Understanding construction contracts: The JCT, NEC and FIDIC contract suites

When it comes to construction projects, the following three contact suites dominate the industry:  

1. Joint Contracts Tribunal (‘JCT’) contracts;
2. New Engineering Contract (‘NEC’) contracts; and
3. Fédération Internationale Des Ingénieurs Conseils (‘FIDIC’) contracts.

The choice of contract form will depend on many factors surrounding the nature of the project. Each contract suite offers a difference in approach, with some contract forms more flexible than others when it comes to management and obligations.

This article considers, in brief, when you might use a form of contract from the JCT, NEC and FIDIC suites.

When you might use a JCT form of contract

The JCT is composed of seven members, each representing different industry bodies, including contractors, local government, surveyors and other stakeholders.

JCT contracts are widely used for construction projects in the private sector in England and Wales and are the predominant contract suite adopted in the UK. The contracts are well suited to domestic and residential developments, with the suite offering contracts suitable for various procurement methods and projects of varying size, value and complexity.

The standard forms offer a more "hands off” approach for an employer, with an employer’s agent / contract administrator / architect being responsible for administering the contract and risk being allocated from the outset.

Generally, JCT contract forms should not be adopted for complex infrastructure projects as they do not contain suitable, detailed provisions.

When you might use a NEC form of contract

The NEC contract suite is published by the Institution of Civil Engineers. It places an emphasis on collaboration between the parties and is commonly adopted in public sector and infrastructure projects in the UK, though is increasingly being adopted internationally. Government bodies usually adopt the NEC suite as a result of its promotion of a positive working relationship.

The standard forms place more responsibility on the employer and its project manager, requiring proactive project management. The NEC therefore requires the employer to have greater experience, management capability and resources compared to a JCT to allow for proper administration of the contract.

Given the NEC requires proactive project management, the contract suite is particularly suited to projects involving BIM. We have also seen the suite adopted in high profile projects including the London 2012 Olympics and HS2.

When you might use a FIDIC form of contract

The FIDIC form of contract is the most widely adopted suite across the globe and is regularly used in international infrastructure and engineering projects, as well as domestic projects with international parties.

The standard forms promote early dispute resolution with clear lines of communication between the parties and early warning mechanisms for events which may impede the progress of a project. The contract terms seek to pre-allocate risk and responsibilities between the parties.

The FIDIC contract suite is particularly suitable for large-scale construction projects and for projects which have specific technical requirements (e.g. for testing and commissioning). FIDIC is therefore commonly adopted in power and electrical projects – which will have specific testing and commissioning requirements to ensure functionality, before final acceptance.

Getting the contract right from the outset

Although the standard forms in each suite have been carefully drafted, they will need tailoring to meet the specific requirements of a project, no matter which form is adopted. A JCT contract will need to be amended (often by way of a schedule of amendments), consideration will need to be given as to which optional clauses in the NEC suite of contracts are to apply and the FIDIC suite allows for the incorporation of special provisions.

Careful thought needs to be given not only as to which contract suite (and form) is to be utilised, but to the modifications of the standard form to ensure that the contract aligns with the project’s specific needs. Risk, responsibility and cost are some of the key factors which will need to be borne in mind.

If in doubt, legal advice should be sought. Ensuring a contract is properly drafted and aligns with the project will put the parties in the best position to ensure the smooth running of the project. It will save the parties time and money in the long run, in the event of a delay or dispute later down the line.

For any questions relating to this article or for advice contact our Construction Solicitors.