In response, the ICE introduced various changes as recommended in the report, resulting in the publication of the second edition (re-titled “The Engineering and Construction Contract“).

One such recommendation was for a requirement of the parties to work “in a spirit of mutual trust and co-operation”.

So now we have the ECC which, together with the Construction Bill, seeks to reduce the unacceptable level of confrontation within the construction industry, and to encourage all concerned to “get on with the job”.

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PHILOSOPHY and OBJECTIVES

The authors make some bold claims for the ECC. These include :

Flexibility

· Intended to be suitable for all the needs of the construction industry.

· Provides for a variety of approaches to risk allocation.

· Adaptable for some design, full design or no design responsibility, and for all current contract options including target , management and cost reimbursable contracts.

International application

The simple wording of the documents is deliberately chosen, and lends itself to ready translation into other languages.

Clarity and simplicity

· The overall structure is quite unlike that of the JCT and other standard forms.

· The ECC is written in ordinary language, using short sentences with bullet points.

· Imprecise terms such as “fair” and “reasonable” have been avoided.

· Legal jargon is minimised.

· The actions required from the parties are said to be “defined precisely”, with the aim of avoiding disputes.

· Flow charts are provided to assist usage.

Stimulus to good management

This is stated to be the most important characteristic of the ECC.

· The ECC is a manual of management procedures, not just a contractual document.

· The ECC is NOT something you lock in the safe and look at only if you have a problem.

· The aim is to present the Purchaser’s Project Manager with options for overcoming problems as they become apparent.

· An “Early warning procedure” places obligations on all parties to flag up problems which could affect time, money or performance of the works.

· “Compensation events” are the method of dealing with problems of both time and money.

· “Actual cost” is used.

· Changes are based on quotations prior to commitment wherever possible.

· Greater financial control is therefore enabled.

· Programme must be kept up to date at all times, to reflect changes.

· The aim is to highlight and resolve problems in a proactive way as the job proceeds.

· “End of job” disputes should be reduced in consequence.

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FORMAT

Range

The full range of documents comes in a handsome box, and the contents include guidance notes, main and sub-contract conditions, flow charts and various “options” such as a management contract, priced with activity schedule, priced with bill of quantities, target contract, and a cost reimbursable contract.

Core clauses

There are nine sections of core clauses - which apply to all contracts, plus a range of optional clauses to suit specific situations.

Options.

There are six main payment options A -F, plus secondary options G - Z, any combination of which can be selected. (See below).

The most common formats will probably be Option A “Conventional contract with activity schedule” and Option B “Conventional Contract with Bill of Quantities”.

The secondary options include such elements as advance payments, sectional completion, bonus for early completion, delay damages.

Schedule of cost components

There is a “Schedule of cost components” which defines “actual costs” by definition. This is NOT a priced schedule.

“Mix and match”

The idea seems to be to present a “mix and match” scenario, so that the Purchaser can choose from the various options in order to achieve the most advantageous contractual arrangements for the particular project.

Contract data

There is “Contract data” which acts as a highly detailed “appendix” for the parties to enter specific information in the tender document (eg price, dates, periods, parties, functions, etc).

SIX MAIN OPTIONS A - F

(A) Lump sum with activity schedule

(B) Priced contract with Bill of Quantities

(Note - the bill is used only for interim payments, not for valuation of compensation events).

(Lump sum quoted by tenderer as target)

(D) Target contract with Bill of Quantities

(Subject to remeasurement)

(E) Cost reimbursable contract

(F) Management contract (By involvement of a management contractor).

Note:

Construction management can be used, in which case each contractor has direct NEC contract with Purchaser

Secondary options G - Z

G and H

Provide for Performance bond, or parent company guarantee etc.

Allows for advance payments

Provides for multiple currencies - international use.

Sectional completion

Limits design responsibility to reasonable skill and care

Formula price adjustment

Retention is an option, not a core clause

Bonus for early finish

Delay damages

Low performance damages

Changes in law which become compensation events