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Are you confused about the right contract to choose for your next project? Are you oscillating between JCT and NEC contracts and puzzling about which one would be your apt choice? Your next project contract choice should be based on thorough research and enriched knowledge about the JCT and NEC form contracts. Learn more about the Joint Contracts Tribunal (JCT) and New Engineering Contract (NEC)here.
The Joint Contracts Tribunal (JCT) and New Engineering Contract (NEC) are the standard contract forms. Each of the contracts is part of the standardized construction contract form whereas the JCT construction contracts are deemed to be more sought after than the NEC. The JCT contract is also considered as the UK’s standard construction contract from its inception.
However, the NEC contracts are considered the most significantly flexible and progressive contracts. For most of the construction projects and Engineering projects, NEC4(ECC) is used extensively. The NEC contracts can be applied to the works, goods and services not only domestically but also globally.
The JCT and NEC contracts are distinct in their nature and style. Both contracts have their defining features and characteristics. The most interesting feature of a JCT contract is that it mainly focuses on using legal and precise terms. The JCT contract deals with work with potential risks. It gives a strategic and straight approach to the construction and engineering projects.
Whereas the NEC contract deals with the terms in common English. It deals with more of the matters in simpler terms. It conveys the contract principles in much easier and simpler ways to be interpreted easily by the users. It mainly focuses on the approach which is collaborative project management. The NEC contract tries to interpret the terms which work with the common sense of the users
The fundamental difference between the two contracts lay in terms of the issues they deal with regularly which involves the quality, cost and time value of the project.
JCT Contract Form
The JCT contract was initially established in the year 1931 and was popularly recognized as the traditional contract for the UK. It is the standardized construction form contract for the UK construction industry. The contract is carefully designed by the experts in the field which covers the various aspects of the procurement choices. The amendments are considered in each case.
JCT offers standard construction forms to design and build, minor and major works, construction management and management contracting even if they work together. The latest edition of the JCT contract came into being from the 2016 edition. The major attraction of the JCT contract is that it manages risk elements and thoroughly focuses on providing risk allocation and compensation assessment without being directly involved in the procedures of managing conflicts.
NEC Contract Form
The NEC ( New Engineering Contract) was introduced to give a solution to the shortcomings faced by the then-existing construction contracts, especially with the traditional JCT. The different types of procurement are being facilitated under NEC. The NEC was drafted not only for the UK but also on a global scale. The NEC4 was the latest version of the contract which was published in 2017.
The NEC contracts establish a framework and collaborative approach. The approach between contract and employer to resolve the time, quality and cost involved in NEC. International projects and engineering contracts throughout the project will be included in NEC. The popularity of NEC is tremendously increasing in the UK. It is now a common element in the construction field.
What is the Difference between JCT and NEC?
In a project, to establish a legal relationship between the clients and various other parties, the construction companies rely mainly on the contracts. The standard contracts aid in resolving the matters in a project. Establishing the legal relationship between both parties is essential for the smooth communication and transaction between parties involved in the process.
The NEC and JCT are the most popular contracts. Both contracts provide structure and management framework for resolving disputes among the various parties while managing risks. There are notable differences between both construction contracts.
NEC contracts are known for their capacity to be adaptable and flexible. It is used in the most complex projects. The collaborative approach is widely applicable in the contract. The NEC contract involves the collaboration, communication and development of solutions for the crisis.
The customization which is high in degree can be handled with the help of NEC. The unique requirements can be applied to the NEC contract.
The JCT contract is more detailed when compared to NEC. The prescriptive mode of the JCT contract makes it different from NEC. It is the traditional project contract.
The roles of each party are well defined in JCT. The JCT contract allows a structured approach when compared to NEC. The parties will be clear on the clauses and the responsibilities.
When compared to NEC, JCT is less flexible. JCT contracts are chosen by the clients who wish to establish more authority over the project. It is preferred by both domestic and global development.
The payment structure is another distinguishing feature between the NEC and JCT contracts. Upon the outset of the project, the NEC uses the system called Option C. This will allow to fix a cost for the entire project.
Penalties are given for exceeding the costs that are fixed. It is not using the traditional approach but the modern approach. The cost will be saved while using NEC contracts.
A fixed price will be assigned for the work performed by the employees in the case of JCT contracts. That is the most distinguishing feature of the two contracts.
The NEC contract will help the parties involved in the project to identify and resolve the issues faced during the time of construction. The NEC contract urges the parties to enter into a logical solution and arrive at a conclusive decision at the time of the dispute. The warnings, meetings, appointments etc. will be given in advance. The JCT contract includes the traditional resolution process including the potentially litigation, negotiation etc.
What to choose for your next project?
The choice of both contracts depends on the requirement of the project, which is specific and valid. The choice required for the project will be directly and indirectly related to the degree of the collaboration, potential risks, budget allocation based on the nature of the projects etc.
Each contract has its advantages and disadvantages and is unique in its sense. The selection should be based on the requirements of the project. The complex projects can be taken under the NEC contract. It shows the flexibility of the JCT contract which is appropriate. Risk can be handled appropriately with the help of the NEC contract. The selection of the contract should be strictly based on the specific project requirement.
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