Lawrence Pearce, specialist construction solicitor at Holmes & Hills, discusses the pros and cons of NEC and JCT construction contracts.
It is always interesting hearing why a client has chosen to enter into a specific form of construction contract. A Contractor may have simply used a specific construction contract over the years and stuck by it as a trusty companion and the thought of change rings alarm bells.
Selection of the most appropriate form of contract will be project specific and should be evaluated on a case by case basis. It is important that Contractors do not approach the New Engineering Contract (NEC) and Joint Contracts Tribunal (JCT) contracts in the same manner where they do use both forms of contract across different projects or where they have previous experience with one but now find themselves dealing with the other.
As many will be aware, the JCT contract focuses on liabilities and risk in the manner of a traditional contract, whereas NEC requires and enables a more proactive and collaborative approach to managing the contract.
A very general overview of the JCT/NEC pros and cons are broadly summarised below:
Under the JCT, the employer will appoint a ‘Contract Administrator’ to oversee the contract. The Contract Administrator must act impartially between the parties and must guide the parties through the process, procedures and timelines set out in the contract.
In comparison, under an NEC contract, a ‘Project Manager’ deals with the administration of the contract. As set out in the table above, the NEC is geared towards collaborative working under a shared responsibility. The Project Manager takes a more proactive role in the administration of the project, with a duty to co-operate and collaborate with both the developer and the Contractor.
The JCT focuses on the submission of a master programme that often does not get reviewed during the project.
The NEC places a greater reliance on the parties to regularly update the programme with the approval of the Project Manager. In doing so, the NEC hopes to improve the efficiency of the project by assessing delays as the project progresses. This is obviously a positive aspect of these forms of contract, however, the administrative burden NEC contracts create can often deter parties from their use or, in the worst case scenario, the contract doesn’t get referred to during the course of a project as it should. Not referring to and updating the NEC construction contract during the project potentially creates grey areas in which construction disputes and litigation can thrive.
The NEC places a greater reliance on the parties to regularly update the programme with the approval of the Project Manager. In doing so, the NEC hopes to improve the efficiency of the project by assessing delays as the project progresses. This is obviously a positive aspect of these forms of contract, however, the administrative burden NEC contracts create can often deter parties from their use or, in the worst case scenario, the contract doesn’t get referred to during the course of a project as it should. Not referring to and updating the NEC construction contract during the project potentially creates grey areas in which construction disputes and litigation can thrive.
Holmes & Hills' team of specialist Construction Law solicitors are regularly providing training to contractors on NEC and JCT construction contracts, with bespoke training sessions designed to focus on the areas and issues of greatest importance and concern.
Call 01206593933 and speak with the specialist team of Construction Law Solicitors.
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