There are several noteworthy updates to the NEC4, one being the Contractor’s right to recommend improvements to the Contract through the issuance of proposals to the Project Manager for value engineering and acceleration. The approved value engineering proposals are treated as Compensation Events with the cost benefits shared between Contractor and Client (formerly Employer) in accordance with the Contract Pricing Option.

Another update concerns the acceptance of the programme whereby the Contractor is now allowed to consider the programme accepted by the Project Manager if there is no acceptance or non- acceptance issued within 2 weeks of programme submission. However, as is the case for most other acceptance procedures, the Contractor has to notify the Project Manager of the failure to issue a determination on the programme.

The NEC4 Payment clause requires the Contractor to submit a payment application to the Project Manager prior to the assessment date, with a potential reduction in the amount due for the Contractor’s failure to submit the application on time. For Options C, D, E and F, the Contractor notifies the Project Manager when the Defined Cost is ready for review, with a failure to respond indicating acceptance. The Project Manager must also issue the final assessment of payment within 4 weeks of the Defects Certificate or 13 weeks of the termination certificate; failure to comply allows the Contractor to issue the final assessment.

The list of NEC4 Compensation Events has been increased to include the cost of preparing quotations for proposed instructions not accepted by the Project Manager. The Client also has the right to add compensation events without further contractual amendments, such as Z clauses. The date of assessing the Compensation Event can be either the date of notification of the Compensation Event or the date of communication from the Project Manager or Supervisor regarding the Compensation Event – newly termed the ‘dividing date’.

The list of NEC4 Client’s liabilities has been increased to include loss or damage to the Client’s property other than the works unless caused by the Contractor in the performance of the works. NEC4 now provides an actual list of Contractor’s liabilities rather than the previous default of everything not on the Client’s Liabilities list.

The NEC4 Dispute Resolution Options W1 and W2 include a preliminary 4-week negotiation period prior to formal dispute resolution procedures; mandatory for international projects and as an option in the UK with respect to HGCRA96 and the right to adjudicate. There is also a Dispute Avoidance Board option for international projects.

In any case it is in the interests of the Contractor and the Client to fully understand the rights and obligations under the NEC4 and to pay particular attention to edits and customisation which may not be apparent without an in-depth review of the contract.

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