New engineering contract vs traditional engineering contract?

The following is the Zhongda Consulting to bring you about the new engineering contracts and traditional engineering contracts for reference.

1, the origin of the traditional contract

For many years, the conditions of contract prepared by the Institution of Civil Engineers (ICE) have ruled the practical activities of management in the field of civil engineering in the United Kingdom and have been used as the basis for all contracts for civil engineering in the United Kingdom. Although the first edition of the ICE contract was published in 1945, the principle of risk apportionment between the contracting parties and the original text of most of the conditions of contract had already been adopted in the canal works and railroad projects carried out during the late industrial revolution in Britain from the 1860s to the 1850s.In 1786 during the construction of the Forth-clyde Canal, which linked the east and west coasts of Scotland, the Consulting Engineer Support for the use of contractors rather than directly employing labor and the development of a management plan that defined the scope of work and responsibilities of the Chief Engineer and his subordinate Resident Engineers and Quantity Surveyors for the construction of the various sections of the canal set the example for the implementation of most civil engineering projects over the next two hundred years, and has continued to be used on projects where the work is managed under traditional contractual terms and conditions.

Since the 1860s, owners of civil engineering projects in the United Kingdom have employed consulting engineers who were responsible for the design of the works, adequately expressing the design intent in technical notes and detailed working drawings, and preparing bills of quantities in accordance with the working drawings, which the contractors were required to quote on a case-by-case basis. The contract conditions at that time described the consulting engineers as masters and the contractors as servants. The servant had to accept the risks inherent in the execution of the works. The consulting engineer had the right to issue new instructions at any time during the progress of the work, which the contractor had to obey unconditionally, while it was up to the consulting engineer to decide on the additional period of time and the additional cost to be obtained by the contractor for carrying out the consulting engineer's new instructions. Even if there is a dispute between the contractor and the consulting engineer, the dispute will be judged by the consulting engineer. As a result, this contractual condition has brought about a number of engineering projects due to continuous disputes between the contracting parties, resulting in project cost overruns, schedule targets can not be accomplished, and often develops into a number of years after the completion of the project, both parties are caught up in the costly and time-consuming legal proceedings. This is a common occurrence on projects implemented under traditional contracts around the world today.

The ICE contract was revised three times over the next 11 years and the fourth edition of the ICE contract was published in 1956, which was widely used in the UK and on overseas projects, leading to the publication of the first edition of the FIDIC contract in 1957, based on the fourth edition of the ICE contract, and which became the contract for the construction of civil engineering works throughout the world.

With the development of the construction industry, management technology continues to progress, the ICE contract preparation committee seeks to reform the past conditions of the contract, published in 1973, the fifth edition of the ICE contract, the implementation of civil engineering projects inherent risks between the contracting parties to make a clearer apportionment of both parties to the contract, the contract becomes a contract acceptable to both sides of the contract conditions.

The first edition of the FIDIC contract was published in 1957, and then almost every time the contract was published. The first edition of FIDIC contract was published in 1957, and then revised almost every ten years. 1977 the third edition of FIDIC contract was revised with the fifth edition of ICE contract as the blue book. 1988 the fourth edition of FIDIC contract made a lot of revisions to the third edition, the contracting parties in the practice of engineering management of their respective responsibilities, obligations, rights are more clearly defined, the risk of apportionment is more reasonable, so that the The World Bank and other financial institutions loan projects designated to use FIDIC contract, FIDIC contract has been by the project owner and the contractor's unanimous praise, and has become the world's construction industry to promote the implementation of the project's international practice.

While the FIDIC contract conditions have been revised many times over the past 40 years, the guiding principle still belongs to the traditional contract management mode, that is, the project owner employs consulting engineers to manage the project, the consulting engineers to provide the design documents, including technical descriptions, construction drawings, bill of quantities, the contractor based on the drawings, technical descriptions of the bill of quantities of the items quoted one by one. Once the quotation is accepted, the unit price in the bill of quantities shall not be changed throughout the contract period, and the payment for the works shall be made by multiplying the quantity of works approved by the consulting engineer by the fixed unit price.The FIDIC contract grants the consulting engineer a great deal of power, and when a dispute arises between the contractor and the owner, the dispute shall be submitted to the consulting engineer first to be resolved (see clause 67.1 of the FIDIC conditions of contract in the fourth edition), though FIDIC conditions of contract in the fourth edition of Article 2.6 stipulates that the consulting engineer shall act impartially, but after all, the consulting engineer is employed by the owner, and its services are paid by the owner, so the contractor has been skeptical of the impartiality of the consulting engineer.

Since the 1970s, the international engineering contracting business has been developing rapidly, and project owners often use a broader contract strategy than before, such as design + construction turnkey contract, target cost contract, management contract. The responsibilities of the contracting parties, the sharing of risks, and the method of payment for the work are all very different from the provisions of the traditional ICE contract/FIDIC contract. As a result, over the past three decades, multiple forms of contracts have emerged and tended to increase in number to meet the changing contract procurement strategies of project owners, each developed by contract documents with a clear purposeful intent and commercial motivation.

Traditional contracts are almost always developed on the basis of opposing business objectives of the owner and contractor, with no incentive or promotion of good project management for either party to the contract. Under the greater pressure of commercial objectives, the traditional contracting process is often utilized as a claims opportunity and leads to disputes. Management efforts such as bidding strategies studied by contractors when bidding for contracts and contract studies during project implementation are all aimed at finding opportunities for claims. The consulting engineers, in order to reduce costs and gain favor with the owner, have to use their power to defend the owner's interests in dealing with disputed events. Contractors in order to obtain more profits, try to win in the dispute, and thus contractors strive to get more payment in the dispute of the efforts made by the contractor is greater than it should try to reduce costs in the construction of the profit efforts made. When the contractor has no influence over the work he performs, the effort he should make to reduce costs is very small.

2, the guiding ideology of the new engineering contract

British Institution of Civil Engineers (ICE) in 1995 published the second edition of the "New Engineering Contract" (New Engineering Contract, referred to as the NEC contract) is a challenge to the traditional contract, it has a Obvious guiding principle, namely: trying to make the contract participants in accordance with the principles and practices of modern project management, management of their own work, and to encourage good engineering management, in order to achieve the objectives of the owner of each project, a quality, cost, schedule goals. This guiding principle in the NEC series of contracts in the Engineering and Construction Contract (Engineering and Construction Contract, referred to as the ECC contract) the core terms of the first article, paragraph 1 made clear: "The Employer, the Contractor, the Project Manager and the Supervising Engineer shall, in accordance with the provisions of this Contract, work in mutual trust and cooperation. and cooperate with each other. The adjudicator shall work independently in accordance with the provisions of this contract". Moreover, this guiding principle runs through all contract conditions, especially reflected in the "early warning" mechanism, "adjudicator" system, "early completion bonus", The "new" philosophy of the NEC contract is reflected in all contract conditions, especially in the "Early Warning" mechanism, the "Adjudicator" system, the "Early Completion Bonus", the "Compensating Event" and other contract conditions.

The NEC contract first introduced the contracting parties to "cooperative partnership" (partnering) idea to manage the project, in order to reduce or avoid disputes. Although the contracting parties have different business objectives, but can be *** with the forecasting and risk prevention to achieve the project objectives, and at the same time to achieve their own business objectives.NEC contract emphasizes the cooperation of the contracting parties, emphasizes the management of their own work, encourages the development of good management practices in order to reduce or avoid disputes, so that all parties involved in the contract are benefited. The Owner benefits from the project achieving its desired objectives; the Contractor benefits from cost savings in construction and from fully utilizing their construction skills in the practice of the project; and the Project Manager and Contracting Officer benefit from more effective management and from more fully utilizing their management skills in the practice of the project. With fewer incidents of disputes, project goals are successfully achieved and ultimately the owner benefits.

3 Contractual Relationships between Contract Participants

3.1, Contractual Relationships in Traditional Contracts

Traditional contracts reflect the dichotomy between the two camps of the owner's side and the contractor's side. In practical engineering activities, the owner's side takes the initiative and can transfer the risks inherent in the project to the contractor as much as possible.

The FIDIC conditions of contract give the consulting engineer supreme power, and thus the rights and obligations should be equal to the contractual relationship has been undermined, resulting in disputes, claims for hydrogen.

3.2, the contractual relationship between the participants in the NEC contract

NEC contract clearly Project Manager (Project Manager) and Supervising Engineer (Supervisor) is the Owner's representative, they are not an independent third party, they are employed by the Owner, from the Owner of the service fees, their responsibility is to represent the Owner to manage the project, to protect the interests of the Owner. They are employed to manage the project on behalf of the owner and receive payment from the owner for their services. However, the Project Manager and the Supervising Engineer sign the NEC Professional Services Contract with the Owner separately, and their respective scopes of work and duties are not the same.The scope and content of work of the Project Manager and the Supervising Engineer are clearly stipulated in Articles 13.6 and 14 of the Core Terms and Conditions of the ECC Contract. The project manager can issue certificates to the owner and the contractor, while the supervising engineer can only issue certificates to the project manager and the contractor.

The design work in an NEC contract can either be similar to a traditional contract in which an engineering consulting firm hired by the owner engages in the design of all permanent works, or the contractor can complete the design, or the owner is responsible for part of the design (e.g., electromechanical equipment, process flow), and the contractor undertakes part of the design (e.g., civil works) to meet the owner's requirements for the process or function. The scope and content of the contractor's assumption of the design shall be specified in the project information in the contract documents. The Contractor's contractual responsibility for its design is specified in Article 21.5. Therefore, the "Designer" may contract with the Owner or Contractor for professional services under the NEC Contract.

The Project Manager is the key person in contract administration, and it should be assumed that any decision made by the Project Manager has the approval of the Owner, and that he has the right to consult with the Owner at any time on the schedule, cost, and quality of the work to be performed, and to make a decision that best suits the Owner's requirements, and to notify the Contractor of that decision.

The supervising engineer is employed by the owner and his main task is to carry out quality control, check whether the works are carried out in accordance with the requirements of the technical description of the contract, point out the defects existing in the works and check the contractor's rectification of the defects. The actions of the Contracting Officer may have cost consequences, but the Contracting Officer is not directly involved in the cost of the project.The NEC contract also provides that the Project Manager and the Contracting Officer shall act independently of each other, and that the Contracting Officer shall not have recourse to the Project Manager when the Contracting Officer's actions are questioned by the Contractor. When the contractor is dissatisfied with the behavior of the project manager or the supervising engineer, he shall have recourse to the adjudicator.

The Adjudicator in an NEC contract is a person independent of both the Owner and the Contractor, and is appointed by the Owner and the Contractor*** together, and the NEC Adjudicator contract is entered into by the Owner and the Contractor*** together with the Adjudicator. The role of the adjudicator is similar to that of a "consulting engineer" in a FIDIC contract, primarily dealing with disputes and controversies. Regardless of the decision, the adjudicator's fees are shared equally between the owner and the contractor.

Summary, the traditional three-party contractual relationship, in the NEC contract into a six-party relationship, the role of the FIDIC contract "consulting engineers", in the NEC contract by the project manager, supervision engineers, designers, adjudicators, which avoids the traditional contract, the "consulting engineer" role, the project manager, supervision engineers, designers, adjudicators. This avoids the disadvantages of traditional contracts where the "consulting engineer" has too much power and is not conducive to project management. the responsibilities of the parties involved in the NEC contract are clear and the division of labor is clear, which is conducive to good project management practices.

For more information about engineering/service/procurement bid writing and production, to improve the winning rate, you can click on the bottom of the official website customer service free advice:/#/?source=bdzd