The slides is for the final presentation of my master thesis, titled 'Early warning of NEC3 ECC, a solution for Dutch design and build construction problem solving?', in which I explored the basic conditions for implementing Early Warning of NEC3 ECC under the Dutch standard design and build contract UAVgc 2005, from both contractual and cultural perspectives.

1. 1
Early Warning of NEC3 ECC, A Solution for Dutch Design&
Build Construction Problem Solving?
Graduation committee:
Prof. mr. dr. M.A.B. (Monika) Chao-Duivis (TU Delft)
Dr. Ir. L.H.M.J. (Louis) Lousberg (TU Delft)
Ir. L.P.I.M. (Leon) Hombergen (TU Delft)
Ir. R.A.J. (Rob) Rijnen (Witteveen+Bos)
Ir. J. (Jelmer) Kooij (Witteveen+Bos)
Yu Gao
Construction Management and Engineering
Faculty of Civil Engineering and Geosciences
Delft University of Technology

2. 2
Construction fraud (2002) in the Netherlands

3. 3
Driven by ‘Value for Money’

4. 4
‘Old ways of problem solving’
• There is in general a lack of interaction and
communication between parties;
• Warning is often too late;
• Consequences of problem are large;
• People begin to blame each other;
• “Ball in the court”
• Duty to warn obligation of UAV-GC 2005 is
insufficient in facilitating problem solving

5. 5
‘Early warning as a foreign way of problem solving’
• Early warning obligation of NEC3 ECC for
reducing unnecessary costs;
• Parties working together based on the ‘spirit of
mutual trust and cooperation’;
• It is used for “Best for projects”
• “Jewel in the crown”.
• Nevertheless, only one project in the
Netherlands was executed under NEC3 ECC

6. 6
International Criminal Court in The Hague (NEC3 ECC)

7. 7
Problem is ‘twofold’
Duty to warn
of UAV-GC
2005 is
insufficient in
facilitating
problem
solving
between
parties.
Early warning
of NEC3 ECC
is alien to
Dutch
construction
industry.

8. 8
“Can Early warning of NEC3 ECC be expected to function properly
under UAV-GC 2005, with the aim of improving Dutch Design and
Build construction problem solving?
Literature
Review
• Early warning in Project Management (Q1)
• Construction Problem Solving (Q2)
• Comparative Analysis (Q3)
Expert
Interview
• Experts’ opinion concerning duty to warn and early warning in
practice (Q4)
• Conditions for proper functioning of Early warning (Q5)

9. 9
Early warning in project management
“Early warning is an observation, a signal, a message or some other
item that is or can be seen as an expression, an indication, a proof,
or a sign of the existence of some future or incipient positive or
negative issue. It is a signal, omen, or indication of future
developments.” (Nikander, 2002, p. 48)

10. 10
The concept of ‘time available’ (Nikander, 2002,
p. 86)
The earlier you pick up the problem, the more ‘time available’ you
have so as to reduce the potential impact of problem.

11. 11
Construction Problem Solving
Culture
Transition
Working
Together
Win-win
situation
Climate
of
Mutual
Trust
Early
Problem
Intervention
Problem
Solving at
the
lowest
level
Problem
Solving as
soon as
possible
Avoidance of
Problem
Recurrence
Learning
from
Problem
Solving
3. Joint problem
solving process
1. Reasonable behavior
2. Equal and balanced
warning responsibility
4. Win-win
attitude
5. The presence
of early warning
6. Learning from
problem solving

12. 12
A comparison of UAV-GC 2005, NEC3 ECC, and
FIDIC yellow book

13. 13
Result of the comparative analysis
Dimensions of
Problem solving
Aspects
(requirements)
Criteria UAV-GC
2005
NEC3 ECC FIDIC YB
Culture
Transition
Climate of mutual
trust
Reasonable
behavior
+/- √ ꓫ
Equal and
balanced warning
responsibility
ꓫ √
(EW)
ꓫ
Working together
(Integration)
Joint problem
solving process
ꓫ √
(EW)
ꓫ
Win-win attitude Win-win attitude +/- √
(EW)
ꓫ
Early Problem
Intervention
Problem solving at
the lowest possible
authority level
The presence of
early warning
+/-
(DTW)
√
(EW)
+/-
(EWP)
Problem solving as
quickly as possible
Avoidance of
Problem
Recurrence
Learning from
problem solving
Learning from
problem solving
ꓫ ꓫ ꓫ

14. 14
Expert interview
Operation side Abbreviation Contract mgt.
experience
Other relevant
experience
2 Employer (E) JD UAV-GC 2005 -
RM UAV-GC 2005 -
6 Employer’s Agent (E)
PS UAV-GC 2005 -
MM2 UAV-GC 2005
-
MKB UAV-GC 2005
-
AV UAV-GC 2005 UAV-GC trainer
JTB UAV-GC 2005 Dutch arbitration
MM1 NEC3 ECC& UAV-
GC 2005 -
4 Contractor (C)
CK UAV-GC 2005
-
JU UAV-GC 2005 -
RS UAV-GC 2005 -
JVR NEC3 ECC& UAV-
GC 2005
-

15. 15
Dutch construction culture
Traditional blame
culture
Dutch construction
culture
No blame
culture
Determining
features
Suspicion of each other Suspicion of each other Climate of mutual
trust
‘Working alone’
(fragmentation)
‘Working Alone’
(Fragmentation)
‘Working together’
(Integration)
‘Win-lose’ (dispute
often end up in court)
‘Give and take’
(dispute resolved
through negotiation)
‘Win-win’ (effective
problem solving)

16. 16
Redelijkheid en Billijkheid (the principle of good
faith)
Article 3:12 The principle of ‘reasonableness and fairness’ (Dutch
Civil Code 3:12, 1992)
At determining what the principle of ‘reasonableness and fairness’
demands in a specific situation, one has to take into account the
general accepted legal principles, the fundamental conceptions of law
in the Netherlands and the relevant social and personal interests
which are involved in the given situation.

17. 17
Influence on people’s attitude and behavior
• It is inferred that the principle is exploited by the contractor
as a bargaining chip for the negotiation about
compensation with the employer
• UNFORTUNATELY, it does not promote trust.
“What can you
expect from the
other
party”(interview)
Take each other’s
reasonable
interests into
account (DCC)

18. 18
Deficiencies of Duty to warn of UAV-GC 2005
Clause 4-7 The Contractor shall warn the Employer in writing
without delay if:
(a)the Employer’s Requirements; or (b)information; or (c)the land
and/or the water; or (d)goods; or (e)any measure; or (f)any
Variation
ordered, provided, or taken by the Employer, evidently contain or
show such faults or defects that the Contractor would be in
breach of the requirements of good faith if he were to continue
work without issuing any warning about such faults or defects.
Clause 4-8 If the Contractor fails to perform his obligation
referred to in section 7, he shall be liable for any damaging
consequences caused by his failure.
Clause 20-4 The Employer shall be under no obligation
whatsoever to use his authority to test pursuant to this clause. It
shall be at the Employer’s discretion to decide whether and how
he uses such authority in the course of Design Work.
Nevertheless, the Employer shall inform the Contractor in writing
in due time if he actually discovers a failure by the Contractor or if
he must have been aware of such a failure.
Duty to warn is not highlighted
Warning is not incentivized
Collaboration is not described
(no ‘follow ups’)
Less equal and balanced
warning responsibility
‘Obvious error’

19. 19
Added Value of Early warning of NEC3 ECC
Clause 16.1 The Contractor and the Project
Manager give an early warning by
notifying the other as soon as either
becomes aware of any matter which could
• Increase the total of the Prices.
• Delay Completion,
• Delay meeting a Key Date or
• Impair the Performance of the works in
use.
The Contractor may give an early warning
by notifying the Project Manager of any
other matter which could increase his total
cost. The Project Manager enters early
warning matters in the Risk Register. Early
warning of a matter for which a
compensation event has previously been
notified is not required.
Early warning as an independent and essential
article
‘Any matter’
More equal and balanced responsibility
Project management instrument (clause 16.2-
16.4)
Early warning is incentivized through ‘Early warning
mechanism’ (trust and compensation event)

20. 20
Project management instrument (clause 16.2- 16.4)
Clause 16.2 Either the Project Manager or the Contractor may
instruct the other to attend the risk reduction meeting. Each
may instruct other people to attend if the other agrees.
Clause 16.3 At a risk reduction meeting, those who attend co-
operate in 1)making and considering proposals for how the
effect of the registered risks can be avoided or reduced,2)
seeking solutions that will bring advantage to all those who will
be affected, 3) deciding on the actions which will be taken and
who, in accordance with this contract, will take them and 4)
deciding which risks have now been avoided or have passed
and can be removed from the risk register. (Meeting agenda)
Clause 16.4 The Project Manager revises the risk register to
record the decisions made at each risk reduction meeting and
issues the revised risk register to the Contractor. If a decision
needs a change to the works information, the Project Manager
instructs the change at the same time as he issues the revised
risk register.

21. 21
Early warning mechanisms (two conditions)
1. Condition 1 Trust as Passive control over opportunistic behavior
- Clause 10.1 The Employer, the Contractor, the Project Manager and the Supervisor
shall act as stated in this contract and in a spirit of mutual trust and co-operation.
- Option C Target contract with activity schedule (sharing ‘pain/gain’)
2. Condition 2 Compensation event as Active control over opportunistic behavior
Clause 63.5 If the Project Manager has notified the Contractor of his decision that
the Contractor did not give an early warning of a compensation event which an
experienced contractor could have given, the event is assessed as if the Contractor
had given early warning.
Compensation
event

22. 22
Is Early warning of NEC3 ECC a solution to Dutch
Design and Build Construction Problem Solving?
No, but Yes!!

23. 23
Why not?
• Lack of ‘active control’
• Lack of ‘support’ for trust
Contract
mechanisms
(UAV-GC
2005)
• A lack of trust between parties is a major
challenge
• Warning often too late
• The contractor is more focusing on being
compensated than warning earlier
• Technicians are strict and bad at communication
Dutch
construction
culture

24. 24
But, ‘every coin has two sides’
The
Spirit of
mutual
trust
Early
Warning
• A lack of trust is not only a threat
but also an opportunity to early
warning;
• Early warning can promote mutual
trust, which in turn encouraging
early warning.
• The more information they share at
an early stage, the better they know
each other
• If people are willing to build trust
and work ‘best for projects’, it can
start with the Early warning.

25. 25
Limitation of the research
• This research has made a start with researching early
warning of NEC3 ECC within the context of Dutch
design and build construction projects.
• Due to scarcity of case projects (NEC3 ECC), project
specific characteristics are not taken into account;
• The result of this research is not typical to one specific
scenario project (e.g. large infra design and build project).

26. 26
Thanks for your attention!
Any questions?