•~nec
PROCURE. MANAGE. DELIVER.
Using the ECC: the contract strategy
W h e n to use t h e ECC
Used by a Client to engage a first tier Supplier
2 To undertake any type of engineering and construction work
3 That requires sophisticated management techniques
4 Any level of design responsibility between the Client and Contractor
5 Drafted to be used in any country
Typical Client designed arrangement
Project Manager Adjudicator
Client
PSC o r PSSC DRSC
Designer
PSC o r PSSC
Contractor
Supervisor
PSC o r PSSC
Subcontractor Supplier
ECS o r ECSS SC o r SSC
Typical design & build arrangement
Project Manager Adjudicator
Client
PSC o r PSSC DRSC
Supervisor Contractor
PSC o r PSSC
Subcontractor Designer Supplier
ECS o r ECSS PSS o r PSSC .C o r SSC
When to use the short form?
Engineering and Construction Short Contract (ECSC) is for use with contracts which
• d o not require sophisticated management techniques and
• comprise straightforward work and
• impose only low risks o n both the Client and the Contractor
Not necessarily low Not necessarily
financial value short duration
When to use the short form? Differences
--~nec4 ■ Only price based - equivalent to ECC Option A and B
■ No options - but includes
engineering and construction
short contract
• X18 - limitation of liability, in part
• Y(UK)2 - Housing Grants, Construction & Regeneration
Act 1996
■ Most of the procedures, but less of the detail
■ Fewer compensation events
■ Contractor assesses amount due and notifies all
compensation events
201?
The Engineering and Construction Subcontract (ECS)
•~~nec4 ■ ECS is designed to be a back-to-back contract with ECC
■ ECC Client, Project Manager and Supervisor all become ECS
engineering and Contractor
construction subcontract
■ ECC Contractor becomes ECS Subcontractor
■ Certain timescales are changed, for example for
communication and payment
■ More detail on the ECS in Volume 2 and 4 of the ECC User
Guides
■ Engineering and Construction Short Subcontract works in
the same manner with the Engineering and Construction
Contract
June 2017
ECC people
People in contract, defined by their role.
These two are the
Parties to the contract
or
Dispute Avoidance
k Board 1
Others (e.g. designers,
Supervisor
fl
Contractor statutory authorities) r
fl F
1
fl ■ fl
fl I fl
Adjudicator
fl Project Manager fl
fl or fl
fl Dispute Avoidance*r
7
1 L Board
The ECC structure
The ECC structure is ALWAYS have the Choose ONE main Option clause (A
modular in form with core clauses to F) which decides the mechanism
5 modules, normally for payment and t h e relevant
chosen by the Client schedule of cost components
Choose ONE dispute Choose as many secondary Add any additional
resolution Option Option clauses as required clauses (prefixed Z)
clauses (W1, W2 or W3) (prefixed X or Y)
Core clauses
1 General
2 The Con tractor 's main responsibilities
3 Time
4 Quality management
5 Payment
6 Compensation events
7 Title
8 Liabilities and insurance
9 Termination
Main Option Clauses
A Priced contract with activity schedule
Priced contract with bill of quantities
Target contract with activity schedule
D Target contract with bill of quantities
E Cost reimbursable contract
Management contract
Activity Schedule (Option A)
Lump sum contract
Project well defined at tender
I
Activities usually defined by Contractor
Activities priced by Contractor r
l\ %Mt
---------1 ------------- —
Payment on completion of defined activities
I-
Milestone payments by grouping activities
Activity Schedule can be adjusted by Contractors reflect Scope
Bill of Quantities (Option B)
Contractor prices
Project well defined
Standard method o f items in Bill of
a t tender b u t
measurement used Quantities at
change likely
tender stage
Contractor paid Original work is re
for quantity of measured (but not
work completed necessarily changed)
Target contracts (Options C & D)
Click each number to reveal
Contractor \s paid or pays
a share of the difference
between total costs and
final target, at the end of
the contract
Target contracts (Options C & D)
Click each number to reveal
Work must be adequately
defined
to establish target
Target contracts (Options C & D)
Click each number to reveal
Target price set by activity
schedule (C) or bill of
quantities (D) which
Contractor prices at
tender
Target contracts (Options C & D)
Click each number to reveal
Contractor tenders Fee
Target contracts (Options C & D)
Click each number to reveal
Con tractor gets paid
forecast Defined Cost
+ Fee
Target contracts (Options C & D)
Click each number to reveal
Target moves with
compensation events
(Options C & D)
and remeasurement
(Option D)
Target contracts (Options C & D)
Click each number to reveal
Contractor is paid or pays
a share of the difference
between total costs and
final target, at the end of
the contract
Cost reimbursable contract (Option E)
Used for example for Contractor Contractor paid Contractor has n o
emergency, tenders Fee forecast Defined financial risk (except
experimental, research Cost + Fee adequacy of Fee)
work where
• work poorly defined
at tender
• work subject to
extensive change
Management contract (Option F)
Click on each icon to learn more
Contractor generally Most work Contractor tenders Contractor Contractor has limited
organises work only carried out by pr/ces (lump sum) gets paid financial risk, except
Subcontractors and Fee forecast for adequacy of
Defined Cost • Fee and
+ Fee • prices for work it
does itself
Financial risk of main Options
lient
Depends o n
pain/gain
mechanism
Contractor
Dispute resolution clauses
for adjudication, where the HGCR Act 1996
W1 does not apply
W2 for adjudication, where the HGCR Act 1996 applies
where a Dispute Avoidance Board is used
Secondary Option clauses
Click each number to reveal
X1 - Price adjustment for
inflation
Secondary Option clauses
Click each number to reveal
X2 - Changes in the law
Secondary Option clauses
Click each number to reveal
X3 - Multiple currencies
Secondary Option clauses
Click each number to reveal
X4 - Ultimate holding
company guarantee
Secondary Option clauses
Click each number to reveal
X5 - Sectional Completion
Secondary Option clauses
Click each number to reveal
X6 - Bonus for early
Completion
Secondary Option clauses
Click each number to reveal
X7 - Delay damages
Secondary Option clauses
Click each number to reveal
X8 - Undertakings to the
Client or Others
Secondary Option clauses
Click each number to reveal
X9 - Transfer of rights
Secondary Option clauses
Click each number to reveal
X10 - Information modelling
Secondary Option clauses
Click each number to reveal
X11 - Termination by the
Client
Secondary Option clauses
Click each number to reveal
X12 - Multiparty collaboration
Secondary Option clauses
Click each number to reveal
X13 - Performance bond
Secondary Option clauses
Click each number to reveal
X14 - Advanced payment to
the Contractor
Secondary Option clauses
Click each number to reveal
X1 5 - The Contractor's design
Secondary Option clauses
Click each number to reveal
X16 - Retention
Secondary Option clauses
Click each number to reveal
X17 - Low performance
damages
Secondary Option clauses
Click each number to reveal
X18 - Limitation of liability
Secondary Option clauses
Click each number to reveal
X20 - Key performance
indicators
Secondary Option clauses
Click each number to reveal
X21 - Whole life cost
Secondary Option clauses
Click each number to reveal
X22 - Early Contractor
involvement
Secondary Option clauses
Click each number to reveal
Y(UK)1 Project Bank Account
Y(UK)2 The Housing Grants, Construction and Regeneration Act 1996
Y(UK)3 The Contracts (Rights of Third Parties) Act 1999
Z Additional conditions of contract
Contract documents
Contract Data parts one (Client) Scope Prices Site Information
and two (Contractor) • specifies and describes • depends on main • describes the Site
• details specifics - see template the works Option chosen - and its surroundings
Contract Data included in • states any constraints include activity
delegate packs o n how Contractor schedule or bill of
• the specific details for the Provides the Works quantities
contract blank forms can be • mainly specification
and drawings
found at the back of the
• supplied by Client or
contract itself
Contractor (for design)
Other documents
With Contract Data
• If Option X12 is chosen - Partnering Information
• If Option X20 is chosen - incentive schedule
In Scope
• if Option X4 is chosen - ultimate holding company guarantee
• if Option X8 is chosen - undertakings to the Client or Others
• if Option X1 3 is used - performance bond
