NEC4 ECC explained - from positive incentives to preventative measures
Updated: Jun 26
In construction there’s two opinions when it comes to good performance and project
delivery – the client’s and the contractor’s.
Both parties have their expectations and their requirements from the outset, so delivering a finished product that suits the timelines, design ideals and quality of the client whilst achieving the margins desired by the contractor is a balancing act. To help provide some stability and regulation to proceedings, the NEC Engineering and Construction Contract (ECC) can act as the perfect mediator.
The ECC is specifically written to contain a variety of provisions that attempt to ensure excellent performance by the contractor. In the cases where this isn’t achieved, the client has the option to pursue a form of recourse in the form of a pre-agreed action or financial penalty.
As a contractor, you are obliged to maintain levels of quality workmanship and hit milestones within pre-agreed timeframes. Should these not be achieved there are preventative measures and negative incentives. On the contrary, if targets and timelines are achieved, there are positive incentives to reward excellent performance.
Preventative measures in action
Fundamental to all NEC contracts is the obligation for both parties to act in ‘a spirit of mutual trust and cooperation’. This collaborative approach is designed to pre-empt problems and find appropriate solutions in advance.
Specifically, clause 15 requests that the project manager and contractor are to proactively identify risk and notify all parties, especially when time, cost or quality is likely to be compromised. Such warnings should come via early warning meetings and communication tools, where solutions are recorded by the project manager in an appropriate register.
Time and quality incentives
In situations where timelines and completion dates are set in stone, clause 36 allows both parties to propose acceleration towards job completion. This is done in mutual trust and agreement – the project manager cannot enforce the acceleration and is required to accept the quotation from the contractor for the acceleration to be granted.
Quality control is maintained via clause 40 insisting that the contractor operates a stringent quality management system, quality policy statement and quality policy plan. Should the terms of the quality plan be breached, the project manager can request corrections without any financial contribution.
Rewards for outstanding performance
Should the contractor achieve pre-agreed time and cost savings, there are various measures by which they can be rewarded in the ECC. One such incentive is where the contractor is paid a share of the cost savings of the job.
Additional incentives include early finish bonuses (assuming all quality control tests are satisfied). The ECC is designed to ensure a desire to complete projects to a high standard, on time and within budget is mutually shared between client and contractor, thanks to sufficient incentives.
NEC4 ECC practicalities and problem solving
The practical application of the ECC ensures all bases are covered – there’s a clear and open relationship between the client and contractor. There are pre-agreed quality measures in place and a mutual benefit to completing a job on time.
When the contract is adhered to and all parties hold up their part of the bargain, the ECC will help to deliver excellence in construction.
To help with your contract management, visit the MPS website to see how our unique CCM Contract Management System can revolutionise the way you do business or call 01223 597933 or email firstname.lastname@example.org
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