NEC3: Engineering and Construction Contract Option E: cost reimbursable contract

Option E is a cost reinbursable type contract where the financial risk is taken largely by the client. This document contains all the core clauses and secondary option clauses the schedules of cost components, and contract data, relevant to an option E contract.
 
OGC endorsement of NEC3;
 
Construction Clients' Board endorsement of NEC3
 
The Construction Clients' Board (formerly Public Sector Clients' Forum) recommends that public sector organisations use the NEC3 contracts when procuring construction.
 
Standardising use of this comprehensive suite of contracts should help to deliver efficiencies across the public sector and promote behaviours in line with the principles of Achieving Excellence in Construction.

Contents

Core clauses

• 1 General
• 2 The Contractor’s main responsibilities
• 3 Time
• 4 Testing and Defects
• 5 Payment
• 6 Compensation events
• 7 Title
• 8 Risks and insurance
• 9 Termination

Dispute resolution W

• Option W1
• Option W2

Secondary option clauses

• X2 Changes in the law
• X4 Parent company guarantee
• X5 Sectional Completion
• X6 Bonus for early Completion
• X7 Delay damages
• X12 Partnering
• X13 Performance bond
• X14 Advanced payment to the Contractor
• X15 Limitation of the Contractor’s liability for his design to reasonable skill and care
• X16 Retention
• X17 Low performance damages
• X18 Limitation of liability
• Y(UK)2 The Housing Grants, Construction and Regeneration Act 1996
• Y(UK)3 The Contracts (Rights of Third Parties) Act 1999
• Z Additional conditions of contract

Note Options X1, X3, X8 to X11 and Y(UK)1 are not used
Schedule of Cost Components
Shorter Schedule of Cost Components
Contract Data
Index

OGC advises public sector procurers that the form of contract used has to be selected according to the objectives of the project, aiming to satisfy the Achieving Excellence in Construction (AEC) principles. This edition of the NEC (NEC3) complies fully with the AEC principles. OGC recommends the use of NEC3 by public sector construction procurers on their construction projects

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