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Cambridge busway row turns on NEC contract

Cambridgeshire County Council has announced it is seeking a government-funded public review of the NEC forms of contract,after further disputes with contractor Bam Nuttall over its new guided busway.

Review “of national importance”

The council said it will carry out an independent public review of the NEC 2 Target Price contract used on the project. It is to ask central government for funding because it believes such a review will be of “national importance”.

It said the review would “make sure other people who use this contract do not have the problems we have faced with Bam Nuttall”, said Cambridgeshire cabinet member for growth, infrastructure and strategic planning Roy Pegram.

The £117M Cambridgeshire Guided Busway project suffered disputes between client and contractor over design changes, delays and alleged defects in work. These led to the council going public about them in March (NCE 11 March).

Public review

A council spokesman said an internal review of the project was always planned, but the council’s cabinet has now decided to turn it into a public review led by a contractual expert, with evidence to be heard in public and the final report published.

“We were always going to have a review once the project was completed to see if there were any lessons we could learn,” he said. However, he said a new dispute over whether Bam should install lighting at a junction was the “final straw”, even though the contractor eventually agreed to install the lighting.

The review will assess “just how well this standard civil engineering contract has worked and been applied by both parties,” said the spokesman.

NEC contracts originator Martin Barnes said the disputes cannot be blamed on the contract itself.

“Everything which Cambridgeshire now appears to be unhappy with should have been apparent from the contractor’s design which the client had the duty to check and accept or reject,” he said. “I don’t think we need a public enquiry about NEC. It usually works fine when people do what the contract says they have agreed to do.”

“Significant use is still made of the ICE conditions”

Rosemary Beales, CECA

A council spokesman said no work had yet started on the review as it is “really too early”, adding that it may not begin for “a number of years” because it will have to be delayed until the outcome of any legal action with Bam Nuttall is known to avoid prejudicing court proceedings.

The council said legal action over the project disputes is “inevitable”. “The legal process could take quite some time to be done and dusted,” said the spokesman.

An independent review will provide a full investigation into the problems that have been faced without the multi million pound bill of a legally based public inquiry, said the council.

In the same week that the council sought a review of the NEC, the Association for Consultancy & Engineering (ACE) and the Civil Engineering Contractors Association (CECA) announced their commitment to maintaining the ICE Conditions of Contract as contracts of choice. By contrast, the ICE said it would no longer maintain the ICE Conditions but would focus on NEC 3 (NCE 5 August).

“Commitment to both contracts”

CECA national director Rosemary Beales said CECA and the ACE were committed to ensuring there is continued choice between the different forms of contract. “Significant use is still made of the ICE Conditions for infrastructure and associated work,” she said.

The NEC was the first standard contract to acknowledge partnering between all the parties and seeks to avoid litigation through mediation. Bam Nuttall has a design and build contract for the guided busway, and detailed design has been undertaken by a joint venture between Arup and Parsons Brinckerhoff.

Costs for the scheme were put at £116.2M − including £87M for construction − when the contract was let in June 2009. Bam Nuttall’s forecast for actual costs has reached £145M but the council said this could be reduced if works are undertaken “efficiently”. The firm has had almost £14,000 a day deducted for late delivery of the project since February 2009 º a total in excess of £7M so far.

Readers' comments (10)

  • Management by commitee or by negotiation always costs more, and I suspect the recent trend in this direction is one reason why project costs compared with estimates have escalated so much.

    This is a major disadvantage and complaint against NEC type C. of C's. The costs rise because negotiation always involve giving part way; joint decisions are too often just a compromise and hence cost more; avoiding confrontation as a core strategy effectively at any price will always mean just that, namely paying more; and from a human point of view there is an almost built in facility and even excuse to take joint decisions simply to dilute personal responsibilities and accountability and even to avoid any dispute and hence later examination of individuals' performance.

    The classic C of C's, such as ICE, discipline both Clients/Engineer and Contractors to focus on what they are wanting (something too many Clients too often fail on prior to Contract starts) and what they are taking on (something that many Contractors still under-estimate or intentionally depend upon claimsmanship to cover up). Given clear and precise specifications(not always provided) and precise and comprehensive responsibility splits (often inadequate) and with firm proactive contracts/design/construction experienced hands-on control and management by the Engineer (regretably almost at times a dying breed) then Clients will get far better performance and value for money than with many of this newer Contract Forms such as NCE which appear to have been provided mainly to overcome these ongoing performance deficiencies by all 3 main players involved, and for no other reason.

    I was always taught the Contract and their procedures covers all eventualities. Given an experienced across-the-board very pro-active Engineer during implementation stage and discipline recourse to the built in procedures - and with the Engineer not from the organisation that drew up the Design, the Specification or the Contract to reinforce his or her neutrality, then prior C of C's were more than adequate.

    We need to go back to the previous Forms of Contract, ICE, I Chem E, I Mech E, IEE and their overseas equivalents such as FIDIC with more effort on hands-on training for the leading 3 players and their organisations to bring everyone up to the necessary standard within any Contract whilst at the same time employing Cost Engineers, keeping QS's solely for the measurement and clerical level activities involved and only as and when requested!

    Then we'll get better performance on Projects, less disputes and much less cost escalation.

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  • NEC works.

    NEC needs a change to a culture of USING the contract.

    NEC highlights:
    - good and bad documents abd
    - good and bad project menagament.

    The client and contractor may well need to review how they used the contract. Who did the joint training session on NEC at project start up? Who was auditing contract compliance and management as they went along?

    Richard Patterson
    NEC and procurrement specialist
    Mott MacDonald
    http://uk.linkedin.com/in/coolsoberandsmiling

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  • Des Downey

    We have been helping Contractors, Employers and Project Managers implement hundreds of NEC contracts over the last 10 years. The vast majority have achieved their objectives when the NEC contract is administered correctly. NEC works ! Lets not go back to the old days of hidden risks, 3 year final accounts and lots of surprises. If you want this, keep using FIDIC .
    Robin Wilkin
    Operations Director
    Management Process Systems
    www.mpsprocess.com

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  • Bureaucracy, overheads, more overheads, and even more overheads, and for what benefit to the cost and efficiency of the project?

    What change of culture? Making the best of what may generally be an inadequate, inefficient and possibly over-expensive contract strategy or trying to justify it or excuse it after the event? The Project is the Engineer (l'Etat -( le Projet), c'est moi, as Louis XIV once said!) and the Contract procedures, responsibilities and risk allocations are pre-defined, accepted and absolute at Contract signature! Every Party does its bit - no more and no less!

    Every problem you talk about happening: - project management, training, documents, usage of the contract either during or after the contract should be a matter of the skill, capability or experience that each of the 3 main parties involved must have within their allocated personnel before they even consider entering into a Contract and something they should have priced for!

    It's free markets that improve efficiencies in design, construction, and project management, driven by reasonable and courteous professional conflict, not analysing the contract problems during or afterwards or devising operational procedures that reduce the very pressures that generate such efficiencies.

    If you reward inefficiency by paying for overcoming such deficiencies in the past and not leaving it as an internal cost to be absorbed and a lesson to be learnt then it's no wonder we have the costs' escalations we have between budgets and Final Certificate plus in many cases Claims/Court Award values.

    I hope it was not a Freudian slip in RP's comment "Menagament" - hopefully this is not evidence of some menage (a deux ou a trois?) - even I didn't dream that Clients, Contractors, and Consultants were now expected to become so friendly, even on NEC projects!

    Joking aside, we have to get back to some form of improvement, even if it means going backwards for a while!

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  • Bureaucracy, overheads, more overheads, and even more overheads, and for what benefit to the cost and efficiency of the project?

    What change of culture? Making the best of what may generally be an inadequate, inefficient and possibly over-expensive contract strategy or trying to justify it or excuse it after the event? The Project is the Engineer (l'Etat -( le Projet), c'est moi, as Louis XIV once said!) and the Contract procedures, responsibilities and risk allocations are pre-defined, accepted and absolute at Contract signature! Every Party does its bit - no more and no less!

    Every problem you talk about happening: - project management, training, documents, usage of the contract either during or after the contract should be a matter of the skill, capability or experience that each of the 3 main parties involved must have within their allocated personnel before they even consider entering into a Contract and something they should have priced for!

    It's free markets that improve efficiencies in design, construction, and project management, driven by reasonable and courteous professional conflict, not analysing the contract problems during or afterwards or devising operational procedures that reduce the very pressures that generate such efficiencies.

    If you reward inefficiency by paying for overcoming such deficiencies in the past and not leaving it as an internal cost to be absorbed and a lesson to be learnt then it's no wonder we have the costs' escalations we have between budgets and Final Certificate plus in many cases Claims/Court Award values.

    I hope it was not a Freudian slip in RP's comment "Menagament" - hopefully this is not evidence of some menage (a deux ou a trois?) - even I didn't dream that Clients, Contractors, and Consultants were now expected to become so friendly, even on NEC projects!

    Joking aside, we have to get back to some form of improvement, even if it means going backwards for a while!

    Unsuitable or offensive? Report this comment

  • Bureaucracy, overheads, more overheads, and even more overheads, and for what benefit to the cost and efficiency of the project?

    What change of culture? Making the best of what may generally be an inadequate, inefficient and possibly over-expensive contract strategy or trying to justify it or excuse it after the event? The Project is the Engineer (l'Etat -( le Projet), c'est moi, as Louis XIV once said!) and the Contract procedures, responsibilities and risk allocations are pre-defined, accepted and absolute at Contract signature! Every Party does its bit - no more and no less!

    Every problem you talk about happening: - project management, training, documents, usage of the contract either during or after the contract should be a matter of the skill, capability or experience that each of the 3 main parties involved must have within their allocated personnel before they even consider entering into a Contract and something they should have priced for!

    It's free markets that improve efficiencies in design, construction, and project management, driven by reasonable and courteous professional conflict, not analysing the contract problems during or afterwards or devising operational procedures that reduce the very pressures that generate such efficiencies.

    If you reward inefficiency by paying for overcoming such deficiencies in the past and not leaving it as an internal cost to be absorbed and a lesson to be learnt then it's no wonder we have the costs' escalations we have between budgets and Final Certificate plus in many cases Claims/Court Award values.

    I hope it was not a Freudian slip in RP's comment "Menagament" - hopefully this is not evidence of some menage (a deux ou a trois?) - even I didn't dream that Clients, Contractors, and Consultants were now expected to become so friendly, even on NEC projects!

    Joking aside, we have to get back to some form of improvement, even if it means going backwards for a while!

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  • Philip Alexander

    Reading Peter Wilson's views on NEC is like a breath of fresh air. I thought I was a lone voice in advocating "old" C of C and it's been an issue of the Emperor's new clothes when it comes to challenging this brave new world of partnership and alliancing. Unfortunately, the NEC has fostered a new attitude of "she'll be right" (I'm in Australia) and too much has been left open at the time of contract signature for the contract to work. It seems to have encouraged a sloppy approach to design issues and a contractor's idea of what's in and what's out; and what constitutes quality/compliance with the Spec will always be different from the client's ideas. These D&C contracts are always about the pressure on the designers to complete the design in a hurry and that leaves gaps which the parties fall through and then it's just downhill from there.

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  • Its an interesting subject.

    Having queued at Cottenham to get onto the A14 one is left with the impression that an old railway ought to be the right solution for any form of public transport. Personally I cxannot see the point of having a guided busway - whats wrong with rails and trams [as long as you dont lay them on top of a gas main ...]. However, we are talking of project management and the dreaded "collaboration" word.

    I have been involved in many contract claims over the years. What is absolutely sure is that the team with the best records wins. And there is only one time to garner in those records - at the time [viz contemporaneously].

    Anyone who has spent six months trying to abstract data from a portal will be aware of not only how difficult and time consuming it is, but also how badly structured the data is.

    TDOC.com is a solution which not only supports the formal types of contract ICE, FIDIC, et al well, but can handle the process flows demanded by the NEC3 approach.

    More important is ISO9001: it says clearly that party A will send to party B what it deems that party B will need [which may be laid down contractually]. It is then up to A to keep B up to date. Thats the Transmittal Process [viz the issue of technical documents]. Design Approvals are just part of this.

    It is NOT upto B to go seeking information unless what A has sent him is lacking, in which case B must tell A, and A must respond expeditiously. Thats the RFI or TQ process. These assist the Design approval.

    None of this is rocket science. Just hard document control work. What is importamnt is that these process's are made EASY to use, FAST, and "contractually secure" by which I mean that BOTH A and B sjhould maintain their own records .... again as mandated by ISO9001.

    As a process, a collaborative "open to all portal" can only be described as placing a bomb in the middle of ISO9001. Bad idea. We all say that all parties must have it - then it gets ignored. Then you get a contract disaster. WHY is everyone surprised ?

    So what one needs is an easy way to communicate. Its easy EMAIL. BUT this must be done in a structured easy to respond to manner. Dashboards are merely an excuse to cover up deficient systems.

    A system must have transmittal - paper, email with attachments and when these are too big, FTP. And EDI if the receipient wants it. But there is no standard. The CITE is long dead.

    A system must cater for approvals. So send and HTML form with some boxes to fill in to retyrn the markups. Buit DONT send a 3mb PDF back, send a few kb of mark up data - we need a standard for all of this. Bluebeam has the mark up data - it works. TDOC has the infrastructure and operational methodology to handle it all. Like you rails and signals and power for trains.

    Again none of it is rocket science.

    BUT it needs to be explained to people who THINK they understand when they dont want to admit that they dont really, and when you add an IT department who just want browser driven portals which are simply less hassle all round for THEM, but not for the users.

    Try wp.tdocplus.co.uk for a set of white papers which explain the DIFFERENCES between the types of system.

    Construction and Computing are still "in the missionary position". Each is pushing their own vested interests not looking at reducing TOTAL cost on a project.

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  • Reading the comments and the article - both on line and in the NCE - it appears to me that the headlines/article/comment do not distinguish between if Cambridge sees as issues around the NEC or with Target Price (or even Design/construct).

    It seems to me that some clients believe that contract management is something 'any-engineer-can do' and Design Construct is a way of contracting before you really know what you want. Of course neither belief is correct. When I used to teach contract management I always repeated the mantra when problems happen the first thing to do is read the contract, second thing is read it again, third thing is get somebody else to read it for you. Unfortunately I think today many project/contract managers don't read the contract or maybe can't read it - and default to 'lets talk to the lawyers.

    I led a review of the NEC for OGC about 6/7 years ago, I believed then and believe now that the contract is a bridge for the two parties to have a common understanding/agreement. As an ex-contract developer using FIDIC and ICE Conditions, I approached the NEC with some reservations, I came away convinced it could work but needed a different approach to the relationship. I had reservations then if most clients, contractors or their respective professional advisors would put in the effort. The Gateway Reviews/audits I have been part of since that point reinforce my view that most don't even accept that any effort is required.

    I suppose what I am really saying is that I would guess that the Cambridge busways would have existed anyway no matter what form of contract had been used. Maybe the NEC just exposes the contract management weaknesses a bit more obviously.

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  • ....or perhaps Collaberative Working between Consultants and Contractors is just something that people may like to think can happen. I'm still staggered (and maybe tainted) that people remain confident that all parties, at all times, tell each other the truth, 'play fair' and enter into the spirit of the ethos of NEC (lets all grow up and be brutally honest, not just make comments based on what the the Contract says is supposed to happen). Everyone is ultimately involved in the Contract to make money. The NEC is not going to change that - Clients have either been mislead or just do not understand the realities...... The NEC is not going to turn your Contractor into a little 'puddy cat' who wants his tummy tickled - He's still got sharp teeth and his claws may not be out yet, but they are there.

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