Early Contractor Involvement Under NEC

NEC ECI, or early contractor involvement, means appointing the Contractor before the design and price are settled, so it can shape both. Under NEC4 there's a standard Option for this, X22; under NEC3 the job is done with a tailored additional clause; and on either edition, some Clients use two separate contracts.

This page compares the routes and the stages. To go through the NEC4 Option clause by clause, read Option X22. Both edition routes sit among the broader choices in the NEC secondary Options.

The three routes

	NEC4 ECC with X22	NEC3 ECC with additional clause	Two separate contracts
How it's written in	Standard secondary Option	Model clause inserted through Option Z, from NEC's April 2016 guidance	A professional service or short contract, then a construction contract
Main Options	C and E only	Guidance covers C and E; A would need extra drafting	Any
Competition	At the start, on Stage One and Fee	At the start	Can repeat before construction
Commitment at the start	One contract, with a notice to proceed	One contract, with a notice to proceed	Only the first contract
Incentive on the Client's total cost	Budget incentive	Budget incentive for Option E	Only if you draft one

Stage One: developing the job

The guidance for NEC3 says Stage One typically covers design development or advice, securing or assisting with consents, and settling what Stage Two will cost. The same logic applies under X22. A useful Stage One gives the Client:

• buildability and sequencing input while it's still cheap to change the design;
• an early view of supply chain and long-lead items;
• a joint risk register that feeds the Stage Two price;
• open-book costs that the Client can check before it commits.

On the cost-based route, the Contractor is typically paid Defined Cost plus Fee in this stage. Tenderers should expect to give a forecast, because that is the main way a Client keeps control of Stage One spending.

Between the stages

This is the decision point, and it's the most sensitive moment in the job. The Contractor presents its proposals for Stage Two. The Client considers them against its Budget and approvals. If it goes ahead, the Project Manager notifies the Contractor. If it doesn't, the Stage Two work leaves the Scope.

Three things help:

1. A clear date. Agree a target decision date, as NEC's guidance recommends keeping the Client informed so there are no surprises.
2. A reference point for price. Without competition at this stage, a Client needs another check. Consider benchmarks, cost consultants and open-book subcontract tenders.
3. A plan if talks fail. The Client should know what it can do with the design and whether another contractor could take it on.

Stage Two: delivering it

The Contractor finishes outstanding design and builds under the main Option. On Option C the incentive is the normal share, based on the Contractor's own costs. On Option E there's no target, so the incentive comes from savings on the Client's Budget. The guidance points out that Option A loses much of this collaborative effect, because the Contractor takes all the gain and loss in Stage Two.

Which route fits?

Situation	Likely route
New NEC4 project, cost-based construction, Client wants a single contract	X22
Existing frameworks on NEC3	NEC's model clause, with legal review
Client wants a lump sum for construction	Two contracts, or heavily adapted terms
Client has to retender construction by law or policy	Two contracts; take procurement advice
Several parties need to share the design stage	Add Option X12 to the chosen route

Pitfalls to avoid

• Designer liability that doesn't line up. The NEC3 guidance adds professional indemnity cover because Contractor design is part of the job. Check that insurance reflects the role, particularly if the Client's consultant is also designing.
• Novation by assumption. If the Client's designer moves across to the Contractor for Stage Two, write the terms down. It doesn't happen on its own.
• A vague Budget. Say what it includes and which events change it. NEC3 guidance says changes to the Budget aren't compensation events, so they need their own list.
• Weak records. Decisions during Stage One will affect the price later. Keep them alongside your compensation event register and risk register.

Related guides

• NEC Secondary Options: X, Y, W and Z Clauses Explained
• Y(UK)1: Project Bank Account
• Y(UK)2: The Construction Act
• Y(UK)3: Third Party Rights
• X21: Whole Life Cost
• X22: Early Contractor Involvement

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.