Construction must change

“The synthesis of off-site fabrication, additive manufacturing, robotics, artificial intelligence and the internet of things produce a perfect storm for a fragmented, information-intensive industry like construction. To harness and adapt this technology in an increasing and useful way will be the key industry challenge of the next decade and beyond.”

Future of Work in Construction – Brought to you by RICS and Autodesk

“Trends such as adopting design-to-make production processes alongside digital technologies, within industrialized construction can bring much needed certainty of cost, schedule, and scope to the architecture, engineering, and construction (AEC) industries. Along with certainty, industrialized construction creates a more sustainable and resilient industry, while addressing skilled labor shortages, waste, diversity, and worker safety.”

Construction Responde to COVID-19

We are, world over, in the midst of a massive change with the construction industry not being spared. All NEC users are trying to understand how they will continue under the exceptional circumstances that the Covid-19 pandemic has forced upon them, and to develop a ‘new normal’.

Read more … https://www.neccontract.com/About-NEC/News-and-Media/Covid-19-pandemic-helping-NEC-users-adapt-to-the-%E2%80%98new-normal

Covid 19 and NEC contracts in South Africa

Proclamation of National State of Disaster & Restriction on the Movement of Persons and Goods 1

As a result of the COVID-19 pandemic, a National State of Disaster for South Africa was proclaimed on 15 March 2020 by the Minister of Cooperative Governance and Traditional Affairs in terms of the Disaster Management Act, 2002. Government Gazette No 43096 of 15 March 2020 contained Notice 313 wherein the Declaration of a National State of Disaster appeared.

After the proclamation of the National State of Disaster, Regulations were published in many separate gazettes.

Government Gazette No 43148 of 25 March 2020 contained Notice No R.398. The definition of lockdown appeared under Section 8 under “CHAPTER 2, Subsection 11A”. Restriction on the movement of persons and goods appeared under Section 8 under “CHAPTER 2, Subsection 11B”.

Implementation of Notice No R.398 became effective on 23:59 on Thursday, 26 March 2020, and the implementation was to stay effective until 23:59 on Thursday 16 April 2020 but has been extended by the State President until end of April 2020.

Outcome for the engineering and construction industry.

As we are all aware this has resulted in mandatory closure of many construction sites, or difficulties for contractors obtaining Plant and Materials as well as obtaining Equipment to carry out work. Furthermore, the Lockdown and distancing provisions have affected not only construction personnel but also supervisory staff, and all built environment professional staff involved in ongoing projects.

Relief in terms of NEC contracts.

At times like these, affected organisations look to their contracts of supply for what happens next as well as any relief that may be available to them in terms of their contracts.

This document is designed to give guidance to those organisations employed under any of the NEC family of standard form contracts.

Anyone using the information provided in this document does so at their own risk, and the authors do not accept any responsibility whatsoever for the interpretation and use of the information provided here.

1 Reproduced with permission from the SAICE publication, “Dealing with the effects of COVID-19 in the ambit of the SAICE Suite of GCC Contracts
Users of NEC contracts Guidelines for dealing with the effects of Covid 19 The effects of Covid 19 on NEC contracts

ECS Associates (Pty) Ltd Page 2 of 5
Guidance issued by owners of NEC, the Institution of Civil Engineers

The NEC office at the Institution of Civil Engineers in London is monitoring the Covid 19 situation continuously and making guidance available in the form of statements and videos on it’s web page www.neccontract.com. Here is the first statement and there is a video on the same web page explaining the statement.

Although the statement relates to NEC4 contracts, the issues under NEC3 contracts are very similar. The situation for both NEC3 and NEC4 contracts is discussed in more detail after the statement.

“Queries have been raised about how to deal with the impact on NEC contracts that may be caused by the prevention and containment measures being instigated to control the spread of the coronavirus. This note is aimed at explaining the ways in which the NEC4 contracts deal with this matter. The guidance is given in relation to the Engineering and Construction Contract (ECC), but similar actions apply under the other NEC contracts. This advice is given in relation to the standard wording in NEC4 contracts. If modifications have been made, the contract should be reviewed to check whether the guidance given here still applies.

The impact of the virus will vary between different countries and affect contracts in different ways. The main problem is likely to be the unavailability of resources, primarily people but also Plant and Materials or Equipment. An early warning of the issue should have been given by either the Contractor or the Project Manager at the time, so that early discussion about the potential impacts could be held in advance, and mitigation measures identified. As the impact of the virus develops, and new restrictions affect the works, further early warning meetings should be held.

Governments in some countries have imposed specific restrictions on movement of people and goods. In this case, if the Site is located in that country and if Option X2 – changes in the law – has been incorporated into the contract, those restrictions would be a compensation event and the impact would be assessed in accordance with the contract.

In the most severe cases, where work has had to be stopped or suffers delay, because of the virus, clause 19 – prevention – may well apply. The situation could arise when people have been prevented from working on the contract or Plant and Materials or Equipment cannot be obtained due to restrictions on movement. These restrictions may have been applied in another country where essential Plant and Materials or Equipment were being sourced. It would be difficult to argue that, in such an extreme case, the Contractor could have anticipated the issue and have allowed for it. If the impact stops the whole of the works being completed by the date for planned Completion shown on the Accepted Programme, or being completed at all, then the provisions of this clause apply and the Project Manager should take control of dealing with the matter.

An event which passes this test will also be a compensation event under clause 60.1(19). Instructions issued by the Project Manager to deal with the matter are likely also to be compensation events, through a change to the Scope, stopping or not starting work or other events identified in clause 60.1.

It should be noted that the test in clause 19 is fairly strict. It is not sufficient that the works or a section of the works is delayed, the delay must impact the date of Completion of the whole of the works. A delay which does not impact the critical path of the programme or that can readily be overcome would not meet that test. It should also be recognised that clause 19 and the corresponding compensation event only applies in the case of delay, and does not apply where the only impact of the virus on the contract is an increase in cost.

Users of NEC contracts Guidelines for dealing with the effects of Covid 19 The effects of Covid 19 on NEC contracts

ECS Associates (Pty) Ltd Page 3 of 5
Where the effect of the virus is having or is going to have a significant impact on the work in the contract, it would be sensible for the Project Manager to manage the effects of the virus on the works in the interests of the Client. That may mean the Project Manager instructing the Contractor to stop work or changing the Scope in some way to overcome the difficulties encountered. Clause 19 has been written specifically to make the Project Manager take control, but whether or not the effect of the virus meets the limitations in this clause, the Project Manager should consider whether or not it would be sensible to issue instructions dealing with the matter. This would allow the Project Manager to control the time and cost effect of the virus on the contract.

Under the NEC4 Term Service Contract, which does not contain clause 19 or the corresponding compensation event, the same approach for early warning and proactive management by the Service Manager should be followed. The Parties should work together in accordance with clause 10.2 to best address any impact on the delivery of the service due to the coronavirus.

Whilst the Short Contracts do not include clause 19, they do include the early warning procedure and (except for the NEC4 Term Service Short Contract) provide for the event being a compensation event. This emphasises the point that the Client should be actively managing the effects of the virus to ensure that actions taken are in the best interest of the project.

(end of statement)

Further statements and supporting videos will be issued on www.neccontract.com from time to time.

Note: The term “prevention” is used in NEC contracts rather than terms like force majeure or vis major used in other forms of contract. Rather than try to identify such events, NEC uses the approach, “if an event occurs which stops the Contractor …..”

How the works contracts ECC32 and ECC43 deal with the effects of Covid 19

The procedures under ECC3 are very similar to ECC4 with the differences noted in the following summary of actions.

The first action is for either the Project Manager or the Contractor to notify an early warning in terms of clause 15 in ECC4 (clause 16 in ECC3) and call an early warning meeting4.

At the early warning meeting, use a collaborative approach to explore the implications of Covid 19 and the new Regulations on the Contractor’s Providing the Works (as well as possible commitments which the Employer is to meet on the Contractor’s Accepted Programme). Depending on the chosen conditions of contract, agree on the actions to be taken and who in terms of the contract will take them. There are three main possible courses of action

  1. An instruction to stop work in terms of clause 34 could be given by the Project Manager who should then notify a compensation event in terms of clause 61.1. If he does not notify a compensation event, the Contractor should notify in terms of clause 61.3. Once the Lockdown ends the Project Manager can give an instruction to re start work.

2 NEC3 Engineering and Construction Contract, April 2013 3 NEC4 Engineering and Construction Contract, June 2017 4 This should have been done as soon as possible after President Ramaphosa announced the lock down measures on Monday 23rd March 2020 or when the Regulations governing it became known.
Users of NEC contracts Guidelines for dealing with the effects of Covid 19 The effects of Covid 19 on NEC contracts

ECS Associates (Pty) Ltd Page 4 of 5

  1. If Option X2 “Changes in the law” applies, the Contractor can notify a compensation event in terms of clause 61.3 in ECC4. In ECC3 this is the job of the Project Manager. The changes in the law could be the new or revised Regulations issued in terms of the National State of Disaster.
  2. If secondary Option X2 has not been selected, or an instruction to stop work has not been given, the Project Manager should utilise clause 19 Prevention by giving an instruction to the Contractor how the Covid19 event is to be dealt with. Whilst the prevention event is itself a compensation event per clause 60.1(19), the Project Manager’s instruction may result in further compensation events, such as a reduction in the scope of work. Alternatively, the Contractor can notify compensation event 60.1(19) which relates to the prevention event. It must be stressed that some employers / clients add conflicting Z clauses that upset the intention of the prevention clause and this advice would need to be reviewed in such cases.

It should be noted that the allocation of risk due to a prevention event differs as between ECC3 and ECC4. Essentially, the trigger for the event in ECC4 is its effect on planned Completion of the whole of the works only, whereas under ECC3 the trigger is the effect on completing the works which could include a section as well as the whole of the works.

Assessing time and cost

With the proclamation of the National State of Disaster, resulting in the Lockdown for a defined period the Contractor, after discussions with the Project Manager, can assess the effects of the event for the period up to end of April 2020. The Project Manager can still use clause 61.6 to make assumptions about the event in his instruction to the Contractor to submit quotations. These assumptions could be in the form of providing separate quotations for the effects of Covid 19 before and then during the Lockdown event.

Any further extensions of the Lockdown can be catered for by a new compensation event.

Quotations and implementation then proceed as required by clauses 62, 63, 64, 65 and 66.

How the short works contracts ECSC5 and ECSS6 deal with the effects of Covid 19

Although the short contracts do not have a prevention clause, the prevention event is provided for by being one of the listed compensation events. There is also a provision for the Employer / Contractor to instruct the Contractor/ Subcontractor to stop work and deal with the effects of it as a compensation event.

The Term Service Contract (TSC37 and TSC48)

The same approach for early warning and proactive management by the Service Manager should be followed. In both editions

• a change in the law of the country in which the Affected Property is located is a compensation event if secondary Option X2 has been included in the conditions of contract and • the Service Manager can use a stop work instruction which becomes a compensation event.

5 NEC3 and NEC4 Engineering and Construction Short Contract 6 NEC3 and NEC4 Engineering and Construction Short Subcontract 7 NEC3 Term Service Contract April 2013 8 NEC4 Term Service Contract June 2017
Users of NEC contracts Guidelines for dealing with the effects of Covid 19 The effects of Covid 19 on NEC contracts

ECS Associates (Pty) Ltd Page 5 of 5

The NEC4 Term Service Contract does not contain clause 19 Prevention or the corresponding compensation event in the core clauses. The Parties should work together in accordance with clause 10.2 to best address any impact on the delivery of the service due to the coronavirus.

Under the NEC3 Term Service Contract, if secondary Option X19 applies and work is administered in terms of a Task Order, compensation event X19.10(6) deals with the impact of prevention on completing a Task by the Task Completion Date.

NEC3 and NEC4 Term Service Short Contract

In both contracts there are no clauses dealing with prevention, but the Employer / Client can issue a notice to stop work and proactively deal with the effects as a compensation event.

The Professional Service Contract (PSC39 and PSC410)

The situation under the PSC contracts mirrors that under the ECC contracts, with just different clause numbers in some cases. The three options of dealing with the effects of Covid 19 through the use of secondary Option X2 (if it applies), the suspension of work clause or prevention apply in the same way as in ECC contracts.

NEC3 and NEC4 Professional Service Short Contract

In both contracts there are no clauses dealing with prevention, but the Employer / Client can issue a notice to stop work and proactively deal with the effects as a compensation event.

The NEC3 and NEC4 Supply Contracts

The same provisions as in the other main contracts are available in both NEC3 and NEC4 Supply Contracts, thus:.

• The Supply Manager can stop work and restart again later, dealing with the matter as a compensation event. • If Option X2 has been selected a change in the law of the country stated in the Contract Data is a compensation event. • Prevention is dealt with in core clause 19 and compensation event 60.1(15) but only applies to stopping Delivery if the event occurs during transport of the goods to the Delivery Place.

We are grateful to Peter Higgins, Chairman of the NEC4 Contract Board for his valuable contribution in the drafting of this paper.

Andrew Baird Assistant to original NEC designer, Member NEC Panel 1993 to 2010 Chairman & Founder, ECS Associates (Pty) Ltd, www.ecs.co.za, 082 880 5236

14th April 2020

9 NEC3 Professional Services Contract April 2013 10 NEC4 Professional Service Contract June 2017

NEC documentation needs getting the scope right

The scope of NEC contracts

It has been commented on that the NEC documentation contract data is the flimsy part. This is because it was left to the parties to complete the pertinent sections unlike the rest of the NEC documentation. 

While Z clauses can be added by parties, one does see contract data with attached works information (scope in NEC4) that contains minimal information and lots of blanks.

Assumption is made that many of the core clauses in NEC contracts have been dealt with the relevant matters in the contract data. This is frequently the case when referring to the scope; but if the scope does not deal with such matters, it will become exceedingly difficult to operate the contract as intended.

NEC documentation scope

Examples of contractual matters overlooked when writing the scope of NEC works contracts

  • Does the scope state whether the working areas are to be shared with other parties (clause 25.1)?
  • Does the scope state who is to provide services and hardware such as water and power (clause 25.2)?
  • Does the scope state the health and safety requirements that are to apply to the contractor (clause 27.4)?
  • Does the scope state the form in which the programme is to be provided (clause 31.2)?
  • Does the scope include requirements relating to any quality management system (clause 40.1)?
  • Has the contractor in the scope been informed about the materials, facilities and samples to be made available for testing (clause 41.2)?
  • Does the scope state the form of payment application (clause 50.2)?
  • Does the scope contain requirements for the marking of plant and materials (to be used under the contract) outside the working areas (clause 70.1)?
AVOIDING MISUNDERSTANDINGS

When filling in the contract data it is crucial to pay close attention and take cognisance when writing the scope of any NEC documentation . If not misunderstandings could develop from the outset, a possible influx of early warnings plus weighty dispute.

Written by Rudi Klein, NEC Users’ Group President

Procurement Practices Solutions

Procurement practices solutions have been delivered by ECS Associates in the engineering and construction sectors for over a quarter of a century.

We are proud to have both Andrew Baird on our executive team. Andrew formed part of the original drafting team of the NEC system as noted in each NEC document, and served on the drafting committee of the expanded NEC suite of contracts for 17 years.

Additionally, in our team we have Mr Peter Higgins, who is the Chair of the NEC4 Contract Board, who has played a pivotal role in assisting the UK construction industry to move towards the collaborative contracting model.

We have a host of other professional within our ranks to assist both Clients and Contractors to move beyond the current adversarial procurement practices to a collaborate procurement solutions that provides more value for money, less claims and frustration.

Procurement Practices Solutions

In addition, we provide top level practical training and development courses in NEC project management, collaborative contracting, forensic planning, claims management, mitigation and avoidance and procurement arrangements.

Procurement Processes in a Collaborative Framework

Procurement processes in a collaborative framework are recommended by the The UK Government Construction Strategy Committee.  They recommend that public projects adopt, design and build private finance initiative or prime-type contract procurement routes, as these are considered to be more collaborative. They also suggest adoption of the NEC3 form of contract which they believe encourages collaboration more effectively than some other more traditional contracts which can be seen as adversarial.

Collaborative Procurement Process

Other forms of collaborative procurement processes include partnering and alliancing, which are broad terms used to describe a management approach that encourages openness and trust between the parties to a contract. The parties become dependent on one another for success and this requires a change in culture, attitude and procedures throughout the supply chain. It is most commonly used on large, long-term or high-risk contracts. Where a partnering relationship is for a specific project, it is known as ‘project partnering’. Where it is a multi-project relationship the arrangement is known as ‘strategic partnering’.

Partnering contracts are often arranged on a cost-reimbursable, target-cost, open-book basis including both incentives, and penalties. Partnering agreements include the project partnering contract PPC2000 (UK), and more often, the NEC partnering agreement and the ICE Partnering Addendum and more recently the NEC4 Alliancing Contract.

Organisational working practices that encourage collaboration might include:

  • Clear lines of communication and authority, this should be in place as part of effective management processes.
  • Protocols for the preparation and dissemination of information; again this should be a standard.
  • Co-location of team members with respect to project requirements.
  • Appointment of a project sponsor or independent facilitator.
  • Financial motivation (such as tying the consultant team and the contractor into a common target cost for which there is joint ‘pain’ or ‘gain’). NEC provides adequately for this.  For multi-contractor / consultant projects this could also include terminal bonuses if the team collectively achieve the Client’s objectives which they helped the Client to define at the outset of the project.
  • Rewarding initiative. This can be particularly important for members of the client team, whose careers are likely to be assessed solely on the basis of their ‘normal’ activities, rather than their involvement in a project. Recognising the work, they put into a project and rewarding them for this is important if they are to remain committed. In particular project completion incentives are important to ensure key team members remain involved until project completion.
  • Regular workshops and team meetings – with transparent team ethos and visible transparent dashboard reporting.
  • Problem resolution procedures, which should be based on solutions not blame.
  • Procedures to ensure continuous improvement. This might require continual benchmarking, target setting, assessment, feed-back loops and adaptation. Independent facilitation is also an innovative addition to this process, utilising questionnaires, survey’s, town hall meetings etc to encourage dialogue on problems / solutions and lessons learned.
  • Effective early warning and risk mitigation procedures.
  • Effective team building activities.

The NEC’s aim is to ‘promote and facilitate global best practice in collaborative procurement processes and project management’. This supports both public and private sector organizations and professionals to achieve world-class standards in their contracting and relationship management process and skills.

NEC contracts include fair and equitable procedures for the management of risk – in a way that is very clear and very flexible. NEC achieves its aims with a series of related and very similar contracts for supply, projects and physical and professional services.

Construction Costs and Time Comparisons

The potential for Construction Costs savings in both time and cost through design partnering is well illustrated by a comparison between the construction of two identical chemical plants in Japan and the UK described by the former Chairman of the UK client ICI, Sir John Harvey – Jones, in his book, “Managing to Survive”.[1] The context for his text is that time is money. As the comparison is so relevant to the point we are making above, it is quoted in full:

Construction Costs Comparison
ICI chemical plant, UK

“Many years ago my division of ICI built a chemical plant in competition with the Japanese.  We were both building identical plants and decided to proceed at exactly the same time.  Moreover, the Japanese had some of our people helping them.  In the event the Japanese came into production, with a plant that worked, significantly more quickly than we did.

They achieve this by processes of parallel development, and the application of very large numbers of engineers, organised in small, self-standing teams.  They gain speed by having the teams continuously working together in a collective way, which ensures that each one of them is able to cover for the other and is involved in all the stages of decision making – despite enormous pressure for speedy results.

When I looked at the reasons why, there appeared to be three.  To my mind the most important was that the Japanese plant was built by a team which shared a single large office and lived, worked and dreamt together, twelve hours or more a day, during the whole time of the development and planning of the plant.  They were each in each other’s minds and did not have to send a memo, or make a telephone call, to check the effects of, for example, locating a valve somewhere else.  Any one of them could cover for anybody else.  Moreover, the whole lot were imbued with a sense of urgency and a determination to ensure that not only did their plant start up first, but that it worked perfectly. 

At that time there was not much difference in the numbers of people that we both deployed, but there was an enormous difference in the philosophy.  We had started breaking ground much sooner than they had and took solace out of commencing construction months before they began such activities.  In their case no work started on the site at all until the total design had been carried out and the materials had all been provided on site. 

The result of this was that nothing had to be redone, and the construction period itself went like greased lightning.  The second reason was that exactly the same team which had done the designing were also involved in the construction.  There was no handover, no communication problems – the thing just flowed.  These differences of approach stem from the belief in the value of time, and consistent efforts to ensure that time can be gained by reducing meetings, memoranda and reports to supervision”.

It goes without saying that if we can apply that philosophy, even just to the preparation of the enquiry document, never mind to the whole project, we will in our view make considerable savings in time and construction costs and improve working relationships beyond all recognition. Think what that will do for the recruiting of engineers and architects and for the industry as a whole. 

Summary of action items and estimated cost savings.

Applying some figures to the above-mentioned areas for potential cost savings may be evaluated as follows –

The savings are to the Client’s total cost of procurement which obviously includes his own costs as well as those of his professional teams and the construction contracts: 

Changing Client awareness, attitude and behaviour through adherence to a Construction Strategy Code of Practice and active membership of a Construction Clients Forum   3%
Introduction or improvement in overall management, value management, and correct application of the benefits of project management and collaboration.  (This could easily be shown to be a negative saving at construction stage but with an ultimate saving to life cycle costs of a substantial proportion of original capital expenditure.)   2%
Optimisation of risk allocation through the application of appropriate contract strategies and appropriate organisational design and decision making to minimise ambiguity and errors in contracts. 5%
Limit the adversarial and claim conscious behaviour with collaborative strategies 9%
Design partnering at the enquiry stage to improve the quality of project definition and contract documentation with subsequent claims reduction. 13%
Deduct additional manpower expenditure at enquiry stage (3%)
Potential saving 29 %

The cumulative total would not always apply as it depends to what extent the above best practices are already in place and the assumptions above may be subjective. Naturally the figures are open to being challenged and we would welcome such a challenge.  Our feeling after over 30 years of experience in the industry is that they a significant saving in construction costs are achievable.


[1] Sir John Harvey-Jones   Managing to Survive,  Chapter 8  The Time Capsule, pp137   Heinemann, London 1993

Contract strategies – the design hiatus

Traditionally there is a hiatus in the contract strategies, when the design professionals package up drawings and specifications and ‘fail safe’ clauses for passing to contractors to develop their price for the project.  Engineering services, including detailed design, is then out of sequence, with the inevitable consequences of delay, disruption and cost overruns[1].

Process plant

In the process plant sector design is usually carried out by the contractor and a lump sum or activity-based form of contract is used.  The client and his professional advisors specify plant performance and the constraints within which the contractor is to provide the works. 

How are they to draft such specifications without the close involvement of the eventual supplier of plant and materials which in many cases is not likely to be the main contractor? Innovative alternatives would not necessarily be known to the specifier. 

When the main contractor prices the bid it often provides the sketchiest of details to a group of potential suppliers to price.  The communication chain between client and specialist plant supplier all done through words in an enquiry document is now so long it is quite likely that the two parties have a very different idea about each other’s needs.   Are the Clients objectives best served this way?  

Building works

In a building contract the situation is even worse as the building design is usually done by the employer before tenders are called.  Certain assumptions are made by both architect and structural engineer about specialist plant capacities, space requirements and loadings again based on past experience.   Only when the contract is awarded and the contractor places his subcontract is the Client’s project team aware of the specialist supplier.   With this disjointed chain, possibly compounded by some changes made along the way between architect and Client the specialist plant supplier now advises final loading and space requirements.   The building, now well under way requires larger columns to support the higher loads and the cable racks need to be 20% larger.  It is an all too familiar tale.   The project schedule goes out of the window and the claims consultants arrive on the site to initiate delay and disruption expense claims.

Contract strategies – the design hiatus

                        The Design Hiatus     © Martin Davis, Drake & Skull 1996

Civil engineering

Constructability is a key part of design.  There are numerous examples where, had a contractor been involved in preparation of the enquiry document, the project design could have been a lot simpler and resulted in a far better outcome with less aggravation for both parties.

Design partnering

At the risk of promoting yet another fashionable panacea, we propose that clients give very serious attention to design partnering at the enquiry preparation stage.   (There is of course no reason why this partnership could not continue to the end of the project). The project team should include not only the design professionals (whether internal or externally appointed) which is the case at present but also representatives of the specialist engineering services, plant suppliers and in particular the control and instrumentation suppliers.   These appointments should be directly with the Client and managed by the appointed Project Manager.  The Project Manager would need to ensure that the Client’s open market interests were protected as far as possible and the question of liability for design and operating guarantees would need to be analysed on a contract by contract basis. Thus avoiding the “Contract strategies – the design hiatus”.


[1] Martin Davis,  Vice Chairman Drake and Skull Engineering, Achievements, Action Plans and how Clients can Help The Latham Implementation Plan, AIC Conference, London October 1995.

Contract documentation

In the final analysis everything is executed through a contractual framework – contract documentation. No matter how good all the other practices are, the process can go off-track if the wrong strategy is applied and the contract document itself is not adequate to manage the project. Poor project definition is probably the major cause of poor contract documentation which in turn leads to unexpected cost and time overruns, poor productivity, disputes and frustration.

The full range of contract strategies are rarely discussed with Clients by their advisors because of the narrow focus inherent in the discipline of the particular advisor.  Similarly, when alternative strategies are applied, such as design and construct within the building industry, the Client must be fully aware of the “pros and cons” and the necessary planning and control measures he needs to have in place before they are applied.

The client needs to recognise and understand how risks are allocated by the various commercial options open to him, (lump sum, bill of quantities target cost, cost reimbursable and management contract pricing strategies; bonding, insurances, parent company guarantees etc.)

  • that the largest single cause of disputes in the construction industry is poor quality of contract documentation mainly as a result of errors, ambiguity, and late supply of documents,
  • the distinction between contracting on an outcomes performance basis and a prescriptive detailed specification basis,
  • the benefits of contracting on a procurement system, as distinct from a discipline, basis and
  • that once the Client has agreed to the terms of a contract, it has to operate in accordance with contract documentation.

Best practices for clients – The catalyst for a culture change and cost savings

There are certain best practices which a client can introduce, most of them based on practicality and good management practice.

Management, first and foremost

An intelligent customer who considers his options carefully and has an understanding of how his service provider can be motivated to deliver a high standard of performance is on the road to success.   Those who simply demand results simply because they are the customer will put adversarial issues on the table before the project is started. In the case of engineering and construction projects the customer itself has to perform its side of the bargain and often overlooks this. In short, the process of procurement should be based on integrated collaboration and teamwork.

The client is well advised to,

  • pro-actively manage the procurement process through a project sponsor,
  • clarify its objectives throughout the process,
  • brief its suppliers thoroughly and check that both parties always have the same understanding of what is required of them,
  • continuously discuss and interrogate the works information (scope of work) with prospective tenderers and
  • ensure that its own organisation (the ultimate user / operator) has “buy in” to the project and its deliverables.

Value management

Clients need to look beyond the idea that the lowest tender price is the only driving factor.  They need to define value for money in place of lowest cost.  Such value for money can be determined from an overall assessment of

  • whole life cycle costs for the asset, not just short-term construction costs,
  • quality weighed against price and
  • overall costs – inclusive of interface management.

The techniques of partnering and benchmarking can be used as tools for value management, hence best practices

The benefits and techniques of Project Management

Project management is the management of change and although the newest of professions in the engineering and construction industry it has built up a considerable wealth of international experience.  The lessons learned from mega projects can be applied by the general engineering and construction Client.

The client must

  • manage the procurement process using the project management planning tools appropriate to his needs at Client level,
  • recognise the pivotal role of the project manager as the sole route for communication between the Client’s project sponsor and the supply side engineering and construction teams,
Project Management
  • allocate risk in a manner which motivates the best performance from each party by allocating a risk to the party best able to manage the outcome should a risk event arise,
  • reduce the incidence of change to the minimum or at least understand and quantify the effects of change before it is implemented and
  • Apply an equitable process for the quantification of change.

These best practices will ensure a successful project.

Changing client culture

Changing client culture involves the client becoming a leader and not a dictator or a passive bystander. 

Example is not the main thing in influencing others.  It is the only thing – Albert Schweitzer

Over the years, there has been a succession of fashionable panaceas promoted to clients for solving project related problems[1]. These have included critical path scheduling, matrix management systems, joint ventures, value engineering, agile project management, six-sigma and quality assurance. The current fashion is partnering and alliancing. In reality all these techniques have a valuable contribution to make but they must not be allowed to displace all previous experience and their application must be understood and integrated into the value chain correctly.

To become a leader, or certainly a leading influence, the construction Client bodies need to be informed and become involved in the industry they wish to influence. Not to any detailed extent but to the extent dictated by sound management practices.  

How should client culture be addressed and changed?

It is easy to analyse client behaviour as has been done above.  As with most industries, undesirable traits could be added to the list. The objective here is only to illustrate the main ones in order that they can be highlighted for what they do to a Client’s total cost of procurement.  If considered on a national scale for all Clients, this amounts to a very inefficient and un-competitive industry.

Solutions are less easy to provide, when it is realised that the solution requires cultural change. Changes in culture are initiated and driven from the highest level in any organisation. The arrival of Dr. John Maree at Eskom in 1985 is proof of this which is evident to the whole country. Hence any solution which is proposed for clients of the construction industry must have appeal and effect at “Chairman / Upper Executive” level. 

Fortunately we in South Africa do not have to re-invent the wheel.  We have the proven UK experience to rely on, and it is for this reason that we propose the solutions are best affected through the following: –

  • A Construction Clients’ Forum, which is party to an agreed strategy for change.
  • Construction Strategy Code of Practice, such as that being developed in response to the Latham implementation plan.
  • Reliance on a tried and tested Form of Contract that promotes collaboration with equitable risk allocation – i.e. the NEC suite.

The former will act as the place of reference for clients large and small, especially for the occasional Client, and the latter, if drafted in simple clear language which appeals to Senior Executives, will be the standard by which the industry operates.   It is hoped that a new Construction Strategy Code of Practice will contain many of the well documented best practices and strategies for clients to follow, and thereby changing client culture.


Clients in the construction industry are inadequately informed

Many clients are either ill advised, think they know the answers, or don’t know what they don’t know (very common).  However, implementation begins with clients.  Clients are at the core of the process and their needs must be met by the industry, even if it relates to re-educating the client.

There is a profound difference between the advisor who (so often) tells the client what he ought to have as distinct from the one who listens intently, soaks up the client culture and requirements, and only then makes a reasoned proposal based on a set of options which the client has.   Professionals in private practice, particularly those who have spent most of their career in that situation, should bear in mind that it would be difficult if not impossible for them to understand the corporate politics which so often determine how the employees of a large client organisation behave and in particular make decisions.

The real challenge to the industry is the Client with massive buying power who has executed many projects in the past and, in a buyer’s market, introduces a degree of stretch into the industry’s performance which is unrealistic.   The obvious example of this is the Client who, having taken months or even years to make up his mind whether to proceed or not, having decided to proceed wants to start on site “tomorrow”. This is often an approach taken by Clients in the Energy sector.

Client Behaviour in the construction industry

Client Behavior

  • As with any transaction there is generally a process of negotiation and ultimately a meeting of the minds (consensus ad idem). The outcome of the transaction is often affected by the behaviour of the buyer and the seller.
  • If the buyer has not made comparisons with other outlets and service he is likely to be disappointed when later discovering he could have obtained better value for money elsewhere.  The buyer, or client, needs to ensure he is correctly advised or to educate himself regarding the best option available before making his purchase.   How do clients in the construction industry behave?  Do they deserve the results they get when dissatisfied? Are the clients in a continuous improvement cycle (as they should be – in accordance with ISO system requirements), or are they victims of ongoing repetition?  For example, is the lowest tender syndrome still prevalent? – which continues to condone mediocrity, often to the detriment of other requirements – often including life cycle costing impact.

The cost led client

  • The temptation for too many managers is the promotion of time and cost at the expense of quality and other deliverables.  This arises, in part, from the difficulty of measuring design quality and other softer criteria whereas time and cost are easy to evaluate.  Design quality, which is often misunderstood by too many in the industry and more understandably by many clients as “gold-plating the taps”, is properly about providing within the available resources added value over and above the merely adequate.  Those who do not strive for good design do so at their collective peril, while those who have experienced it know what good value they have added[1]
  • It is the collective responsibility of design professions to explain the design process and the critical role of ‘effective briefing’.  Good design is not necessarily expensive but it may be undermined by competitive tendering.   US experiences, in this regard, have on occasion been so bad that as far back as 1972, legislation was introduced outlawing competitive tendering for professional services.  Similar campaigns have been initiated in the UK often supported by legislation. It is recommended that Government and major stakeholders evaluate such innovative practices to improve their procurement systems.
  • The ‘lowest cost’ tender syndrome is another frailty within the industry which seems in particular to affect organs of State and SOE’s. There are many other criteria which need to be considered before price. Reference checking the bidders is a key practical consideration that often is not carried out. Further, over the passage of time, the capability of bidding contractors to deliver changes, analogous to that of a top football team. Just because a contractor has satisfied the pre-qualification criteria, this is not a guarantee that he will deliver.  Other issues also need to be considered, such as:-
  • Safety culture – a necessary
  • Liquidity – ‘a key determinant in the current market
  • Core personnel – with commitment to project duration
  • BBBEE – a valid and necessary attribute of successful companies in SA.
  • Management changes – often beset by acquisitions and take-overs
  • Over capacity – leading to under delivery
  • Litigation issues – detracting focus form primary objective “the project”
  • Commitment to training – top performers value and train “their people”
  • External issues – (hostile take-over, problematic projects, leadership changes). 

A key maxim in the engineering and construction industry states that a contractor is only as good as its last project. Continuous reference checking is a necessity.

Technical acceptance of the tender, after sales service, track record and financial stability of the tender are just a few of the tender evaluation practices required.   If there is substantial distortion, or range of bid prices, the client’s first concern should be the quality of its tender documentation. Yet how often is the lowest price tender accepted without further thought, then regretted afterwards when a termination results in the overall project programme being forced into jeopardy or the ultimate customer has to live with a substandard asset, often coupled with a plethora of claims.  The difference between tender prices is probably minuscule in comparison with the additional life cycle cost of poor quality and the ongoing burden of frustration.

The Occasional Client

  • The occasional client who reads about but is not in regular contact with the construction industry must be weary of the day it has to invest in a new building or process plant unless of course it can call on a trusted service provider who successfully carried out its last project. Even in these circumstances, shareholders will be questioning why the project was not administered on an open tender basis just in case the trusted supplier was no longer the cheapest or most innovative. Should the client use Turnkey, Design and Construct, Management Contractor or a Construction Manager?  Who should manage the work for him amongst the variety of professional advisors:  Engineer, Architect, Quantity Surveyor, Planner or Project Manager many of whom can offer only very limited liability for the outcome, often seeking to cap their liability at 10% of their respective contract value?
  • The occasional client is naturally reluctant to play a comprehensive management role as this is likely to be temporary and will generally have in-house project management personnel constraints.  Often, its limited understanding of the construction industry compels it to rely on professional advisors either through direct employment or on a contract basis.  With so many requirements (political, community based, environmental, structural, aesthetic, financial, etc.) to consider and, with the best will in the world from even the most capable of advisors, there is no substitute for experience. Without requisite experience and knowledge, the client will be stumble over problems as the project progresses.  Many of the lessons learned will be forgotten by the time the next project arises. It is important to note that, in most sophisticated client organisations there will be project close out reports and lessons learned logs to ensure continuous improvement is driven forward.  

The “Pass All Risk to the Contractor” Client

  • It is not illogical for a client to reason that as the construction industry is not his core business, why should he take any liability at all when he is employing an experienced contractor whose core business it is.  There are contractors around who will happily take on such a role knowing that if a risk arises which they feel they cannot contain, the small print will in all probability contain the necessary loopholes for them to seek to evade the full liability and/ or exploit the Client.  The client, in this instance has achieved the exact opposite of what he intended.
  • Whilst many such clients may reason that the additional cost of this approach is good value or insurance against project over-runs, would they be happy to know that if the risks which the contractor had to allow for never arose they have in fact paid for nothing. This forces up project costs and leads to an enhanced profit margin for contractors and on the whole is not good for the industry or the country. Better scope definition and/or collaborative gain/share contracting are good options to eliminate this cost creep.
  • The latest in this context is the client who requires that the contractor take on the risk of design done by the design professionals which the client has selected and appointed to prepare the project brief.   It is referred to as “novation”.   With a professional’s liability of duty being limited to reasonable skill and care, is it up to the contractor to allow for the gap between this and fitness for purpose in respect of a service which is not his core business either? This approach is fraught with risk. Furthermore, and often to the Clients detriment is the responsibility to manage the interface. Eskom has and continues to suffer this oversight at both Kusile and Medupi, where it is forced to manage the complex interfaces between boiler, turbine and balance of plant. The magnitude of this task is then escalated when one considers that interfaces have to managed for 12 turbines and 12 boilers. 
  • In the United States an attempt was made to shift more responsibility onto industry through the Total Package Procurement concept introduced in 1966.  This concept is based on concurrent development.  Projects with major problems are without exception those begun before development is complete and design is frozen[2].

The Book End Client

  • This type of Client prefers to be involved only at the beginning and end of a project and clearly prefers the hands off “Turn-key” approach.    In so doing he places total confidence in the original brief.   A one-shot brief for all but the most straight forward of projects must take some doing even by the most competent of scope draftsmen.  In an age of rapidly changing technology and other matters to which a project contractor is exposed, the book end client is likely to be disappointed when he arrives to collect his finished project.
  • It is often said that most Clients pay more than they should, believe there is far too much aggravation surrounding execution of their projects and claim they are less than perfectly happy with the outcome.   Is this true; is it justified and if so why?

[1] Robin Nicholson, RIBA  Director of Edward Cullinan Architects, and Vice Chairman of the UK Construction Industry Council, in a paper presented to the Latham Implementation Plan Conference, London, October 1995.

[2] Peter W. G. MorrisThe Management of Projects, The New Model,  Thomas Telford Services Ltd., London 1994

Collaborative Contracting using the NEC system of standard form contracts

Collaborative Contracting using the NEC system of standard form contracts

Understanding Clients Objectives

It is common knowledge that in any procurement process, particularly of major assets with a considerable life cycle, the purchaser desires

  • certainty of outcome during the development and construction to commissioning period,
  • value for money, with least cost as a key factor and
  • ease of operation and maintenance throughout the life of the asset.

Other key criteria in the South African context include:

  • Unrelenting focus on health, safety and environment.
  • Promotion of training and mentoring with key measuring and auditing constraints.
  • Community development initiatives inclusive of measurement criteria.

Change starts with Clients

Background.

1)  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.

2)  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.

3)  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.

4)  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.

 5)  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.

6)  The driving issue behind this paper is the question – ‘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

Collaborative Contractual Frameworks

With rising energy demand and widespread desire to access more power, Africa’s energy and natural resource sectors are set for significant growth, whilst undergoing rapid clean energy innovation. Collaborative contractual frameworks provide the best solution for on time delivery of projects for all stakeholders. At ECS we have the expertise and contractual solutions to ensure effective project implementation.

‘Dysfunctional’ EPC contracts are a threat to the infrastructure boom.

According to an article written by Oliver Probert for Rail Express, published July 10, 2019  – ‘Dysfunctional’ EPC contracts are a threat to the infrastructure boom.

The old school engineering, procurement and construction contract model is driving costs sky high on projects with at least a quarter way over budget. There is a call away from the traditional confrontational and disputable EPC model towards Alliance-based collaborative models for mega projects.

Challenges are to be expected on mega projects, which run over years and with various stakeholders.  Problems end up being litigious rather than synergic resolution,  keeping stakeholders isolated as opposed to cooperative. Cohesion and shared responsibility creates the ‘identify-and-fix-first’ approach, thereby avoiding delays and budget over spend.

ECS Associates, with its continued focus on collaborative project strategies, is ideally placed to support a fruitful turnaround on mega projects.

Lesotho Highlands Water Project Phase 11

ECS Associates is proud to be supporting Mkhulu EDP in implementation of the construction of a 132kV power line in Lesotho as part of Lesotho Highlands Water Project Phase II which was started in September 2019.

The power line is the 38-kilometre, connecting the Polihali dam to the existing Lesotho Electricity Company (LEC) transmission network in Matsoku Valley for hydropower.

Mkhulu Electro Distribution Projects has extensive experience in overhead transmission line construction and civil engineering projects in southern Africa including in Namibia, South Africa, Botswana and Mozambique.

construction site.

Collaborative “One Team” Approach

Across Sub-Saharan Africa we have a team of infrastructure and energy professionals specialising in project management, contract and commercial management, claims management, project controls, risk management and health, safety and quality compliance. We currently provide expert services on some of the largest and most complex projects in the region. 

Experience Counts

With a dedicated and multi-disciplined team we are able to advise clients, throughout the region, continuously through the life cycles of Energy and Infrastructure Projects. We have hand-on core capabilities in Water, Oil and Gas, Power, Mining and Infrastructure mega-projects. We are considered Specialists in the industry and have served regional clients for almost 30 years. We fully recognise the need to distinguish between risks, opportunities, challenges and solutions. Our collaborate contracting strategies and models yield “win/win” more often than not. In addition we are pleased to have forged alliances and partnerships with some of the biggest and best players in the Energy and Infrastructure sectors. ECS Associates make a positive difference when engaged early in project development.

Dealing with contract disputes

Irrespective of the best contract documentation, the nature of engineering and construction projects is such that changes, delays and unforeseen events are inevitable. Dealing with these changes in a proper and professional manner requires not only an understanding of the parties’ rights and duties but also sensitivity to the commercial reality of needing to maintain both cordial and collaborative contractual relationships where possible. This can only be achieved by having experienced experts available to deal with the day-to-day realities of complex construction projects. ECS Associates occupy this apace and have done so successfully for over 25 years – see how we can help you deliver your contracts profitably and professionally.

Formal partnership deal with SAICE to deliver NEC Accredited Project Management

The NEC Project Management Accredited Programme throughout Sub-Saharan Africa is to be delivered by ECS Associates . It is pleased to announce that it has concluded a formal partnership deal with SAICE (South Afrcan Institution of Civil Engineers) in order to do so.

Attending an NEC (New Engineering Contract) training course equips individuals and project teams with the NEC knowledge to broaden their skill set and embed best practice across their organisations. Achievement of an NEC Accreditation is recognised and sought after by employers and more so now in Africa. Accreditation is form London with all examinations marked in London

The course is perfect for all those who are, or are looking to become an ECC Project Manager such as existing Project Managers, Quantity Surveyors, Civil Engineers, Construction Managers, Architects.  It is also aimed at Government, SOEs (State Owned Enterprises), contractors and the construction and engineering industry as a whole. 

The The NEC Project Management Accredited Programme course is Gold Standard – peer reviewed and delivered by industry experts. It facilitates more efficiently run ECC projects for all parties by equipping delegates with effective ‘how to’ skills for ECC project management to ensure capital projects are delivered safely, on time, within budgets and to the required quality standards.

Upload Image...

ECS Associates sign a 1 year strategic consultancy contract with PWC

A strategic consultancy contract has been signed between ECS Associates and PWC. ECS Associates will be supporting PWC on thier Capital Project advisory and specialist consultancy services. The agreement covers capital projects in Mozambique and South Africa.

ECS Associates has already been providing contract, forensic planning, risk management, technical assurance and specialist consulting services to PWC for the last 18 month and this award recognises our excellent service delivery. 

PWC are a global leader in Capital Project Advisory and provide services to Africa as well. They provide capital and infrastructre advice and support on every stage of their customer’s projects. including including strategy, planning, funding, procurement, project management, risk assurance, governance and optimisation.

ECS Associates are solution providers and have partnered with PWC providing strategic consultancy.

ECS Associates assists CCQ International

Project management and contract management services by ECS Associates have been retained by CCQ International to provide for their demining works at the new Sasol gas wells in Temane and Pande, Mozambique.

Specifically, ECS will provide planning support, health, safety and quality management and training together with NEC contract management and support.

Sasol intend to explore an area of over 3,000km² in southern Mozambique, and is also part of a successful bid to explore an area of 5,145km² further north in the Angoche Basin. Mozambique has become a hotbed of investor activity after one of the largest gas finds in the world’s recent history located offshore in the Rovuma basin, near the Tanzanian border.

About 20% of the gas Sasol produces in Mozambique is used for power generation there. The balance mainly feeds into an 860km pipeline to the company’s Secunda plant in SA, where it is used in its production processes. Sasol is also looking at the feasibility of pipeline to move gas from Rovuma to SA.

CCQ International are recognised experts in the field of demining and have successfully concluded many contracts for major players in the gas exploration and mining sectors and ECS Associates are proud to be providing project management and contract management services.

Aecom Training on the NEC Suite of Contracts

ECS Associates (Pty) Ltd recently provided training to Aecom www.aecom.com) on the NEC suite of contracts, including the new NEC 4 contract which has been recently introduced into the country.
Stefan Cremer, senior Quantity Surveyor thoroughly enjoyed the training, commenting that the training was “real world and highly practical”. Due to the success of the initial training on NEC ECC 4 contracts further training was scheduled covering NEC PSC4 and practical aspects of NEC project
management. Training also focused on contrasting the differences between NEC 3 and the newly issued NEC 4.

Accredited NEC Project Manager Course

ECS Associates recently won the privilege to deliver Accredited NEC Project Manager courses in South Africa. This is the widely acclaimed as the gold standard for NEC Project Management and is a prestigious qualification given by the Institute of Civil Engineers London.

ECS Chairman, Andrew Baird, who was a drafter of the NEC contract suite and introduced NEC into the country also qualified as the first accredited trainer to be allowed to deliver the course in Africa. Commenting Andrew said that the importance of effective contract training within the sphere of Government and State Owned Enterprises could not be underestimated. ECS have delivered the first accreditation course successfully, with further courses planner for later in the year. Refer www.ecs.co.za for dates.

NEC4 – Training and Documents

NEC

NEC3 has been transformative on the South African Construction industry. The adoption of NEC3 contracts put collaboration and collective risk sharing as the foundation for modern  procurement.

These high profile projects were procured under NEC3:

Sol Plaatje

Wits and Mpumalanga Universities

NMPP pile-line project,

Durban Harbour

Widening ABSA Towers

Heathrow T5

London 2012 Olympic and Paralympic Games

These contracts have proven that even large, high-risk, complicated projects can be delivered on time and within budget.

https://www.ecs.co.za/shop/
https://www.ecs.co.za/shop/

 

NEC4 contracts reflect procurement and project management developments and emerging best practice. They include improvements in flexibility, clarity and the ease of administration.

Two brand new contracts have been added to the suite – NEC4 Design, Build and Operate Contract (DBO) and NEC4 Alliance Contract (ALC).

The contract is suitable for procuring a full array of Works, Services and Supply, ranging from a major framework to small-scale projects.

New engineering Contract 4 is up on the successful NEC3. NEC4 contracts keep on using plain English and present tense to facilitate the celebration of contracts across the world.

NEC4 contracts aim to:

NEC4:

  • Reflects user feedback, industry developments and user best practice
  • Improved contract administration and reduces administration costs
  • Increased flexibility in each contract and NEC suite
  • Improved risk opportunity and management
  • Designed for international use
  • Better value, greater certainty and improved delivery

THE NEW SUITE OF CONTRACTS:

  • Engineering and Construction Contract (ECC)
  • Engineering and Construction Short Contract (ECSC)
  • Engineering and Construction Subcontract (ECS)
  • Engineering and Construction Short Subcontract (ECSS)
  • Term Service Contract (TSC)
  • Term Service Short Contract (TSSC)
  • Professional Service Contract (PSC)
  • Professional Service Short Contract (PSSC)
  • Supply Contract (SC)
  • Supply Short Contract (SSC)
  • Framework Contract (FC)
  • Dispute Resolution Service Contract (DRSC) (previously NEC3 Adjudicator’s Contract)
  • Design Build Operate Contract (DBO) NEW
  • Alliance Contract (ALC) NEW
  • Supply Short Contract (SSC)
  • Framework Contract (FC)
  • Dispute Resolution Service Contract (DRSC) (previously NEC3 Adjudicator’s Contract)
  • Design Build Operate Contract (DBO) NEW
  • Alliance Contract (ALC) NEW

NEC4: CHANGES AND IMPROVEMENTS : 

Mozambique LNG

Mozambique LNG (Liquefied Natural Gas) development was recently approved.  It is a huge game-changer for the local Engineering and Construction industry in Mozambique. In terms of capital value the development is currently reported at over $120Bn in terms of Capex. This excludes downstream plant opportunities.  These include such as gas to power, gas to liquids, fertilizer and LNG bunkering opportunities. It is situated on the Afungi peninsula in Cabo Delgado province.

ECS Associates Involvement:

We currently provide consulting services to a number of companies who are actively chasing opportunities in this space such as CCQ https://www.ecs.co.za/2019/10/08/ecs-associates-assists-ccq-international/ . ECS currently work in Mozambique in the LNG gas space. We have significant experience in the areas of project development, contract management and planning.  Plus risk management and dispute resolution.

In addition, ECS Associates provides experienced technical resources. These can be integrated within customer teams to complement capacity and capability. This ensures that objective deliverables are achieved. Our leadership has been involved in the majority of mega-projects executed in Mozambique over the last 25 years, including Mozal 1 & 2, Moma Sanda 1 & 2, Vale Tete 1 & 2 and a range of other smaller projects in the Power, Mining and Oil & Gas sectors.

The benefit of Mozambique LNG development:

The Mozambique LNG (Liquefied Natural Gas) opportunity will empower the country from an economic and social perspective. Creating jobs and sourcing products locally.  ECS Associates are committed to assisting with training and development of the new jobs that will be created in Mozambique and other services as required. The development is also great news for the local South African Engineering and Construction industry, which has seen negative growth over the last few years. Civil, Mechanical and Electrical engineering and contracting companies will be eyeing the development in the hope of securing project work.

If managed correctly, Mozambique LNG has the capacity to develop the region into a global gas and industrial powerhouse.

Read more https://www.reuters.com/article/us-mozambique-anadarko-lng/anadarko-approves-20-billion-lng-export-project-in-mozambique-idUSKCN1TJ2DI