April 2013 NEC3 amendments – What has changed?

NEC is a name which is becoming more familiar in Hong Kong. Following the success of the first modest-sized pilot project, a HK$200 million community hospital at Tin Shui Wai, the Hong Kong Government has been actively promoting the adoption of NEC across all Government projects. In September 2012, the Drainage Services Department signed an agreement with the contractor for the major works of the Happy Valley Underground Stormwater Storage Scheme, worth HK$678 million. This major project is scheduled for completion in early 2018.

In April 2013, an updated version of the NEC3 suite of contracts was released. The April edition does not contain any major changes to the established NEC3 wording, but does include some amendments to take into account growing new industry practices, such as the use of BIM and some minor amendments to correct drafting inconsistencies.

Other more significant changes in the April edition include a requirement that for “Compensation Events”, the Project Manager must now also notify the Contractor of compensation events arising from the Project Manager or Supervisor issuing a certificate or correcting an assumption (Core Clause 61.1 of the Engineering and Construction Contract). Further, the parties may now under Options C (target contract with activity schedule), E (cost reimbursable contract) and F (management contract) agree to use rates and lump sums to assess compensation events (see new Clause 63.14). This was previously only available to Options A (priced contract with activity schedule), B (priced contract with bill of quantities) and D (target contract with bill of quantities).