NEC3 and JCT: A Comparative Analysis - Essay Example

Running Head: NEC3 and JCT NEC3 and JCT A Comparative Analysis NEC3 and JCT: A Comparative Analysis Task 1 The Client has had minimal prior knowledge about the New Engineering and Construction Contract 3rd edition (NEC3) but has never used any of the NEC3 contracts for any of their projects. As a result of the numerous problems that arose with the use of the JCT on this project the client is considering using the NEC3 for any of their future projects. They are therefore asking for information about this suite of contracts and how it compares and contrasts with the JCT2011. As a contract administrator you have been tasked to produce a report explaining how the NEC3 Contract works and how it differs from the JCT2011 Contracts highlighting the possible implications for administering a project with the NEC3. Introduction New Engineering Contracts 3rd Edition or NEC3 is a modernistic family of contracts of contracts. It helps in implementing construction project management and supervisory principles. NEC3 synchronises the different business and engineering practices and also renders definitions for the different legal relationships and liabilities. Hence, adoption of NEC3 family of contracts culminates at an altogether cultural transformation of a construction company and its different construction project sites and subsidiaries. According to New Engineering Contract (2005), the principal feature of this cultural transformation is the complete abandonment of a hindsight dependent reactive management paradigm. NEC3 helps the construction company and its various contractors to embark on a foresight based proactive management mechanism with clearly defined contracting rules and regulations that are fair towards both the employers and the contracting agencies. NEC3 versus JCT2011 The Office of Government Commerce (OGC) has endorsed NEC3 as a family of contracts that can satisfy the contemporary Achieving Excellence in Construction (AEC) principles (New Engineering Contracts, 2005). This implies that NEC3 is compliant with the most recent government regulations laid down by the 21st century legal developments of UK. In this context, NEC3 contracts can be synchronised with the regulations such as Utilities Contracts Regulations (2006) too (Ashworth, 2011; Close, 2011). OGC has recommended the use of NEC3 family of contracts by the public sector procurers on their construction projects for the sake of authenticity and complexity issues. So it can be further deduced that NEC3 has been recommended by OGC as a compact and unitary engineering contracts mechanism. This is not the case with JCT2011. JCT contracts (as devised by the Joint Contacts Tribunal Limited, 2011a) are often put to work in conjugation with other categories of contractual agreements. Examples of such agreements are Pre-Construction Services Agreement (General Contractor) (PCSA), Pre-Construction Services Agreement (Specialist) (PCSA/SP), etc. Again, in some cases, JCT2011 contracts cannot be used with other contractual agreements. For example, in the realm of traditional procurement, a Use Measured Term Contract in JCT2011 family of contracts cannot be used along with a Framework Agreement (The Joint Contacts Tribunal Limited, 2011b). Evidently, these issues are responsible for the functional, implemental and technical difficulties with JCT2011 in the contemporary environment. Further, NEC3 provides the employer (or the main industrial procurer) with different kinds of contracts. These contracts have predefined titles that help an employer to deal with different categories of contracting authorities. NEC3 designates separate contract mechanisms for contractors, subcontractors and professional contractors with different and specific parameters. This lessens the scope of ambiguity while applying the different terms in the case of disputes. On the other hand, the Joint Industrial Tribunal (2011a) has devised standard building contracts or SBCs under JCT2011 which act like legacy applications of the older JCT editions. As early as 1982, in the context of the hearing of Percy Bilton v Greater London Council, it was noted that JCT clauses did not properly cover the issue of withdrawal of a subcontractor (Ashworth, 2011). Since even the latest version of JCT has been on the very basis of its earlier editions, the original drawbacks may surface in the course of dispute resolution and legal intervention scenarios. Moreover, NEC3 and JCT2011 have terminological differences too. The project overseer is called Project Manager or PM in NEC3 terminology, whereas the overseer is called a Contract Administrator or CA under JCT’s terminology. Adding to the complexities of these two contacting methodologies, the powers and responsibilities of a PM are not completely congruent to those of a CA. The NEC3 PM needs to have sound judgement skills since the New Engineering Contracts (2005) delegates more flexibility to the parties partaking in an NEC3 contract. Hence, the PM has to adjust with the proactive nature of the contractual arrangements. For example, during project management sessions, a PM will have to allocate enough extra time for project completion to avoid downtime due to bad weather. Moreover, the PM has to play a collaborative role with both the employer and the contractor though prescribed routes of communication. (Close, 2011, adopted from Figure – 1) A JCT2011 CA has to manage the on-site management affairs as well as the fiscal dimensions of procurements. CA has to monitor the contractors’ compliance with the different obligations of the contract. This situation prevails due to the fact that traditionally, the Joint Contracts Tribunal has relied on risk sharing rather than risk delegation or transference (Ashworth, 2011). But the CA has the power to act on behalf of the employer even as per the legal regulations which renders him/her with more authority and decision making capabilities (Close, 2011). Therefore, due to the increased responsibilities and implicit risk sharing principles, the traditional Contract Administrator (CA) overseeing a JCT2011 contractual arrangement has more power than the Project Manager (PM) serving in an NEC3 framework. But the PM can make use of the innovative contract management tools available in NEC3 and help in designing an optimised plan on the basis of practical feedback and experiential inputs. Conclusion A comparative analysis of NEC3 vis-à-vis JCT2011 reveals that NEC3 has received governmental endorsement. NEC3 has been recognised by researchers like Close (2011) to have a simpler approach and more scope for accommodating 21st century management practices. On the other hand, JCT2011 adheres to a traditional approach although it is time tested and widely accepted in the construction industry. While highlighting the possible implications for administering a project with the NEC3, it is important to note that NEC3 helps the contracting parties to explore the dimensions of modern construction technology and planning paradigms with more ease and flexibility. NEC3 permits the contracting parties to handle the issues of arranging and organising the different utilities as well. For example, utilities like wiring, cabling, gas supply, power management and generation, etc. can be handled distinctly under NEC3’s special contracting instruments such as the NEC3 Professional Services Contract (PSC). However, JCT2011 is more concerned with the civil engineering aspects of a project such as the material and construction of buildings. Therefore, in larger projects, the construction company may fail to find solutions to the contracting issues regarding utility services inside the JCT2011 family of contracts. Using NEC3 can be more rewarding in such circumstances. Reference List Ashworth, A. 2011, Contractual Procedures in the Construction Industry, Harlow: Pearson Education Close, J. 2011, Different strokes – Comparing roles under JCT and NEC, Building Surveying Journal, 2011 (October-November Issue). Available: http://www.nec-adjudicators.org/articles/jon-close/78-different-strokes-comparing-roles-under-jct-and-nec. Last accessed on 10th February, 2013 New Engineering Contract 2005, Procurement and Contract Strategies, Institution of Civil Engineers and Ben & Bain Ltd: London and Glasgow The Joint Contracts Tribunal 2011a, SBC/Q 2011: Standard Building Contracts with Quantities 2011. London: Sweet & Maxwell The Joint Contracts Tribunal 2011b, Practice Note – Deciding on the Appropriate JCT Contract, London: Author The Utilities Contracts Regulations 2006. SI 2006/6, London: Her Majesty’s Stationary Office. Read More