NEC4 Alliance Contract

Unlocking Collaborative Success with the NEC4 Alliance Contract

In an enlightening seminar held in London on June 20th, 2018, NEC unveiled the NEC4 Alliance Contract— an innovative multiparty agreement poised to revolutionise the collaborative landscape for major projects and programs. Diverging from conventional contracts, this pioneering approach fosters enhanced collaboration between clients and suppliers.

For those embarking on extensive, multidisciplinary projects or programs with a focus on long-term collaboration, the NEC4 Alliance Contract emerges as an ideal choice. By uniting multiple suppliers under a single agreement, it paves the way for a unified front in achieving the client’s objectives.

The core principle of the contract is to encourage all parties to work harmoniously, with shared risks and rewards. This approach cultivates deeper collaboration among consultants and contractors, fostering a climate of shared interests and a reduced potential for disputes.

While NEC contracts have always emphasized collaboration, the NEC4 Alliance Contract represents the next evolution—a ‘true’ alliance among parties involved in construction projects, where all members of the alliance have an ‘equal voice.’

In previous NEC contracts, ‘X clauses’ were optional, allowing their inclusion in the main contract if desired. Notably, the optional clause X12 promoted multiparty collaboration and incentivized suppliers to collaborate. The NEC4 Alliance Contract builds upon this concept, solidifying collaboration as a core requirement to achieve project objectives and targets.

Structure of the NEC4 Alliance Contract:

  • The Alliance Board: Comprising contract-defined ‘partners,’ this board includes a representative from each tier 1 contractor and a representative from the client. The Alliance Board’s responsibilities encompass setting the strategy, work allocation, appointing the Alliance Manager, and serving as the initial point of referral for disputes. Unanimity and equal voting rights among board members are paramount.
  • The Alliance Manager: Equivalent to the project manager in traditional NEC contracts, the Alliance Manager oversees the alliance in accordance with the contract and implementation plan, with a duty to follow the Alliance Board’s directives.
  • The Alliance Delivery Team: Comprising the client and individual partners, this team is responsible for delivering the alliance’s work. Partners may include civil contractors, designers, and equipment suppliers, effectively forming the tier 1 supply chain.

Notably, the client plays a dual role in the NEC4 Alliance Contract. They wield specific powers and responsibilities both within and outside the alliance, actively participating as a member of the alliance.

Keep in mind that this contract thrives on collaboration. Most decisions are made by the Alliance Board unanimously, reflecting a team effort committed to resolving claims among members only under exceptional circumstances, typically involving serious breaches of contract.

If you are interested in the NEC4 Alliance Contract and would like to see how the payment processes work, take a look at our article here…

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