A study on NEC implementation and its design to mitigate contractual risks

Abstract

The New Engineering Contract (NEC) has been widely adopted in Hong Kong for construction projects, aiming to foster collaborative and transparent management practices. This research investigates the achievability and challenges faced by project stakeholders in adhering to key NEC provisions. The study employs a mixed-methods approach, combining quantitative data from a survey of industry professionals and qualitative data from semi-structured interviews with key stakeholders. The survey data is analyzed using descriptive statistics and ANOVA to identify significant differences in perceptions among stakeholder groups. The interview data is analyzed using thematic analysis to gain deeper insights into the experiences and challenges of implementing NEC contracts in Hong Kong. Through interviews with contractors, consultants, and clients, the study reveals that while the NEC's principles are well-intentioned, their implementation in practice faces various obstacles. Contractors struggle with resource constraints, frequent documentation requirements, and short defect rectification periods, making it challenging to comply with timeframe obligations fully. The NEC's inherent complexity also poses difficulties for contractors unfamiliar with its processes. From the consultant and client perspectives, internal approval processes often hinder strict adherence to time bars, such as the 3-week period for processing compensation events. However, the existence of defined timeframes in the NEC creates a sense of urgency to address issues promptly, contrasting with the traditional practice of delaying until project completion. The findings reveal that while NEC contracts have built-in mechanisms to address various project risks, their effectiveness is influenced by several factors, including cultural differences, lack of proper education, resistance to change within government structures, and practical limitations in adhering to contractual requirements. The perceptions of NEC's effectiveness in managing project risks vary among stakeholder groups, highlighting the need for better communication and alignment of expectations.