The first NEC
\ncontract was drafted in 1993 with an aim to encourage collaboration and sharing
\nof risk and reward within construction. (NEC, n.d.) Using plain language, it inspires
\ngood management and limit disputes between contractor and employer by introducing
\ncompensation events to promote risk prevention over blame delegation. (NEC,
\nn.d.) There have been 4 iterations published; the most recent being the NEC4 in
\n2017. (ICE, n.d.) By this time the contract has proved itself in its
\nprocurement of the 2012 Olympics. As a result of the success ICE decided to
\nsolely endorse this form of contract from 2009. <\/p>\n
The Joint contracts tribunal was formed in 1931 by the Royal
\ninstitute of British Architects and is made up of seven members representing a
\nwide range of interests in building and construction industries. They have been
\nresponsible for standard forms of contracts, guidance and other standard forms
\nof documentation used in the construction industry. It focuses on ensuring risk
\nallocation is balanced between parties, schedules and payment procedures. (Pinsent
\nMasons, 2012) Unlike the NEC these contracts are only appropriate for those
\nexperienced in construction and risk analysis, that have appropriate in-house contractual
\nprocedures. (Pinsent Masons, 2012) The JCT form of contract has little provision for
\ndealing with unknown risks arising throughout the project. (NEC, n.d.)<\/p>\n
Both contracts encourage In the case of NEC applies condition precedents to ensure compensation events are recognised early[5]<\/a> (Dalton, 2011) Ensuring cost and time disputes are efficiently resolved so there is limited detrimental effects to the project. In JCT there is no time precedent for risks to be concluded, adopting a \u2018pay later\u2019 approach. (Shutte, 2016) The contract therefore resolves disputes in a final account procedure[6]<\/a> in which adjustments to the contract sum are agreed and the final payment is confirmed. This process can be time consuming and adversarial, making the NEC \u2018pay as you go\u2019 angle more appealing to minimise disputes at the end of a project and ensure an efficient closing process. (ICE, 2017)<\/p>\n NEC promotes a risk Each form of contract In summary; the PM From this we can see There are still a The introduction of In the case of technology This very brief Advances in the Project Managers can During the building Big data can also be used Blockchains are Development of When dealing with [1]<\/a> [2]<\/a> Clause [3]<\/a> Clause [4]<\/a> Clause [5]<\/a> Clause [6]<\/a> Clause
\nan authoritative figure that works with the contractor on behalf of the
\nemployer; in NEC a Project manager and in JCT a Contract administrator. The PM
\nadopts an active role, connecting all parties practically; the NEC\u2019s choice to
\nopen with a collaboration clause[1]<\/a> promotes this united work
\nethic. (Shutte, 2016) This good management and active input from all parties is
\nencouraged through the risk register[2]<\/a> and compensation event
\nprocedures[3]<\/a> (mentioned later) put in
\nplace by the NEC. (Close, 2011) The CA instead has an accounting focus and is
\nnot as proactive in leading parties; their roles include keeping the accounts
\nand guiding parties through procedure. (Shutte, 2016) <\/p>\n
\nexpense disputes; the NEC uses a compensation event procedure which considers
\nboth time and costs together, with the ethos being that problems are solved in
\nreal time. (Jenkins, 2014) Compensation events also have a condition precedent
\nnature, with denial of appeal if the contractor fails to inform the PM within 8
\nweeks. This time bar makes the resolving of risks an active part of the
\ncontract and a mutual interest between all parties involved. Conversely, JCT
\ndeals with cost and time matters separately and the contractor is obliged to
\nnotify the CA of relevant events\/matters, however suffers no contractual
\nconsequence if they fail to do so.[4]<\/a> (Weld, n.d) <\/p>\n
\nregister tool to aid in identifying risks and determine appropriate mitigation
\nfor each circumstance. The risk register is started at the outset of the
\ncontractual stage and compiled of risks identified in the contract data. The
\nlist can then be added to accordingly as the project progresses by means of the
\nearly warning[7]<\/a>
\nregime. The contract states that either the PM or Contractor must request a
\nrisk reduction meeting[8]<\/a> to discuss risk
\nmitigation, solutions beneficial to all, assigning roles and removal of risks
\nfrom register if required. Early warning acts as an incentive providing an
\nagreed pay\/time sum efficiently for those involved in the dispute. JCT however
\nworks on standard allocation of risks, where the burden of risk is not shared
\nbut allocated to individuals. These risks are not actively dealt with therefore
\nsolutions are often achieved in a less timely fashion. (Ross, 2017)<\/p>\n
\nis required to specify their preferred route of dispute resolution procedure.
\nUnder the goal of \u2018mutual trust and cooperation\u2019 the NEC encourages
\nadjudication and then arbitration as their preferred practice (Rousel, 2010);
\nthis process avoids the courts by providing an experienced unbiased third-party
\nmember to consider the contractor and PM\u2019s arguments and come up with a
\nresolution. This method is ordinarily more efficient, cost effective and tends
\nto cause less bad blood between the PM and contractor however it is binding, and
\nparties must agree to whatever award is granted by the arbitrator. There is
\nusually no option to appeal the final decision as the parties are assumed to
\nhave understood the risks. (Legal-dictionary, n.d) JCT conversely favours
\nlitigation, which can be preferable if the case has a law focus as an
\narbitrators\u2019 role is based upon technical expertise surrounding the project. Litigation
\nhowever is becoming less desired as it damages the continuity of the plan and
\ncan damage both sides reputation. (Rousell, 2010)<\/p>\n
\nrole encourages a greater deal of cooperation within projects whereas the CA
\nstill poses a rift between employer and contractor. The compensation event
\nprocedure and time bar clauses have efficiency however there is evidence to
\nsuggest disputes arise from contract lexis (Coward, 2017). The lack of
\nconsequence for the CA if risks aren\u2019t reported can cause disputes later in the
\nprocess. Condition precedents and the risk register meetings promote a good
\nrelationship between the contractor and the PM and allow each to stay informed.
\nThe programme update process though is extremely complex and requires a highly
\norganised and experienced PM for it to succeed. Finally, the push for
\narbitration can be positive in a continuing project but the case itself
\ndictates whether the claim is more effective than if litigation were used. <\/p>\n
\nNEC is overall seemingly more positive due to the promotion of good practice in
\nindustry however discrepancies in wording can hinder projects and the step away
\nfrom legalise is something to get used to. It is also important to note that an
\nexperienced and active PM can often make all the difference in NEC\u2019s success. <\/p>\nDisputes <\/h3>\n
\ngreat deal of disputes in the construction industry with the UK average value
\nof disputes at \u00a326m in 2016 and 17. (ARCADIS, 2017) Time taken to resolve these
\nhas seen obvious increases over 2016 and 17. This highlights a need for better
\ncontract administration and more robust documentation, there is also a need for
\nall parties to be more clear on their contractual obligations. A worldwide
\nstudy conducted by ARCADIS in 2017 highlights the main causes of disputes are; incorrect
\ndistribution of contracts, poorly handled claims and a lack of understanding
\nwhen it comes to contractual obligations. (ARCADIS, 2018) <\/p>\n
\n4D BIM is an example of the kinds of technology that can aid in mitigating such
\ndisputes. 4D Building information modelling introduces the 4th<\/sup>
\ndimension \u2018time\u2019 and allows CAD to show the project participants a predicted
\nview of each stage in the construction process. (Patel, 2018) This allows all
\nmembers of the project of what tasks, when and how they are carried out giving
\nthem an informed understanding of the plan. Seeing the project allows
\nindividuals to detect and circumvent problems such as an overcrowded work site;
\nissues that are difficult to spot using the regular critical path method
\nschedule. This early detection will reduce quick reaction rescheduling and
\nworkarounds will become less common meaning an overall reduction in disputes
\nover time\/cost loss. (NAVIGANT, 2016)<\/p>\n
\nsuch as smart phones, virtual platforms and the internet of things. Sharing and
\naccess of information is becoming much easier. When considering contracts such
\nas NEC4 with a continuously adapting programme in place, internet sharing of
\nthis information will allow all work members to have access to this information
\nimmediately, ensuring they remain informed of their roles in the project. (Dupay,
\n2015)<\/p>\n
\nanalysis suggests that the introduction of new forms of technology is a long
\nprocess and requires testing in order to earn the trust of the industry. However,
\nwhen used correctly, access to information and an increased awareness of site
\nprocedures will aid in the decrease of disputes once the industry becomes
\nacclimatised to using technology.<\/p>\nBig data and the
\nBlockchain<\/h3>\n
\nstorage capabilities of computational data and power and a drop-in sensor costs
\nmeans that we can gather more data than ever before. Data regarding anything
\nfrom utilities and building management systems to operational cost monitoring can
\nall be used to understand the behaviour of a complex site. Smart technologies
\nallow the collection and storage of big data and provide transparency through
\nbeing accessible. They can analyse such data and determine how one change may
\ninfluence others. Construction 2025 argues that live data will provide an
\ninsight into construction processes resulting in smarter more energy, work
\nforce and material efficient designs. (Designing buildings wiki, 2017) <\/p>\n
\nuse big data in every stage of the project. In the design stage, building
\ndesign and modelling, environmental data and even social media can inform what
\nand where to build. Analysing historical data can pinpoint where similar
\nprojects have failed, this makes the risk detection process much more accurate.
\n(Burger, 2018)<\/p>\n
\nstage, weather, traffic and community activity can dictate appropriate times
\nfor construction activities. Sensors allow machine use to be monitored and the PM
\ncan conclude optimum leasing times for equipment in order to reduce fuel usage
\nand ecological impact. (Burger, 2018) Environmental impacts can be considered
\nsuch as noise levels and particulates in the air, this is extremely useful in
\nbuilt up areas where standards must be met. For example, the tideway tunnel must
\nconform to the Clean Air Act 1993 which requires monitoring of dust released
\ninto the air. (Thames Water, 2014)<\/p>\n
\nto monitor the performance of the build. Bridges can be monitored to detect if
\ndeflection becomes out of bounds, this information can then be fed back to BIM
\nto schedule maintenance measures. <\/p>\n
\ndecentralised databases which securely records transactions in chronological
\norder. (Hughes, 2017) Blockchains are both faster and more secure than traditional
\nsystems and much more cost effective. There are usually a wide number of
\ncompanies involved in a project and typically there is a wait time on the
\nsharing of documents and information. Whether it be contracts or changes to the
\nprogramme made by the PM. Blockchain\u2019s centralised system means that all this
\ndocumentation is easily accessible to all members and wait times aren\u2019t an
\nissue. This allows management to spend more time focussing on the project than
\nthey would previously have spent transferring data. (Matthews, 2018)<\/p>\nSmart contracts and their implications<\/h3>\n
\nblockchain technology is proposing smart contracts in which software can negotiate
\nagreement terms, verify their fulfilment and executes these agreed terms. Although
\nsmart contracts are beginning to be talked about due to the success of blockchains
\nin bitcoin, the idea was originally introduced 20 years ago. As a smart
\ncontract is programmed to process claims, it removes the need for a middle man\/
\nlawyer making transactions more efficient and cost effective. But as the
\ncontract is imbedded in a blockchain, no one oversees the money leading to
\nquestions about virus protection and liability if errors occur. However, the
\nsmart contract has similar features to the blockchain in that it is immutable
\nthus no one can tamper with the contract and they are distributed meaning
\neveryone involved must validate the transaction for it to go ahead. (Tania, H n.d)\n<\/p>\n
\nrisks during the project s there is a lack of confidence in the use of AI for
\ndecision making, with tech engineers pushing this alternative means of dispute
\nresolution. (Hryniewicz, 2018) Perhaps due to fear of the unknown, many
\nengineers when asked in a study of the opinion of stake holders on smart
\ncontracts said that in the case of resolving a dispute it is necessary for
\nhuman interaction. (J, Martin & H, Escott, 2018) AI may limit the to and
\nfro traditional disputes have, there is an argument that it is common practice
\nto achieve trust through interaction. (Lewicki, 2003) However, some suggest
\nthat a fully automated system may lead to a greater degree of trust due to ease
\nof sharing and security. This may pose difficulties when trying to integrate
\nthe NEC\u2019s compensation event format into smart contract code. This in turn
\ncould pose confusion, such as who has the right to claim for compensation
\nevents and who is liable when such risks pose delays or cost impact. (Winfield,
\n2018) <\/p>\nReferences <\/h3>\n
\n
\n
\nClause 10, NEC3<\/p>\n
\n11, NEC3<\/p>\n
\n61-65, NEC3<\/p>\n
\n2.4, JCT <\/p>\n
\n16, NEC3<\/p>\n
\n30, JCT<\/p>\n