NEC4 ECC: X22 - in simple terms how does ECI work

With the new X22 secondary option - can you explain in VERY simple terms how it works?

I understand it is split into stage 1 and stage 2, stage 2 being the notice to proceed and the agreed Completion Date/Target Price (if option C) will be set at that time. So what incentive is there for the Contractor to flush out all the good ideas in stage 1 - what is in it for them (other than the fact they are more likely to get Stage 2)?

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You have hit the nail on the head with any contract strategy whereby the Contractor / Consultant / Supplier knows they are in poll position in any competition. Under ECI, they naturally want the Prices for Stage 2 to be as high as feasibly possible to maximise the subsequent gain share.

Theoretically though, if the Price for Stage 2 is too high, then the Employer (NEC3) or Client (NEC4) could revert to another Contractor. However, practically that may not be feasible (in part because there is no express termination provision !). So things you can do are :

  • make sure there is sufficient float in your overall programme for the project to be able to appoint another contractor;
  • state specific rules by which the Prices for Stage 2 will be built up e.g. subcontracting for Packages over £X is subject to 3 quotes all of which must be available and seen by the Client etc…