This year, on July 13th, ICE (Institution of Civil Engineers) hosted a conference to commemorate the 30th anniversary of the NEC Contract. Our founder, Andrew Baird, and our MD, Mile Sofijanic, were invited to this historic occasion. They have both presented on 30 years of the NEC contract in South Africa. Mile Sofijanic’s presentation is embedded below.
Promote the NEC in South Africa as intended
“It is my honour and privilege to follow in the footsteps of Andrew Baird in trying to further promote use of the NEC Contracts in South Africa as intended.” Mile Sofijanic.
There are still however many challenges that Andrew Baird was faced with during the past 30 years. Even though many of South African blue-chip companies, state owned organisations and institutions adopted the NEC as the contracting platform hoping for better outcome in the procurement processes and projects implementation, a lot of resistance to embrace collaboration particularly in their respective legal departments was faced. This is clearly reflected in several Z clauses (sometimes more than 40) that often change the essence of the NEC, which is further exacerbated by some project management resources, let’s call them the “old guard”, which would turn any good idea into confrontation and “there is only one winner here and it is me” attitude.
In an ongoing battle of those who believe in collaboration vs. those who do not, there is a change on the horizon, and it is partially driven by the economic crisis that South Africa is faced with. Very often it is true that times of crisis are the best times to innovate or in South Africa’s to fully embrace the spirit of mutual trust and co-operation. It is simple because we either change or we will face an unfortunate economic collapse.
Silver lining…
1 – The Square Kilometre Array (SKA) is a multibillion-dollar radio telescope project being developed in South Africa (mid-frequency) and Australia (low-frequency). The Jodrell Bank Observatory in the United Kingdom houses the combining infrastructure, the Square Kilometre Array Observatory (SKAO), and the headquarters. The SKA cores are being constructed in the southern hemisphere, where the view of the Milky Way galaxy is sharpest and noise, light, and radio interference are lowest. The NEC4 suite of contract is being used for the project, and ECS aided the local team with the contract setup and initial introduction to the NEC4.
2 – Witwatersrand University, the University of Cape Town, and Durban University of Technology are using the NEC4 with continued assistance from ECS. Some initiatives make use of Framework Contracts and risk/reward contracts. ECS also aided the South African Council for Scientific and Industrial Research in the establishment and operation of the NEC4. It is encouraging that bright, young minds are being introduced to collaborative contracting from early on in their careers as a sign of a brighter future.
3 – During 2021, ECS started engaging with SCAW Metals, which resulted in appointment of ECS as the PMO partner, fully integrated with SCAW Metals.
The portfolio of projects consists of two main projects, which are a new Continuous Casting Machine and Narrow Hot Strip Mill supported by other projects necessary for operations.
The projects are executed in a brown and red field environment. A combination of engineering and equipment supply from an OEM inItaly and local engineering and construction bring all elements together.
Although the client insisted that we “have to use” the FIDIC Red Book, ECS managed to:
- Establish a fully collaborative project culture,
- A mechanism of Early Warning was established,
- Pricing was done, under “option B” but work was done under “option E”, which required introduction of the “fee percentage”, “Defined Cost”, “working areas” etc.
- We managed to engage contractors on an “Early Contractor involvement” basis to enable value engineering, constructability and maintainability studies,
- The programme was agreed through collaboration and consultation.
After initial doubts by both contractors and the client team (not the owner!), we managed to get excellent results and a model project that all other clients are now looking at and considering their options.
4 – Based on the success of our project at SCAW Metals, AngloAmerican Platinum visited the site and negotiated an agreement for collaborative project implementation support over three year period to try and change the way about the current use (read: “misuse”) of the NEC3 suit of contracts. Just for general information, Southern Africa has the largest deposits of Platinum in the world and in support of transformation to generation and use of green energy in the future.
5 – ECS signed a three-year contract with Eskom (the same Eskom that Andrew started his NEC work with 30 years ago) for training across all contractual platforms. Let’s hope that we will get “some more light” out of Eskom through collaboration with NEC Contract in South Africa.
6 – One of the major mining company invited proposals for GBP400m extension of life project with the following statement:
“In view of the often unfavourable schedule and cost outcomes of high-value, complex construction projects within the South African mining industry, the company is endeavouring to explore alternative contracting models. Within the traditional models of contracting (predominantly bilateral lump sum or re-measurable contracts, based on the General Conditions of Contract), competing positions and interests exist between the Owner and the Contractor, which in turn may result in an adversarial approach to the relationship from the outset. Parties will usually protect their individual interests, without consideration or appreciation of what the best interest of the collective may be. In the effort to advance a more collaborative and risk-sharing model, the company is desirous to adopt a new way to execute this project based on the sharing of risk and reward.”
With the above in mind, it looks like that we may be having a more “collaborative” future and application of the NEC Contract in South Africa as intended for the benefits to all.