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The NEC 3 Engineering and Construction Contract: A Commentary

ISBN: 978-0-632-05386-5
392 pages
September 2006, Wiley-Blackwell
The NEC 3 Engineering and Construction Contract: A Commentary (0632053860) cover image
From its launch in 1991 the New Engineering Contract has rapidly overtaken traditional building and civil engineering contracts to become the UK’s leading standard form for major construction projects. Additionally, under the generic title NEC3, there is now a family of New Engineering Contract standard forms.


This book provides a detailed commentary on the latest edition of the main form - NEC3 Engineering and Construction Contract. It explains how the contract is intended to operate and examines each clause to consider its application and legal interpretation. It draws upon the author's successful book on the second edition of the Engineering and Construction Contract, ECC2, and it identifies and comments on the changes between ECC2 and NEC3.


Particular attention is given to the revised compensation event procedures in NEC3, with five chapters of the book devoted to this subject. In-depth analysis is also given to:



  • The role of the project manager
  • The obligations of the parties
  • The liabilities of the parties
  • The revised dispute resolution procedures
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Preface.

1 Introduction.

1.1 Development of NEC contracts.

1.2 Characteristics of NEC 3.

1.3 Structure of NEC 3.

1.4 Feedback from ECC 2.

1.5 Changes from ECC 2.

1.6 Points of interest in NEC 3.

2 Main options.

2.1 Introduction.

2.2 Contract strategy.

2.3 Option A - priced contract with activity schedule.

2.4 Option B - priced contract with bill of quantities.

2.5 Target contracts generally.

2.6 Options C and D - target contracts.

2.7 Option E - cost reimbursable contract.

2.8 Option F - management contract.

2.9 Option W1 - dispute resolution.

2.10 Option W2 - dispute resolution.

3 Secondary options.

3.1 Introduction.

3.2 Option X1 - price adjustment for inflation.

3.3 Option X2 - changes in the law.

3.4 Option X3 - multiple currencies.

3.5 Option X4 - parent company guarantee.

3.6 Option X5 - sectional completion.

3.7 Option X6 - bonus for early completion.

3.8 Option X7 - delay damages.

3.9 Option X12 - partnering.

3.10 Option X13 - performance bond.

3.11 Option X14 - advanced payment to the contractor.

3.12 Option X15 - limitation of contractor's liability for design.

3.13 Option X16 - retention.

3.14 Option X17 - low performance damages.

3.15 Option X18 - limitation of liability.

3.16 Option X20 - key performance indicators.

3.17 Option Y(UK)2 - Housing Grants, Construction and Regeneration Act 1996.

3.18 Option Y(UK)3 - Contracts (Rights of Third Parties) Act 1999.

3.19 Option Z - additional conditions.

4 Contract documents.

4.1 Introduction.

4.2 Entire agreements.

4.3 Clause 12.4 of NEC 3.

4.4 Construction of contracts generally.

4.5 NEC 3 documentation.

4.6 Essential contract documents.

4.7 Identified and defined terms.

4.8 The contract date.

4.9 Works information.

4.10 Site Information.

4.11 Contract data.

4.12 Schedules of cost components.

4.13 Ambiguities and inconsistencies in the contract documents.

4.14 Schedule of clauses referring to the works information.

5 Key players.

5.1 Introduction.

5.2 Others.

5.3 Actions.

5.4 The employer.

5.5 Express obligations of the employer.

5.6 The project manager.

5.7 Express duties of the project manager.

5.8 The supervisor.

5.9 Express duties of the supervisor.

5.10 Communications.

5.11 The project manager and the supervisor.

6 General core clauses.

6.1 Introduction.

6.2 Actions.

6.3 Identified and defined terms.

6.4 Interpretation and the law.

6.5 Communications etc.

6.6 Instructions.

6.7 Adding to the working areas.

6.8 Early warning.

6.9 Ambiguities and inconsistencies.

6.10 Illegal and impossible requirements.

6.11 Prevention.

7 Obligations and responsibilities of the contractor.

7.1 Introduction.

7.2 Design obligations, responsibilities and liabilities.

7.3 Providing the works.

7.4 The contractor's design.

7.5 Using the contractor's design.

7.6 Design of equipment.

7.7 People.

7.8 Working with the employer and others.

7.9 Subcontracting.

7.10 Other responsibilities.

7.11 Express obligations of the contractor.

7.12 Express prohibitions on the contractor.

8 Time (and related matters).

8.1 Introduction.

8.2 Starting and completion.

8.3 Programmes.

8.4 Revision of programmes.

8.5 Shortened programmes.

8.6 Access to and use of the site.

8.7 Instructions to stop or not to start work.

8.8 Take over.

8.9 Acceleration.

9 Testing and defects.

9.1 Introduction.

9.2 Definitions and certificates.

9.3 Tests and inspections.

9.4 Testing and inspection before delivery.

9.5 Searching and notifying defects.

9.6 Correcting defects.

9.7 Accepting defects.

9.8 Uncorrected defects.

10 Payments.

10.1 Introduction.

10.2 Assessing the amount due.

10.3 Payments.

10.4 Defined cost.

10.5 Payments - main option A.

10.6 Payments - main option B.

10.7 Payments - main options.

10.8 Payments - main option D.

10.9 Payments - main option E.

10.10 Payments - main option F.

11 NEC 3 compensation event schemes.

11.1 Introduction.

11.2 Changes in NEC 3.

11.3 Outline of procedures.

11.4 Defining a compensation event.

11.5 Compensation events as exclusive remedies.

11.6 Fairness of the compensation event procedures.

11.7 Unusual features of the compensation event procedures.

12 Listed compensation events.

12.1 Introduction.

12.2 Omissions from the list.

12.3 Works information related events.

12.4 Employer's default events.

12.5 Employer's risk events.

12.6 Project Manager / supervisor related events.

12.7 Physical conditions.

12.8 Adverse weather.

12.9 Prevention.

12.10 Measurement related events.

12.11 Secondary option clause events.

13 Notifying compensation events.

13.1 Introduction.

13.2 Notifications by the project manager.

13.3 Notifications by the contractor.

13.4 Project manager's response to notifications.

13.5 Last date for notifications.

14 Quotations for compensation events.

14.1 Introduction.

14.2 Instructions to submit quotations.

14.3 Instructions for alternative quotations.

14.4 Submission of quotations.

14.5 Status of the contractor's quotations.

15 Assessment of compensation events.

15.1 Introduction.

15.2 Changes from ECC 2.

15.3 General assessment rules.

15.4 Particular assessment rules.

15.5 Project manager's assessments.

15.6 Implementing compensation events.

15.7 Other financial remedies.

16 Title.

16.1 Introduction.

16.2 Employer's title to equipment, plant and materials.

16.3 Marking equipment, plant and materials.

16.4 Removing equipment.

16.5 Objects and materials within the site.

17 Risks and insurances.

17.1 Introduction.

17.2 Employer's risks.

17.3 Contractor's risks.

17.4 Repairs.

17.5 Indemnity.

17.6 Insurance cover.

17.7 Insurance policies.

17.8 Contractor's failure to insure.

17.9 Insurance by the employer.

18 Termination.

18.1 Introduction.

18.2 Summary of NEC 3 termination provisions.

18.3 Termination for "any reason".

18.4 Termination under section 9 of NEC 3.

18.5 Reasons for termination under NEC 3.

18.6 Procedures on termination under NEC 3.

18.7 Amounts due on termination under NEC 3.

19 Dispute resolution.

19.1 Introduction.

19.2 Developments in dispute resolution.

19.3 Meaning of dispute.

19.4 Adjudication under option W1.

19.5 Adjudication under option W2.

19.6 Review by the tribunal.

19.7 NEC 3 Adjudicator's Contract.

20 NEC 3 engineering and construction subcontract.

20.1 Introduction.

20.2 Core clauses - general.

20.3 Core clauses - the subcontractor's main responsibilities.

20.4 Core clauses - time.

20.5 Core clauses - testing and defects.

20.6 Core clauses - payment.

20.7 Core clauses - compensation events.

20.8 Core clauses - title.

20.9 Core clauses - risks and insurance.

20.10 Core clauses - termination.

20.11 Dispute resolution.

21 NEC 3 family of contracts.

21.1 The contracts.

21.2 Engineering and construction short contracts.

21.3 Term service contract.

21.4 Framework contract.

21.5 Professional services contract.

21.6 Adjudicator's contract.

21.7 Concluding comment

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Brian Eggleston, CEng, FICE, FIStructE, FCIArb is a registered arbitrator
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  • NEC3 has become the leading standard form for major construction projects.
  • Examines the new contract clause by clause and compares it with the previous edition.
  • Written by a highly regarded contracts commentator and experienced arbitrator and adjudicator.
  • 'Those who pride themselves on a comprehensive law library will buy this book straightaway.' - Construction Industry Law Letter
  • Previous edition published under the title The New Engineering Contract (PB 0-632-05742-4, HB 0-632-04065-3).
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‘Eggleston is the author of a number of highly successful guides to engineering contracts […] he writes with a certainty and facility that commends him to many practising lawyers and with an ease which makes him highly readable for other construction professionals. Given its readability and perceptiveness, Eggleston can be thoroughly recommended to all construction professionals.’ – Paul Newman, Construction Law


‘A very useful and helpful guide.’ – Fiona Hammond, Legal Advisor, BAA plc


‘Brian Eggleston’s books are always good. This one is unique, as the only analysis on this contract that is both detailed and fair. The light it shines is startlingly revealing.’ – Robert Fenwick Elliott, Fenwick Elliott, Solicitors


'Those who pride themselves on a comprehensive law library will buy this book straightaway. Others would be well advised to buy it as soon as they are faced with the prospect of an NEC project.' - Construction Industry Law Letter

'everyone involved in projects using the NEC should have a copy' Building Magazine

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The NEC 3 Engineering and Construction Contract: A Commentary (US $155.00)

-and- Construction Claims and Responses: Effective Writing and Presentation (US $85.00)

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