Busting NEC myths (part I)
This is the first blog building on the slot that NEC had at this year’s APM conference ‘Myth Busting: dispelling the myths to improve project delivery success’. The part I in the title is a bit of a clue that there could well be a number of myths to bust! So here we go…..
Myth 1: NEC3 contracts are admin heavy and not what it is was originally meant to be
If I look back to when I first started in industry on my first job we had approaching 10 different ways that change might occur on our project – verbal instructions, confirmation of verbal instructions, technical queries, requests for information, letters, claims, site instructions, variation orders, perhaps even minutes of meetings – a process for each, most of these actually not even being supported by the chosen conditions of contract (not NEC) and no agreement ever on anything until after the site works were completed and the contractor had half an idea of his subcontract/own liability – absolute chaos.
NEC3 contracts rationalise these processes and provide a slick and sensible approach for dealing with changes to the client’s requirements (the works information, scope etc, depending upon which NEC3 contract is being used). So rather than admin heavy I would argue most, if not all of the NEC3 processes are necessary and reflect modern day good contract management practice. Managing projects is not an easy task, doing everything and managing extensive change and risk on complicated schemes on the nod of a head is completely unrealistic. But then there’s always room for improvement, NEC will not stand still and we would happily rationalise processes that do not bring about value to projects.
Myth 2: NEC3 are being misused within project management
APM’s user review found that Z clauses (or ‘zombie’ clauses!) are being misused within project management. It is said they are there to enable organisations to work together collaboratively in highly regulated industries but sometimes are in fact being used by the stronger party to ensure the contract is more in their favour.
The proliferation of ill-conceived and poorly drafted amendments to standard form contracts have plagued our industry for as long as I can remember now. If a mass of Z clauses are ‘necessary, then I would argue there’s every chance that NEC3 contracts are not for you; or perhaps no one has taken the time to understand them. I see many instances of clauses being snipped or altered that have profound effects because the drafter simply doesn’t understand the starting point of the NEC3 contract; or a raft of ‘my company thinks NEC3 contracts need amendments’ so here they are for considerable £££s to the client without often even bothering to understanding how the client wishes to behave/do business; and just how many of these Z clauses come with a flow chart to validate they work, or a guidance note to perhaps explain the clause in use?
So my plea to clients is to use a standard form of contract (such as NEC3 contracts) with minimal amendments – put your efforts (and finances) into producing brilliant tender documents rather than muddled-up z clauses, which dump risk, confuse and detract people’s focus away from producing fantastic project outcomes. But then people might lose fee income here, what a shame!
Why does this industry exist – to appease other industries or to create some brilliant cost-effective outcomes? So I’m struggling to bust this myth. Z clauses in my opinion are definitely being misused; there some shocking examples and we have to tackle this. What I’m not convinced of is the suggestion that people make changes to favour the client – I’ve never heard this proposition from any client I’ve ever worked with on an NEC contract. The perception is that’s why people make changes perhaps, but maybe we stumble into this outcome rather than deliberately create it?
This blog is written and sponsored by NEC3.
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The Annual General Meeting of the APM Hong Kong branch was convened in the evening of Tuesday 19th May 2015 at Royal Hong Kong Yacht Club.