NEC Heads East

The NEC3 Engineering and Construction Contract (ECC) has often been hailed as the 'construction contract of the future'. In terms of UK public sector projects, this has rung true; NEC3 is the Office of Government Commerce's contract of choice on construction projects and has been used on many projects such as Heathrow Terminal 5 and the 2012 Olympic Games. In other parts of the world, including Asia, the local or in-house standard form contracts are still very much in use on domestic projects, and FIDIC (or hybrids thereof) dominate the international projects scene. However, in some Asian countries at least, this may be set to change. For example, the Hong Kong government recently completed a pilot run using the ECC on a road drainage project, and is considering NEC3 for many other projects in the pipeline.

Globalisation

While Asia's diverse political and legal landscape makes any generalisation about the regional adoption of a standard form construction contract inappropriate, the globalisation of the construction services industry, the homogenisation of various technical and product standards in parts of the region (this is particularly evident in the ASEAN member countries Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Laos PDR, Myanmar and Cambodia. For further discussion on this, see Dr P Chan & A Gunawansa 'Is it the correct time for an ASEAN standard form contract?' (2010) International Construction Law Journal 448), and the increase in foreign investment in many Asian countries (either directly or through public private partnerships)), means that the question of a standardisation in construction contracts is not as far-flung as it may initially seem. The more familiar both employers and contractors are with a form of contract, the less likely (at least in theory) the scope for dispute as to each party's respective roles.

Although published by a UK company, the NEC3 suite of contracts are not intended for use just within the UK. The parties are free to choose what law governs the contract and the contracts are structured so that the 'core' clauses can be used on any project, and then adapted for different pricing structures and regulatory regimes through the use of 'secondary' options. For projects which adopt English law and/or are based in the UK, specific secondary clauses are provided. The contract's 'simple English' approach to drafting is also intended to be easy to translate into other languages.

Unique features

The NEC3 prescribes procedures each party has to follow (including the project manager and the supervisor, who are not parties to...