CFW NEC Management of change under the NEC3

Supply Chain Development
Management of Change Under the NEC 3
Stuart Brisbane(CFW Consultant)
21st Sept 2017
The Vale Hotel - Hensol

Agenda
1. Overview
2. Early Warnings
3. Compensation Events
• Clause 60 (Definition)
• Clause 61 ( Notification)
• Clause 62 (Quotation)
• Clauses 63 & 64 (Assessment)
• Clause 65 (implementation)
4. Some Points to Note
5. Recap

NEC3 Suite of Contracts
• Works
• Engineering and Construction Contract (ECC)
• Engineering and Construction Short Contract (ECSC)
• Engineering and Construction Subcontract (ECS)
• Engineering and Construction Short Subcontract (ECSS)
• Services
• Professional Services Contract (PSC) – Architecture, Engineering
• Term Service Contract (TSC) – Maintenance, Management
• Term Service Short Contract (TSSC)
• Supply
• Supply Contract (SC) – Goods, Products
• Supply Short Contract (SSC)
• Others
• Adjudicator’s Contract (AC), Framework Contract (FC)
1. Overview

1. Overview

1. Overview
The brand new NEC4 Design Build and
Operate Contract (DBO) allows Clients to
procure a more integrated whole-life
delivery solution. It reflects the increasing
demand for contracts extending into the
operational phase.

1. Overview

Core & Main Option Clauses
• The Core Clauses are set out in nine sections and apply in all
contracts. The clauses allow for a flexible amount of Contractor
design.
• Section 1: General
• Section 2: The Contractor’s Main Responsibilities
• Section 3: Time
• Section 4: Testing and Defects
• Section 5: Payment
• Section 6: Compensation Events
• Section 7: Title
• Section 8: Risk and Insurance
• Section 9: Dispute and Termination
• The Main Option Clauses provide two options for the dispute
resolution procedure.
• Option W1: Used unless the HGCRA 1996 applies.
• Option W2: Used in the UK when the HGCRA 1996 applies.
1. Overview

Cost Components & Contract Data
• The Cost Components are two schedules which contain cost information
supplied by the Contractor. They are used to assess payments to the
Contractor and the cost effect of Compensation Events. Costs are defined in
relation to people, equipment, plant and machinery, utility charges,
manufacture and fabrication, design and insurance.
• Known as the ‘Contract Particulars’ under JCT, the Contract Data provides
data required by the specific conditions of the contract. The section is split
into two parts
• Part 1 - Data provided by the Employer
• Part 2 – Data provided by the Contractor. Information includes...
• Name of Parties
• Insurance Details
• Start and Completion Dates
• Interest Rates
• Retention Percentage if applicable
• Rates for Delay Damages if applicable
1. Overview

Works and Site Information
• The Works Information specifies and describes the Works to be carried
out, including Contractor’s design responsibilities. Most information will be
given in a specification and on production drawings in the traditional
manner. However, it may also include…
• Statement of Constraints on how works are carried out
• Health and Safety
• Details of Contractor’s Design elements
• Information on Specialist Subcontractors
• Details of Tests
• Performance or Advance Payment Bonds
• The Site Information describes the site and its surroundings and is used
to assess compensation for site conditions. Information may include soil
investigations, contamination reports and details of below ground
services.
1. Overview

Managing Change
• NEC3 includes a clause which obliges the Contractor and
Project Manager to notify each other as soon as they become
aware of any matter which could increase the Prices or delay
Completion. This is called an Early Warning.
• Under the JCT Type, the procedure for managing change is
known as ‘Variations’. A Contractor’s Schedule 2 Quotation can
be used to obtain a fixed price quotation for a variation.
However, it is not mandatory and typically responsibility lies with
the QS to price variations. Disputes can arise and are often not
resolved quickly.
• Under the NEC3, the procedure is known as ‘Compensation
Events’ and an immediate assessment of the cost and time
implications are made. These are mandatory and binding, with
no provision for later review. They are events which do not
arise from the Contractor’s fault and entitle the Contractor to be
compensated for any effect the event has on the Prices and
Dates.
Compensation Events
are listed in the Core
Clauses and the
Options. The Contract
Data also has
provision for the
Employer to insert their
own additional
compensation events.
1. Overview

1. Overview
Terms in italics are project specific
Defined terms have capital initials
These drafting principles make it easier to understand the contract
These principles should be adhered to when drafting documents & communicating
Clause 11.1:
Terms identified in the Contract Data are in italics e.g.. Period for reply, boundaries of
the site
Defined terms have capital initials, e.g. Accepted Programme, Completion, Defect
The index is useful to refer to as it details the links within the contract – it helps
build the intellectual map

• There are 19 defined terms relevant to the core
clauses
• These are in alphabetic order
• Additional defined terms exist dependent upon the:
– Main Options
– Secondary Options
1. Overview

Clause Defined term & comment Linkage
11.2(1) Accepted Programme – latest Accepted Programme supersedes
previous. Vital to have an Accepted Programme in place for the good of
the project
31.3, 50.3
(remedy)
11.2(2) Completion – the second bullet serves as a basic filter, the first bullet
allows the Employer to be very precise
X7.1 (remedy)
11.2(9) Key Date – critical milestone from the Employer’s perspective, often
reflects interface between the Contractor and Others
14.3 (alter),
25.3 (remedy)
11.2(14) Risk Register – consists of risks identified as part of the tender process
plus early warnings
Contract
Data, 16.4
11.2(16) Site Information – factual information about the site 60.1(12),
60.2, 60.3
11.2(18) Working Areas – necessary for Providing the Works & used only for
work on this contract
15.1, SCC,
SSCC
11.2(19) Works Information – specifies and describes the works or any
constraints
14.3, 60.1(1)
Some Defined Terms and Basic Contract Linkages
1. Overview

Clause Defined term & comment
Main Option A,
11.2(20)
Activity Schedule (note the sequential clause numbering)
Main Option A,
11.2(27)
Price for Work Done to Date (PWDD) – completed activities
Main Option B,
11.2(28)
Price for Work Done to Date (PWDD) – bill items
Main Option C,
11.2(23)
Defined Cost – definition of what is paid for under Options C-F
Main Option C,
11.2(25)
Disallowed Cost – definition of what is not paid under Options C-F
X5.1 Sectional Completion – references equally apply to Sectional
Completion eg clause 16.1
1. Overview
Some Defined Terms and Basic Contract Linkages

Key People
• The ECC sets out the responsibilities and roles of the following key
people:
• Employer
Not involved in administrating the contract – no power to issue instructions.
• Project Manager
Known as the ‘Contract Administrator’ under the JCT, the Project Manager manages
procurement of the Works for the Employer. Contract contemplates appointment prior to
the Consultants so that they manage the design process.
• Supervisor
Known as the ‘Clerk of Works’ under the JCT, the Supervisor exercises certain
responsibilities on site for the Employer, including testing, monitoring quality and issuing
the Defects Certificate.
• Contractor
• Subcontractors
• Adjudicator
• Note, no references to an Architect or QS by profession.
Unless delegated the
role or responsibility, the
Architect who produced
the Works Information,
may not have a role in
the Contract and
therefore have no
responsibility to monitor
quality and compliance
with the Works
Information. The
Supervisor may have
limited knowledge of the
Works Information and
this may affect the
quality of the completed
building. Traditionally as
Contract Administration,
the Architect has a
responsibility to monitor
quality.
1. Overview

Communication protocol: Clause 13.1
• Clause 13.1 clearly states the methods of communication which the contract requires in a form that can be
read, copied and recorded
• The contract requires professional record keeping
• The Project Manager should discuss and agree with the Contractor which method(s) of communication
will be used at commencement of the contract
• The NEC published guidance on communication in April 2013
• Good examples and suggestions are contained within this guidance
1. Overview
• As a minimum, the ECC pro-forma’s are recommended as the means of communicating
• They state the relevant clause
• The communications are structured
• This is not being contractual – it’s following what the contract requires (‘acting as stated’)

Communication protocol: Clause 13.7
• ‘Notified’ matters need to be communicated separately!
• Each early warning should be notified separately
• Each defect should be notified separately
• Each compensation event should be notified separately
1. Overview

Full list of notifications under the ECC (clause 13.7)
Clause Issue
14.2 Delegation
14.4 Replacement of the PM or Supervisor
16.1 Early Warning
17.1 Ambiguities and inconsistencies
18.1 Illegal or impossible requirements
31.3 Programmes
40.3 Tests and inspections
42.2 Defects
61.1 Compensation Events
61.5 Decisions on Compensation Events
61.6 Assumptions on Compensation Events
62.6 Quotations for Compensation Events
64.3 Assessments of Compensation Events
64.4 Late assessment of Compensation Events
65.1 Implementation of Compensation Events
73.1 Discovery of objects of value etc
1. Overview

• The Contract Data ‘refers’ to the documents
which contain the Works Information.
– Contract Data Part 1 identifies the Employer’s
Works Information
– Contract Data Part 2 identifies the Contractor’s
Works Information for his design
1. Overview

• What happens if there are inconsistencies between
the Works Information provided by the Contractor
(for his design) and that provided by the Employer?
Clause 17.1
notify
Clause 14.3
Ability to
change
Clause
60.1(1),
Second bullet
Changing the Contractor’s WI to comply with the Employer’s is not a
compensation event. In that respect, the Employer’s WI is dominant
1. Overview

• What happens if the Employer’s WI contains
inconsistencies in drafting and/or is
ambiguous?
Clause 17.1,
Notify
Clause 14.3 –
ability to
change
Clause 63.8,
Employer
pays
The Employer compensates the Contractor for any inconsistency or ambiguity
1. Overview
TELEVISIONS – 42” or 24” – 63X £127.99 = £8063.37

• The Risk Register is a new feature under NEC3.
• It is a live document that is formed by the Project Team post-contract (i.e. not a
contract document) and will change as the work progresses.
• Risks can be added to the Register as part of the Early Warning process, or
removed because of actions taken by the parties (i.e. soil investigations).
• Risks are allocated a likelihood of occurrence and impact, along with an
approximate cost effect. Regular Risk Reduction Meetings should be held during
the Contract.
1. Overview

1. Overview
• Clause 80.1 defines the Employers Risks under the contract
• Clause 81.1 sets out that all other risks are carried by the Contractor.
• Clause 83 each party indemnifies the other against events which are at its risk
• Often ITT’s are including preliminary risk registers to help prospective contractors understand what
getting into.
• Risk Registers are a practical project management tool , time or cost consequences should fall
outside of clause 83 and be addressed through other mechanisms (CE’s) Parties need to be very
clear as to how any such risks are allocated.
• Recent difficulties around final entry clause 80.1 which allows additional Employers risks to be
specified in the Contract Data in order to include a preliminary risk register .
• Employer will often append or refer to the risk register in the contact data and if that register
assigns actions to the employer could be argued that they become part of 80.1
• Broad consensus that risk register operates at a practical level and not intended to alter 80.1 and
81.1 however still limited case law and remains uncertainty.
• Prudent for clarity to amend the contract that items in the risk register are not employers risks.

• Under the JCT Types, the Contractor is required to submit a Programme but
it is not a binding Contract Document and there is no requirement to keep it
up to date.
• In contrast, the Accepted Programme forms part of the Contract Data under
the NEC3 and the Contractor is required to keep it up to date. Any changes
must be accepted by the Project Manager within 2 weeks. It is an important
document and is used to monitor/assess the time effects of Compensation
Events.
Programme should show…
• Start Date/Completion Date/Key Dates
• Planned Completion
• Order and Timing of Operations
• Time Risk Allowances
• Health and Safety Requirements
• Information from Required Others
• Float
1. Overview

• The programme is key – it’s the ‘beating heart’ of the NEC
• The NEC programme is a joint programme
• It provides critical management data
• If the programme is not compliant/accepted it becomes
very difficult to objectively assess compensation events
• In order to ensure acceptance it is worthwhile considering a
joint review before final submission/acceptance
1. Overview

• Early Warnings are very important part of NEC
• They are about identifying potential problems before they occur
with a view to avoidance or mitigation
• Designed to avoid waiting until they have happened and seeking to
apportion blame
• There is no entitlement under Early Warnings
• They should not be viewed as claims however if not given or given
and ignored have consequences
• Under Clause 16.1 Contractor or PM can issue
• Consequences if Contractor not issued when could have – under
options C-F could be disallowed costs
• Clause 16.2 gives rights to PM or Contractor to Instruct attendance
at risk reduction meeting.
• Issue of EW entails PM must add to the Risk Register
• All about encouraging proactive and collaborative working
2. Early Warning

The early warning process:
2. Early Warning

The early warning process
• The Project Manager should facilitate and
trouble shoot the process
• This is not about casting blame
• Its about mature project management –
recognising that both parties will encounter
problems
• Its about overcoming them collaboratively
3. Early Warning

•‘Notify’ – separately
(13.7)
•4 reasons
•5th reason is
discretionary
•Protecting time,
quality and cost
16.1 Notify
•May instruct others
to attend
16.2 Instruct a
meeting
•How to avoid or
reduce
•Seek solutions
•Decide on actions
•Update
16.3 Mitigate
•Revise
•Issue to the
Contractor
16.4 Update
and issue
2. Early Warning

Impact if we don’t manage Early Warnings:
Clause 16.1
Notify (separate
communication:
clause 13.7)
The Prices
Clause 63.5: “…event is
assessed as if the
Contractor had given
early warning”
Disallowed Cost
Clause 11.2 (25)*….was
incurred only because the
Contractor did not ….give
an early warning….
Options A-F
Options C-F
Under Options C-F failure to notify early warnings can have a detrimental effect on the Prices (value)
and Defined Cost (cost)
*11.2(26) under Option F
3. Early Warning

2. Early Warning
Options A-F

2. Early Warning
Options C-F
Core clauses General 11.2

Implementing the key
procedures: Early warnings
Procedures in contract
• Risk Register to be compiled by the
Project Manager
• Each early warning to be notified
and recorded in the Risk Register
• Mitigation & risk reduction to be
undertaken as per clause 16.3
Practical suggestions
• Ensure the ethos is right within the team
– early warnings are not a pre-empt to a
claim!
• Develop the Risk Register from the
tender process
• Consider a protocol of picking up the
phone and discussing initially. If both
parties agree/one feels strongly then
follow through with the paperwork?
• Ensure dialogue is maintained
• Consider a categorisation system eg. category 1 = critical (meet in the next 24 hours),
category 2 = non-critical (record and discuss at the next progress meeting)
2. Early Warning

Compensation events are defined as events which if they do not arise from
Contractors fault, entitle Contractor to be compensated for effect on the
Prices, Key Dates and Completion Date
Therefore it is important to remember that compensation events deal with both time
and money

What is a compensation event?
• Events which entitle the Contractor to be compensated for
the effect on the Prices, Key Dates and Completion Date
• Both time & cost are assessed in a single quotation
• Some compensation events may be negative e.g. omit work
from the Works Information (this will have a negative impact
on the Prices but will not bring forward the Completion
Date)
• This section rewrites the traditional rule book in terms of
change management
 Clearly defined timescales are in place
 Failure to comply with these timescales can result in the
Contractor being time barred
The timescales are clearly defined with sanctions in place for those that do not
follow the process!

What is a compensation event?
• Compensation Events are the ONLY way to
change price / and or Completion Date
• All in one place and treated in the same way
• Cost assessed at forecast change in cost
• Time forecast delay based on latest Accepted
Programme
• All to tight and defined timescale

The compensation event process – Overview:
• The compensation event process is clearly defined
• Section 6 is divided into 5 main sections: Define,Notify,
Quote, Assess, Implement
• Timescales are in place with sanctions for either party
if they are not followed
• The timescales are about agreeing the impact not
when the work is done
• Both time and cost are assessed
• There is no separate prolongation/extension of time

The compensation event process – Overview:
• There is a defined process to agree (or impose)
the effects of a compensation event
• Within defined time limits
• Definition (60)
• Notification (61)
• Quotation (62)
• Assessment (63/64)
• Implementation (65)
• Either Party can make sure that process and time
scales are adhered to

What are the reasons for a compensation event?
• There are three main reasons:
• A change of mind/decision
• Failure to do something (a lot relate back to the programme)
• Something has happened that is beyond a reasonable risk

Where are they listed?
• There are four sources of compensation events:
• Clause 60.1 (19 reasons)
• A further 3 stated in clauses 60.4, 60.5 & 60.6 (Options B & D)
• Also secondary Options X2, X12.3(6) & (7), X14.2, X15.2 &
Y2.4
• Potentially additional compensation events in Option Z
• NEC 4 also introducing a new category for introduction of
client specific CE’s

Lots of Effort !!!
• Many find the Compensation Event process particularly
challenging.
• Need to consider that the conventional contracts have not
avoided the need to manage change, in fact most simply
push much of the work to the post completion phase
resulting in delays , debates, and extended payments.
• NEC3 requires contemporaneous change management and
the increased effort should be rewarded by the whole
project team having greater certainty of outcome and
avoidance of post – completion disputes.

Definition of
Compensation events
Clause 60

60. Definition
Essentially is the list of items which are
compensation events under the contract.
The first step in administering the
Compensation Event process is a simple
initial check as to what is / has / could be
happening on the project against that list.

Summary of the compensation event clauses
Clause Description Relevant Clauses
60.1(1) Change to the Works Information 14.3, 27.3 & 44
60.1(2) Access and use of the site 33.1
60.1(3) Employer providing something 31.2
60.1(4) Stop or not start any work 34.1
60.1(5) Employer and Others working times and conditions 31.2
60.1(6) Replying to communications 13.3
60.1(7) Object of value 73.1
60.1(8) Changing decisions -
60.1(9) Withholding acceptance 13.8, 13.4, 24.1,31.3
60.1(10) Instructions to search 42.1
60.1(11) Test or inspection causing delay 40.5
60.1(12) Physical conditions 60.2 & 60.3
60.1(13) Weather -
60.1(14) Employer’s risk 80.1
60.1(15) Take over 35.2
60.1(16) Employer provides materials, facilities and samples 40.2
60.1(17) Correction to an assumption 61.6
60.1(18) Breach of contract -
60.1(19) Unforeseen events 19.1

Compensation event clauses

NEC 4 – adding compensation Events
Compensation events - Additional compensation events
may now be added by the Client in the Contract Data Part
One.
Compensation events - A new compensation has also
been added, in the core clauses, entitling the Contractor to
claim for preparing quotations for a proposed instruction
which are not accepted by the Project Manager.

Notification of
Compensation events
Clause 61

61. Notification
There is a reciprocal duty for the Contractor
and the Project Manager to notify each
other of any Compensation Event they
become aware of.
The details of these obligations are set out
in core clause 61.

Notification of Compensation Events

Both Parties have a responsibility to Inform and manage
Many PM’s and majority of contractors need to consider.
The 8 week time barring period does not apply to
compensation events that the project manager should
have notified , in which case the contractor has long as he
wishes to notify up to defects date.
For that reason it is in the Employers best interests for the
Project Manager to notify compensation events in order to start
the procedural clock ticking

Beware contract
amendments
and Z Clauses
Options A-F

Quotations for
Compensation Events
Clause 62

62. Quotations
The Project Manager must instruct the contractor to prepare a quotation , or
alternative quotations when a Compensation Event is instigated on behalf of the
Employer.
A decision to instruct will depend on the outcome of the quotation.
The Project Manager must also instruct the contractor to prepare quotations for
any other Compensation Event.
The timeframe both for the contractor to submit a quotation and for the Project
Manager to reply are prescriptive.
Timescales can be altered by agreement between the Contractor and the Project
manager although such agreements should be based on genuine necessity.

Quotations for compensation Events

Assessing Compensation
Events
Clause 63

63 & 64 Assessing
Compensation Events are assessed relative to Defined Costs and accepted
Program.
Quotations deal with both Time & Money
Employer.
Core Clause 63 details the provisions that must be followed by the contractor.
There are circumstances in which the Project manager must assess a
compensation Event and these are governed by the detailed provisions set out in
Core Clause 64.

Assessing Compensation Events

Project Managers
Assessment of
Compensation Events
Clause 64

63 & 64 Assessing
Compensation Events are assessed relative to Defined Costs and accepted
Program.
Quotations deal with both Time & Money
Employer.
Core Clause 63 details the provisions that must be followed by the contractor.
There are circumstances in which the Project manager must assess a
compensation Event and these are governed by the detailed provisions set out
in Core Clause 64.

Project Managers Assessment of Compensation Events

Implementing
Compensation Events
Clause 65

65 Implementing
Compensation Events are implemented when their time and money are fixed.
These implications are fixed once and once only and not revisited even in the
context for a prediction subsequently not transpiring
Time and money are inextricably linked through the Programme and the Defined
Cost.

Implementing Compensation Events

Time Barring
The compensation event procedure includes temporal obligations with respect to change
management that are both reciprocal and onerous.
The potential time and money rights of the parties in relation to change can be time-barred if the
contractual timescales are not followed. Specifically, if the following actions which confer those
time and money rights are not taken within the specified time periods, then those rights are
extinguished:
• The Contractor must notify a compensation event within eight weeks of becoming aware of it
– it is a large carrot to notify a compensation event on time if the right to it can be extinguished
after eight weeks.
• The Project Manager must notify the Contractor within two weeks of receipt if any event is
considered not to be a compensation event – it is an equally large carrot to check a compensation
event on time if it is deemed to be accepted after two weeks by default, i.e. if it is not proactively
rejected if it is considered accepted.
The purpose of such time-barring is to effectively incentivise the parties to perform efficiently and
deal with compensation events as they arise. This is a critically important objective of NEC3 in
dealing with change contemporaneously and not leaving it for a final account debate.

HANDOUT 4

Agree to meet regularly & maintain dialogue
Consider the contractual loop / Genuine need for Alterations to the periods –
And KEEP YOUR CLIENT INFORMED

Implementing the key procedures:
Compensation events
Procedures in contract
• Clear timescales and procedures
detailed in section 6
• Both parties may ultimately be time
barred if they fail to follow the
timescales
Practical suggestions
• Meet to discuss appropriate
compensation events before final
submission
• Discuss any issues – the aim is to
informally agree before formal
submission
Agree to meet regularly & maintain dialogue

HANDOUT 5

HANDOUT 6

HANDOUT 7

Some Points to Note

• Clause 80.1 defines the Employers Risks under the contract
• Clause 81.1 sets out that all other risks are carried by the Contractor.
• Clause 83 each party indemnifies the other against events which are at its risk
• Often ITT’s are including preliminary risk registers to help prospective contractors understand what
getting into.
• Risk Registers are a practical project management tool , time or cost consequences should fall
outside of clause 83 and be addressed through other mechanisms (CE’s) Parties need to be very
clear as to how any such risks are allocated.
• Recent difficulties around the final entry clause 80.1 which allows additional Employers risks to be
specified in the Contract Data in order to include a preliminary risk register .
• Employer will often append or refer to the risk register in the contact data and if that register
assigns actions to the employer could be argued that they become part of 80.1
• Broad consensus that risk register operates at a practical level and not intended to alter 80.1 and
81.1 however still limited case law and remains uncertainty.
• Prudent for clarity to amend the contract that items in the risk register are not employers risks.
4. Points to Note

Key risks – physical conditions:
• Physical conditions (clause 60.1(12)) are a compensation event if they are over and
above the defined risk:
• …… an experienced Contractor ….. such a small chance of occurring
……unreasonable for him to have allowed for it
• When ‘judging’ if it is a compensation event – clause 60.2 lists what the Contractor
is deemed to have taken account of
The Contractor needs to take account of the risks which are within the parameters of this
definition
On most projects this represents a significant risk
Example: A new housing development on a disused hospital site: Discovery of a redundant
drain and telephone cables in different places to those shown on drawings is unlikely to be a
compensation event (?)
4. Points to Note

4. Points to Note
Check the Z clauses – Advice is to minimise however increasingly seen used
• Introduction of Provisional Sums
• Significantly altering of periods (4 weeks to become time barred)

Note that clause 26.3 sets out the reasons why the Project manager might reject
a subcontractor.
The use of any other reason would potentially trigger a compensation event as
clause 60.1(9)
So Project Managers must tread carefully when considering such matters.
And as later note that Welsh LA have added further reasons via the
amendment of a core clause rather than adding a Z clause.
4. Points to Note

Consider the final part of clause 26.2 the Contractor is prohibited from appointing a
proposed subcontractor until the Project Manager has accepted that subcontractor.
Contractor’s should be aware of this prohibition as at clause 91.2 the appointment
of a subcontractor for substantial work before the Project Manager has accepted the
subcontractor is Reason 13 of the reasons allowing the Employer to terminate the
Contract.
The only point for debate in respect of this reason is what is substantial work as
opposed to unsubstantial work.
4. Points to Note

4. Points to Note
Recommendations are to keep Z clauses to the minimum
Government and NEC Guidelines available which detail and
suggest reasonable and some of the more common uses of Z
clauses – such as compliance with Official Secrets act.
Review of this Contract discovered significant amendments to
and introduction of new core clauses (Just on compensation
events)adds to 60.1(10), removes 60.1(12),60.1(19), 60.2, 60.3
adds 60.4 (confirms contractors risks on risk register not CE’s) and
60.5 liability under common law relating to compensation events.
Recent works with Welsh Contractor reviewing NEC framework
Documents issued by Local Authority

4. Points to Note
Inclusion of 33 Z Clauses – covering such items as
Contractors obligations for Security Waste Management & WRAP
Confidentiality and FOIA & EIR Quality and Quality plans
Publicity & Advertising Preliminaries and Value Engineering
Guarantees / Warranties / Insurances Provisional Sums
Community Benefits Welsh Language
BREEAM & EPC CDM
Discrimination Recycling
BIM & Soft Landings Considerate Constructors
Data Protection

4. Points to Note
LA’s added and amended the core NEC 3 clauses – in this case adding Disallowed costs
into an Option A contract !!
Significant risks of introducing confusion – NEC3 is a set of standard procedures and
processes with supply chain contracts designed to be back to back.
Changes should be via Z clauses

4. Points to Note
Is it really the
LA’s intention
to pass
obligations
down the
entire supply
chain

4. Points to Note
LA’s added reasons why the Project manager is able to reject a proposed sub contractor –
Again need to be commercially aware of potential ramifications

4. Points to Note
Consider how you might need to add into supply chain agreements – use of vesting
certificates ? – Protect your liability?

4. Points to Note
Consider how you might need to add into supply chain agreements – and manage the
payment process to protect cashflow

4. Points to Note
Consider how you might need to add into supply chain agreements in relation to
Compensation Events.

4. Points to Note
LA’s intention being to pass obligations down
the entire supply chain. Contractors involved
in such Frameworks need to consider the
practicalities of actually being able to pass
these onto their supply chain / or take an
informed commercial risk.

Recap
1. Overview
2. Early Warnings
• Clause 60 (Definition)
• Clause 61 ( Notification)
• Clause 62 (Quotation)
• Clauses 63 & 64 (Assessment)
• Clause 65 (implementation)
4. Some Points to Note
5. Recap

Planned CFW NEC Activities / Interventions
Workshop 2 – Tuesday 10th October 7.30am-11.00pm
Conway Business Centre, Junction Way, Conwy LL31 9XX
Importance of Program control and management under NEC 3
Program is often referred to as the beating heart of the NEC – but what should it
include, how often does it need to be updated? How does it relate to compensation
events? What is acceptance? We will also explore how the NEC3 deals with inclement
weather and acceleration.
Workshop 3 – Thursday 12th October 7.30am-11.00pm
National Botanic Garden of Wales, Middleton Hall, Llanarthne SA32 8HN
Understanding works information and contract data under NEC 3
In this workshop we will be delving a little deeper into the importance of the Works
information, Contract data parts 1 & 2 – Where is the key information? What is
included? What might you need to be aware of? We will look the functions of the risk
register, explore use of activity schedules and the concepts of allowed and disallowed
costs.

Management of Change Under
NEC3
Stuart Brisbane
Contact 07981 954 417
Thanks for Listening
21st Sept 2017

CFW NEC Management of change under the NEC3

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