NEC vs FIDIC in contract management

Both FIDIC and NEC contract frameworks are recognised internationally and used widely in AECO projects. FIDIC, which stands for the French translation of International Federation of Consulting Engineers, has been around for a long time and is considered to be the traditional standard. It’s ‘rainbow suite’ provides a series of standard agreements applying to different use cases. NEC, an acronym for New Engineering Contract, is considered the newcomer, launching in the early 1990s, but it quickly gained favour with project planners thanks to its flexibility and clear language.

In contrast to the adversarial contracts of the past, both FIDIC and NEC contracts promote proactive collaboration and protect the parties involved, thus helping to avoid lengthy and costly disputes. Both are used to outline time, quality, and cost obligations associated with a project. Both are also adaptable when necessary.

The NEC is a suite of contracts that quickly became an “industry favourite” thanks to its simple and straightforward language. Using plain English, free from confusing legal terms makes these contracts user-friendly and easy to understand.. They promote effective project management and enable collaboration between parties, as well as minimise chances of  formal disputes occurance.

Designed to manage a wide variety of AECO projects from start to finish and avoid costly disputes, NEC contracts protect the interests of both the client and contractor, which also makes them a favourable option. Clients often opt for NEC contracts because they ensure a level of certainty in regard to the outcome of the project. Contractors appreciate that these contracts ensure that they’re compensated promptly and adequately.

Additionally, NEC contracts take a proactive and preventative approach to contract management, outlining an early warning system for how to proceed if an unexpected error or event that may affect project quality, cost or time occurs. Within this context, detailed programmes are submitted to the Project Manager regularly, reducing the risk of potential problems by making it easier to detect potential issues early.

NEC contracts are endorsed by a number of industry and international bodies thanks to a strong track-record aiding in the success of large-scale projects. They have been used to help deliver high-profile infrastructure projects such as Christchurch International Airport, the Halley V1 British Antarctic Survey research station, and the International Criminal Court (ICC) buildings in the Netherlands.

Developed by the International Federation of Consulting Engineers, FIDIC contracts have been the industry standard for many decades and are used by AECO companies of all sizes throughout the world. They can be applied to almost any project and have been tested and refined over sixty years.

Thanks to their wide recognition by many international bodies and jurisdictions, these contracts provide a globally accepted foundation that makes it easier to work across borders. The International Federation of Building and Public, Inter-American Federation of the Construction Industry, and Multilateral Development Banks are just a few of the international bodies that have ratified FIDIC contracts.

One benefit of using FIDIC contracts is a variety of options in risks allocation, which is determined by a form selected from the suite.. This is particularly helpful in mega-projects with multiple parties and stakeholders. It’s always possible to select a form of FIDIC contract that would accurately reflect the needs of the project and ensure a balanced approach to responsibilities, roles, and risk management.

While there are variations amongst FIDIC’s ‘rainbow suite’, the standard forms ensure coverage of procedures such as dispute settlement and resolution, obtaining permits and approvals, roles and authority, defect liability as well as liability for errors, labour conditions, and more. All FIDIC contracts are designed to address disputes, risks, claims, and liabilities.

Whilst application of internationally recognised contract frameworks like NEC or FIDIC provides a strong base for the contract management, administration of contract still represents a challenge. Using a cloud-based NEC or FIDIC software for contract management helps streamline the process, ensures compliance, and promotes collaboration. The collaborative nature of this software may support increased productivity, efficiency and promote better culture.

With NEC and FIDIC software for contract management project stakeholders may observe higher level of visibility and transparency when undertaking a construction project.

This provides clarity and intelligent insights for decision making and promotes good relationships throughout the project supply chain.

Acknowledged by name in all NEC4 contracts and developed by industry experts and practitioners, CEMAR is the leading cloud-based contract management solution for NEC, FIDIC, and other contract types. This software is designed to help and simplify the management of sophisticated contracts while fostering collaboration and ensuring contract compliance.