The contracts can be used to procure a wide range of works, services, and supplies, from large-scale framework projects to small-scale projects and the acquisition of supplies and items. National and international projects have benefited greatly from NEC contracts in terms of time, cost savings, and increased quality. Standard formats of contracts in construction contract procurement are FIDIC and NEC. The FIDIC standard is for the purchase of works and consultancy services, whereas the NEC standard is for the procurement of products, works, and services.
NEC began operations in 1991, and its contracts were made to be flexible, clear, and allow for appropriate execution management. FIDIC is the older and more well-known of the two, and it was the standard for many years and is therefore assumed to be the standard contract for usage across the world (Omran, 2019). This is mostly because FIDIC is an international standard, utilized by most international organizations.
According to FIDIC, the FIDIC Suite 2017 continues the concepts of balanced risk sharing while attempting to improve the user experience and modernize the contracts. The changes are extensive, but the new FIDIC Suite is more prescriptive. The NEC4 Contracts are built on the foundation of the NEC3 Contracts. This new edition maintains the NEC philosophy’s established and distinctive mechanisms for cooperation, fair dealing, and proper project management.
Both FIDIC and NEC allow for payment to the contractor based on bills of quantities, and both allow for staged payments. NEC also offers lump payment or cost-based open-book contract alternatives, including management contracts, cost reimbursable, and the increasingly popular target cost contract. At a more detailed level, FIDIC provides several subjective standards for determining whether certain activities warrant remuneration to the contractor (Kotb, Razik, and Sabry, 2017). The NEC handles the impacts of cost and time together, allowing the contractor to create a quotation and have it accepted by the project lead as soon as the changes occur.
According to FIDIC, the contractor must submit an initial comprehensive-time program and revise it if actual progress or the contractor’s requirements change. Other FIDIC provisions do not use this software. NEC requires that increasingly detailed sets of papers that make up the program be delivered regularly, as the customer specifies (Jobling, Smith, and del Rey, 2018). This becomes the instrument by which change is measured once it has been approved by the project lead. Progress is tracked, allowing for early warnings and recompense to be managed for further analysis by the professionals in charge.
The NEC family of contracts is purposefully created to formalize the necessity to implement best-practice project management systems, which the respective Parties should be undertaking anyhow. The contractual standards should help project teams comprehend the project’s status and related obligations for both time and money throughout its lifespan (Ndekugri et al., 2021). The contracts are intended to give methods for Contractors and Clients to collaborate, and they are intended to improve the efficiency of job management and communication between the two sides.
As a framework, NEC Contract is designed to be used to engage one or more suppliers to do construction work or offer design or consulting services on an “as instructed” basis for a specified period. The NEC Suite of Contracts aids in the streamlining of procedures, the reduction of the risk of difficulties, and the promotion of procurement best practices (Kwok, Leung, and Colgan, 2020). Guidance notes and flow charts accompany the Framework Contract, providing support and information on developing and administering the contract, as well as worked samples of contract data.
The NEC requires both the supervisor and the contractor to notify each other of flaws as soon as they are made aware of them, allowing for a more open approach to addressing and resolving them. In FIDIC, the same duties are noticeably lacking. The NEC also allows for the acceptance of any flaws from the contractor’s side, provided that this is feasible for both parties and that the project lead accepts a proposal from the contractor that reflects cost and/or time savings.
Contracts based on the NEC and FIDIC standards are standardized types of contracting. FIDIC is a standard family for procuring works or consultancy services, whereas NEC is a standard family for products, works, and services. In both cases, a designated individual (project manager in NEC, engineer in FIDIC) acts on behalf of the customer. Though the express criteria are somewhat different, both contain duties about cost, quality, and time. The NEC allows for more extensive choices and provisions, allowing and mandating a more realistic and cooperative approach to conducting the contract.
Both contracts provide for change management (in the NEC, compensation events, and the FIDIC, variants, and/or claims). After modifications occur, FIDIC splits the cost and time components, addressing them and their constituents independently at various phases. While there are no such objectives in the FIDIC framework, critical drafting aspects of the NEC are centered on clarity, simplicity, flexibility, and encouragement for effective management. NEC offers several benefits over FIDIC, especially in terms of transparency, flexibility, clear project management processes, collaboration and teamwork, risk management, measures of weather and ground conditions hazards, and variations.
Reference List
Jobling, P. E., Smith, N. J., and del Rey, F. (2018). Discussion: Experience of the role of contracts in megaproject execution. Proceedings of the Institution of Civil Engineers-Management, Procurement and Law, 172(1), 36-37.
Kotb, M., Razik, M.I.A. and Sabry, R.A. (2017). FIDIC General Conditions / Payments Clause FIDIC refers to (Fédération Internationale Des Ingénieurs Conseils). Asian Business Research, 2(3), p.53.
Kwok, B. C., Leung, R. H., & Colgan, J. (2020). Discussion: How one shall interpret ‘spirit of mutual trust and co-operation’in NEC contracts. Proceedings of the Institution of Civil Engineers-Management, Procurement and Law, 173(3), 120-121.
Ndekugri, I., Ankrah, N. A., Adaku, E., and Mzyece, D. (2021). An analysis of health and safety provisions in NEC contracts. Proceedings of the Institution of Civil Engineers-Management, Procurement and Law, 40(XXXX), 1-11.
Omran, M.E. (2019). A Review about FIDIC Contracts in Saudi Arabia. Indian Journal of Science and Technology, 12(36), pp.1–12.