NEC Suite of Contracts benefits the industry

NEC Suite of Contracts

With low growth levels the engineering and construction sectors are experiencing tough times and order backlogs are reducing.  Add to this the generally poor performance demonstrated on major capital projects where budget and schedule overruns are common and the urgent need for improvement is clearly apparent. This is where the NEC Suite of Contracts benefits the industry.

Having experienced political turbulence in recent time, we are now blessed in South Africa with an environment which seeks transparency and self-evaluation for the ultimate benefit of the nation as a whole. The Government and the State-Owned-Enterprises (SOE’s) are very much committed to this environment of transformation. The comments made in this paper could apply to any client body, public, private of hybrid. The views expressed are offered as part of the debate on the much-needed procurement reform process, for the ultimate benefit of all Clients and the nation as a whole.

If a better procurement framework can be implemented, Clients will get more “bang for their buck”, projects can be deployed faster and a myriad of other benefits will be delivered, ranging from improved living standards through to increased quality of life.

In addition, an improved framework of project procurement can be made available to other neighbouring countries to promote further collaboration, up-skilling, partnering and ultimately bring forth new economic opportunities.

It is worth noting that if the Governments infrastructure spend is evaluated – a saving of 10 – 20% on the annual expenditure would yield significant results. Further, expenditure at SOE’s such as Transnet and Eskom could be managed in a more collaborative and integrated manner which would benefit all stakeholders.

Can complex projects be delivered in a better way?  What is to be done now in an industry in which the cost of capital, coupled with the adversarial philosophy of contracting, is constraining development and resulting in lost opportunity due to ongoing disputes and litigation?  At this juncture, it’s is good reflect on the global landscape for inspiration.  For many years the UK construction industry has looked to the collaborative philosophy to develop large and complex projects. The pre-curser to this step change relates back to the ground-breaking Latham Report, delivered by Sir Michael Latham in 1994, which in chapter one clearly states that “implementation of any process of change does indeed start with clients”.  A copy of the report is freely available for reference on the internet.  The reports main findings concluded that current practices were; ineffective; adversarial; fragmented; and incapable of delivering for its customers,  proposing that there should be greater partnering and teamwork  with change starting with Clients. This philosophy has been integrated into the NEC Suite of Contracts.

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