NEC4 Design, Build and Operate Contract
NEC4 brings a new addition to the NEC family of contracts: NEC4 Design, Build and Operate Contract (DBO), released in 2017. It has been added to the suite of contracts in response to the increasing demand for contracts extending into the operational phase.
The demand is coming both from UK clients and from international funding agencies, such as the World Bank and the Asian Development Bank (ADB). In 2015, ADB commissioned NEC to draft a consultative DBO contract, the feedback from which has helped to shape the NEC4 version.
It also aligns with the UK government's commitment to 'soft landings', in which designers and constructors are involved with projects at least three years after construction completion to ensure a smoother handover to the operator.
The new DBO contract is not only intended for the 'traditional' DBO approach, where the client requires a new facility or asset to be designed, constructed and then operated by a contractor. It is also available for situations where a client wants to have an existing facility or asset operated by the contractor while it is being upgraded or extended.
In such situations, the timing of the design and construction phase would normally be stated by the client, but may be determined by the contractor – which will undertake the work at a point to suit the performance requirements of the overall service.
The new DBO contract provides for option A (priced contract with price list), option C (target contract with price list) and option E (reimbursable contract).
 Focus on operational needs
 Greater role for contractor
The management of the work through plans and programmes for the construction and operation phases are still important.
 Incentives and productivity
A key issue for the client is identifying and incentivising performance and productivity of the total asset. This may be through any or all of the traditional NEC approaches, including the reduction of payments for poor performance.
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