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Hong Kong – Contract Corner , NEC3 2013.

30 April, 2013

Last week, a revised set of NEC3 contracts was published. We have not yet received the set, but the NEC's press release suggests that the most significant change is the addition of The Professional Services Short Contract, a shorter version of the existing NEC3 Professional Services Contract.  The set now includes seven guides explaining how to complete various elements of the contracts, such as the Works Information.

 

The release suggests that no significant changes have been made to the existing forms. However, communications forms and clauses dealing with recent industry developments such as project bank accounts and the Construction Industry Council's Building Information Modelling protocol have been added. Amendments required in light of the revised payment and adjudication provisions in the Housing Grants, Construction and Regeneration Act 1996, which since autumn 2011 have been available to download at no charge as separate documents from the NEC website, have been incorporated into the revised contracts. Only once the contracts have been received and studied in detail will we be able to confirm if any other substantive changes have been made.

 

The CIOB Complex Projects Contract 2013

 

One possible challenge to the NEC3's ECC is the new 2013 Complex Projects Contract or CPC, published last week by the UK's Chartered Institute of Building. The contract is being promoted as a contract for use by experienced contractors on high-value, complex projects and one which builds on the NEC's collaborative approach but addresses some of the NEC's weaknesses by adopting a more traditional drafting style and providing clearer and more prescriptive guidance for meeting collaborative aims. The contract requires much more information sharing and progress reporting than the ECC, with the aim that cost and time issues are managed more actively. For example, the contract's promoters claim that the contract is more prescriptive than the ECC on how the programme should be used as a project management tool, particularly the requirement that it be updated regularly. The consequences of a failure to do so or a failure to accept the programme in the first place are also addressed in more detail than in the ECC. Key to the success of the contract is the production of a detailed, auditable critical path network to allow a more accurate assessment of events entitling the contractor to extra time and money. A new role of Project Time Manager, separate from the project manager, to manage these aspects of the contract, has also been introduced in this new form.

 

There is greater clarity too on the ownership of the float, contingencies and how the risk register, early warnings and concurrent delay should be dealt with. The cost consultant or quantity surveyor is given an enhanced and more active role in managing the cost risk by being named as the Valuer and given specific duties. Dispute resolution is by means of expert determination followed by more formal dispute resolution using adjudication, arbitration and mediation. Issues in dispute are deemed to be agreed by the parties following the elapse of 20 business days, a much shorter time period than parties may be used to under NEC3 or FIDIC contracts. This is intended to prevent issues festering and enable projects to move forward. As a result, parties will need to act much more quickly when raising issues in dispute.

 

 

For further information, please contact:

 

Timothy Hill, Partner, Hogan Lovells
timothy.hill@hoganlovells.com
 
Damon So, Partner, Hogan Lovells
damon.so@hoganlovells.com

 

Hogan Lovells Dispute Resolution Practice Profile in Hong Kong

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