Views from the New Engineering Contracts (NEC) Annual Conference 2024

Published: 30 July 2024

You might think a conference for New Engineering Contracts (NEC) professionals would involve wood-panelled rooms, sharp suits, and clause-based puns. In reality …. that’s pretty much correct!

This year, the conference was hosted at One Great George Street, home to the Institution of Civil Engineers (ICE). Ben King, Associate Director for Birmingham and proud member of the ICE, attended and captured these insights.

Collaboration

Collaboration isn’t a new kid on the block for NEC; it’s been around from the beginning. What is interesting is the use of collaboration rather than the contract terminology in clause 10.2 of ‘co-operation’. Does this represent a language change? Clauses X10 and X12 already use collaboration as a means for providers and partners to communicate.

Collaboration was brought to life in two presentations: the first from Teck Thai Heng, Deputy CEO, Building & Construction Authority, Singapore; and the second from Michael Fong, Director, Civil Engineering and Development Department (CEDD), China.

Highlights:

Singapore is advancing collaboration with adoption of NEC (reported by the ICE).
Secondary option clauses are being produced for Singapore, to capture national legislation for contracts.
A mindset shift is required when transitioning from ‘traditional’ contracting to the NEC approach. The UK’s expectation of collaboration is not always embedded around the world.
Michael Fong demonstrated rapid project delivery on CEDD infrastructure projects, including use of team ‘war rooms’ and 7 Cs (commitment, comprehensive roadmap, can-do team, clear targets, creativity, control, collaboration).

Our approach

As we head into AMP8, we have been collaborating with several of our clients and partners. This has created several opportunities where Aqua Consultants and the wider Adler & Allan Group has provided a package service to clients to form true collaboration across multiple businesses under the same umbrella.

Adler & Allan brings together several businesses to form a cohesive team collaborating with one client, consisting of:

Aqua Consultants for analysis, asset strategy and business case development.
Detectronic for active flow monitoring.
Oneline and Jet Aire for sewer cleaning, lining, remediation, and jetting.

Alliancing – FAC-1 contract

A core part of the conference was discussion about the Framework Alliance Contract (FAC-1) which came out in 2016. The NEC has prepared 'Guidance on using NEC4 contracts with the FAC-1'. This is an interesting collaboration in the sense that NEC issued their own NEC4 Alliance Contract in 2018. The FAC-1 has the same essences of NEC and terminology is comparable.

It’s not common to see alliancing contracts used, mainly for major governmental clients on large frameworks. However, we are seeing alliancing as a common approach within the water industry where the AMP cycle provides continuity and scale for all parties to collaborate.

This has grown evident with our clients, notably Northumbrian Water Group (NWG), who have adopted a partnering model with their Living Water Enterprise (LWE).

The NWG LWE is structured to function as a collaborative venture rather than a traditional framework alliance. Whilst it incorporates some principles of an alliance, it does not depend on a single contractual relationship among partner organisations. Instead, each partner operates under its own framework agreement, utilising individual NEC4 contracts (such as ECC, PSC, and TSC).

This enterprise focuses on incentivising performance through pain-gain share mechanisms to mitigate against the negative impacts of particularly complex projects. Although key performance indicators will be tracked, they will not influence the pain-gain share arrangements.

Our role in this is to provide NEC project management and commercial support as part of the strategic commercial partnership.

Key similarities to the NEC FAC include:

Awarding individual contracts within an agreed framework programme.
Establishing common objectives, success measures, targets, and incentives.
Ensuring joint commitment from all members to surpass the scope of individual project contracts in the pursuit of enhanced value and strategic level efficiencies.

Overall, the NWL Living Water Enterprise is continually evolving, with ongoing efforts to refine its operational and incentivisation details.

Fostering professional growth

A key component of the conference was about artificial intelligence and the professional growth of the next generation. Whilst AI is a never-ending topic for discussion, the industry is still on its journey of supporting apprentices and young adults into the profession.

With opportunities in ‘clean’ sectors such as technology, accounting and software, the construction industry (from frontline workers up) has a significant task in changing opinions about its physical and dirty arena.

We are changing this mindset and offering additional opportunities to the next generation. In 2024, we recruited five graduates and are training them through their chosen career, whether that's project management, commercial, asset management, engineering, or advisory. Training will involve on-the-job diversity across multiple clients and projects, as well as off-the-job formal training and education.

Everyone in the industry has a part to play in this, which is why we will be continuing our graduate intake through 2025 and compounding the opportunities and knowledge gained to enhance their lived experience.

Not only this, but we offer variety and opportunity for all our teams to undertake training, such as the NEC4 Project Manager Accreditation, pursue chartership, and learn in environments that inspire and challenge them. This is open to everyone as is part of our dynamic approach as a consultant.

Ultimately, this conference was an opportunity to take stock of the industry and meet and discuss topics with our partners and industry collaborators. The next 12 months will no doubt continue to be a challenge for the construction industry, but there is always opportunity and benefit to be had for all.