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could be a consequence of the contractor applying for these items for ease and having the project manager deduct them in his or her assessment. Consider this scenario at the start of a contract: the contractor needs to procure some timber for formwork, a circular saw, personal protective equipment, some padlocks and some cleaning products for the site compound. The contractor’s buyer goes directly to the local builder’s merchant, which can deliver the items the next day. One purchase order is raised and one invoiced received. Even assuming the contractor understands the schedule of cost components and has appropriate cost coding systems, the reality is a difficult administrative exercise to allocate the costs to the correct component and exclude those covered the by percentage for working area overheads. The aim of the percentage for working area


overheads is twofold: to reduce the administrative burden and place the risk of excessive wastage of hand tools and the like on the contractor. I would question whether administration really is greatly reduced. In terms of wastage and utilisation, there certainly seems a conflict with the general philosophy of the contract, where the risk of reasonable resource utilisation, plant and materials wastage and defects before completion are shared by the parties.


What needs to change? The objectives of the schedule of cost


components align with the contract and are generally considered positive progression from current practices, with 80% of my survey respondents supporting the open-book approach of option C. But evidently more needs to be done to improve understanding of how costs are to be reimbursed to the contractor. The real question is what needs to change, the contract or the users?


Distinction must be drawn between an absence


of clarity and an absence of knowledge: the former being an issue with the contract and the latter a characteristic of the users. While the relationship between knowledge and understanding of participants was outside of the scope of my research, I am not sure if those having problems have genuinely taken the time to acquire the knowledge necessary to apply the schedule of cost components in practice. If it is not working the easy option is to blame the contract but, as the old saying goes, ‘a bad workman always blames his tools’. NEC3 contractors generally require changes in


philosophies, attitudes, working methods, systems and procedures, as well as education and training. If users make the effort to acquire the knowledge but cannot develop the necessary understanding to operate the contract effectively, then the objective of clarity has failed. However, until we can be sure they have, it is impossible to conclude what needs to change. The recent publication of a number of new


reference books and guides for NEC3 contractors perhaps suggests that it is more commonly acknowledged that the problem lies in the user’s understanding and application of the contract in practice, rather than in the contract itself. Some suggestions from the results of my


research that may be useful to consider going forward include


■ providing clear and thorough guidance notes


■ training personnel in line with roles and responsibilities under the contract


■ appointing an independent auditor / advisor ■ using of a single schedule ■ providing a schedule of rates for people ■ collaborating on supply chain management.


BIM, IP and NEC3 KHALID RAMZAN PINSENT MASONS


Building information modelling (BIM) is the talk of the UK construction industry at the moment and with good reason. Projects are increasingly being procured in a BIM-enabled


environment. A good example is the NEC3- procured Crossrail project, where the employer has mandated use of BIM to develop a system- wide model, enabling more efficient long-term management of the new infrastructure. But BIM also gives rise to intellectual property


(IP) issues – which NEC3 contracts may also help to resolve.


Level 2 BIM For those not yet familiar with BIM, a building


information model can be a single computerised model developed by a single designer or subcontractor to model its own contribution to a project. BIM has been used in this way by structural steel fabricators for some time, but its overall potential is limited to little more than what could be achievable with three-dimensional computer-aided design. BIM’s potential lies in multiple supply chain


members producing their own (‘authored’) models, connected up to a single ‘federated’ model, whether that model is controlled by the employer or the main design-build contractor. The latter has been defined as ‘level 2 BIM’, which


the UK government in its 2011 construction strategy (Cabinet Office, 2011) has declared will be mandated for all public projects by 2016. The most immediate benefits of level 2 BIM


include simulation of the construction process, which can help to evaluate and optimise the construction sequence and enable early clash detection. The detailed design in the model can also be used to create fabrication drawings. This avoids traditional multi-staged processes which lead to errors, thus enabling more efficient production of off-site manufacture.


Intellectual property challenge But despite BIM’s huge potential, the risks


inherent in what is essentially a collaborative process have been subject to increasing debate. One key issue is IP ownership. Level 2 BIM results in overlaying IP created


by different supply chain members in a single federated model. Essentially, this means that more participants may have access to more project information than would be the case in non-BIM environments. To varying degrees, models will capture design


data, cost data, design processes, tables, databases and graphical information. Each of these will be protected by one or more kinds of IP and each of these rights is created by separate statutory provisions. Obvious IP risks include the inadvertent sharing


The way forward I believe there is a lack of understanding of


the contractual provisions for the reimbursement of cost under option C, often resulting in an inaccurate target before the works have even started. For me, one of the more significant changes


from the second edition of the ECC to the third clearly has not resonated through the industry in the way in which it was intended: the change in definition from ‘actual cost’ to ‘defined cost’ to underline that the contractor is not simply reimbursed amounts paid. Despite these misunderstandings, it is


unlikely that wholesale changes to the contract will be made, certainly not any time soon. It is here perhaps that the employer must optimise the flexibility of the NEC3 contracts and work collaboratively with the contractor. If you do not think the schedule of cost


components will work practically on your project, by all means amend it; but do it properly, with clarity, common sense and with the true objectives of the contract in mind.


References


Edwards-Stuart, J. (2010). Cited in Anglian Water Services Ltd v Laing O’Rourke Utilities Ltd [2010] EWHC 1529 (TCC) p28.


Lloyd, H. (2008). Some Thoughts on NEC3. International Construction Law Review, 468.


Rowlinson, M. (2006, August). NEC3 – Revisions to the Schedules of Cost Components and the Fee in the ECC. NEC Users Group Newsletter Issue 36, pp. 4-5. ●


For further information please ccontact the author on +19539 566000 or email john.rossiter@doigandco.co.uk.


of trade secrets or patented processes, unlawful use of copyright or database right-protected materials, and the risk that designers will withhold design elements to protect their IP.


Perils of joint ownership To address such risks, one approach is to


adopt joint ownership of IP. Another is for each contributor to license use of IP provided for the purpose of the project alone. However, neither approach is entirely satisfactory. One of the driving-forces of BIM is its potential


for long-term facilities management. A main contractor may seek to license the federated model for long-term use to the employer. Such a licence may define the purpose, extent of reliance that can be placed on the model and limitations on liability for its use. Joint ownership would complicate any such


intentions. None of the joint owners would be able to use or license to a third party without the consent of others. It would also be difficult to assign or sell rights in a design without agreement of all the joint owners.


An NEC3 solution? Unsurprisingly, given the relative infancy


of BIM, standard approaches to IP have not yet developed. Indeed, once formulated, even standard approaches will have to take into account the position of parties within the supply chain and the individual project’s BIM aspirations. Consider again the example of the main


contractor, with clear aspirations to license the model to the employer for facilities management following completion. The main contractor will require widely defined licences or preferably a


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