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Effective procurement using NEC3

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Legal considerations of NEC3

Legal considerations of NEC3

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  • 1. Is NEC3 the finished product for effective procurement ? 26 February 2010 Jon Close – Partner & Head of Construction & Engineering
  • 2. INTRODUCTION
    • 5 Years on……. what’s changed?
    • How have the principles of NEC3 been achieved?
    • Overview of 3 areas of ongoing interest:
      • Contract formation;
      • Partnering; and
      • Coping with industry expectations……or evils!
  • 3. Flexibility vs. Clarity – contract formation
    • The elements:
      • 9 core clauses;
      • 15 secondary options;
      • Bespoke terms/ z clauses
      • 2 cost components.
    • Qu 1: Too much choice?
    • Qu 2: Does it really matter? The “new” Construction Act implications.
  • 4. Partnering – quest for the Holy Grail?
    • “ the parties agree to work together, in a relationship of trust, to achieve specific primary objectives, to achieve specific primary objectives”.
    • Sir Michael Latham
    • (Constructing the Team, 1994)
    • Core clause 10.1 – good faith? An effective interpretation?
      • Bedfordshire County Council v Fitzpatrick Contractors Ltd [1998]
      • Petroemec Inc & Others v Petrobras & Others [2005] CA
        • term expressly agreed; and
        • Loss calculation established/measurable by reference to conduct of the parties.
  • 5. Partnering – when mutual trust and co-operation disintegrate into dust
    • Standard of care
      • Birse Construction Limited v St David Limited [1999] TCC
      • Consistency of approach with X12.2 (6)
      • practical point: list activities demonstrating good faith.
    • Measurable Partnering
      • X20 Key Performance Indicators
      • Incentives where “improved upon” – further clarity required.
  • 6. Please mind the gap…….z clauses
    • Bridging with industry expectations:
      • collateral warranties
      • copyright
      • un/suitable materials
      • confidentiality
      • 3 rd party interests
    • Avoiding industry evils – culture and the curse of “the red pen”.
    • Appropriate where in line with convention and tenants of established law e.g.. Core clause 17.1: treatment of discovered ambiguities/inconsistencies
    • Appropriate amendment - excluding contractor breach.
  • 7. Effective form of procurement?
    • YES!
    • Influencing factors:
      • shift in mindset;
      • experience;
      • administrative resource; and
      • knowledge.
  • 8. BPE Construction & Engineering Team
    • Jon Close – Partner David Holmes – Solicitor and Chartered Engineer
    • (01242) 248278 (01242) 248268
    • [email_address] [email_address]
    • John Beevor – Consultant and Honorary Consul to Republic of Estonia
    • (01242) 248213
    • [email_address]
    • Jason Stratford-Lysandrides – Solicitor and former QS
    • (01242) 248240
    • [email_address]
    • Adam Hiscox – “Soon-to-be-Newly Qualified”
    • (01242) 248215
    • [email_address]

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