NEC 4 and the Irish Public Works Contract – Can They Work Together in Harmony ?

The ‘New Engineering Contract’ first came into being in 1991.  Today, the NEC 4 contract is actively utilised across various transport projects globally. In Ireland, it is being deployed on the exciting Metrolink project.

The Irish Public Works Contract itself is a unique animal. It is not used internationally. It is a suite of standard forms of contract used for public sector construction projects in Ireland. It is part of the Capital Works Management Framework (CWMF), developed by the Office of Government Procurement (OGP) to ‘ensure consistency, cost control, and value for money in public construction procurement.’ It is also a standalone contract. The Irish Public Works contract is not a framework contract.

And what about the NEC 4 Framework Contract?

The ‘NEC4 Framework Contract’ is typically limited to just two parties. It lacks features though for joint objectives, success measures, incentives, improved value, supply chain involvement, or collaborative risk management. The NEC4 Framework Contract is silent on collaborative working and Alternative Dispute Resolution (ADR), despite the greater potential for a collaborative approach when working with the same team over successive projects.

FAC-1, which stands for ‘Framework Alliance Contract – 1’. It is a relatively new innovative collaborative framework approach that was introduced in 2016 by Professor David Mosey at the Centre of Construction Law and Dispute Resolution at King’s College.

FAC-1 encourages joint objectives, success measures, incentives, improved value, supply chain involvement, or collaborative risk management.

With FAC-1, clients and their programme teams could award “Project Contracts” such as PWC-CF1 and NEC 4 through separate consultant appointments and construction contracts, while leveraging multi-party FAC-1 systems to create connections, integration, and enhancements at every stage of one or more projects through contractors and consultants.

As Prof. David Mosey puts it FAC-1 ‘overcomes the ‘Groundhog Day’ of lost learning from one project to the next.!’ [1]

Think of FAC-1 a bit like an umbrella and ‘integrator’ of different standard forms of contracts, such as NEC 4 and the Irish Public Works Contract. Now this could very well work.

In addition, if FAC-1 were used to integrate multiple Public Works Contracts under a single framework, then this approach could also be practical. But are there limitations with EU procurement?

FAC-1 is unique in its approach to collaboration. It cannot be compared to NEC 4 and the PWC suite, as its contract structure is that of a collaborative multi-party framework. The contract philosophy of FAC-1 is a strategy-based approach with risk allocation shared across a ‘alliance’. The flexibility of FAC-1 is very high. This is a distinct advantage of FAC-1.

So, how does FAC-1 promote collaboration? FAC-1 has a ‘Core Group.’ This core group has shared objectives that are monitored through KPI’s and continuous improvement. Dispute resolution is avoided through collaborative governance. This is key. Especially as the Public Works Contract is adversarial.

FAC-1 Recognition internationally…

Following the debacle and cancellation of the Metro North project tendering process in the late noughties, several bidders lost substantial sums of money in the tendering process. Once bitten, twice shy, as they say.

But the adoption of FAC-1 on the Metrolink project may be a good move in attracting prospective bidders.

As of 2024, FAC-1 has been adopted for procurements valued at over £100 billion. It has gained widespread recognition both in the UK and internationally for establishing clear commercial systems that extend beyond the traditional role of contracts and enhance the contributions of individual team members. FAC-1 is also recognised in the Construction Playbook[2] , the European Bank for Reconstruction and Development also published guidance recommending the use of FAC-1 as an integrator for multiple FIDIC project contracts.  Also, in 2024 the NEC (New Engineering Contract) published guidance[3] recommending the use of FAC-1 as an integrator for multiple NEC project contracts.

So FAC-1 is here to stay. NEC has produced Guidance on using NEC 4 contracts with FAC-1. But can it be used with the Irish Public Works contracts? Who knows but obviously the positives outweigh the negatives.

[1] https://www.kcl.ac.uk/what-is-the-fac-1-framework-alliance-contract

[2] https://assets.publishing.service.gov.uk/media/6312222de90e075880923330/14.116_CO_Construction_Playbook_Web.pdf

[3] https://www.neccontract.com/getmedia/927fb0b0-eab4-406d-895e-7e3f14b4627a/NEC4_FAC-1-Guidance-Notes.pdf

 

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