NEC 4 ECC Hong Kong Edition July 2023 - Main Option Clauses

NEC 4 ECC Hong Kong Edition July 2023 - Main Option Clauses KCTang Thu, 21/03/2024 - 17:31

Note

Created: 18/3/2024

Intro

NEC 4 ECC means NEC 4 Engineering and Construction Contract published by Thomas Telford Ltd who owns the copyright.

Retabulated to enable easier comparison

OPTION A: PRICED CONTRACT WITH ACTIVITY SCHEDULE
OPTION B: PRICED CONTRACT WITH BILL OF QUANTITIES
OPTION C: TARGET CONTRACT WITH ACTIVITY SCHEDULE
OPTION D: TARGET CONTRACT WITH BILL OF QUANTITIES
OPTION E: COST REIMBURSABLE CONTRACT
OPTION F: MANAGEMENT CONTRACT

Bullet "o" below is "-" in NEC.

Option

Clause

Text

Identified and defined terms

11.2

(21) [HK Edition: (25)] The Activity Schedule is the activity schedule unless later changed in accordance with these conditions of contract.

11.2

(22) [HK Edition: (26)] The Bill of Quantities is the bill of quantities unless later changed in accordance with these conditions of contract.

11.2

(23) [HK Edition: (27)] Defined Cost is the cost of the components in the Short Schedule of Cost Components.

11.2

(24) [HK Edition: (28)] Defined Cost is the cost of the components in the Schedule of Cost Components less Disallowed Cost.

11.2

(25) [HK Edition: (29)] Defined Cost is

the amount of payments due to Subcontractors for work which is subcontracted without taking account of amounts paid to or retained from the Subcontractor by the Contractor which would result in the Client paying or retaining the amount twice and
the prices for work done by the Contractor

less Disallowed Cost.

11.2

(26) [HK Edition: (30)] Disallowed Cost is cost which

is not justified by the Contractor's accounts and records,
should not have been paid to a Subcontractor or supplier in accordance with its contract,
was incurred only because the Contractor did not
- follow an acceptance or procurement procedure stated in the Scope [HK Edition: contract],
- give an early warning which the contract required it to give or
- give notification to the Project Manager of the preparation for and conduct of an adjudication or proceedings of a tribunal [HK Edition: an arbitration or other tribunal] between the Contractor and a Subcontractor or supplier

and the cost of

correcting Defects after Completion,
correcting Defects caused by the Contractor not complying with a constraint on how it is to Provide the Works stated in the Scope,
Plant and Materials not used to Provide the Works (after allowing for reasonable wastage) unless resulting from a change to the Scope,
resources not used to Provide the Works (after allowing for reasonable availability and utilisation) or not taken away from the Working Areas when the Project Manager requested and
preparation for and conduct of an adjudication or proceedings of a tribunal [HK Edition: an arbitration or other tribunal] between the Parties.

11.2

(27) [HK Edition: (31)] Disallowed Cost is cost which

is not justified by the Contractor's accounts and records,
should not have been paid to a Subcontractor or supplier in accordance with its contract,
is a payment to a Subcontractor for
work which the Contract Data states that the Contractor will do itself or
the Contractor's management,
was incurred only because the Contractor did not
follow an acceptance or procurement procedure stated in the contract,
give an early warning which the contract required it to give or
give notification to the Project Manager of the preparation for and conduct of an adjudication or proceedings of an arbitration or other tribunal between the Contractor and a Subcontractor or supplier

and the cost of preparation for and conduct of an adjudication or proceedings of an arbitration or other tribunal between the Parties.

11.2

(28) [HK Edition: Not used] The People Rates are the people rates unless later changed in accordance with the contract.

11.2

(29) [HK Edition: (32)] The Price for Work Done to Date is the total of the Prices for

each group of completed activities and
each completed activity which is not in a group.

A completed activity is one without notified Defects the correction of which will delay following work.

11.2

(30) [HK Edition: (33)] The Price for Work Done to Date is the total of

the quantity of the work which the Contractor has completed for each item in the Bill of Quantities multiplied by the rate and
a proportion of each lump sum which is the proportion of the work covered by the item which the Contractor has completed.

Completed work is work which is without notified Defects the correction of which will delay following work.

11.2

(31) [HK Edition: (34)] The Price for Work Done to Date is the total Defined Cost which the Project Manager forecasts will have been paid by the Contractor before [HK Edition: one week after] the next assessment date plus the Fee.

11.2

(32) [HK Edition: (35)] The Prices are the lump sum Prices for each of the activities on the Activity Schedule unless later changed in accordance with the contract.

11.2

(33) [HK Edition: (36)] The Prices are the lump sums and the amounts obtained by multiplying the rates by the quantities for the items in the Bill of Quantities.

11.2

(34) [HK Edition: (37)] The Prices are the forecast of the total Defined Cost for the whole of the works plus the Fee.

11.2

(35) [HK Edition: (38)] The Total of the Prices is the total of

the quantity of the work which the Contractor has completed for each item in the Bill of Quantities multiplied by the rate and
a proportion of each lump sum which is the proportion of the work covered by the item which the Contractor has completed.

Completed work is work which is without notified Defects the correction of which will delay following work.

Providing the works

20.2

The Contractor manages the Contractor's design, the provision of Site services and the construction and installation of the works. The Contractor subcontracts the Contractor’s design, the provision of Site services and the construction and installation of the works except work which the Contract Data states that it will do.

20.3

The Contractor advises the Project Manager on the practical implications of the design of the works and on subcontracting arrangements.

20.4

The Contractor prepares forecasts of the total Defined Cost for the whole of the works in consultation with the Project Manager and submits them to the Project Manager. Forecasts are prepared at the intervals stated in the Contract Data from the starting date until Completion of the whole of the works. An explanation of the changes made since the previous forecast is submitted with each forecast.

Subcontracting

26.4

The Contractor submits the pricing information in the proposed subcontract documents for each subcontract to the Project Manager unless the Project Manager has agreed that no submission is required.

The programme

31.4

The Contractor provides information which shows how each activity on the Activity Schedule relates to the operations on each programme submitted for acceptance.

Tests and inspections

41.7

When the Project Manager assesses the cost incurred by the Client in repeating a test or inspection after a Defect is found, the Project Manager does not include the Contractor's cost of carrying out the repeat test or inspection.

Assessing the amount due

50.7

Payments of Defined Cost made by the Contractor in a currency other than the currency of the contract are included in the amount due as payments to be made to it in the same currency. Such payments are converted to the currency of the contract in order to calculate the Fee and any Contractor's share using the exchange rates.

50.8

50.9

The Contractor notifies the Project Manager when the Defined Cost for a part of the works has been finalised, and makes available for inspection the records necessary to demonstrate that it has been correctly assessed. The Project Manager reviews the records made available, and no later than thirteen weeks after the Contractor's notification

accepts that part of Defined Cost as correct,
notifies the Contractor that further records are needed or
notifies the Contractor of errors in its assessment.

The Contractor provides any further records requested or advises the correction of the errors in its assessment within four weeks of the Project Manager’s notification. The Project Manager reviews the records provided, and within four weeks

accepts that part of Defined Cost as correct or
notifies the Contractor of the correct assessment of that part of Defined Cost.

If the Project Manager does not notify a decision on that part of Defined Cost within the time stated, the Contractor’s assessment is treated as correct.

Defined Cost

52.2

The Contractor keeps these records

accounts of payments of Defined Cost,
proof that the payments have been made,
communications about and assessments of compensation events for Subcontractors and
other records as stated in the Scope.

52.3

The Contractor keeps these records

accounts of payments made to Subcontractors,
proof that the payments have been made,
communications about and assessments of compensation events for Subcontractors and
other records as stated in the Scope.

52.4

The Contractor allows the Project Manager to inspect at any time within working hours the accounts and records which it is required to keep.

The Contractor’s share

54.1

The Project Manager assesses the Contractor's share of the difference between the total of the Prices and the Price for Work Done to Date. The difference is divided into increments falling within each of the share ranges. The limits of a share range are the Price for Work Done to Date divided by the total of the Prices, expressed as a percentage. The Contractor's share equals the sum of the products of the increment within each share range and the corresponding Contractor’s share percentage.

54.2

If the Price for Work Done to Date is less than the total of the Prices, the Contractor is paid its share of the saving. If the Price for Work Done to Date is greater than the total of the Prices, the Contractor pays its share of the excess.

54.3

The Project Manager makes a preliminary assessment of the Contractor's share at Completion of the whole of the works using forecasts of the final Price for Work Done to Date and the final total of the Prices. This share is included in the amount due following Completion of the whole of the works.

54.4

The Project Manager makes a final assessment of the Contractor's share using the final Price for Work Done to Date and the final total of the Prices. This share is included in the final amount due.

54.5

The Project Manager assesses the Contractor's share of the difference between the Total of the Prices and the Price for Work Done to Date. The difference is divided into increments falling within each of the share ranges. The limits of a share range are the Price for Work Done to Date divided by the Total of the Prices, expressed as a percentage. The Contractor's share equals the sum of the products of the increment within each share range and the corresponding Contractor’s share percentage.

54.6

If the Price for Work Done to Date is less than the Total of the Prices, the Contractor is paid its share of the saving. If the Price for Work Done to Date is greater than the Total of the Prices, the Contractor pays its share of the excess.

54.7

The Project Manager makes a preliminary assessment of the Contractor's share at Completion of the whole of the works using forecasts of the final Price for Work Done to Date and the final Total of the Prices. This share is included in the amount due following Completion of the whole of the works.

54.8

The Project Manager makes a final assessment of the Contractor's share using the final Price for Work Done to Date and the final Total of the Prices. This share is included in the final amount due.

The Activity Schedule

55.1

Information in the Activity Schedule is not Scope or Site Information. If the activities on the Activity Schedule do not relate to the Scope, the Contractor corrects the Activity Schedule.

55.2

Information in the Activity Schedule is not Scope or Site Information.

55.3

If the Contractor

changes a planned method of working at its discretion so that the activities on the Activity Schedule do not relate to the operations on the Accepted Programme or
corrects the Activity Schedule so that the activities on the Activity Schedule relate to the Scope

the Contractor submits a revision of the Activity Schedule to the Project Manager for acceptance.

55.4

A reason for not accepting a revision of the Activity Schedule is that

it does not relate to the operations on the Accepted Programme,
any changed Prices are not reasonably distributed between the activities which are not completed or
the total of the Prices is changed.

The Bill of Quantities

56.1

Information in the Bill of Quantities is not Scope or Site Information.

Compensation events

60.4

A difference between the final total quantity of work done and the quantity stated for an item in the Bill of Quantities is a compensation event if

the difference does not result from a change to the Scope,
the difference causes the Defined Cost per unit of quantity to change and
the rate in the Bill of Quantities for the item multiplied by the final total quantity of work done is more than [HK Edition: the greater of]
- 0.5% of the total of the Prices at the Contract Date [HK Edition: or
- the compensation amount].

If the Defined Cost per unit of quantity is reduced, the affected rate is reduced.

60.5

A difference between the final total quantity of work done and the quantity for an item stated in the Bill of Quantities which delays Completion or the meeting of the Condition stated for a Key Date is a compensation event.

60.6

The Project Manager gives an instruction to correct a mistake in the Bill of Quantities which is

a departure from the rules for item descriptions or division of the work into items in the method of measurement or
due to an ambiguity or inconsistency.

Each such correction is a compensation event which may lead to reduced Prices.

60.7

In assessing a compensation event which results from a correction of an inconsistency between the Bill of Quantities and another document, the Contractor is assumed to have taken the Bill of Quantities as correct.

Assessing compensation events

63.12

If the effect of a compensation event is to reduce the total Defined Cost and the event is a change to the Scope provided by the Client, which the Contractor proposed and the Project Manager accepted, the Prices are reduced by an amount calculated by multiplying the assessed effect of the compensation event by the value engineering percentage.

63.13

If the effect of a compensation event is to reduce the total Defined Cost and the event is a change to the Scope provided by the Client, which the Contractor proposed and the Project Manager accepted, the Prices are not reduced.

63.14

Assessments for changed Prices for compensation events are in the form of changes to the Activity Schedule.

63.15

Assessments for changed Prices for compensation events are in the form of changes to the Bill of Quantities.

For the whole or a part of a compensation event for work not yet done and for which there is an item in the Bill of Quantities, the changes are

a changed rate,
a changed quantity or
a changed lump sum.

For the whole or a part of a compensation event for work not yet done and for which there is no item in the Bill of Quantities, the change is a new priced item which, unless the Project Manager and the Contractor agree otherwise, is compiled in accordance with the method of measurement.

For the whole or a part of a compensation event for work already done, the change is a new lump sum item.

63.16 [HK Edition: Not used]

If, when assessing a compensation event the People Rates do not include a rate for a category of person required, the Project Manager and Contractor may agree a new rate. If they do not agree the Project Manager assesses the rate based on the People Rates. The agreed or assessed rate becomes the People Rate for that category of person.

63.17 [HK Edition: 63.16]

If work which the Contractor is to do is affected by a compensation event, the Project Manager and the Contractor agree the change to the price for the work and any change to the Completion Date and Key Dates. If they do not agree, the Project Manager decides the change.

Payment on termination

93.3

The amount due on termination is assessed without taking grouping of activities into account.

93.4

If there is a termination, the Project Manager assesses the Contractor's share after certifying termination. The assessment uses as the Price for Work Done to Date the total of the Defined Cost which the Contractor has paid and which it is committed to pay for work done before termination, and uses as the total of the Prices

the lump sum price for each activity which has been completed and
a proportion of the lump sum price for each incomplete activity which is the proportion of the work in the activity which has been completed.

93.5

If there is a termination, the Project Manager assesses the Contractor's share after certifying termination. The assessment uses, as the Price for Work Done to Date, the total of the Defined Cost which the Contractor has paid and which it is committed to pay for work done before termination.

93.6

The Project Manager’s assessment of the Contractor's share is added to the amount due to the Contractor on termination if there has been a saving or deducted if there has been an excess.

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