Why reinvent the wheel if you don’t have to? That’s the idea behind the New Engineering Contract, Version 4, aka NEC4. NEC4 is a construction contract suite developed in the United Kingdom, with Version 1 being released in 1993.
The intent was to templatize different contracts in a mix-and-match style and adopt uniform, straightforward terminology for more consistency and a reduced need to create contracts from scratch. This has had a positive, direct impact on project management, which has helped to deliver improved outcomes on projects of all types and sizes.
Used extensively in the UK and other countries around the world — including Australia, New Zealand, South Africa and Hong Kong — NEC4 contracts continue to gain broader acceptance. However, it has yet to see widespread adoption in the United States.
Over the last thirty years, it has evolved to outline and emphasize collaboration, transparency, change management and risk management — contract elements that ultimately improve project outcomes. Contractors and owners are relying on modern technology to better manage them. And leveraging integrated platforms offers the best opportunity to optimize how NEC4 contracts are carried out.
Even without formally implementing the contract suite, American construction companies may still benefit from its intent by adopting an integrated platform to streamline and manage the above elements. Let’s look at some of NEC4’s top project-impacting elements and how an integrated platform supports them:
Fosters a more collaborative approach to working and decision making
Right from the beginning, the unconventional step of building collaboration into the NEC contract suite was taken. It might sound unusual to do, given how collaborative construction has to be to successfully achieve project outcomes. But it’s because it has to be that this makes sense. Its inclusion elevates collaboration from being assumed to being required.
Having collaboration and workflows codified into a contract is a great start to establishing working relationships that are more egalitarian and cooperative — and less adversarial. But to further ensure project teams can work together effectively, having technology that supports them must be part of the mix.
That’s what makes a cloud-based integrated platform so ideal. The platform is designed to work across all business functions, making all project data, documentation and workflows accessible to project teams and stakeholders. Shared access to the same real-time information makes it far easier and more efficient for everyone to collaborate from a common understanding for more informed, consensus-based decision making. The platform becomes a tool to overcome the tendency toward miscommunications and misunderstandings that stem from the lack of such access, which inevitably impacts the ability to meet contractual obligations.
Opens up transparency into project data and documentation, communication and workflows
How many contracts have you seen that stipulate all communications must be easily understood and accessible? NEC4 lays out this proactive approach so there’s a prevailing understanding of the project’s performance, the planned workflows, and the expected overall requirements and outcomes.
The common thread among these is transparency. An integrated platform supports this in several ways: as a single source of truth to access information, via earned value management (EVM) metrics that track ongoing project performance and direction, through online dashboards that condense all those metric values and display them in visual formats for quick-hit comprehension; and as a communication channel to share and explore issues and insights. In essence, integrated platforms connect people with data and to each other, forming a digital ecosystem.
This level of transparency afforded by the platform promotes a sense of trust for project owners who want validation not only that outcomes and contractual requirements are being met, but how. Taking a step further, consider how assuring it is for project teams when they see positive progress and performance data, knowing everyone is working solidly toward shared goals.
Facilitates improved, auditable change management processes
What does a particular change involve? Who approved it? Who completed it, and what did they do? How does the change impact workflow, cost, schedule, scope and quality? The answers to these types of questions can be hard to come by — because even though changes are inevitable, they haven’t always been easily or reliably trackable.
NEC contracts emphasize real-time updating on the details of changes. Integrated platform technology streamlines managing this process, bringing tracking, transparency and accountability to the fore. From the moment a change is created, its workflow can be tracked for all to see with relevant details linked to it — approvals, costs, discussions and documents, for example. This creates a digital breadcrumb trail of accountability.
Promotes proactive, data-driven risk management and dispute prevention
Owners and contractors alike worry about risk. What risks are imminent? Where are they? How will they impact the owner’s project and the contractor’s business? How can they be resolved? Will a dispute result?
NEC contracts seek to keep surprises from happening while carefully allocating the burden of risk among the parties and reducing the likelihood of disputes. It all comes down to how they’re managed.
With the contract suite’s prioritization of ongoing collaboration, transparency and real-time documentation — things an integrated platform helps manage — potential issues have less chance of becoming cause for concern and the basis for a dispute.
One functionality within the platform can play a crucial role: EVM performance data. As an objective metric highly reactive to risk factors, it acts as an alert system when any of its schedule (SPI) or cost performance indicators (CPI) ventures outside of its normal operating ranges — signaling to project team members and stakeholders that something requires attention. That makes it an ideal companion to the Early Warning Notice (EWN), NEC’s risk management tool, meant to identify budget and timeline risks to address before they worsen.
The functionalities of an integrated platform inherently honor the spirit of the NEC4 contract suite. So whether or not you use the specific suite, your projects can still benefit from the collaboration, transparency and documentation capabilities like those in the InEight integrated platform. Learn more by scheduling a time to talk with us.
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