NEC4 Alliance Contracts – The Behaviours and Tools Needed For A New Approach

What is the NEC4 Alliance Contract?

NEC launched the new NEC4 Alliance Contract (ALC) at the NEC Users’ Group annual seminar in London on 20 June 2018.  Its purpose is to create a “true” alliance between a client and supply chain partners entering into long term collaborative relationships for major programmes of work.

In this next step of collaboration for the NEC suite of contracts these Partners have an equal voice and share of the performance of the whole alliance rather than just their own individual KPI’s.  The alliance contract form is effectively a reimbursable contract, equivalent to NEC option E, overlaid with a performance regime which consists of targets for meeting alliance objectives set out in a performance table.

This focus on completely shared objectives and performance targets across all delivery partners is aimed to drive even greater collaboration than the existing best practice project management processes embedded in the NEC4 suite.  It takes the essence of NEC’s underpinning good faith provision of working in “a spirit of mutual trust and cooperation” and reinforces this with incentives and penalties entirely shared between delivery partners.

What behaviours will be needed for success?

The NEC suite has always aimed to drive collaboration, however, it’s common knowledge that poor practice and behaviours often undermine those provisions and result in adversarial relationships.  

Trust is a cornerstone of the NEC suite and essential to make the alliance contract operate successfully.  In an alliance transparency is key to build a foundation for that trust.  For integrated teams brought together from separate companies this may feel uncomfortable however a level of radical transparency should support collaborative decision making.

Collaboration is an obvious fundamental behaviour and critical success factor.  One of the existing underlying obstacles to effective outcomes in NEC contracts is a misconception that cooperation is the same as collaboration, explored in this article for NEC.

Cooperation may be passive, collaboration is always active.  The alliance model of creating shared ownership of a shared problem aims to focus Partners on actively working on a problem and drive true collaboration rather than an acceptance to cooperate with the “rules” of the contract.

Timeliness of actions and communications is a strong theme that runs through all processes in the NEC suite of contracts.  One behaviour that has a significant impact on success and timely decision making is to consider the timescales as a back stop and not a target to be beaten.  Too often it’s common place to utilise the full period for reply where an earlier response may create a better outcome.

What tools are needed to support those behaviours?

So what tools are needed to support these behavioural pillars of trust, collaboration and working in a timely manner?

An obvious answer is “common tools”, solutions that work across all parts of the business, accessible to all and invested in by all partners.  With common tools a level of transparency may be achieved with common data sets and shared knowledge in real time.

For the last ten years it’s been common practice to adopt contract administration software and this is critical for alliance partners driving consistent processes through the supply chain.  Solutions like CEMAR have been developed specifically for the NEC suite of contracts and provide a common administration platform for large programme management teams.

Alongside a common data environment, generally underpinned with a document management system, there is an evolving area of providing a “common visualisation environment”.  A term coined by Sensat it refers to a platform where an asset may be visualised alongside other relevant information for teams to understand geographical constraints and opportunities.  Created by drone survey and overlaid with more detailed project information it’s a space for collaboration and problem solving.

Planning has always been a part of large infrastructure projects with the dominant solution being Oracle’s Primavera P6.  This is the common platform for longer term planning and resource analysis however for short term planning and sequencing projects are often still using techniques revolving around whiteboards, sticky notes and paper.  One solution to this is Aphex created to support this short term collaborative planning process.

Finally, once work is planned and delivery starts, there’s been very little investment in consistently capturing structured site data to support commercial management.  For an Alliance contract to truly succeed a feedback loop must be established between works planned and works delivered.  Too often this information is delayed, partially completed and anecdotal.  Tools such as Raildiary aim to fix this problem by providing a simple to use and powerful application for commercial assurance.

Overall, NEC4 alliance contracts offer a promising approach to delivering successful rail projects. By fostering a culture of collaboration and trust, and implementing the right. However, it is important to remember that this approach requires a commitment to change and a willingness to challenge traditional ways of working in the industry.