clause 4~ Quality Management Similar to Resident Engineer or Architect, Supervisor is responsible for checking the works are in accordance With the contract » Two primary roles + Tests and inspections ~ Clauses 40-41 + Defects management - Clauses 42-46 Important role in issuing Defects Certificate which finalises contract obligations and triggers final payment BensrnctOF raining Course (CNPC-190712) Module 1 ste is ofthe tes whole ee ae ge ele y BK SUROO La 9BXSURCOTraining | SRE etc SSE 2- Contractor's Main Responsibilities 20 ~ Providing the Works 21 - Contractor's Design 22 Use of Contractor's Design 23 ~ Design of Equipment 24 People 25—Working with Employer and Others 26 ~ Subcontracting 5 BiAsiaracic OS [os SN oe DS Es Ra Contractor's Main Responsibilities Providing the Works (Clause 20) + Contractor Provides the Works in accordance with the Scope * Contractor advises on the practical implications of the design and subcontracting arrangements le (Options C to F 20.3) + Contractor provides forecasts of total Defined cost together with information on changes at intervals set out in CD1p80 ( Options C to F 20.4) : Bessie OF (Certified NEC Profesional Training Course (CNPC-190712) Module | [Canyon led ain et in tidy BK SURCO aBXSURCOTraining CES ET Contractor's Main Responsibilities Contractor's design (Clause 22) * Contractor designs the parts of the works which the ‘Scope states he isto design + Default is Client designs + Design acceptance by PM before proceeding (Cause 212) + Reasons for not accepting design should be provided 7 pensar OS, EET Contractor's Main Responsibilities People (Clause 24) Contractor employs each key person stated in Contract Data or Employs replacement person accepted by PM Reasons for not accepting (Clause 24.1) PM may instruct removal of persons (Clause 24.2) - Benserci OS Certified NEC Professional Training Course (CNPC-190712) Module 1 te tn is a ss ote aro tained reine y BK URCO La ‘ety yt ep ny al my bi oly mts tn pain BK SURED La 31BXSURCOTraining Dies sew eas SCS TSN SEE Contractor's Main Responsibil Working with Clientand Others (Clause 25) The Contractor has to ‘co-operate with Others in providing information ‘which they need in connection with the works hare the working areas with Others as stated in the Scope provides services and things stated in the Scope. Any Costs incurred by Employer for non-compliance are assessed by PM and deducted from Contractor : Bensarec OS Contractor's Main Responsibilities Subcontracting (Clause 26) Contractor does not appoint a Subcontractor until PM Fas approved subcontract conditions (26.3) Reasons for disapproval include ‘il nt allow the Contactor to Provide the Works to Sstement in subconvact for muta stand co-operation Failure of Contractor to comply with above is grounds for termination by Employer (Clause 91.2) NB Contractor requires $/C co-operation for Early Warring ‘and Compensation Event process . Beside OS, ‘Certied NEC Professional Training Coarre(CNPC-190712) Mode 1 {Oconto nef meio a aed tr weBXSURCOTraining IT Contractor's Main Responsibilities Subcontracting (Cause 26) Af subcontracts, Contractor stil responsible for Providing the Works, nd compliance with actions, notices (26.1) Contractor submits ame ofeach propoed Subcontractor to PM for sceptance (262) propored sonic condtions unless NEC contrac is proposed or PM agrees no submission required (26.3) pricing information nthe proposed subcontract PM (264, Spiers ctor NB this information is needed by PM to establish Defined Cost (11.2(24)) _ BuisiaracticO& NEC Subcontracting Subcontracting (Clause 26) he NEC Engineering and Construction Subcontract (or the Professional Services Contract for design work) is expected to be used...” Alternative is NEC Engineering and Construction Short Subcontract for straightforward, low risk subcontracts For Hong Kong the PM may accept other subcontract conditions Latest Practice Notes mandate use of HKCA Standard Form ‘of Domestic Subcontract “where appropriate” (GN A6.5.2.4) e Bersiaractic OE CCertined NEC Professional Training Course (CNPC-190712) Modul Sipe tin hn ce ny ROBXSURCOTraining ECS Contract Options Engineering and Construction Subcontract ("ECS") Largely identical to ECCin content '5 Contractor/Subcontractor Procurement Options (6in ECC) Limited usage in HK appears rarely used/ignored Effectiveness of ECC Main Contracts dependent on S/C involvement ~ teamwork, programming/progress. early warnings, compensation events. “Makes sense for larger, more complex subcontracts For simpler subcontracts “Short Subcontract” can be used Employer can mandate use of ECS through provisions in ‘Scope and ECC S/C approval process Beis OS EY Roles and Responsibilities - Adjudicator » The Adjudicator is an independent 3° party appointed by the Parties (Le. Client or Contractor) to resolve disputes who can be + named in the contract, or + agreed or appointed when a dispute arises (W..2) » Clause W.1.2 states 5 BeAsioract OS Certified NEC Profesional Course (CNPC-190712) Module 1 ‘Ocinyi fe nan, ns at iat un aol a at ing ined SURO Lil ‘iy iy tpn yw ely Sige wo he wn poi SURED LiBXSURCOTraining » The DAB comprises one or three neutral advisers named in the contract who visit site to monitor progress and assist in resolving potential disputes referred (W3.2) » Clause W.3.2 states » New Roles + PM/Supervisor/ Contractor/Adjudicator/DAB + Hands-on Role for PM New Procurement Choices * Payment, Risk Profile, Incentivisation New Management/Admin Responsibilities: Risk management (Early warning) + Time management (Programme, Time bar) + Cost basis evaluation of change jon/ Partnership/ Mutual trust + Proactive approach BeAsarccicOS (Certined NEC Profesional Training Course (CNPC-190712) Made {Scop se a, naa a oft mts ane et a ig ed by BK URC Lt ‘ty mn bree nay nym ay pe aay it rin oon oR SURO LiBXSURCOTraining BiAsiaPacific@ © Nee Ho iin NEC Poesia Tring Cae (CXPE-10712) Mae ‘copy oe an, et ee ul en at ig td OK SURCO Lit sy tb es ny wy er yp yw ea oo FONE La[NEC Pro Certified Training — Case Studies | Workshop Exercises ~ Day 1 Module 1 Collaboration, What is your personal experience of collaboration on projects. = Povtinty nerkshay - Sent supe = setial evenks “Gpen deason Spenties = Cen opeetion in parties How can collaboration on projects be improved? Faspec€ = Capea Remon ond Redan Me cordlnre ot Frtores( be peasenable igs ads ot oth. Avi Tse ~ Fok, Warn ~ aI Asean STraee BxAsiaPacific @ &