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Comparing NEC and FIDIC Contracts

Sep 2, 2024

Comparison of NEC and FIDIC Contracts

Introduction

  • Two commonly used international construction contracts: NEC (New Engineering Contract) and FIDIC (FĂ©dĂ©ration Internationale des IngĂ©nieurs-Conseils).
  • NEC was first released in 1993, while FIDIC was formed on July 22, 1913.

Background of FIDIC and NEC

  • FIDIC:
    • French acronym for International Federation of Consulting Engineers.
    • Founded by Belgium, France, and Switzerland.
    • Principles: Quality, Integrity, and Sustainability.
  • NEC:
    • More recent contract designed to address shortcomings of prior contracts.
    • Aims for a progressive approach in contract management.
    • Appoints a Project Manager (NEC) vs Engineer (FIDIC).

Key Similarities

  • Both contracts designed for international use.

Administration of Contracts

Time Management

  • Requirements:
    • Both contracts require contractors to submit a work program.
    • Employers must notify of key dates (start, completion, access, sectional completions).
  • NEC Specifics:
    • Requires more detailed programs including float and time risk allowance.
    • Uses an initial program for assessing variations and project progress.
    • Emphasizes the necessity of an up-to-date accepted program.
    • Early warnings are critical—submitted upon awareness of events affecting time, cost, or quality.
  • FIDIC Specifics:
    • Requires initial detailed program but updates are only for inconsistencies.
    • Less emphasis on maintaining a current program compared to NEC.

Cost Management

  • Pricing Methods:
    • Both contracts allow pricing based on a bill of quantities.
    • NEC offers various procurement options:
      • Cost-based open book contracts.
      • Target cost options where profit/loss is shared.
      • Lump sum and management contracting.
  • Variations:
    • FIDIC refers to variations/claims.
    • NEC refers to compensation events, grouping time and cost together.
    • FIDIC uses subjective tests for variations, while NEC uses objective tests.
    • Example: FIDIC’s reference to exceptional adverse climate conditions vs. NEC’s worse than 1 in 10-year approach.

Summary

  • FIDIC focuses on liabilities and risk in a traditional manner.
  • NEC promotes a proactive and collaborative approach.
  • Recent changes in FIDIC aim for clarity, similar to NEC’s plain English drafting style.

Further Reading

  • Link to NEC report provided in the video description.

Full transcript