Advantages of NEC Contracts

The main advantages of an NEC contract are earlier sight of problems, change that is settled as the job goes along and a single family of forms that can handle most pricing arrangements. None of these comes automatically. Each depends on people using the procedures, so this list includes the condition attached to each benefit.

Examples are from the NEC4 ECC unless stated. For the other side of the argument, read the disadvantages of NEC contracts, and for wider context the comparison of NEC and other contracts.

The advantages, and what each one depends on

Advantage	What it means in practice	The condition
Problems surface early	Either side warns of a matter that could affect cost, time or performance (15.1), and meetings look for ways to reduce the effect (15.3)	People need to raise issues without treating every warning as an argument
Change is dealt with as it happens	Compensation events are quoted for and assessed quickly, with price and time together	Both sides stick to the periods, and the Project Manager has time to review quotations
A live programme	The Accepted Programme is regularly revised, and delay is measured from it (32.2, 63.5)	Your planner keeps it realistic and the Project Manager reviews it
Flexible pricing	The same ECC covers priced, target, cost reimbursable and management arrangements	You choose the right main Option for the work
Consistent family	Main contracts, subcontracts, consultants and term services use similar language	Subcontracts are kept in step with the main contract
Plain structure	Short sentences and a logical order help non-lawyers find what applies	Readers learn the defined terms; plain wording doesn't make them optional
Modular choices	Secondary Options add only what the job needs, such as delay damages, retention or bonds	Choices are made carefully at tender, and Z clauses stay under control
Clear reply duties	Silence has a consequence for the Project Manager under several procedures, so decisions don't just drift	The client side resources its replies

What these look like together

Take a fictional bridge refurbishment with illustrative figures. In week 12, the Contractor's survey suggests more concrete repair than expected. It gives an early warning that day. At the meeting, the team agrees to change the repair method, which reduces the likely extra cost from about £80,000 to £35,000.

The Project Manager instructs the change and notifies a compensation event. The Contractor quotes, and three weeks later the matter is accepted. The Client has an updated budget and date in week 17, not at the end of the job, while the Contractor knows it will be paid and can plan around the change.

The value doesn't come from any single clause. It comes from the warning, meeting, quotation and programme all feeding into each other. Remove one, and much of the advantage is lost.

Advantages for each party

• Clients get sooner sight of cost and time, choices of risk allocation and, on target contracts, a shared interest with the Contractor. See target cost and the Contractor's share.
• Contractors get a defined route to be paid for events outside their responsibility, along with deadlines that apply to the client side too.
• Subcontractors on an NEC subcontract get similar procedures, although their periods may differ from the main contract's.
• Consultants can have their programme and changes in brief handled under the PSC.

Claims you should treat with care

• "NEC reduces disputes." The aim is reasonable, and the procedures help, but we don't quote figures here because a statistic can't tell you how your project will go. NEC jobs still go to adjudication, particularly over assessments and time bars.
• "NEC is always cheaper." The form doesn't reduce the cost of the work. Better decisions can save money, but it also takes more management time.
• "NEC is collaborative, so it's all fine." The contract asks for mutual trust and co-operation (10.2 in NEC4, part of 10.1 in NEC3), yet it's the procedures and the people that produce the benefit.

How to get the advantages

1. Appoint a Project Manager with the time and authority to do the job.
2. Train both sides together at the start, using the actual contract, and hold an effective kick-off meeting.
3. Agree how communications are sent, recorded and tracked.
4. Keep the programme current and don't accept it without reading it.
5. Limit amendments, and test each one against the procedures it touches.

Related guides

• NEC vs Other Construction Contracts
• Disadvantages of NEC Contracts
• NEC and Public Sector Procurement
• Who Has to Use NEC?
• NEC vs GC/Works
• NEC PSC vs Other Consultancy Appointments

This guide is general information in our own words, not legal advice. Your contract and its Contract Data always govern. NEC, NEC3 and NEC4 are trade marks of Thomas Telford Ltd; Contract Status is not affiliated with or endorsed by NEC.