When would you use an NEC contract?

The NEC Contract provides an efficient tool for managing the programme. The accepted programme is used to assess delays and extension of time under the contract in real time under the compensation events procedures, which often reduces conflicts between the parties as issues are highlighted early.

What is NEC contract?

The New Engineering Contract (NEC), of which the Engineering and Construction Contract (ECC) forms a part, is a suite of standard form construction contracts created by the Institution of Civil Engineers.

What is the advantage of NEC contracts?

With a complex structure of options, the NEC3, arguably, offers greater flexibility and adaptability; it is a form of contract that benefits from having a sophisticated client. NEC3 provides clarity, simplicity and flexibility of use.

Where are NEC contracts used?

Who uses NEC and where? To date NEC has most often been used for infrastructure and building contracts, most specifically in the UK, South Africa, Hong Kong and New Zealand. The contracts are designed for worldwide application. Known for helping to improve project management, they can be used in any sector.

Which countries use NEC contracts?

To date NEC has most often been used for infrastructure and building contracts, most specifically in the UK, South Africa, Hong Kong and New Zealand. The contracts are designed for worldwide application. Known for helping to improve project management, they can be used in any sector.

What is the difference between a JCT and NEC contract?

JCT provides separate contracts for employer-design or contractor-design. NEC identifies a state at completion which is defined within the works information, unlike JCT which relies upon a subjective judgement of practical completion determined at the time.

Is NEC option a fixed price?

Option A is a fixed price lump sum contract and interim payments are based upon the completion of activities which are included in an Activity Schedule. There is no final account process under NEC contracts.

How does NEC option C work?

‘The NEC Option C is a target cost contract with activity schedule where the out-turn financial risks are shared between the client and the contractor in an agreed proportion. Throughout the works the Contractor is reimbursed for his “Defined Costs” plus fee minus any “Disallowed Costs”.

What are the principles of a NEC contract?

Traditional contracts are focused on the allocation of liability and often written in legalese. In contrast, NEC contracts reflect three key principles: clarity, flexibility, and stimulus to good management. Clarity – NEC contracts are written in plain English, using short sentences and bullet points.

How are EPC contracts used in the oil and gas industry?

 There are a number of contractual approaches that can be taken to construct an oil and gas facility. An EPC Contract is one approach. Another option is to have a supply contract, a design agreement and construction contract with or without a project management agreement.

What happens if you fail to comply with EPC contract?

Failure to comply with any requirements will usually result in the Contractor incurring monetary liabilities. It is timely to examine EPC Contracts and their use in oil and gas projects given the bad publicity they have received, particularly in contracting circles.

What does non-recourse mean in the oil and gas sector?

“Non-recourse” means there is no recourse to the project Sponsors at all and “limited recourse” means, as the name suggests, there is limited recourse to the Sponsors. The recourse is limited both in terms of when it EPC Contracts in the oil and gas sector PwC 6 can occur and how much the Sponsors are forced to contribute.