Hong Kong Government has started her trial of NEC (formerly named as New Engineering Contract) in contract procurement since 2009.  Up to end 2016 some 30+ pilot contracts have been launched to use this new form of contracts.  It is recognized that the Government has directed to extend the use of NEC beyond 2016 for works contracts.  It is therefore envisaged that more and more practitioners would sooner rather than later get involved in the use of NEC.

Under many traditional forms of contract, one of the key contract administration duties of quantity surveyors is valuation of variations and contractual claims. Under the NEC regime, we have a different name called “compensation events”.  Taking the most popular NEC form in use in Hong Kong, the Engineering and Construction Contract as an example, a number of compensation events are stated in the contract (e.g. adverse weather and change in Works Information), if occur, to enable the Contractor be entitled to a possible financial and/or time compensation. NEC requires all changes to time and cost as resulted from compensation events be assessed contemporaneously with the events arising. Such “sort it out now” approach could enable the contract parties to manage risk more effectively and offer the Employer a wider choice and better control over changes with an incremental price and time certainty in place. This is counter to the normal behaviour in many of the contracts using traditional forms of contract where adversarial relationship between the contract parties is quite common - to keep records and to “sort it out later” hopefully some months later if not years. In this seminar, Hayman and Tony will, via an interactive “role play”, explain the process of compensation events from notification to assessment until implementation, in order to help the audience to have a better understanding of this key NEC feature.

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