JCT vs.

NEC – 10 Key Differences

19 Feb 2014 | Comment

The use of the NEC contract is growing in both the public and private
sectors.

The recent National Construction Contracts and Law Survey 2015,

issued by the NBS, has highlighted an increasing use of the NEC form
of building contract in the construction industry, almost tripling in the
past five years.

The following are key differences between the JCT Design & Build 2015
form of building contract (‘the JCT Contract’), and the NEC Engineering
and Construction Contract Option C form of Contract (‘the NEC
Contract’).

1 Price
The JCT Contract is a fixed price lump sum contract. NEC Option B
offers a fixed price lump sum contract but Options C and D are target
cost contracts.

2 Provisional sums
The JCT Contract contains provisional sums, whilst the NEC Contract
does not.

3 Cost scrutiny
In a JCT contract there may be some cost scrutiny via the contract sum
analysis and tender negotiations but the NEC contract has an open
book procedure with the key concepts of defined cost and disallowed
cost.
4 Ground Risk
In the JCT contract ground risk is with the contractor. However, the NEC
contract uses the ICE forseeability test in relation to ground conditions.

5 The programme
The JCT contract does not have a programme as a contractual
document. The programme is at the heart of the NEC ethos. It is a
contractual document and to be regularly updated. The NEC contract
also has key concepts such as float, completion float and time risk
allowances.

6 Payment
In relation to payment, the JCT contract payment section is clear, is all
in one section (clause 4) and easy to follow. However, in relation to the
NEC contract it is located in three different locations – clause 5, Y(UK)2
and Contract Data Part 1.

7 Extension of time/loss and expense

In relation to extensions of time and loss and expense, the JCT contract
has relevant matters and relevant events and time and money are dealt
with as separate concepts. The NEC contract has the compensation
event and it deals with both time and money. The ethos of
compensations events is that they are dealt with in real time as much as
possible and this is very much process driven. The compensation
events also have a condition precedent nature, and failure to notify the
compensation event within the 8 week period can have dire
consequences.

8 Insurance
The JCT contract contains comprehensive detail in relation to
insurances at clause 6 and Schedule 3. In relation to the NEC contract,
the insurance detail is very brief and contained at clause 84 of the
contract. The NEC contract is silent on some insurances. The missing
insurances relate to existing buildings insurance and adjacent property
insurance, and need to be included in the additional insurances section
of the Contract Data Part 1.

9 Design risk
The JCT contract has a clear interaction between the Employer’s
Requirements and Contractor’s Proposals and there is extensive
drafting in the JCT. The NEC contract however simply states a
contractor is to design the parts of the works which the Works
Information states he is to design. The Works Information contains far
more than Employer’s Requirements. There is guidance as to what the
Works Information should contain and it is dangerous and bad practice
to simply re-badge a JCT Employer’s Requirements document as an
NEC Works Information document.

10 Employers Requirements/Works Information

The Works Information contains far more information than a JCT
Employers Requirements as it is a shorter contract and leaves the some
of the detail to the Works Information. Simply re- badging a JCT
Employers Requirements as an NEC Works Information is dangerous
as the terminology and level of detail required is different.