NEC3 Contracts Explained

NEC3 contracts are the third edition of the NEC suite, covering works, professional services, term services, supply and frameworks. Each NEC3 contract combines standard core clauses with chosen Options and project data, and it manages the job through early warnings, a live programme and compensation events.

This page explains how the edition is organised and how an NEC3 job runs, using the Engineering and Construction Contract (ECC), April 2013 edition. For the quick definition, read what NEC3 is, and for the current edition, the NEC4 contracts guide.

The NEC3 forms

Form	Abbreviation	Used for
Engineering and Construction Contract	ECC	Engineering and construction work, with any level of design
Engineering and Construction Subcontract	ECS	Subcontracts under an ECC
Engineering and Construction Short Contract	ECSC	Simpler, lower-risk works
Engineering and Construction Short Subcontract	ECSS	Simple subcontract packages
Professional Services Contract	PSC	Design and other professional services
Professional Services Short Contract	PSSC	Small, simple appointments
Term Service Contract	TSC	Services over a period, such as maintenance
Term Service Short Contract	TSSC	Simple term services
Supply Contract and Supply Short Contract	SC, SSC	Goods and related services
Framework Contract	FC	Appointing suppliers to a framework
Adjudicator's Contract	AC	Appointing an Adjudicator

How an NEC3 ECC is assembled

1. Core clauses: nine sections, from general matters to termination.
2. A main Option: A to F, deciding how the Contractor is paid. See NEC3 main Options.
3. A dispute Option: W1, or W2 where the UK Construction Act applies.
4. Secondary Options: such as X7 delay damages and X16 retention, plus Y(UK)2 for the Construction Act.
5. Z clauses: the Parties' bespoke amendments.
6. Contract Data: part one from the Employer, part two from the Contractor.
7. Works Information and Site Information: the documents the Contract Data points to. See Works Information vs Scope.

How the job runs

Procedure	Clause	How it works
Early warning	16	Either side notifies a relevant matter; it goes on the Risk Register; either side can instruct a risk reduction meeting
Programme	31, 32	Project Manager replies within two weeks. Revised programmes go in at the Contract Data intervals
Compensation event notification	61	Contractor has eight weeks from awareness (61.3); Project Manager replies within one week, or longer if agreed (61.4)
Quotations	62	Three weeks to submit, two weeks to reply (62.3), and treated acceptance can follow a notified failure (62.6)
Assessment	63, 64	Based on the effect on Defined Cost plus the Fee; delay measured against the Accepted Programme (63.3)
Implementation	65	The Prices and dates change
Payment	50, 51	Project Manager assesses at each assessment date; certificate within one week; payment within three weeks, unless the Contract Data differs
Tests and Defects	40 to 45	Tests, searching for and notifying Defects, correcting and accepting them

A worked example

A fictional NEC3 Option B road resurfacing job, with illustrative figures. The Project Manager instructs an extra length of carriageway on 2 April.

1. The same instruction is notified as a compensation event, and quotations are instructed (61.1).
2. The Contractor quotes on 22 April. It prices the change using the bill's rates, as the Parties agree under 63.14, which gives £38,000 and one week of delay on the Accepted Programme.
3. The Project Manager replies on 6 May, accepting the quotation. The event is implemented under clause 65.
4. The next assessment includes the extra work once it's done, at the changed rates.

What catches teams out on NEC3

• The Risk Register isn't a corporate risk log. The NEC3 Risk Register explains what it is meant to hold.
• Meetings happen only if someone calls them. Without NEC4's minimum interval, risk reduction meetings tend to fade away.
• The Project Manager's silence on a programme. It doesn't lead to acceptance, so a Contractor can spend months without an Accepted Programme. That has knock-on effects: the Project Manager can assess events itself (64.1), and first-programme failures can trigger the one-quarter hold (50.3).
• Two fee percentages. Direct and subcontracted work carry different figures, so keep the split in your cost records.
• Option F and the definitions. Definition numbers change with the main Option. For example, Disallowed Cost is 11.2(25) in Options C, D and E, but 11.2(26) in Option F.
• Applying NEC4 habits. A team fresh from NEC4 may expect a first register within a week, a final assessment or deemed programme acceptance. NEC3 has none of these unless a Z clause adds them.

Managing a live NEC3 contract today

Keep NEC3 templates separate from your NEC4 ones, and label each register with its edition. Make sure anyone joining from an NEC4 job gets a short briefing on the differences in NEC3 vs NEC4. If the Parties are thinking about changing a live contract across, read moving from NEC3 to NEC4 first.

Related guides

• NEC4 Contracts: A Complete Guide
• NEC3 Main Options
• Moving From NEC3 to NEC4
• The NEC3 Risk Register
• NEC4 Questions and Answers
• What Is NEC3?

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.