NEC chips away at JCT domination, while 98% avoid e-tendering, contract survey reveals

A major increase in industry take-up of the NEC form of contract has been recorded by the RICS’ latest Contracts in Use Survey. The survey found that 6.7% of contracts used in 2004 were one of the NEC variants, which is to be used on the upcoming Olympics project. This equated to 155 projects worth 12.8% of the total value of the contracts surveyed – in 2001 there were only 10 recorded uses of the NEC, which was first published in 1993.

The rise of the NEC and the use of partnering contracts led to a drop in dominance of the JCT – 78% of all contracts employed one of the JCT standard forms, down from 91% in 2001. Of the JCT contracts in use in the period, the JCT With Contractor’s Design accounted for over 35% of the value of the contracts surveyed. Standard form with quantities came in a distant second with 18% of the values of contracts recorded.

The survey also reported a significant increase in the With Quantities form in both numbers and value compared to 2001. The survey captured a total of 2,330 projects worth a total of £3.035bn.

Design and build accounted for 14% of the total number of contracts

The report recorded a major increase in the use of partnering contracts, from 45 projects worth £143m to 116 projects with a total value of £316m. There was a particular surge in the use of the PPC2000 documents, up fourfold compared to 2001. The study recorded no great change in the use of design and build contracts or in the employment of negotiated contracts.

Design and build accounted for 14% of the total number of contracts, virtually the same percentage as in 2001. In terms of contract value, however, the contract does dominate – it accounted for 43% of the value of construction work, the same as in 2001. The number of negotiated contracts rose from 173 in 2001 to 201 two years ago but the value as a percentage of the sample slipped from 5.9% to 4.2%.

The survey confirmed the decline in use of management contracting and construction management, whose heydays were in the 1980s and the early 1990s on major projects. In 2004 both forms only accounted for 1.1% of the number of projects and just 1.7% of the value, the lowest figures recorded in any of the surveys of the last 20 years.

The survey captured a total of 2,330 projects worth a total of £3.035bn

The survey asked about the use of incentivisation in contracts for the first time and found that some sort of pain/gain share was used in 3.3% of contracts and just as likely to be used on small projects as larger ones.

Only 2.3% of respondents reported the use of electronic tendering and the majority of those were on small contracts. Have things changed since 2004? Let us know what you think by emailing us: qsnews@cmpi.biz