The Provisions of National Engineering Contract - Essay Example

Comparative Evaluation of the Provisions of National Engineering Contract 3rd Edition and Joint Contract Tribunal 2005 Introduction The legislation that takes care of all intricacies of the legal relationship between the employer and contractor is preferred and followed by majority of the people in the construction industry. In the United Kingdom, there are mainly two contracts prevalent in the construction industry, namely National Engineering Contract (NEC) and Joint Contracts Tribunal (JCT). The latest version of NEC came to be known as NEC 3 and that of JCT was JCT 2005. At this juncture, the present essay attempts to evaluate some of the important provisions of the two contracts. The essay takes a comparative approach wherein an attempt is made to compare and contrast the important provisions found in both contracts. Comparison is made in the context of provisions such as Design Changes, Delays and Disputes, Payments, and Dispute Resolution. National Engineering Contract 3 (NEC3) The first version of the National Engineering Contract came into being in 1991 under the name New Engineering Contract and was used for a number of projects, particularly in South Africa (Smith 1999, p.250). The contract was different in many respects from other similar contracts and therefore it was criticized by many in the initial periods of its inception. With its new version came into force as NEC3, its popularity has widenened. Joint Contract Tribunal 2005 Established in 1931, Joint Contracts Tribunal (JCT) has much experience and resources in the field of construction industry. Its resources include standard forms of contracts, standard documentation, and other guidance notes. JCT was incorporated as a company limited by guarantee in 1998. Thereafter, it has been the responsibility of the company to look after the JCT Council and producing suites of contract documents for the use of construction industry (Mulcahy 2008, p. 165). Comparison between NEC3 and JCT 2005 1. Design Changes National Engineering Contract 3 Under this contract, the contractor is obliged to design the works of the project in conformity to the project information supplied by the employer (Clause 21, p.7). The contractor is also responsible to ensure that that the project design is accepted by the Project Manager. Sometimes, the project manager may not accept the design in case the design is not prepared in accordance with the work information and / or relevant legislation. The contractor needs to commence the works once the consent from the project manager as to the acceptance of work design is received. One of the provisions of this contact grants authority to the employer, to use the design so prepared for purposes in connection with construction, use, alteration or demolition of the project work. In case, it is not allowed, it will be separately stated in the contract. It is also notable that the project manager is given the authority to accept or reject the design after a careful scrutiny of the same. Joint Contract Tribunal 2005 As per the provision of JCT 2005, the preparation of the work design is the responsibility of the contractor like that of NEC3. The provisions of this contract stipulate that the contractor is required to prepare and submit the project design before the administrator/architect appointed by the employer. It also states that the design should be prepared in such a way that it meets all the requirements as mentioned in the Employer's work requirement. Once the design is prepared, the same is handed over to the architect for scrutiny. The architect, within 14 days of acceptance, should give the design back to the contractor after putting his comment on one copy of the original design. Three comment grades are usually used under this contract, namely A, B, and C. The mark 'A' signifies that the contract can commence the work as per the work requirements with the same design and no change is needed. The mark 'B' implies the design need not be changed, but works have to be carried out as per the comments put forward by the architect. The comment 'C' is meant to inform the contractor that the design as such is not acceptable and come changes will have to be made in the design before commencing the project work. To sum up, JCT 05 has more provisions as to the design changes as compared to that of NEC3. JCT 05 provides the contractor three alternatives by which he can change the design as required by the employer. The rest of things in both contracts are more or less similar and no significant difference is found. 2. Delays and Disputes National Engineering Contract 3 The provisions on Delays and disputes are contained in Clause 2.9.3 of the Contract (Schedule 1). As per this clause, the contractor shall not be granted the permission to commence the work before the date of access as indicated in the work requirements and shall have to complete the work on or before the completion date. It is the duty of the project manager to decide upon the completion date and he is under obligation to certify the completion as per the work requirements within one week from the date of the completion of the project. The contract further stipulates that the contractor shall be responsible for activities such as the date on which work has to be commenced, the date of access to site, important dates for the works, and also completion date. In addition to that the contractor is required by the contract that he must ensure that planned completion of the project, order and timing of the operations, dates when the contractor plans to meet each condition stated, provisions for float, time risk allowances, health and safety requirements of workers etc. Joint Contract Tribunal 2005 The provisions with regard to Delay are contained in Clause 2.26-1, 2.26-2 (JCT SBC 05 p. 37). In case the project is delayed, the contractor shall have to report the same to the Contract administrator in advance stating the reasons thereof and also the expected date by which the delayed works/project can be completed. This clause also makes it clear that the contractor shall be obliged to inform the Contract administrator in writing that of any changes in the work on account of the stated delay. On successful scrutiny of the report received from the contractor, the administrator grants work extension by stipulating a later date for the Completion of the project, if he finds it fair and reasonable. In case the contractor fails to comply with the instructions provided by the administrator, he shall issue a 'Non-Completion Certificate. To sum up, NEC3 provides that delay and disruption should be scheduled in advance and the delays should be compensated by them. However, JCT05 stipulates that delayed events should be reported in advance and the contractor administrator will finally decide upon the extension. If he finds that stated reasons are genuine, he will grant an extension, otherwise the request shall be rejected. Payments National Engineering Contract 3 As per Clause 50 of the Contract, the payment due after each assessment date is computed by the project manager. The assessment dates shall be decided in such a way that both parties are not affected by payment. It also stipulates that the tax required to be payable by the contractor as required by the law is inclusive of the amount due. This clause further states that the payment should be certified by the project manager within one week from the date of each assessment. It is also stated in the clause that all payments shall have to be made in currency of the contractor unless otherwise stated. The payment should be made within three weeks from the date of the assessment. Joint Contract Tribunal 2005 In line with the provisions of Clause 4.6 of the Contract, the tax (VAT) is exclusive of the payment made to the contractor by the employer. As per the provisions of this contract, the tax due shall be paid by the employer and it need not be transferred to the contractor. Moreover, the adminstrator shall issue the payment certificate not later than two months. To Summ up, in the case of NEC3, the payment to contractor is inclusive any tax, and that of JCT05 is exclusive of tax payable. The payment is adminstered by the Project manager and contract asminstrator in the case of NEC3 and JCT05 respectively. Dispute Resolution National Engineering Contract 3 As pe the Clause 51.2 of the contract, if there are disputes between the project manager and contractor, the same can be solved by any of the following two (NEC 3, p.13). it is possible either by the Project Manager in relation to a mistake or a compensation event or by the Adjudicator of the tribunal. Joint Contract Tribunal 2005 The provisions of dispute resolution are contained in Clause 9.2 of teh contract (JCT SBC 05 p.77). Thic clause states that in case there arise a dispute as to any material fact of the contrct between the employer and contractor, it is subject to the decisions of the Adjudicator who has to act as an independent expert and to be nominated in the contract particulars. To sum up, the Adjudication procedure and dispute resolutin are common in both contracts. Conclusion Both contracts are not free from merits and demerits. As regards the protection of employer's interest is concerned, NEC3 is more effective and operational than JCT05. The reason being, a contract administrator is appointd as an indepedent and project manager is more less the wellwisher of the employer. References Smith,Vincent Powell, Douglas A. Stephenson,& John Redmond 1999, Civil engineering claims, 3: Wiley-Blackwell Legal 2006, 'Making it work for you: NEC3 the engineering and construction subcontract', News letter, November/December 2006, Retrieved on 7 April, 2009, fromhttp Mulcahy Linda, &John Tillotson 2008, Contract Law in Perspective, 5, Taylor & Francis Clamp, H, 2007 Which Contract - Choosing the appropriate building contract - 4th Edition RIBA Publishing, London Schedule 1, 'Clause 2.9.3'; JCT SBC 05 with Quantities, page 79 JCT SBC 05 with Quantities, Clause 2.26-1, 2.26-2 page 37 NEC 3, Clause 50, page 13 JCT SBC 05 with Quantities, Clause 4.6, page 51 NEC 3, Clause 51.2, 51.3, page 13 JCT SBC 05 with Quantities, Clause 9.2, page 77 Read More