NEC3: Building Stronger Teams

The NEC3 suite of contracts is seen by many as a step change in delivering collaboration to the construction arena.  Much has been written on the benefits and challenges presented by the practicality of NEC3 contracts. We would like to focus on the benefits that NEC3 brings to building stronger more effective teams, this article will consider both practitioners and those with only an awareness of NEC3.

The format and language of NEC3 allows for widespread understanding of the contract. The six options, 17 secondary options and use of Z clauses enables greater understanding and less of a reliance upon extensive legal training.  Both those with an awareness and practitioners can gain a good understanding of the contents of specific NEC3 contracts through reading the contract. The ability to brief colleagues on the nuance of the contract and specific elements has the potential to increase the team ethos between different functions, i.e. contract administrators and the project management function (recognising the official NEC3 term Project Manager relates to a specific person with well documented responsibilities).

When NEC3 was developed it was done so in an attempt to bring the Employer and Contractor closer together in a collaborative approach resolving issues as they occur.  The use of Early Warning Notices and Compensation Events has meant that not only the Employer, Contractor and Project Manager have to engage with each other but their supporting teams have to do so as well.  Within the Employer’s / Project Manager's team the need for the project management function to be aware of the requirements to respond to Contractor communications in a given timeframe has significant ramifications. The contract management function has the opportunity to embrace the opportunity to provide assistance and direction on the specific requirements.

The variety afforded by NEC3 to contract to lump sum, target cost, based on quantities or to a programme brings a complexity that requires different skills and communication between specialist teams. Recognising that sound risk management underpins the development of both lump sums and target costs the need to overlay risk management with financial modelling and articulate this in a contract that will have specific contract administration ramifications brings a number of parties together (financial, risk, commercial and contract managers).  When delivering a project that is adhering to a schedule (NEC3 term – programme) there is a need for additional team working between the project delivery and contract management functions when there are schedule driven payment milestones.

Regardless of whichever option of the NEC3 suite is selected there is a degree of complexity that will be created; furthermore, the size of the project will add a multiplying effect to the complexity. The adoption of an NEC3 specific contract management application will greatly assist in overcoming the complexity and cutting through the administration.  The adoption of an effective contract management application will require more interaction between the project management and contract management functions.

Recognising that there is a significant requirement to develop better cross-functional working there are two specific activities that can be taken to help deliver this joined up approach; engagement and communication.

Engagement. Most organisations compete work through a procurement department and then hand over the contract to the contract management element of the organisation.  Engaging the contract management function prior to contract award can help put the adoption of NEC3 on the front foot in terms of organisational design, team training and the adoption of any new applications.

Engagement. Identify NEC3 champions within the organisation.  The champions can provide internal training and advice to colleagues.

Engagement. When planning ahead identify suitable away days where NEC3 scenarios can be war gamed. This not only provides the opportunity to greater understand the workings of NEC3 in light of potential scenarios but also brings together different teams from the organisation.

Communicate. Ensure the wider organisation is aware of the requirements of NEC3 and the NEC3 champions. Wherever possible develop and issue desktop guides to colleagues to provide readily accessible information on the requirements of NEC3.

Communicate. Provide regular updates, including statistics, and training clinics.

The success of projects using NEC3 is wholly dependent on trained staff forging effective relationships.