JCT and NEC contracts

There are several different types of contracts used in the UK construction industry. The 2 most popular are the JCT ( Joint Contracts Tribunal) and NEC   (New Engineering Contract). The difference between JCT and NEC contracts will be discussed in this article

Why are 2 different types of contract used?

The JCT contract has been in use since 1931. It is regarded as a more traditional contract. There were many people who felt that JCT contracts had certain shortfalls. As a result the NEC suite of contracts were released in 1993. They are regarded as a more progressive form of contract and are designed to overcome the shortfalls of the JCT contract

Are either of these used on property development/refurbishment projects?

It is strongly advised that no matter how small your project you use a contract on a refurb project.  JCT contracts are the most commonly used ones on property development/refurbishment projects. It is very unlikely that NEC contracts will be used, unless it is on a major Government housebuilding initiative. The reasons why will be explained below

Who is in charge of the contract on a project?

Both contracts make provision for someone to work on behalf of the employer to oversee the contract. In a JCT contract this is known as the Contract Administrator. On an NEC contract this is known as the Project Manager

How are they different?

The 2 contracts differ in 2 major areas , which are time and cost.


Both forms of contract require the contractor to submit a programme of works. The employer must give details such as start date, completion date and sectional completions ( if any).

The JCT doesn’t stipulate what the programme should show. And there are no requirements for revisions to be submitted

The NEC form however requires more detail and should include key concepts such as float. The NEC uses the initial programme as a tool for how variations, Earned value management and progress of the project is assessed.

Early warning notice

An EWN ( Early Warning Notice) is a  key feature of addressing risk to programme extensions

This will be submitted by either the Project Manager or Contractor. They should do this as soon as they become aware of anything that may affect the time, cost or quality of the works. The rsult of this is that issues will be identified early on and not left to cause problems later on in the project

Risk mitigation meeting

After an EWN has been submitted this should be followed by a risk mitigation meeting. This is where both parties will work collaboratively to mitigate risk. As a result a task that would prove extremely difficult if an up to date programme was not in place


On any contract the cost to an employer goes in 3 stages

  • Initial price
  • Variations
  • Final/ interim payment

The JCT is most commonly used as a lump sum contract, either with or without quantities.

The NEC goes further with pricing options, by providing the method to choose how work is procured.

These include cost based open book contracts such as cost reimbursable. There are also target cost contracts where profit and loss is shared between the employer and the contractor

Are provisional sums allowed in both?

The answer is no. Provisional sums are allowed in the JCT. But in the NEC  the full scope of works must be presented to the contractor in a document called the works information. If a piece of work is of an unknown cost or quantity then it cannot be included in the works information. Once the project has started the time and cost of that particular piece of work would become a compensation event


Under the JCT variations are known as RE ( relevant events). Under the NEC they are known as CE   (compensation events)

The JCT deals with time and price variations separately. An extension in time does not automatically guarantee a price adjustment. In the NEC time and cost are grouped together under a CE

Both contracts have different conditions as to what constitutes a variation


There may be unforeseen ground conditions which an experienced contractor could not have foreseen, such as a storm or prolonged torrential rain.

Under the NEC this would be a valid reason for a CE. Consequently in this instance the employer carries the risk.

However under the JCT this would not be a valid reason for an RE. So in this instance the contractor would carry the risk


Selecting the correct contract for your project is an essential element for success. All the profit made on a contract can be lost by poor Contract Management. Think carefully if you decide to take on this role yourself. Bear in mind also that any bespoke clauses inserted at the contractors or employers request can invalidate the whole contract


The JCT is usually preferred by employers who want a higher level of control over project delivery, providing a balance of risk between employer and contractor

The NEC is the common choice for public sector work. This is due to the NEC’s focus on collaboration which inspires innovation, risk reduction and mitigation of disputes by utilising an early on approach to issues on site. The NEC is therefore more suited for major infrastructure and building work


The author of this article has over 25 years experience in administering contracts on major infrastructure projects


We have experience in commercial and contract management on projects of all sizes. If you would like help or advice in selecting the correct contract for your project please contact us.

Contract Administration is one of the many services we offer









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