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Warning sounded over Olympic contracts

LONDON OLYMPIC bosses must stop contractors altering the Engineering and Construction Contract (ECC) if they are to avoid disputes on 2012 projects, a construction law expert warned this week.

New Engineering Contract (NEC) Users Group chairman Rudi Klein said he welcomed the Olympic Delivery Authority's (ODA) adoption of the NEC3 suite of contracts on all London 2012 projects.

However, he was concerned that contractors might try to fiddle with the contract further down the supply chain.

'What we don't want to see is the main contractor being given the NEC but then operating bespoke arrangements downstream, ' said Klein, who is also chief executive of the Specialist Engineering Contractors Group.

The ECC is a non-confrontational document, drawn up by the ICE and updated in the NEC3 suite in August last year, which encourages client, contractor and subbies to work together in partnership.

Klein said that on the widening of the M25 and Heathrow Terminal 5 spur road, main contractor Balfour Beatty had amended payment provisions with its subcontractors.

'This kind of practice would undermine the whole ethos of dispute-free procurement, ' said Klein.

In April, ODA procurement chief Ray Payne told the NEC User's Group annual seminar that the NEC3 suite of contracts would be used on all Olympic projects (NCE March 30).

Projects that have used the NEC include Heathrow Terminal 5 and the Channel Tunnel Rail Link, both of which are running on time and to budget.

Wembley is the most highprofile example of an old-style adversarial contract, where contractors and subcontractors end up suing each other to claw back their money, with costs escalating and deadlines being missed.

Klein said the NEC was best employed when risk was taken on by the parties best able to manage it, rather than shunted along the supply chain.

'If you put [the risk] further down, it is a recipe for dispute, ' he added.

Klein also said that there should be no room for contractors withholding payments to subcontractors, otherwise known as retentions, on Olympic projects.

'I think there will be an outcry if adversarial weaponry like retentions was being applied - contractors shouldn't be using these if they are partnering, ' he said.

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