NEC vs JCT Contracts

Below, we explore the key differences between NEC contracts – the standard form used across all SCAPE frameworks – and JCT contracts to support our public sector clients in gaining a greater understanding on which type of contract might suit their project best, and what to expect from the SCAPE process, to help them make an informed decision.

SCAPE use NEC contracts (New Engineering Contract) to manage projects delivered across our entire suite of Construction, Civil Engineering, Consultancy and Utilities frameworks.

We advocate the use of NEC contracts because they provide a proactive approach to project management with an overarching emphasis on collaboration, that aligns closely with SCAPE’s Gold Standard values of partnership and quality assurance. Both the NEC and JCT are adaptable with different contractual options and pricing mechanisms to suit your project.

As part of SCAPE’s onboarding process, we provide our clients with free to access guidance and training on NEC3 and NEC4 contracts.

JCT contracts (Joint Contracts Tribunal) are the most widely used in the UK construction industry, differing from NEC contracts in a number of areas.

JCT contracts are legally focussed, both in their language used and formality. JCT are a suite of contracts using standardised forms, without the more communicative elements of the NEC.

NEC embeds communication procedures and risk allocation mechanisms throughout the project lifecycle. For example, ‘Early Warning’ notifications enable early resolution of on-site issues. Subsequent early warning meetings allocate the associated risk to the party best suited to manage it. Whilst the JCT does allocate risks at project outset, it does not have ‘live’ risk management procedures thereafter, nor processes for formal ongoing communication between parties.

Supporting more timely contract and cost management, NEC includes a time bar for Compensation Event notifications. JCT does not have a timescale for the equivalent Relevant Events, which can lead to an accumulation of claims towards project completion, increasing dispute likelihood.

The JCT fixed price lump sum contracts are inclusive of all costs for the completion of the project, with no separation of 'defined cost' and fee as per the NEC. JCT encourages cost scrutiny via its contract sum analysis mechanism and front end tender negotiations.

NEC encourages an open book procedure, particularly in its ‘target cost’ contracts which reinforce its ethos of ‘mutual trust and collaboration’ - something which is placed at the heart of all SCAPE frameworks.

The simple answer is there is no “best” form of contract, ultimately the decision on whether a JCT contract or NEC contract is best suited for the project is down to you, the client, and the desired project outcomes.

Clients that favour JCT contracts tend to choose them because they are the most widely used and have standard forms for different projects. Clients that prefer NEC contracts typically choose them because they favour collaboration and are customisable to suit a wide range of projects.

SCAPE’s suite of Gold Standard frameworks use NEC contracts as, for our clients and delivery partners, they encourage close collaboration and proactive project management from project inception, delivering efficiency, value for money and enhanced social value outcomes.

Both forms of contract can deliver quality outcomes for the client, which you choose is down to preference.

If you have any queries and would like to discuss NEC and JCT contracts further, contact our team today.