Wednesday 28 March 2012

Should the Fee be fixed in ECC target cost contracts?

A question from a client at the recent NEC Users' Group annual Seminar related to the thoughts of changing the variable Fee approach with target cost contracts. These are his further thoughts, a Newsletter article is likely but some opinion in the meantime would be very helpful.....

ECC target cost contracts (main Options C and D) provide a mechanism for charging Fee based on the tendered fee percentage x the cost (Defined Cost). This is a variable Fee approach.

A number of alternative approaches are being adopted by clients to either fix the Fee amount regardless of costs incurred (a lump sum Fee), or to “invert” the fee calculation to base the Fee on the target (Prices) rather than the Defined Cost. In doing so, this is thought to provide benefits of a “double incentive” to the Contractor to optimise or dilute Fee when costs are below or above target, to give the client better cost certainty of the amounts paid in respect of Fee sums, and not to “reward” the Contractor by way of additional fee recovery when costs exceed the target.

Comments, thoughts and soundings on these alternative approaches are welcomed. Are these alternative approaches commonplace throughout the  industry, are they seen as fair and equitable, are there any unintended consequences?

Rob

Monday 26 March 2012

z clauses v Works Information

I see quite a few examples of very poor tender documents indeed - both in terms of conditions of contract (Contract Data with z clauses) and the brief (Works Information). The z clause part of the document is often very extensive indeed, to the point of wondering why bother using an NEC3 Contract at all. Apart from tackling this, I'm curious as to what users think is a realistic and sensible split of time/cost spent between preparing lets say z clauses against the Works Information, assuming NEC3 ECC is the contract chosen.

Although each contract/project has its own constraints/risks etc, I believe the intelligent client should probably spend 10 or 20 times more time/cost on producing a high quality, clear and comprehensive Works Information as opposed to z clauses. I sense the reverse is often too - that has to be madness!

What do you think?

Tuesday 20 March 2012

NEC Users' Group Annual Seminar discussion

Hi all,

Hopefully many of you made the annual NEC Users' Group Annual Seminar last Monday, a really good turnout, event and plenty of debate as usual. If there's any follow up queries, something you didn't get chance to ask or not sure of any issue then by all means debate here or use the Users' Group helpline if you prefer.

What came across to me were problems associated with not following the contract or not using the correct language - both are extremely important and will put you in a better place than you would otherwise be.

Rob

Wednesday 14 March 2012

Student NEC research

Dear all,

You can all have long lunches today!

More student research, this student says...

I am currently an Honours level student at Glasgow Caledonian University studying Quantity Surveying. As part of my final year dissertation I am conducting a survey of people in the industry with practical experience of NEC3 projects. The title of my dissertation is 'Dispute Avoidance and NEC3; to what extent has use of the NEC3 contract reduced disputes?' The purpose of the survey is to gather information from NEC3 users on their experiences of how successful the contract is at reducing disputes.

Thank you,
Rob

NEC student research

Another student looking for support with their research who says...

I am a student researching the role of the Project Manager on NEC contracts.

I would be most grateful if you could forward the link to my survey to the NEC Users' Group members.

Thank you.
Rob

Student NEC research

Dear all,

Another student survey if you would please. This student  aims to determine the impact of the gain / pain share mechanism specifically, in contributing to value for money in NEC contracting. Depending on whether the user is basing their response on the use of Options A / B, or C / D, a slightly different survey route will become available. He then hopes to be able to compare and contrast, and discover the impact this incentive mechanism (and its absence) has on value for money.

Thank you.

Rob

https://www.surveymonkey.com/s/73S3QPF

Tuesday 6 March 2012

Any good examples of use of X12?

We've had a few enquiries recently on the extent of use of secondary Option X12 Partnering in NEC3 Contracts. Maybe this is a sign of greater collaboration, let's hope so. Anyway, it's always a real problem trying to follow who is doing/using what and therefore are there any users out there who have successfully used X12 and would like to share:
- project details?
- experiences?
- benefits?

Friday 2 March 2012

Student NEC research

Dear all,

Another survey to complete on your next tea break if you would be so kind.

The title is ......"Does the NEC help the project manager to act as a competent project manager?"

And the student says "The NEC (www.neccontract.com ) is advertised as a project management tool - but does it work? As part of my dissertation for an MSc in Project Management, I would be grateful if you could spend 5 minutes of your time to complete a short survey on the above topic. I hope to share my findings within the NEC and APM communities.

Many thanks
Ignacio Herrero
Graduate Engineer and Project Manager"
www.surveymonkey.com/s/ignacioherrero

Thank you,
Rob