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NEC4, Early Warning and Compensation Events

Most people would agree with the general statement that increased collaboration in a business is a good thing. Since the new engineering contract model, version four (NEC4) has a reputation for improving collaboration between construction clients and suppliers, jumping onboard with such contracts should be a no-brainer, right? The answer, as usual, is that it depends.

Like most general statements, foregone conclusions are often true and untrue in varying proportions based on the situation.

In NEC4’s case, it is because that while its framework does lay down several helpful policies and processes, especially around the Early Warning Notice (EWN) and Compensation Event (CE) elements, these conceptually simple processes still have the potential to spawn many sub-processes that span multiple parties as well as multiple internal departments in those parties. In addition, many clients, particularly UK government-based ones, also demand that you adopt their IT systems in the process. So much for simplicity.

Then why put your organization in a place where it must comply with processes over which it has little input?

Because organizations know that these processes — executed to their best advantage — reduce risk to both client and supplier. Let’s take a closer look at how this happens and what you can do to get moving in the right direction.

Simplifying the Complex to Avoid Risk

Even though NEC contracts don’t magically make bad projects any more deliverable, they can at least limit the harm and, potentially, provide some solid red flags that the latest and greatest “next big thing” may not be all it’s cracked up to be.

To decipher such flags, though, we must first make complex information accessible. Experience has shown that we can do this by following these four principles:

• Seamlessness. Make the information input a part of the day job. This can be done by reusing known data such as user details and then making it clear what the user must do to complete the task and pass it along the chain, if possible, without requiring the user to remember who the next person might be.
• Relevance. Ensure that people are only expected to complete data that they should know or would likely have reasonable access to. Asking someone to fill in a form that includes data (especially in “mandatory” fields) that is outside their purview is an open invitation to default box ticking or the use of “alkjdfhkaskf” in text fields.
• Time Sensitivity. By this I don’t mean having a critical dependence on immediate input, but being sensitive to how people use their time. For example, if you are going to expect a site manager to complete a two-page form that can’t be saved midway through, then don’t expect to get the form anytime close to the event.
• Reusability. Unless it’s required for separation of duties or other controls, don’t ask people to re-key data. Data is like water — it’s always cleanest and most reliable at its source. Capture it appropriately the first time and then leave it alone. This extends to making the same data accessible where appropriate to derive value, with a corresponding requirement to know its origin by using appropriate tags or other metadata.

Enhancing NEC Outcomes Via a Holistic Approach…and the Right Tools

Why are these four principles so important? Because with these in place we can share a truly holistic, integrated view of our project’s data, leveraging the value of project data analytics and common classifications.

This integrated approach also means that decisions can be made with more supporting data to back them up, and in a timelier fashion. Why spend a week fixing a problem that surfaced on a monthly report when a supervisor could have resolved it in a few hours on the day it happened?

Given the above, how do we get to a situation where a project’s entire delivery community can collaborate in a manner that increases trust, improves outcomes and reduces risk?

Having tools capable of supporting the four data principles is a crucial part of this capability. In our previous example for time sensitivity, a very quick “holding pattern” to capture urgent or critical data with a more measured step later would be a helpful capability to have.

While it’s clear that EWNs and CEs are at the heart of the client/supplier conversation, the fact is that everyone in the chain will have their own controls, decision points and “internal” work processes to deal with as well, most of which will be aimed at reducing corporate risk.

Building Your Body of Knowledge While Collaborating

Given the above, I feel it’s incumbent on processes and tools to allow for the fact that project data goes on a journey which should be supported and managed according to the four principles. This can allow organizations to make all the small decisions in a sometimes-lengthy chain between event and outcome in a way that delivers value across the entire length of that chain. This will result in proper delivery to every organization in the chain individually and collectively.

Let’s face it. Trying to ignore the fact that a supplier will perform due diligence before notifying a client leads to unwarranted pressure on all sides. Compelled collaboration is no substitute for a shared understanding that, while both organizations may see the value in a well-delivered project, there is still the tension between them both wanting their project delivered on specification, on time and on budget.

A corporate body of knowledge is a hard-won thing, and something understandably worth protecting. Every project delivered, process followed, mistake made, opportunity taken and moment of inspiration captured has value — even more so in this age of machine learning and artificial intelligence.

I firmly believe, therefore, that those organizations that take the opportunity to properly capture and handle the data needed to build their body of knowledge will make better decisions, because those decisions will be informed by their experience and the advantage of their insights. This can only lead to more project wins, more often.

Ready to take a deeper dive? Schedule a one-on-one consultation to find out how InEight can help you succeed in your construction management journey.

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