Whether you’re a contractor, an investor or a developer, no one enjoys legal disputes during construction projects, particularly when they cause delays.
While some disputes happen despite significant planning, there are steps you can take when implementing contracts to avoid difficulties arising.
New Engineering Contracts (NECs) are designed to minimise these issues by outlining a collaborative approach to project management and procurement, cemented in best practices.
Adam Davis, one of our construction law experts, takes a look at some of the ways in which these contracts can be the key to making your project a well-oiled machine!
An early warning system
One of the standout features of NEC contracts is the early warning mechanism.
This system requires both parties to raise any potential risks or issues as soon as they become apparent.
Whether it is a delay, cost increase, or change in scope, early warnings allow problems to be addressed before they become critical. They may also outline who is responsible for acting on issues and resolving them.
By dealing with issues proactively, parties can avoid the costly disputes that often arise from unmanaged risks.
‘Mutual trust and cooperation’
NECs require all parties within the agreement to act according to this principle.
They place a strong emphasis on joint decision-making and acting always in the best interests of the project.
This collaborative approach means that decisions are made with input from all stakeholders, reducing the likelihood of a dispute.
This clause can also help to reduce the severity of any disputes that do arise, such as payment disputes which could delay a project. An NEC is likely to require parties to try to end the dispute through negotiation and mutual understanding.
Responsibilities
NECs are designed to outline a project and promote collaboration, so these agreements may detail:
- The timeline of work to be completed
- Quality expectations
- Payment
- Roles and responsibilities of all parties.
Being clear on these from the start is key to avoiding disputes, mistakes or accidents on-site.
Clear communication channels
Another way NEC contracts help prevent disputes is by ensuring clear and structured communication between parties.
The contracts lay out specific procedures for exchanging information, ensuring that all parties are kept informed throughout the project.
This includes regular meetings and updates, which keep everyone on the same page and allow for quick responses to any emerging issues.
What should I look out for?
Agreements between parties in construction projects are often complex and may require multiple contracts.
It is important that, if you include bespoke clauses in an NEC agreement or any other contract, clauses do not contradict one another.
This can result in disputes and delays, bringing your project to a halt.
A specialist solicitor should always review your construction contracts to ensure that your agreements are clear, binding and conducive to a well-run project.
Need further advice on NECs? Contact our team today.