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Page 1: Choosing the right NEC contract - Thomas · PDF filemethods and conditions of contract have lagged behind. ... each chapter in general terms, ... 5 The Engineering and Construction

Choosing the right NEC contract

Bill Weddell

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Published by Thomas Telford Publishing, Thomas Telford Ltd, 1 Heron Quay,London E14 4JD. URL: www.thomastelford.com

Distributors for Thomas Telford books areUSA: ASCE Press, 1801 Alexander Bell Drive, Reston, VA 20191-4400, USAJapan: Maruzen Co. Ltd, Book Department, 3–10 Nihonbashi 2-chome,Chuo-ku, Tokyo 103Australia: DA Books and Journals, 648 Whitehorse Road, Mitcham 3132,Victoria

First published 2006

Also available from Thomas Telford BooksNEC Managing reality (complete box set). B. Mitchell and B. Trebes.ISBN 07277 3397 4NEC 3 (complete box set). Institution of Civil Engineers NEC Panel.ISBN 07277 3382 6

A catalogue record for this book is available from the British Library

9 8 7 6 5 4 3 2 1

ISBN: 0 7277 3383 4

# Thomas Telford Limited 2006

All rights, including translation, reserved. Except as permitted by the Copyright,Designs and Patents Act 1988, no part of this publication may be reproduced,stored in a retrieval system or transmitted in any form or by any means,electronic, mechanical, photocopying or otherwise, without the prior writtenpermission of the Publishing Director, Thomas Telford Publishing,Thomas Telford Ltd, 1 Heron Quay, London E14 4JD.

This book is published on the understanding that the author is solelyresponsible for the statements made and opinions expressed in it and that itspublication does not necessarily imply that such statements and/or opinionsare or reflect the views or opinions of the publishers. While every effort hasbeen made to ensure that the statements made and the opinions expressed inthis publication provide a safe and accurate guide, no liability or responsibilitycan be accepted in this respect by the authors or publishers.

Typeset by Academic + Technical, BristolPrinted and bound in Great Britain by Bell & Bain Limited, Glasgow

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Preface

While there have been many changes of construction technology during andsince the industrial revolution, the changes in contract strategy, procurementmethods and conditions of contract have lagged behind. But the last decadesof the twentieth century have seen the beginnings of change – a constructionreformation. The appearance of the New Engineering Contract (NEC) and itscommendation by Sir Michael Latham in his report of 1994 were undoubtedlyan important part of that change. The UK Office of Government Commerce’srecommendation of the use of NEC3 by public sector procurers was alsosignificant.

The NEC now has a reasonable track record both in the UK and further afield.This book is the product of the author’s experience in advising on and trainingin the use of the NEC contracts since the beginnings.

Of course there have been problems. Many of these have been caused by:

. Lack of understanding of the NEC contracts: users have often been tooready to import the baggage of the ‘traditional’ forms of contract.

. Inappropriate drafting of z clauses creating problems of interpretation. Theaddition of conditions without regard to the standard NEC clauses, usuallywith a priority clause added, can produce serious problems of interpreta-tion for users.

. Amendments in the form of z clauses that change the allocation of risk toan extent that is tantamount to a change in the nature of the contract.When an ‘unreasonable’ risk eventuates, the parties quickly revert totraditional combative attitudes.

. Inappropriate choice of contract and of the options available.

The purpose of this book is to help users and potential users avoid some ofthese problems and provide an overview of the NEC family of contracts. It doesnot attempt to provide a detailed commentary – that is available in otherpublications, not least in the guidance notes and flowcharts that have beenpublished to accompany the contract forms. The book also has a positivepurpose, namely to help users who may be familiar with the establishedtraditional forms but who are new to the NEC approach to contracts. That iswhy the content and distinguishing features of each contract are described ineach chapter in general terms, and also the choices available in the form ofmain and secondary options.

Capitals and italicsThe conventions of the individual NEC contracts in the use of capital initials fordefined terms and italics for terms in the Contract Data have not been followed.Hopefully this will make for easier reading, particularly for those who do nothave available the actual contracts. Exceptions are where reference is madeto job descriptions or parties with specific roles in a contract. Terms in theContract Data are sometimes in inverted commas to assist meaning.

NoteThe use of him/he has been used throughout rather than the cumbersomehim/her, he/she. This in no way reflects the fact that it is a male-only industry.

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Acknowledgements

I gratefully acknowledge the contributions of colleagues in the working group,drafting teams and NEC Panel to the debates and discussions (very lively attimes) which have taken place and have been crucial in producing the NECfamily of contracts. I would also like to acknowledge the helpful discussionswith delegates on training courses, both in the UK and abroad, on the NECcontracts. These discussions have usually revolved around the application ofthe NEC to particular problems and to the difficult issues that are so oftenpart of modern construction. Much of this book is the product of these debatesand discussions. The assertions, views and opinions expressed may trespassinto controversial areas but nevertheless they are mine alone. They may notrepresent the opinions of colleagues and others.

Bill Weddell

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Contents

Preface

1 The NEC Family 1

2 The Engineering and Construction Contract (ECC) 10

3 The Engineering and Construction Subcontract (ECS) 28

4 The Engineering and Construction Short Contract (ECSC) 36

5 The Engineering and Construction Short Subcontract (ECSS) 44

6 The Professional Services Contract (PSC) 48

7 The Term Service Contract (TSC) 61

8 The Adjudicator’s Contract (AC) 75

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5 The Engineering and Construction Short Subcontract (ECSS)

OriginsThe first edition of the ECSC was published in 1999 together with guidancenotes and flowcharts. Those guidance notes included a section entitled ‘Use ofthe ECSC as a subcontract’. This described how the ECSC could beamended for use as a short subcontract. Thus, a contractor wishing to use it asa subcontract would have needed to physically amend a copy of the ECSC, orissue a list of amendments to be read with the ECSC. Neither of these waslikely to produce a user-friendly document for subcontract work. It was probablyfor this reason that a first edition of the short subcontract (ECSS) waspublished in 2001. When the family of NEC3 documents was published in2005, second editions of both the ECSC and ECSS were published, togetherwith a set of guidance notes covering both contracts. At the end of theseguidance notes there was a separate short section entitled ‘Supplementaryguidance notes for the ECSS’. This recognised the similarity between the twocontracts.

The ECSS is not restricted to use as a subcontract to the ECSCThe ECSS is most likely to be used where work under the short contract (theECSC) is subcontracted to a subcontractor. As a result of the general back-to-back nature of the two contracts, this ensures that the obligations of theContractor under the ECSC are largely passed to the Subcontractor, estab-lishing a chain of liability. But the ECSS may be used in other situations. Itsmost common alternative use is likely to be for subcontract work under theECC. Many subcontracts under the ECC are for straightforward work, involvinglow risks and unsophisticated management procedures – characteristics thatthe ECSC and ECSS were designed for. These smaller contracts are unlikely tojustify use of the Engineering and Construction Subcontract (ECS). Many of thecontract conditions of the ECC are reproduced in the ECSC and ECSS, albeitin an abbreviated form. Thus, while the back-to-back nature of these twocontracts is less evident, there should be little conflict between the two. In sucha situation the subcontract data of the ECSS may require rather more carefuldrafting.

One of the newer contract forms published under NEC3 is the Term ServiceContract (TSC). This is essentially different from others in the NEC family inthat it caters for providing a service over a fixed period of time, rather thanproviding a project by a completion date. It is designed for use for mainte-nance-type work. However, in carrying out such work the contractor may need tocarry out discrete items of work as part of providing the service. Examples arereplacement of things that have reached the end of their useful lives, andproviding project-type works under the Task Order option of that contract.Except for major high-risk work carried out under the TSC, much work that thecontractor wishes to subcontract is of such a nature that the ECSS is ideallysuited for that purpose.

A further, though less frequent, use of the ECSS is as a subcontract under theProfessional Services Contract (PSC). Sometimes, when a consultant isengaged to do a feasibility study or design work, some physical investigationwork is necessary. For example, this may comprise the provision of physicalaccess to examine the condition of a bridge or building, or a ground investiga-tion with boreholes, trial pits and soil testing. The consultant will normally

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arrange for this type of work to be done by a contractor and the ECSS is wellsuited for this purpose. The consultant will fulfil the role of the contractor andsome minor amendments to the contract data of the ECSS will be necessary.

Completion of the forms in the ECSS is very similar to completion of the forms inthe ECSC

There is a certain amount of additional information included in the contract dataof the ECSS, mainly concerning the main contract details. For example, thenames and details of the Employer, Project Manager, Supervisor and Adjudicatorin the main contract are to be stated where applicable. Also included is adescription of the main contract works as well as the subcontract works. Wherethe main contract is the ECS, TSC or PSC, these entries will need to be amendedto suit. There are obvious advantages in having the same person named asadjudicator in both the ECSC and ECSS.

The period for reply is related to the period for reply in the main contract.Replies by the Contractor to the Subcontractor are to be a stated number ofweeks more than the period for reply stated in the main contract, to allow forthe passage of information emanating from the Employer. Similarly, replies bythe Subcontractor to the Contractor are to be a stated number of weeks lessthan the period in the main contract. This allows the Contractor time to passthe information to the Employer and so fulfil his obligations for timing of hisreply under the main contract.

Careful consideration is needed in deciding the defects date of the subcontract.There are two possibilities. First, it may be a stated period after completion ofthe subcontract works. Thus, if the subcontract works are completed some timebefore completion of the main works, the Contractor carries certain risks relatingto the subcontract works from the defects date of the subcontract to the defectsdate of the main contract. Second, it may be related to completion of themain contract, in which case the Subcontractor carries risks of the completedsubcontract works for an extended period.

Pricing of the Price List is entirely a matter between the Contractor and Sub-contractor and does not relate directly to the Price List in the main contract.However, pricing of compensation events in the main contract may involve ratesand prices in the subcontract price list where assessment has to be based onthe effect of a compensation event on defined cost (the latter includes effectson defined cost of subcontracted work).

The Works Information is a detailed statement of what is to be provided by theSubcontractor and how, and what things and facilities, if any, are to be providedby the Contractor

At first glance the Works Information section appears to be identical to that ofthe ECSC and, in preparing tender documents for a subcontract, theContractor may well be tempted to copy all the main contract information. Thismay result in much irrelevant information being included, leaving it to theSubcontractor tenderers to identify what information applies to the sub-contract works. If problems are to be avoided, the Works Information shouldbe carefully drafted. While much of the information may be reproduced fromthe main contract documentation, there may be additional informationrequired. In particular, the relationship of the subcontract works to the maincontract works should be made clear, and how the timing of the subcontractwork fits into the main contract programme. One of the entries under thesection on programme requirements concerns the use for which the sub-contract works are intended. This statement is for use mainly to decide whenthe subcontract works have been completed. Section 6 should list all thethings that the Contractor intends to supply for the Subcontractor’s use, suchas services, equipment including health and safety equipment, and welfarefacilities.

The Engineering and Construction Short Subcontract

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There are no named parties in the ECSS conditions other than the Contractor,Subcontractor and Adjudicator

The main powers and obligations in the ECSS are exercised by the contractingparties themselves – there is no equivalent of the Project Manager or Super-visor. Neither is there any provision for delegation as in the ECSC. However, atthe start of the subcontract, it is good practice for the parties to state who willbe representing them and what powers they are given.

The terminology, definitions and provisions in the ECSS are similar to, but notalways identical with those in the ECSC

Some of the more important terms and provisions are described in thefollowing. Reference should be made to the chapters on the ECC and ECSC forfurther details of the definitions. Certain terms have been prefixed with ‘subcon-tract’ to distinguish them from terms in the ECSC, and a subcontractor of thesubcontractor is described as a subsubcontractor.

The weather compensation event is similar to that in the ECSC but it may havedifferent consequences. Many subcontracts will be of shorter duration than thatof the main contract. The occurrence of a weather compensation event isexpressed, as in the ECSC, in terms of the number of full working days lost tobad weather as a proportion of the total number of days in the contract. Hence,the ECSS appears to be more sensitive to the occurrence of a weather compen-sation event than the ECSC because of the possible shorter period of thesubcontract. It is possible that a weather compensation event may occur in thesubcontract but not in the main contract. The Contractor should be aware of thissmall difference of risk.

A further compensation event has been added in the ECSS. This concerns thepossible extended period from completion of the subcontract works to thedefects date, where the latter is the same as the main contract defects date.The inclusion of this compensation event has the effect of removing from theSubcontractor the risk of the consequences of late completion by the maincontractor.

The ECSC and ECSS both contain a mechanism whereby a particular disputeaffecting both contracts may be referred to a single adjudicator. He thendecides the dispute as between all three parties. To make this effective therecommended additional clause in the ECSC guidance notes should be incorpo-rated as an additional clause, The reciprocal clause is already included in theECSC under the heading ‘combining procedures’.

When to use the ECSSFrom the above, use of the ECSS as a subcontract in the ECSC is an obviouschoice, because of its simplicity and back-to-back nature. Use of the ECSS as asubcontract in the PSC has many advantages where work of a physical andmanual nature is required. Similarly, use of the ECSS as a subcontract in theTSC has distinct advantages over, say, the ECSC, since the former is drafted asa subcontract rather than a main contract.

How to use the ECSSNotwithstanding the fact that this contract is largely back to back with theECSC, great care should be exercised in its preparation. Once a subcontractoris appointed, it may be prudent to invite his personnel to join in trainingsessions for all people working on the project. This should assist in familiarisingall parties with the content and procedures of the contracts and developingteam working. The obligation of mutual trust and co-operation is a basicrequirement of the ECSS as well as the other NEC contracts; joint trainingsessions should help all parties to meet these obligations.

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Exercises(1) The local authority of a coastal town proposes to invest in a leisure devel-

opment scheme to attract tourists. It has placed a management contractvalued at £35m with a contractor under the ECC using main option F.The various works packages are to be let as subcontracts. Decide whichof the following items of work would be suitable for use with the shortform of subcontract (ECSS) giving reasons for your answer. The esti-mated value of each package is shown in brackets. Make any necessaryassumptions.

(a) Dredging of a disused harbour to provide 3m minimum depth ofwater for mooring yachts. The dredging may include some under-water rock excavation. [£450000]

(b) Site clearance consisting mainly of demolition of derelict buildingsand structures. [£550000]

(c) Drainage, road works and service ducts to provide the infrastructurefor the development and access from the existing roads. [£4.5m]

(d) Design and construction of a yacht club building. [£2.5m](e) Design and construction of 15 residential apartments. [£4.5m](f) Design and construction of a children’s paddling pool. [£1.2m](g) Design and construction of six kiosks located on the promenade.

[£35000 each](h) Landscaping. [£400000]

The Engineering and Construction Short Subcontract

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Index

Page numbers in bold type refer to definitions. Abbreviations are those used in the text and are also referencedin the index.

AC see Adjudicators’ Contractsacceptance procedures, TSC 70Activity Schedules 23, 56

payments for 11priced contracts with

ECC 11PSC 49

priced subcontracts with, ECS 30target contracts with, ECC 12–13

additional conditions see z clausesAdjudicators

ECC 22ECSC 38, 41introduction of 13PSC 51, 55rejection of decisions by 14TSC 69

Adjudicators’ Contracts (AC)conditions of 76expenses and fees 76, 77

advance payments 76forms of agreement 75joinder clauses 76origins 75and Subcontractor disputes 76termination of appointment 76–77use of 77

advanced paymentsto Contractors, ECC 17to subcontractors, ESC 32

Affected Properties 69amendments see z clauses

Banwell Report (1964) 4Barnes, Dr Martin 1Bills of Quantities 12, 23

priced contracts with 12priced subcontracts with 30target contracts with 13target subcontracts with 30

bonuses, early completion, ECC 15

cash flow, by lump sum payments 11change, managing, ECSC 41clause function statements 1–2collateral warranty agreements, PSC 52communications

effectiveECC 23ECSC 39–40PSC 57TSC 70

compensation

assessingECC 24ECSC 37, 41

compensation events 22–23Contractors 71ECC 24–25ECSC 40–41PSC 58–59TSC 71

Completion 22, 39, 55completion dates 55consequential losses, defects, ECC 18‘Constructing the Team’ see Latham Reportconstruction management, contract selection 6Consultantssee also Professional Services Contractappointment of 4

Contractorsadvanced payments by Employers, ECC 17agents, ECSC 38compensation events 71defects, liability for 17, 70–71as designers, ECC 19–20Employers, effective communications 57insurance 71limitations of liability, ECC 17, 18non-performance by, ECC 17offers by 37roles and responsibilities

ECC 20TSC 68

subcontracting, permission for 68unfair risk allocation 10–11

Contractors’ plans, TSC 70Contractors’ shares, calculation 12contracts, creation of 36–37Contracts (Rights of Third Parties) Act 1999ECC 19TSC 67

Cost ComponentsSchedule of 23

Shorter 23cost reimbursable contractsECC 12–13ECS 30TSC 64

CostsDefined 12, 23, 39Disallowed 23

currenciesexchange rates 15multiple

ECC 15

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currencies (continued)ESC 31TSC 65

damagescaps 16delaysECC 15–16ECS 32

liquidated 15–16low performanceECC 18ECS 32TSC 66

unliquidated 16defects 22, 55–56

consequential losses, ECC 18Contractors’ liabilities, ECC 17dates, ECSS 45management ofECC 24ECSC 40TSC 70–71

notification, ECC 21, 22retention, ECC 17–18

Defects Certificates 21, 22Defined Costs 12, 23, 39, 69delay damages

ECC 15–16caps 16

ECS 32design work

by Contractors, limitations of liability 17ECSC 38–39PSC 17

designers 19Contractors as, ECC 19–20

Disallowed Costs 23, 69dispute resolution

Adjudicators 13–14ECC 13–14, 19ECSC 41ESC 30–31PSC 51, 55tribunals 14TSC 64

early completion bonusesECC 15ESC 31

early take over, Employers, ECC 24early warning procedures

PSC 57TSC 70

ECC see Engineering and Construction ContractsECSC see Engineering and Construction Short

ContractsECSS see Engineering and Construction Short

Subcontractsemergency works, contracts for 13Employers

acceptance by 37

advanced payments to Contractors, ECC 17breach of contract by 58Contractors, effective communications 57duties, ECSC 38early take over, ECC 24inflation risks, ECC 14–15limitations of liability, ECC 18low performance damages, ECC 18PSC, termination 52rights and responsibilities, TSC 68roles and duties

ECC 20PSC 54–55

end of liability dates 66Engineering and Construction Contracts (ECC)

Adjudicators, appointment of 22advanced payments to Contractors 17changes in the law 15communications, format 23compensation

assessing 24events 24–25

defectsContractors’ liability 17management of 24retention for 17–18

delay damages 15–16development of 10dispute resolution 13–14, 19early completion bonuses 15and ECS 28Key Performance Indicators 18–19limitations of liability 17, 18low performance damages 18multiple currency payments 15options

cost reimbursable contracts 13management contracts 13priced contracts with activity schedule 11priced contracts with bill of quantities 12target contracts with activity schedule 12–13target contracts with bill of quantities 13

parent company guarantees 15partnering 16, 20performance bonds 17price adjustments, inflation 14–15programmes 24Project Managers, appointment 20–21risk reduction meetings 24roles within 19–22sectional completion 15structure 11Subcontractors, appointment 20, 21Supervisors, appointment 21tenders 25third party rights 19uses of 25–26z clauses 19

Engineering and Construction Short Contracts (ECSC)Adjudicators 38, 41communications, effective 39–40compensation assessments 37, 41

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compensation events 40–41contract creation 36–37Contractors

agents 38roles 39

defects, management of 40design under 38–39development of 36dispute resolution 41Employers, roles 39payment procedures 40Price Lists 37problems, early warnings 40Site Information 38subcontracting 40tender documents 42uses of 41–42Works Information 37–38

Engineering and Construction Short Subcontracts(ECSS)

Compensation Events 46weather 46

defect dates 45development 44and ECSC 44–45, 46information required under 45Price List pricing 45and PSC 44–45and TSC 44uses of 46Works Information 45

Engineering and Construction Subcontracts (ESC)advanced payments to subcontractors 32construction of 29–30damages, delays 32dispute resolution 30–31early completion bonuses 31and ECC 28key dates 28Key Performance Indicators 32limitations of liability 32low performance damages 32multiple currency payments 31options

cost reimbursable subcontract 30priced subcontracts with Activity Schedule 30priced subcontracts with Bill of Quantities 30target subcontracts with Activity Schedules 30target subcontracts with Bills of Quantities 30

parent company guarantees 31partnering 32performance bonds 32price adjustments for inflation 31retention 32sectional completion 31subsubcontractors 33suspension of performance 33third party rights 33time-barring sanctions 34uses of 34Works Information 28z clauses 33

Equipment 22, 39, 69ESC see Engineering and Construction Subcontractsexchange rates, currencies 15expenses and fees, AC 76

Fees 63freedom to contract 7

Gantt charts 38‘Guide to Project Team Partnering’ 16

Housing Grants, Construction and Regeneration Act1996

AC 75construction contracts 31dispute resolutions

ECC 13–14, 19, 21–22ECSC 41ESC 30–31PSC 51, 53TSC 64, 67

incentives, Key Performance Indicators as 16inflationprice adjustments

ECC 14–15ESC 31PSC 51TSC 64–65

innovation, advantages and pitfalls of 2insurance, Contractors 71

joinder clauses, AC 76

key dates 56ESC 28sectional completion, ECC 15

Key Performance Indicators (KPI)ECC 16, 18–19ESC 32TSC 66–67

Latham Report (1994) 4–5adjudication 13mutual trust and co-operation 67

Latham, Sir Michael 4see also Latham Report (1994)

law changesECC 15TSC 65

liability, end of 66limitations of liabilityECC 17, 18ESC 32PSC 53TSC 66

liquidated damages 15–16low performance damagesECC 18ESC 32TSC 66

lump sum contracts 11

Index

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lump sum items 63

management contracts, ECC, subcontracted work 13multiple currencies

ECC 15ESC 31TSC 65

mutual trust and co-operation 64, 67, 69

New Engineering Contracts (NEC)dates of publication 5feedback on 4objectivesclarity 3flexibility 3simplicity 3

optionsmain 7secondary 7z clauses 8

partnering within 16selection of appropriate 5–6construction management 6subcontracts 6

terminology 3–4

parent company guaranteesECC 15ESC 31TSC 65

partneringECC 16, 20ESC 32PSC 52, 54TSC 65–66

Partnering Information 16PSC 54

Partners, Schedule of 16payment procedures, ECSC 40performance bonds

ECC 17ESC 32TSC 66

Perry, Professor John 1Plant and Materials 39, 69Price Lists 39

ECSC 37, 45lump sum items 63remeasurable items 63

Priced Contracts with Activity SchedulesECC 11PSC 49

Priced Contracts with Price Lists, TSC 63Prices for Services Provided to Date 56, 58, 69Prices, The 23, 39, 56, 69Prices for Work Done to Date 23, 39Professional Services Contracts (PSC)

Adjudicators 51, 55collateral warranty agreements 52communications, effective 57compensation events 58–59delegation under 52

development 48dispute resolution 51, 55early warning procedures 57and ECSS 44limits of liability 53options

priced contract with activity schedule 49target contracts 49–50term contracts 50time-based contracts 50

partnering 52, 54information 54

payments under 58price adjustments, inflation 51programmes within 57–58roles and duties under 54structure 48–49subcontracting under 54–55termination by employers 52third party rights 53uses of 59z clauses 53

programmesECC 24ECSC 38within PSC 57–58

Project Managersappointment

ECC 20–21PSC 59

delegation by, ECC 21introduction of 4qualifications, ECC 20subcontractors, approval of 20, 29

PSC see Professional Services Contract

quantity estimates, by employers 12

remeasurable items 63retention

ECSC 40ESC 32

risk reduction meetingsECC 24TSC 70

risk registers 7, 56risks

allocation 6–7to contractors 10–11

Schedule of Cost Components 23Shorter 23

Schedule of Partners 16schedule of rates contracts see Term Service

Contractsscope 56sectional completion

key datesECC 15ESC 31

Service Information 69TSC 72

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Service ManagersTSC

appointment 62, 67Contractor’s plans 70role of 68subcontracting 68

Shorter Schedule of Cost Components 23Site Information 22

ECS 34ECSC 38

standard conditions of contract, pre-NEC 1Subconsultants, PSC 54–55subcontract forms, need for 4Subcontractors 29

see also Engineering and Construction Subcontractappointment of

ECC 21, 29ECSC 40

disputes with Contractors 76management contracts, ECC 13obligations 33–34partnership by 21

subcontractsselection of appropriate 6TSC as 71

subsubcontractors, ESC 33Supervisors

appointment ofECC 21PSC 59

introduction of 4suspension of performance, ESC 33

target contractsECC 12–13ESC 30with price lists, TSC 63–64PSC 49–50

target prices, establishment of 13tender programmes, ECC 24tenders

ECC 25ECSC 42Price List compilation, ECSC 37

term contractsPSC 50

pricing 50Term Service Contracts (TSC)

acceptance procedures 70Adjudicator’s role 69changes in the law 65compensation events 71construction 62Contractor’s plans 70defect management 70–71development 61

dispute resolution 64, 67early warnings 70effective communication 70Key Performance Indicators 66–67limits of liability 66low performance damages 66multiple currency payments 65mutual trust and co-operation 64, 67, 69options

cost reimbursable contracts 64priced contracts with price lists 63target contracts with price lists 63–64

parent company guarantees 65partnering 65–66performance bonds 66price adjustments for inflation 64–65roles and duties within 67–69Service Information 72Service Managers 62, 67as subcontract 71subcontracting within 68–69time period 44uses of 61, 71–72z clauses 67

terminology, policies on 3–4third party rightsECC 19ESC 33PSC 53

time charges 56time provisions, incorporation 3time-barring sanctions, ESC 34time-based contracts, PSC 50transfer of rights, PSC 52TSC see Term Service Contract

unliquidated damages 16

value engineering clauses 12

weather risks, ECSC 40–41, 46working areas 22Works Information 22ECSC 37–38ECSS 45ESC 28performance bonds, ECC 17

z clausesECC 19ECS 33effects of 2flexibility using 8minimising use of 3PSC 53TSC 67

Index

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