Form of Contract

NEC4 Engineering and Construction Contract: Option C.

G7 recommends that KID pursue this project using the NEC4 Engineering and Construction Contract: Option C. This is a target cost contract with an activity schedule, so when tendering, the contractors will submit activity schedules based upon the scope of the works provided by KID. When defining the contractor's design contribution within the scope of the works, it must be clearly stated that the project is primarily design and build, so the contractor and their team will take the lead in designing the building whilst still meeting any criteria or conditions presented within the scope of the works.

Pain/Gain Share Mechanism

The pain/gain share mechanism is exclusive to NEC options C and D. This mechanism provides an incentive for the contractor to produce the project under budget, as they will receive a share of the surplus funds. A performance bond, Secondary Option Clause X13, will ensure that the contractor still fulfils contractual obligations and does not disregard them in an attempt to reduce the total costs to wrongly benefit from this mechanism.

This mechanism is one of the primary reasons as to why the NEC4 Engineering and Construction Contract: Option C, over a JCT Design and Build contract.

Resolving and Avoiding Dispute Clauses

As the project is based in Sheffield within the United Kingdom, it is therefore regulated by the Local Democracy, Economic, Development and Construction Act (2009). This means that the contract must select Option W2.

Secondary Option Clauses

The table at the foot of the page outlines some of the secondary option clauses available within NEC4, a brief description of how it relates to the project and why G7 recommends their implementation. Not all clauses are outlined below and other clauses may be relevant at your discretion, although G7 considers those in the table to be the most significant for this project.

Final Notes.

KID have the option to execute this contract as a deed to extend the limitation period and the Professional indemnity insurance to twelve years as opposed to six. However this is likely to come at an increased cost for contractors involvement which could add significantly to the total cost of the project. With the small size of the site limiting potential future returns, G7 would not recommend this although it is being presented as an option if KID believes it to be viable.

Created by Connor Littlemore