Civil Engineering Reference
In-Depth Information
The NEC3 Option A contract is a priced contract with an activity
schedule. Where possible the fi xed-price Option A form was preferred.
This was the primary contracting route for assets that could be well
defi ned and where cost and time risks could be identifi ed and appropri-
ately managed. This option provides value for money and precludes
high-risk premiums. Option A, with a fi xed-price option, provided cost
certainty while allowing transparency of contract changes owing to the
activity schedule, which lists and prices various activities, should more
or fewer be required.
The NEC3 Option C target contract with activity schedule was used
to execute the majority of construction works contracts, particularly
those involving a two-stage tender process with partly defi ned require-
ments and where the design was not fully complete (at RIBA stage C or
D). One of the main advantages of using an option C target form of
contract is that it provides the client and contractor with an actual cost
mechanism that can be used to share risk and incentivise performance.
Option C can include incentives for the contractor and the supply chain
to meet specifi ed targets around time, cost and other predetermined
parameters. These incentives may include incentive payments, bonuses
or pain/gain sharing of expenditure above or below the original target
price. Target prices are based on an agreed activity schedule, which
enables the close monitoring of contracted targets against actual costs
and programme. NEC3 Option C contracts also allow the contractor the
fl exibility to reduce costs and other aspects of the programme as work
proceeds to achieve incentivised targets. Achieving these targets bene-
fi ted both the ODA and the supply chain. Option C allows for a design-
and-build approach, which transfers the risk of the design activities and
the programme risk to the contractor. With appropriate incentives, this
can lead to benefi ts to both parties. Some programmes, such as Crossrail,
have used optimised contractor involvement (OCI) or, similarly, the
Highways Agency uses early contractor involvement (ECI), which can
equally well be used under the Option C approach. OCI and ECI are
methods of gaining early inputs or technical advice from contractors.
NEC3 Option E is a cost-reimbursable contract. This form of contract
is used only where risk cannot be adequately determined or mitigated
by the client. In the event, the NEC3 cost-reimbursable option was
never used during the London 2012 programme.
NEC3 Option F is a management contract and was used only in
certain instances on London 2012, where packages of works were agreed
as the works proceeded. There was also potential for its use where mixed
