This NEC webinar focused on the use of the Early Contractor Involvement (ECI) Clause (X22) in NEC4 Engineering and Construction Contracts (ECC).
Presenters discussed the context, contract preparation, supplier selection, and contract management under NEC4 X22, with a focus on practical application rather than a clause-by-clause review.
Key issues addressed included the rationale for using Option C/E, approaches to pricing information, best practices in supplier selection, management of the submission and approval process, and the handling of open questions.
The session wrapped up with a Q&A, highlighting concerns around financial stability, incentive alignment, stage progression, budget management, and contractual adaptation.
Action Items
(No specific due date – NEC User Group Secretariat): Publish written answers to any unanswered webinar questions in the NEC User Group newsletter and/or on the website.
(Ongoing – Event Organizers): Share the recorded webinar on the NEC website and YouTube.
(October 11th – NEC Event Lead, Glasgow): Prepare and promote the upcoming NEC event in Glasgow on supply chain collaboration.
(By November 29th – NEC Asia-Pacific Team): Organize and promote the NEC Asia-Pacific User Group Conference in Hong Kong.
Introduction and Context of ECI in NEC4 ECC
The webinar introduced the NEC4 ECC X22 Early Contractor Involvement clause, which allows clients and contractors to collaborate early in a project's lifecycle.
ECI is primarily published for use with NEC4 contracts, particularly Option C and E, with modifications needed for Option A.
The focus of the session was on "middle ground" projects—those with established schemes and fairly defined budgets, where ECI can realize its full potential.
Rationale for X22 Use and Applicability
X22 was written for Options C (target contract with activity schedule) and E (cost reimbursable contract) because both involve risk sharing.
While ECI could theoretically be adapted for Option A (priced contract with activity schedule), it would require additional modified clauses to ensure contractor motivation and risk management align with ECI principles.
The intention is for both client and contractor to work towards best outcomes within an agreed target price and to use contractors’ existing estimation processes.
Contract Preparation and Pricing Information
In preparing ECI contracts, clients must specify what pricing information is required and how this will be used in setting and assessing stage 2 prices.
Pricing information should provide not just rates but an explanation or “story” about how prices are assessed, leveraging the contractor’s own systems.
Clarity is needed on the process and mechanism to be used for calculating stage 2 prices, ensuring transparency and mutual understanding.
It's important that information required at tender is also relevant and useful in contract execution.
Supplier Selection
Clients and contractors both benefit from openness: the contractor should disclose its pricing and estimation systems, while the client should clarify how submitted data will be used in selection.
A balance between technical, professional, and financial submissions is needed. Overemphasis on price alone is discouraged.
The selection process should give confidence in both the contractor’s competence and the appropriateness of their pricing methods.
The approach can potentially be adapted for subcontractor selection, though formal ECI processes for subs are uncommon and may encounter resistance.
Submissions and Stage Process Management
During stage one, ongoing submissions—including design proposals, budget forecasts, and programs—are expected, culminating in a comprehensive submission before stage two approval.
Submissions should address not just technical solutions but impact on budget and program, with enough design detail to support client approval but not all final details.
The contract allows client specification of the submission and review/acceptance procedure; successful process requires dialogue and staged review.
Stage Two Price Assessment and Budget Management
Assessment of stage two pricing should strictly follow the agreed process outlined in the contract and based on submitted pricing information.
Regular submissions and forecast updates should ensure there are no last-minute surprises regarding budget or program feasibility.
Project approval to move to stage two depends both on meeting technical requirements and remaining within the agreed budget; if not, adjustments or withdrawal are possible.
Contract Management Considerations
During stage one, standard NEC contract mechanisms (forecasting, early warnings) still apply, though some are less relevant if only stage one prices are in play.
The contract should clearly state the expected timeline for the client’s internal approval to move to stage two, treated as a program constraint.
Any approvals needed for project advancement (e.g., planning consent) must be obtained during stage one.
Handling of Design and Scope at Stage Two
Any remaining design to be completed in stage two must be clearly identified, as responsibility falls to the contractor.
The transition between stage one and stage two should be seamless, ensuring all approvals, design, and pricing details are ready before construction commitment.
Q&A and Additional Topics
Issues discussed included financial stability checks (a standard procurement rather than contractual issue), incentivizing contractor alignment with client goals, practicalities of design progression in stages, supply chain/subcontractor engagement, and rare instances of budget change triggers.
The adaptation of ECI for consultant contracts (e.g., PSC) was queried; it is technically possible but unusual and may complicate procurement law compliance.
Decisions
Focus on Option C/E for ECI (X22) in NEC4 — Because these options best align contractor motivation with collaborative risk-sharing, while Option A use would require substantial modification.
Stage 2 Approval Contingent on Meeting Budget and Program — Projects only proceed when stage two pricing and scope align with client budget and all requisite approvals are in place.
Open Questions / Follow-Ups
Written answers will be provided for any participant questions not addressed during the live session.
Follow-up needed on best practices for ECI adaptation to subcontractor engagement and any emerging issues with PSC (consultant) contract adaptation.
Clarity requested by participants about handling design changes and compensation if projects do not proceed to stage two.