Contracts on the catwalk: When and how much the NEC is being used

The RICS said the increase in the use of NEC forms of contract was the most dramatic finding of its survey of the construction industry’s contracting habits in 2004. While the NEC was barely used in the last survey in 2001, with just ten projects adopting the document, in 2004 the number rocketed to 155.

The NEC accounted for 6.7% of all the contracts the RICS survey recorded for the year. More impressively, the document accounts for 12.8% of the value of all the contracts. It was used on projects of all sizes.

The vast majority (77%) of people using the NEC in 2004 went for the Option C Target Contract with activity schedule.

The second most widely used version of the NEC was Option A Priced with activity. This was used on a spread of schemes with contract values up to £10m. Bills of Quantities were found to have been used on 10 projects using Options B and D.

Single uses were reported of the use of the Cost Reimbursable contract (Option E) and the Management contracts (Option F).

The NEC Short contract (ECSC) was found to have been used on five contracts, up from no use at all in 2001. The RICS said the document, introduced in 1999, “is not intended as a minor works form but for low risk, straightforward work of any value. Nevertheless the five instances recorded were all on contracts below £250,000 in value."

The partnering version of NEC proved popular in 2004, being used on 11% of all the NEC contracts identified by the survey. The NEC - Option X12: partnering Option, rolled out in 2001, was used on 17 jobs alongside an NEC contract. It was mainly used on schemes in the £2-10m value range.

The RICS said that although Michael Latham recommended the NEC in his 2001 report 'Constructing the Team', the 2001 survey revealed scant enthusiasm for the document. The Engineering and Construction Contract, part of the NEC family of contracts, was first published in 1993. The second edition, published in 1995, was available for use on projects that started on site in 2004.

More from the RICS Contracts in Use Survey on this website throughout the week.