Since 2009, the Development Bureau (DEVB) has been adopting the New Engineering Contract (NEC) form in public works projects to enhance management efficiency and cost-effectiveness of the projects. With the adoption of the NEC, the DEVB and its works departments have received multiple awards and commendations. This time, the bureau will explain what the NEC is and what its strengths are, and I have invited colleagues from the award-winning departments to share how to achieve an early solution to challenges encountered during construction together with contractors through the NEC form, thereby reducing the risk of delay or cost overrun in works projects.

Working together to tackle difficulties and enhance management efficiency of projects

The DEVB has introduced the NEC form in public works contracts to advocate the spirit of collaborative partnering in the project team and bring the team together to tackle difficulties, with a view to facilitating the smooth implementation of the project. The Principal Assistant Secretary (Works) of the DEVB, Mr LEUNG Hon-wan, David, says that the conventional form of contract previously adopted in public works focused more on the responsibilities and obligations of the two contracting parties. Once problems or foreseeable risks occurred during the construction period, both parties tended to focus on identifying the responsible party, and hence disputes would arise. As a result, the problem was not dealt with promptly and it might take more time or cost to complete the works. The NEC embraces a collaborative culture and through contractual mechanisms fosters the building of a mutual assistance/trust partnering relationship between the contracting parties to encourage them to resolve difficulties together, thereby minimising the risk of cost overrun and delay.

Complete project management system

Is the collaborative culture advocated by the NEC a slogan only? Mr David LEUNG says that since the contractual provisions have incorporated a complete project management system, including an early warning mechanism, a compensation mechanism and action timeframes, the contract itself is a complete management handbook. The projects will be completed smoothly by following the requirements stipulated in the handbook. For example, with the early warning mechanism, the contractors are encouraged to identify and raise potential risks that may affect the projects as early as possible, and when construction difficulties and problems are encountered, to negotiate and formulate the optimal solution for the project according to the prescribed procedure framework and timeframes in the contract.

Multiple awards to the DEVB and its works departments

Assistant Secretary (Works Policies) of the DEVB, Ms LI Wai-man, Joyce, says that from 2009 to now, there have been over 500 public works contracts adopting the NEC form with a total value of over $270 billion, of which over 150 works contracts have been completed with no contractual disputes. Recently, the DEVB and its works departments have achieved encouraging results with multiple awards and commendations at the NEC Annual Conference 2023 and Prize Presentation Ceremony of the Martin Barnes Awards 2023 in London, the United Kingdom. The Martin Barnes Awards is aimed at giving recognition to projects and organisations around the world that have showcased excellence in project delivery through collaborative partnering.

Major awards to two projects of the Architectural Services Department

The Architectural Services Department (ArchSD) has received the awards of Building/Facility Management Project of the Year (Building Project of the Year) and Sustainability Award of the Year. Chief Project Manager of the ArchSD, Mr SUEN Chi-hang, Kevin, says that the Drainage Services Department (DSD) Office Building project, which has won the award of Building Project of the Year, supports the Government’s policy of “single site, multiple use” through the construction of a 21-storey building at the Cheung Sha Wan Sewage Pumping Station.

He says that since some of the construction materials and prefabricated parts of the project could not arrive in Hong Kong on schedule during the COVID-19 epidemic, the contractor informed the ArchSD of the difficulties through the early warning mechanism of the NEC. Meanwhile, under the mutual trust/assistance culture, the two parties tried to work out a solution through discussion and finally an alternative construction plan proposed by the contractor was adopted, which could reduce the costs, ensure the works quality and avoid any delay in the works.

Construction cost expected to be lower than target cost

The ArchSD has adopted the target cost option of the NEC in the DSD Office Building project for the first time, which advocates a pain-gain share management approach between the two contracting parties. They have jointly handled over 100 subcontracts and selected the most cost-effective subcontractors. Under this approach, if the actual construction expenditure is different from the contractual target cost, the Government and the contractor will bear the cost overrun or share savings from the target cost. So far, the construction cost of the office building is expected to be lower than the target cost.

Water Contract of the Year award to the Water Supplies Department

The award-winning project of the Water Supplies Department (WSD) is the recently completed project of Improvement to Dongjiang water mains P4 at Sheung Shui and Fanling. Under the project, the project team had to replace large water pipes of about 5 kilometres long with a diameter of 2.3 metres in two and a half years. Senior Engineer (Building Information Modelling) of the WSD, Mr WAN Wai-yin, says that the project was under a tight schedule and various challenges were encountered during construction. Fortunately, acting in the spirit of mutual trust and win-win co-operation advocated by the NEC, the project team held meetings on a weekly basis and solved the problems with new thinking and new technologies, including the adoption of slip-lining method which involves rehabilitation of pipes by pushing a new liner (polyethylene liner) into the old pipe section by section and filling the gap between the new and the old pipelines with cement slurry. Despite the impact of the COVID-19 epidemic, the project was completed two months ahead of schedule with cost savings, and has received the NEC Water Contract of the Year award.

The Yuen Long Effluent Polishing Plant project of the Drainage Services Department

Senior Engineer (Sewerage Projects) of the DSD, Mr LAU Wai-kit, says that the Yuen Long Effluent Polishing Plant (YLEPP) project adopted the NEC in 2020. The NEC emphasises the spirit of co-operation, encouraging the project team to solve various challenges together, such as to ensure that the ecological environment and the habitat of birds will not be affected by the project. The project team has also reached a consensus through discussion to adopt advanced energy-saving technologies to enhance renewable energy contribution of the effluent polishing plant, including solar power and biogas, and hence the project has received the first runner-up of the NEC Water Contract of the Year award. The facility, which is expected to be completed in 2027, will increase the treatment capacity of Yuen Long Sewage Treatment Works from 70 000 cubic metres (m3) per day to 100 000 m3 per day and upgrade its sewage treatment level to tertiary effluent polishing standard.

Launch of the Hong Kong Edition of the NEC last month

To keep abreast of time, the DEVB launched the Hong Kong Edition of the NEC last month, incorporating local legislative requirements and procurement practices into contracts and introducing new provisions to offer incentives to encourage the adoption of innovation and technology by contractors.

Looking forward, the DEVB will continue to focus on the application of NEC and promotion of innovation and technology, with a view to facilitating the industry to manage their works projects more effectively for better efficiency and cost control so as to address various challenges during the golden era of the construction industry.