NEC3 Engineering and Construction Contract

Project Management is the concept that is associated with strategizing, execution, controlling and finishing the specified task of a group or a team or an organization with a purpose to achieve the desired objective and to meet the specified standards.

This report is purported to shed light over the plans with reference to the construction of networks relating to road and rail in Greenland, a country located in Latin America[1]. Further elaboration of the report would be made by analyzing the expectations of the Government of Greenland with reference to the dependence over multinational entities and a design that is internationally acceptable. The firm that has undertaken the initiative to get involved in building road and rail links in the region of Latin America starting with Greenland is HCL, a reputed organization that is adept in undertaking projects related to design and construction mainly in the region of Western Europe including the United Kingdom. Such kinds of projects are undertaken by HCL in compliance with the regulations enshrined in the NEC3 Engineering and Construction Contract[2]. The common law system followed in Greenland implies that HCL would not face any major difficulty in with reference to the legalities involved in the implementation of the project in Greenland due to its experience in handling projects in the United Kingdom. However, HCL is not well acquainted with the policy, framework and procedure with reference to the market operations of international construction companies in the region of Latin America[3]. Furthermore, HCL has come to know from reliable sources that for a successful implementation of projects relating to construction the key thing is being well-versed with the Red Book (1999 Edition) of International Federation of Consulting Engineers( popularly known as FIDIC). Such Red Book is mainly known as the FIDIC suite of contracts[4]. Finally, the report would make a conclusion by presenting an overview of the analysis of the legalities involved in the construction and design works of HCL in accordance with NEC3 Engineering and Construction Contract and the FIDIC suite of contracts with reference to the establishment road and rail networks for the purpose of linking Greenland internally.

The NEC3 Engineering and Construction Contract is the most essential contract in the NEC3 group of contracts. Such kind of contract has been quite useful in some of the great projects in the world such as the London Olympics of 2012. Crossrail, the largest construction project in Europe has also utilized the clauses and other terms and conditions set forth in the NEC3 Engineering and Construction Contract. The various categories of contract under the NEC3 Engineering and Construction Contract include priced contracts, target contracts, cost reimbursable contracts and management contracts as envisaged in Options A to F. Option A of the NEC3 Engineering and Construction Contract throws light over the priced contract with a schedule of activities[5]. This further implies that the risk involved with reference to the undertaking of the concerned task at the concluded costs to be mainly paid off by the contractor. Option B of the NEC3 Engineering and Construction Contract throws light over the priced contract with a receipt furnishing the quantities[6]. This further implies that the obstacles as per the work concerned at the decided prices is to be incurred by the contractor. Option C of the NEC3 Engineering and Construction Contract throws light over the target cost contract with a schedule of activities[7]. This further implies that the target price contract with a schedule of activities occurs where the turnovers of monetary risks are divided amongst the client and the contractor in a proportion decided by them jointly. Option D of the NEC3 Engineering and Construction Contract throws light over target cost contract with a receipt furnishing the quantities. This further implies that the target cost contract with a receipt furnishing the quantities with a receipt furnishing the quantities takes place where the outcomes of financial risks are allocated amongst the client and the contractor in a proportion decided by them together. Option E of the NEC3 Engineering and Construction Contract throws light over the contract relating to reimbursement of the costs incurred in the respective construction project. This further implies that the contract with reference to reimbursement of the costs incurred in the respective construction project states that the client mainly undertakes the risks relating to monetary transactions. Such kind of a contract can be insured again[8]. Option F of the NEC3 Engineering and Construction Contract throws light over the contract relating to management of the construction project concerned. This further implies that the further implies that the contract with reference to the management of the construction project in question is caused when the client expresses willingness to undertake the monetary risks involved in the project. Such kind of contract is reimbursable in nature[9].

Advantages of using NEC3 Engineering and Construction Contract

HCL has acquired the reputation of undertaking a plethora of projects relating to construction and renovation of major buildings and the overhauling of road and rail links across the region of Western Europe that includes the United Kingdom[10]. Such projects have been undertaken and completed in accordance with the NEC3 Engineering and Construction Contract. The main philosophy with reference to the modus operandi of NEC3 Engineering and Construction Contract is the development and existence of trust and confidence between the parties to the contract[11]. Such parties to the contract include the client and the contractor. The guidelines with reference to which such kind of philosophy regarding the modus operandi of NEC3 Engineering and Construction Contract include Vision which is implemented in a collaborative manner surpasses the problem and minimizes the risk and the allocation of labour and responsibility amongst people in a proportionate manner helps accountability and inspires people to play their roles.

The structure of NEC3 Engineering and Construction Contract is quite lucid in nature that is feasible to understand for a layman. Such kind of simplicity with reference to the structure of NEC3 Engineering and Construction Contract is one of the most essential features of NEC3 Engineering and Construction Contract[12].

The process of NEC3 Engineering and Construction Contract is based on the methodology of the management of the construction project concerned. Additionally, the process of NEC3 Engineering and Construction Contract involves developing a flow chart that is easily understandable for any rational person[13].

With reference to construction contracts in international projects, the guidelines envisaged in the Red Book of 1999 Edition (commonly known as the FIDIC suite of contracts) play a very crucial role in the execution and completion in such kind of projects[14]. FIDIC is the French acronym for The International Federation of Consulting Engineers, a body that has been set up by France, Belgium and Switzerland at Geneva with an objective to globally enhance the ideas of multinational construction firms and engineers who are adept in imparting innovative services related to technology[15]. The Red Book of 1999 Edition lays down the conditions for a contract with reference to the projects related to construction and design at an international level. Such conditions are incorporated in the Red Book of 1999 for effectively managing projects related to construction throughout the world in terms of completion by the decided deadline in a cost-effective approach. The philosophies of the principles of FIDIC include setting forth the Conditions of a Contract with reference to the management of projects relating to construction that follow an approach of smooth functioning of the construction projects. The kind of contract prescribed by the Red Book of 1999 is mainly the Contract for Construction.  

FIDIC suite of contracts

The structure of the FIDIC suite of contracts enshrined in the Red Book of 1999 implies the roles of the persons involved in the respective construction project and the estimated costs to be incurred in the project[16]. The areas with reference to the Goods and Services involved in the project include roles each person is specified to perform and the details of the equipment to be used for the construction project. Such areas are also inclusive of the structure of the project[17]. The structure of the FIDIC suite of contracts enshrined in the Red Book of 1999 further sets forth the responsibilities of the employer, engineer and contractor with reference to the co-operation and budgeting involved in the construction project. Additionally, the provisions relating to the claims the employer can make against the contractor are also set out in the structure of the FIDIC suite of contracts enshrined in the Red Book of 1999[18]. Furthermore, as per the structure of the FIDIC suite of contracts enshrined in the Red Book of 1999, the engineer is a person who acts on behalf of the employer thereby taking due diligence with reference to exercising job duties and concluding towards a fair determination by duly taking into account of all the circumstances[19]. The employer is held liable for contravening the terms and conditions of contract relating to the project when the engineer is found to have acted in contrary to the entrusted duties. The contractor is debarred from sub-contracting each allotted duty. However, the whole work can be sub-contracted in installments. The employer provides the information to the contractor with reference to the details of the data and the site concerning the construction project.

The responsibilities of the contractor with reference to the construction project form the most essential objective of the respective contract. The retrieval of any fossil fuel or an archeological excavation further complicates the construction project. 

The process of FIDIC suite of contracts enshrined in the Red Book of 1999 is based on the approach relating to the systematic procedure to be followed while carrying out the tasks relating to the planning and execution of the construction project[20].

The provisions with reference to construction projects envisaged in the NEC3 Engineering Construction Contract and the FIDIC Red Book of 1999 are mainly in complete contrast of each other[21]. The terms expressed in the NEC3 Engineering Construction Contract are quite lucid in nature that is feasible to be understood by a nonprofessional while in the FIDIC Red Book of 1999, terms incorporated are in consonance with legal language. The nature of clauses enshrined in the NEC3 Engineering Construction Contract are linked with each other while in the FIDIC Red Book of 1999, the nature of clauses are extremely dichotomous to each other. The choices with reference to the setting of the costs as per the NEC3 Engineering Construction Contract includes six options as aforesaid while in case of the FIDIC Red Book of 1999, the choices with reference to the setting of the prices are confined to the traditional approaches[22]. The NEC3 Engineering Construction Contract implies that any kinds of dispute is to be addressed through adjudication while the FIDIC Red Book of 1999 implies that such disputes should be resolved by boards which are entrusted to resolve such disputes. The management of any risk arising in project is to be registered by the parties involved in the project as per the NEC3 Engineering Construction Contract while in case of the FIDIC Red Book of 1999, the concept of risk management is minimal among people involved in construction project governed by the Red Book. The NEC3 Engineering Construction Contract implies that the administration involved in the construction projects is quite high thereby making it mandatory for the parties to furnish written communication while the FIDIC Red Book of 1999 implies that the administration involved in the construction projects is quite marginal[23]. The period of a construction project as prescribed by the provisions of the NEC3 Engineering Construction Contract is twenty years while the provisions prescribed by the FIDIC Red Book of 1999 imply that the period of a construction project is sixty years. Furthermore, the NEC3 Engineering Construction Contract implies that the scope of referring previously decided case laws is quite limited in nature while the FIDIC Red Book of 1999 implies that the scope of referring previously decided case laws is quite wide in nature[24]. The NEC3 Engineering Construction Contract implies that the objective involved in a construction project is focused on the aspect of the project while the FIDIC Red Book of 1999 implies that the objective involved in a construction project is focused on the modus operandi of the contract with reference to the project[25]. The NEC3 Engineering Construction Contract signifies that both contractor and supervisor are under a compulsion to intimate each other with reference to the grey areas, drawbacks and shortcomings concerned with the construction project while in the FIDIC Red Book of 1999 no such kind of compulsion is available. The NEC3 Engineering Construction Contract places importance over the status of the project when it is accomplished while FIDIC Red Book of 1999 lays emphasis over the subject matter conclusion that is identified at the time of its completion. The NEC3 Engineering Construction Contract follows an objective approach with reference to the completion of the project while the FIDIC Red Book of 1999 follows a subjective approach with reference to the completion of the project. The NEC3 Engineering Construction Contract requires for an explained bundle of documents to be submitted on a regular basis as demanded by the employer for the purpose of the accomplishment of the project[26]. However, the FIDIC Red Book of 1999 requires for the details of the schedule of the project and the particulars regarding any inconsistency arising in due course of the project in terms of inconsistency of the project[27].

Contract for Construction

From the comparative analysis drawn between the NEC3 Engineering Construction Contract and the FIDIC Red Book of 1999, it is hereby deduced that the most suitable category of contracts applicable to the region of Latin America is the NEC3 Engineering Construction Contract. Such is the scenario due to the lucid style with reference to the feasibility in understanding the terms and conditions in the contract concerning the modus operandi of the construction project as incorporated in the NEC3 Engineering Construction Contract. Furthermore, the FIDIC Red Book of 1999 has a narrow prospect relating to the administration, choices relating to the chalking out of costs and the controlling of any risks arising out in due course of the construction project. Additionally, NEC3 Engineering Construction Contract contains clauses that form cohesion in the order of their mention that is straightforward in terms of the legalities involved in the construction project. The clauses in the FIDIC Red Book of 1999 are quite contrary to each other that possibly give rise to a number of complexities in getting a hold of the legalities involved in the construction project. Moreover, one has to overcome bureaucratic hurdles while addressing the legal issues arising with reference to the construction project that further throws light over the fact that the NEC3 Engineering Construction Contract should be preferred over the FIDIC Red Book of 1999. Furthermore, the NEC3 Engineering Construction Contract implies that the disputes arising out of the construction projects can be resolved through adjudication that can be held out of court while the FIDIC Red Book of 1999 implies that such kinds of disputes are to be resolved by the Dispute Adjudication Board. This further signifies that the modus operandi of settling disputes as envisaged in the FIDIC Red Book of 1999 is quite tumultuous and tedious in nature. Additionally, most of the countries in the region of Latin America are not economically strong to bear any inflating costs arising in the course of the project that signifies that the NEC3 Engineering Construction Contract would be more effective in Latin America than the FIDIC Red Book of 1999. Furthermore, Greenland follows the common law system that signifies that the reputed construction firm HCL would not face any legal hurdles while taking up construction works relating to the establishment of road and rail links in Greenland as HCL has tremendous experience in handling high profile projects in the United Kingdom. The NEC3 Engineering Construction Contract has been referred in many high profile projects across Europe such as Crossrail, one of the most reputed rail networks in Europe and the London Olympics of 2012. This further signifies that once awareness is created regarding the portfolio of HCL and the NEC3 Engineering Construction Contract in Greenland, the acceptability of the project relating to construction of road and rail links in Greenland would increase. Furthermore, the region of Latin America is plagued with rampant corruption that implies that the application of the FIDIC Red Book of 1999 would lead to more and more complications and ambiguities in projects related to construction of road and rail networks in Greenland. The market operation in the region of Latin America is dependent on the economic policies varying from country to country. The framework of Foreign Direct Investment in a nation is the key thing with reference to an effective marketability of a foreign conglomerate. Since the policy relating to the economic affairs of Greenland is quite liberal and global in nature, HCL would face little or no issues with reference to setting up their market in Greenland. Additionally, the establishment of road and rail links in Greenland would not only broaden the scope of land transportation in Greenland but also lead to a sharp rise in the travel and tourism industry in Greenland[28]. This would lead to the sprawling up of more and more hotels and other kinds of lodging facilities in Greenland thereby attracting more and more tourists and visitors that would lead to development of the economy of Greenland. For example, laying out more roads in Greenland would lead to the establishment of highways that would further result in the setting up of lodging facilities and services (retail outlets for refreshment). Additionally, the establishment of rail links in Greenland would lead the need for more and more railway stations in Greenland that would be economically viable for frequent rail commuters in Greenland. Furthermore, the successful completion of projects relating to the development of road and rail networks in Greenland would strengthen the links between towns, cities and villages in Greenland. The application of the NEC3 Engineering Construction Contract in Greenland with reference to the establishment of road and rail links would be more effective than the application of the FIDIC Red Book of 1999. The NEC3 Engineering Construction Contract in Greenland would also be more economically viable than the FIDIC Red Book of 1999 in terms of time and budget of the construction projects relating to the establishment of road, and rail links. Furthermore, the projects related to construction of road and rail links in Greenland would lead to the generation of more and more employment opportunities in Greenland especially for the youth. Additionally, the formation of linkages in Greenland through road and rail would lead to a decline in the mass exodus of people to the United States of America. Moreover, the establishment of road and rail links in Greenland would attract more and more businesses in Greenland and lead to a rise in the Foreign Direct Investment in Greenland.

Structure of the FIDIC suite of contracts enshrined in the Red Book of 1999

Conclusion

Therefore, from the above discourse, it can be concluded by stating that the legalities with reference to the construction projects relating to the establishment of road and rail links in Greenland is justified and appropriate. The applicability of the NEC3 Engineering Construction Contract and the FIDIC Red Book of 1999 have also been dealt with in addition to a comparative analysis between them as far as the construction projects at a global level are concerned. The above discourse implies that the implementation of the NEC3 Engineering Construction Contract would be more feasible than the FIDIC Red Book of 1999 as far as the construction projects relating to the linking of Greenland by road and rail due to the lucidity of the language expressed in the NEC3 Engineering Construction Contract. The cohesion of the clauses enshrined in the NEC3 Engineering Construction Contract addresses the difficulties in getting a clear picture of the contractual obligations of the parties involved in the construction project in question that is in contrast to the clauses enshrined in the NEC3 Engineering Construction Contract that give rise to a conflict and dichotomy amongst them. Additionally, the NEC3 Engineering Construction Contract provides for the settlement of disputes through adjudication that includes a non-litigious approach. However, the FIDIC Red Book of 1999 implies that the disputes arising in the course of the respective ongoing project must be settled through the Dispute Adjudication Board thereby following the bureaucratic approach towards settlement of disputes. Briefly, it is hereby recommended that the NEC3 Engineering Construction Contract would be more effective and viable than the FIDIC Red Book of 1999 with reference to the construction of road and rail links in Greenland. Furthermore, the NEC3 Engineering Construction Contract provides a more effective approach than the FIDIC Red Book of 1999 in terms of handling risks arising in the course of the project concerned. Thus, the legalities involved in the construction of road and rail links in Greenland with reference to the effectiveness of the NEC3 Engineering Construction Contract over the FIDIC Red Book of 1999 is justified.

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