NEC Contracts – Maintaining Good Communications - Part 1
This blog considers the importance of maintaining good communications in accordance with the requirements of NEC Contracts as a means of promoting dispute avoidance.
NEC disputes often arise where the parties fail to communicate in the manner required by the contract. For example, I have seen situations where a verbal instruction has been given to a site operative by the Project Manager or Supervisor, and there has been nothing subsequently put in to writing. This has led to disputes where the instructed works have been carried out by the Contractor but not paid for, with the project management team asserting that the works were never instructed.
How could such a situation have been avoided?
This is where we need to look at the NEC contract itself to see what is required when it comes to communications between the parties (incl. for the purposes of this blog, the Project Manager and Supervisor).
NEC contracts are prescriptive when it comes to the requirements for communications related to matters such as the giving of notices, making applications for payment (as NEC 4) and the procedures required in respect to compensation events. Whilst these are matters to be considered in separate blogs, this blog will focus on NEC 4 clause 13, which details the contract’s general requirements in respect to ‘Communications’.
Starting with clause 13.1, we note:
“Each communication which the contract requires is communicated in a form which can be read, copied and recorded. Writing is the language of the contract.”
So, right from the start, NEC’s intention is clear – every communication should be in writing; it is the very language of the contract itself. These communications could include documents sent by post, email, and any other electronic means.
In keeping with the trend towards digital contract management, NEC 4 continues in clause 13.2:
“If the Scope specifies the use of a communication system, a communication has effect when it is communicated through the communication system specified in the Scope.
If the Scope does not specify a communication system, a communication has effect when it is received at the last address notified by the recipient for receiving communications or, if none is notified, at the address of the recipient stated in the Contract data.”
Those familiar with NEC 3 may remember that its clause 13.2 uses similar wording to that used in the second half of the NEC 4 version above. However, NEC 4 now includes for the use of a ‘communication system’ as ‘specified in the Scope’ (‘Scope’ is akin to NEC 3’s ‘Works Information’).
It is essential that those working under NEC 4 projects familiarise themselves with any communications requirements that may be specified in the Scope – such as the use of ‘4P’.
If use of a system such as ‘4P’ has been specified, those using NEC 4 must pay particular attention to the fact that “a communication has effect when it is communicated through the communication system specified in the Scope.” [Emphasis added.] In other words, if you do not use the communication system as specified in the Scope, your ‘communications’ could become meaningless and have no effect!
Another problem frequently encountered with ‘communications’, is the timing. To ensure that all matters are dealt with promptly under NEC 4, clause 13.3 requires that:
“If the contract requires the Project Manager, the Supervisor or the Contractor to reply to a communication, unless otherwise stated in these conditions of contract, they reply within the period for reply.”
Firstly, we can discern that ‘the Project Manager, the Supervisor’ and ‘the Contractor’ are all required by the contract to respond to a communication. Further, NEC 4 imposes constraints to ensure that all matters are dealt with in a timely manner. For example, clause 61.3 identifies the maximum amount of time within which a contractor must notify a compensation event, i.e. 8-weeks. Other sections of the NEC contract impose a timetable by which certain actions are supposed to have been carried out – e.g. clause 62.3, where the Contractor has 3-weeks to submit a quotation after being instructed to do so (in respect of a compensation event), and then the Project Manager has 2-weeks to respond (please note that timings may be altered pursuant to clause 62.5).
However, where the ‘conditions of contract’ do not impose a specific time frame, clause 13.3 still requires that other communications be responded to ‘within the period for reply.’ This period will be defined in the Contract Data Part 1 and is typically a period of 2-weeks.
The prompt responses to communications, as required by NEC contracts, ensures that matters are dealt with in a timely manner which then results in a more efficiently run project. In my experience, failure to observe the NEC’s requirements in respect of communications has led to a number of unnecessary disputes that could so easily have been avoided had the parties acted ‘as stated in the contract’ and issued all their communications in writing, and on time.
This is the end of Part 1 of this blog. Part 2 will continue to look at the provisions of NEC 4 clause 13 where I will consider, amongst other things:
· the Project Manager’s withholding acceptance of a communication submitted by the Contractor and, the requirement for the Project Manager to explain its' reasons for doing so in sufficient detail.
· a provision whereby the Project Manager and Contractor can agree to extend the period of reply.
· the issuing of certificates.
· the importance of issuing notifications and certificates as separate communications, and
· the Project Manager may only withhold acceptance of a communication for a reason stated in the contract.
I hope that you have enjoyed considering the first few provisions of NEC 4 clause 13. If you would like further information on anything included in this blog, or would appreciate assistance with a current dispute, please feel free to send me a message or give me a call. I would be pleased to hear from you (07958 102334).