The Building and Construction Authority (BCA) has launched the NEC4 contract for construction and engineering projects in Singapore. Together with NEC, BCA has also developed a set of additional clauses (Y clauses) to align the contract with local laws.
This move is part of BCA’s efforts to widen the adoption of collaborative contracting in Singapore’s built environment sector. Another initiative includes identifying pilot projects to use the Public Sector Standard Conditions of Contract (PSSCOC) Option Module.
According to BCA, public sector developers such as the Housing and Development Board (HDB), JTC Corporation (JTC) and Land Transport Authority (LTA) will be piloting the use of NEC4 contract in their upcoming projects.
“Collaborative contracting seeks to overcome the issues in conventional construction contracts; it builds trust, strengthens communication and facilitates a more balanced share of risks among contracting parties. It also nudges parties to consider and implement solutions to address the issues identified to avoid additional costs and project delays,” explained Kelvin Wong, CEO of BCA.
“Having seen the positive impact of NEC4 contract in overseas projects, we encourage our industry partners to adopt the use of NEC4 contract in their projects. It is a step forward in our collective commitment to drive excellence and collaboration in project delivery, in line with our refreshed Built Environment Industry Transformation Map goals.”
The NEC4 contract, which originated from the UK, has been adopted in overseas jurisdictions (e.g. UK and Hong Kong) with demonstrated success in project delivery. “Collaborative contracting allows project parties to have better time and cost control, better management of risks and efficient project management,” said Sathia Jagateesan, partner at law firm Allen & Gledhill LLP.
“Compared to conventional lump-sum contracts, collaborative contracts such as NEC4 contract provides a target cost option which allows project parties to share cost savings or overruns when they occur. This could encourage project parties to resolve issues early and explore more productive solutions together.”
With the launch of NEC4 contract in Singapore, the local built environment sector now has more options to consider when adopting collaborative contracting in their projects for better project delivery. Private and public sector developers can choose the PSSCOC Option Module or NEC4 contract.
In anticipation of the training demand, the BCA Academy, the Singapore Academy of Law, Institutes of Higher Learning (e.g. Singapore University of Social Sciences), industry associations (e.g. SCAL, ACES and SPM5) and firms have introduced courses and seminars to raise competencies in collaborative contracting. Moving ahead, the BCA Academy will also provide training to facilitate the implementation of NEC4 contract in the pilot projects.
The Hong Kong government carried out its first NEC pilot in 2009 and has been extending its use for various public sector construction projects. Preliminary analysis shows that the NEC4 contract can help improve performance in terms of cost and time management, including large and complicated projects delivered on time and within budget. Based on a review in 2021 by the Hong Kong government, NEC projects are found to achieve 10% saving in time and 2% saving in costs, compared to those procured under its standard General Conditions of Contract (GCC) forms.
The additional Y clauses (for the NEC4 contract in Singapore) will be made publicly available on the NEC website on 1 May 2024. For further inquiries and support on collaborative contracting, firms may contact BCA directly.
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