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Nec3 Contract Options Explained
Nec3 Contract Options Explained: A Comprehensive Guide
A New Engineering Contract (NEC) is a contract that is used extensively in the construction industry, and it is intended to be a flexible contract that can be used for a wide range of construction projects. The NEC3 is the third generation of the NEC, and it is widely used in the UK and other countries. In this article, we will explain the NEC3 contract options in detail, so you can better understand how it works.
Option A - Priced Contract With Activity Schedule
Option A is a priced contract with an activity schedule. This means that the contract includes a schedule of activities, and the contractor is paid based on the completion of each activity. The contract includes a list of prices for each activity, and the total contract price is determined by the completion of all activities.
Option B - Priced Contract With Bill of Quantities
Option B is a priced contract with a bill of quantities. This means that the contract includes a list of items or materials that will be required for the construction project. The contractor is paid based on the quantity of each item or material used. The contract includes a list of prices for each item or material, and the total contract price is determined by the quantity used.
Option C - Target Contract With Activity Schedule
Option C is a target contract with an activity schedule. This means that the contractor and the client agree on a target price for the project, and the contractor is rewarded based on how efficiently and effectively the project is completed. The contract includes a list of activities and a target price for each activity. The contractor will be paid the target price for each completed activity, and will receive a bonus if the project is completed below the target price.
Option D - Target Contract With Bill of Quantities
Option D is a target contract with a bill of quantities. This means that the contractor and the client agree on a target price for the project, and the contractor is rewarded based on the quantity of each item or material used. The contract includes a list of items or materials and a target price for each item or material. The contractor will be paid the target price for each quantity used, and will receive a bonus if the project is completed below the target price.
Option E - Cost Reimbursable Contract
Option E is a cost reimbursable contract. This means that the contractor is reimbursed for all of the costs incurred during the construction project, and the client pays a fee on top of the costs to cover the contractor`s overhead and profit. This option carries the most risk for the client, as they will be responsible for all costs incurred during the project.
Option F - Management Contract
Option F is a management contract. This means that the contractor is responsible for managing the construction project, but the client is responsible for buying the materials and hiring the subcontractors. The contractor is paid a fee for managing the project.
In summary, the NEC3 contract options offer a range of flexible options for construction projects. The choice of contract option will depend on the nature of the project, the risks involved, and the preferences of the contractor and the client. Hopefully, this guide has helped you to better understand the NEC3 contract options and their implications.