Navigating NEC Contracts: Successes, Challenges, and the Path Forward

In the ever-evolving landscape of construction and infrastructure projects, the New Engineering Contracts (NECs) have become a cornerstone in reshaping how projects are executed. As Chris Ruszala, Sensat's Utilities Business Development Manager, reflects on this year's NEC People Conferences, we’ve interviewed him on his thoughts on the successes and challenges of NECs, shedding light on the industry-wide issues they face.

“What is NEC?”

“One second, let me just take my sales hat off.

NECs, introduced in the UK in the early 1990s, have transcended borders, gaining global traction for their practical approach to project execution. The Institution of Civil Engineers (ICE) describes NEC as a series of contracts designed to manage projects comprehensively, emphasising collaboration, flexibility, and fair risk allocation. These contracts, written in ‘plain English’ for easy understanding, have played a pivotal role in high-profile infrastructure schemes like Crossrail and the London 2012 Olympic and Paralympic games.”

“What are some of the challenges NECs face?”

“Having had the pleasure to attend both NEC People's Conferences this year,  one challenge has become apparent to me: cooperation and collaboration and how they impact a project. I believe Neil Earnshaw  summarised this point brilliantly - “So long as there are people, there will be disputes.” 

While the foundation clauses of NECs stress the need for parties to act "in a spirit of mutual trust and cooperation," the practical application of cooperation in the construction industry remains a complex issue.

Whilst project teams must all work in parallel through cooperation, there is an opportunity here for teams to take this a step further to enhance each other's work using collaborative efforts. However, the challenge lies in the lack of a universally agreed method on how parties should interact, leading to potential issues being brushed under the carpet.” 

“How can collaboration be improved?“ 

The imperative nature of cooperation in construction projects often leads to a misconception that it automatically ensures project success. However, without a clear and agreed-upon framework for collaboration, the industry sees issues such as:

•  Compartmentalised decision-making 
• Conflicting objectives
• Miscommunication
• Lack of coordination

This lack of a structured, go-to communication platform also results in discrepancies in project plans, specifications, and changes, leading to errors, rework, and increased project costs.

From the panel discussions, this seems a familiar challenge. The industry recognises the need for better collaboration. Still, an agreed-upon method needs to be improved to create misinterpretations and inefficiencies on projects, which can lead to delayed delivery and million-pound project losses.

Interestingly, communication and collaboration aren't just verbal but digital. While verbal communication and collaboration directly impact any project, it's also critical to state that the flow of information and data is FUNDAMENTAL!

In summary, the necessary environment might be a face-to-face team meeting, but with the essential data, of which there is a ton, this collaboration is challenging!

“How can technological advancements support these challenges”

To address these issues, there is a growing call for a more holistic approach to collaboration. The construction industry needs to define and adopt more structured methods for collaboration that go beyond just acknowledgements of its importance. The NECs, while not explicitly requiring collaboration, could benefit from including specific guidelines or mechanisms to ensure effective collaboration and cooperation among project stakeholders.

Technology can provide tremendous improvements such as:

Improved efficiency: Providing real-time access to accurate data and fostering seamless collaboration enhances project efficiency. Stakeholders can make informed decisions faster, minimise delays, and optimise resource allocation.

Enhanced communication and coordination: Communicating virtually through collaboration enables teams to communicate more effectively among project teams. This leads to better teamwork, reduced misunderstandings, and improved alignment of goals.

Risk mitigation: By identifying potential issues and risks early, teams can minimise project disruptions and costly rework. Proactive risk management based on reliable data empowers stakeholders to take preventive actions and ensure project success.

Increased Transparency: A data-driven approach promotes transparency among all parties involved. Clear documentation, progress reports, and visual representations foster trust, reduce disputes, and establish stronger client relationships.

While these benefits can be realised through collaboration, as mentioned previously, It's important to emphasise that having an agreed method of communication and collaboration is key without a “single” environment for project delivery teams to share, overlay and interrogate project data the same issues we see daily will start to creep back in.

What is the future of NEC?

NEC is like a living organism constantly evolving and developing through time, so NECs have undoubtedly been a positive change to project management in the construction and infrastructure industry. However, challenges still need addressing that will ultimately help the industry to unlock collaboration, not just cooperation,  and this will most likely be found using technological solutions (like Sensat).

While not covered in this blog, NEC professionals are concerned about NEC project managers, input into early warning systems and programme management. However, this is definitely for another Sunday afternoon!

As the industry grapples with these issues, the evolution of NECs and the adoption of effective collaboration methods and technology will play a crucial role in shaping the future of construction projects worldwide.