The Engineering and Construction Contract (ECC) is a document belonging to the New Engineering Contract family of documents. It was published in Consultative Edition as the New Engineering Contract in 1991 and is currently in second edition while a third edition being planned for the future.
THE ECC is designed to be flexible enough to be used for any construction contract and has been used in civils, process, mechanical and electrical and building projects. Some more well-known examples of its use are the Cardiff stadium, the Eden Project, the Kingston Bridge in Glasgow and the Channel Tunnel Rail Link.
The ECC second edition was drafted to incorporate Latham’s principles of a modern contract as described in his report Constructing the Team. The contract has three objectives: flexibility; clarity and simplicity; and a stimulus to good management. It is this latter objective that encourages many people to use the ECC for the first time.
The ECC incorporates non-adversarial actions and encourages the parties to work together collaboratively and proactively. It is drafted in a different manner from traditional contracts and facilitates a different relationship between the parties. As such, it should be procured in a manner that correlates with its objectives and drafting principles.
Procuring an ECC contract in the same way as traditional contracts could lead to difficulties and tensions from the very start.
This is the first in a series of six brief articles about the choices made when procuring a contract using the Engineering and Construction Contract. Other articles will include:-
• the selection of secondary options,
• drafting the Works information,
• the use of the programme,
• compensation events, and
• mutual trust and co-operation.
The choice of main option.
The Employer has a choice of six main options under the ECC. These six main options effectively represent the way in which the Contractor will be paid during the period of the contract. Some of the choices are easy: if you want a management contractor, you choose option F; if you want a cost reimbursable contract, you choose option E. Options B and D use a bill of quantities, while options A and C use an activity schedule, which describes milestone payments. Options A and B are priced contracts and options C and D are target contracts.
Many Employers tend to prefer a fixed price (option A) or a remeasurable bills of quantities contract (option B), where the budget for the contract is relatively secure, barring variations ordered by the Employer or his representative. In order to receive a fixed price contract from a Contractor, however, the scope of works is required to be fixed, too. This is often not possible due to planning, budget or time constraints. In this case, the Employer has a decision to make about whether he wants to take the risk of changes made to the contract, or whether he wants to share the risk with the Contractor, who could make valuable contributions to the solving of work scope dilemmas. This could change his choice of option from A to C or from B to D.
In some cases, an Employer may have an idea about what a target contract (options C and D under the ECC) represents. Some employers may regard a target contract as a means of ‘sharing the risk’. This is, of course, an aspect of any target contract, but there are other considerations as well. Principally, the behaviour of the two parties to the contract should be modified from the armslength attitude of a fixed price contract, to the more collaborative relationship that is required to make a target contract work.
The primary driver for choice of main option under the ECC is the status of the Works Information, which describes the Employer’s Requirements. An option A contract based on a Works Information that is only 50% complete is difficult to reconcile and would inevitably result in large compensation events.
The selection of secondary options will be discussed in the next article.
Bronwyn Mitchell is a Senior Consultant in the Stirling office and specialises in Procurement methods.