The ECI Agreement generally sets deadlines or deadlines within which ECI services must be completed. Sometimes, and especially for large projects, there will also be an extension of the time mechanism. As a rule, the most critical date is the date on which the contractor`s package offer is to be delivered to the customer. The NEC has also issued an alliance agreement. The intention is for all parties to the alliance to enter into the agreement instead of multiple lump sum contracts, thus eliminating the individual systems of incentives for pain and target price benefit mentioned above. We are not aware of any draft that has used the NEC Alliance Agreement and we have reservations about the provisions it contains to avoid and put an end to disputes; in particular, how they will actually work if the incentive system collapses. More importantly, however, we do not see why the time and cost of negotiating an alliance agreement between several different package contractors who have never been parties to such an agreement could justify replacing a two-tier incentive system based on the following: the ECI agreement generally contains provisions setting out the standard of due diligence that the contractor must provide in the provision of that agreement. Services required. For example, there may be a guarantee or commitment on the part of the contractor to perform the ECI services with care and expertise. If a trading contractor is in default, this is done at the client`s own risk. A typical form of the construction management agreement is the AS 4916, which you can read here. Or, if you want to learn more about construction management contracts in general, click here.
Like a project alliance, ECI contractors are typically selected through a no-price selection process, where the focus is on the performance of the proposed team (although selected margins and rates may also be requested based on the selected AIC model). The tendering procedure is often interactive and allows the customer to get an idea of the contractual behaviour of the bidders. The contract, once awarded, can be a stand-alone contract or a contract with two different phases. While collaborative behavior is constantly motivated and encouraged, good collaboration and communication can bring the greatest benefits of Phase 1. Early Contractor Involvement (ECI Contract) is a type of construction contract in which the prime contractor is engaged at the beginning of the project to provide design feedback. The concept allows contractors to have a say in the design of the project and recommend cost-cutting measures. The contractual terms applicable to the construction phase are usually contained in a separate document that can be attached to the ECI agreement or otherwise left to the parties to negotiate during the ECI phase. As with any construction contract, the key to understanding the agreement is not to worry too much about the title of the document.
Instead, you should focus on the substantive terms of the document and, in particular, what the contractor will ultimately receive. An ICE agreement is usually used when the client wants to divide the project into two phases: an ICE phase and a construction phase. This article summarizes what you usually find in an ECI agreement. Perhaps the most important part of an ECI agreement is the part that determines exactly what the entrepreneur must have produced by the end of the ICE phase. As we explain in more detail here, ECI missions (or „early participation of contractors“) can be structured in different ways. An ECI agreement is typically used when the project is divided into an ECI phase and a construction phase. Some clients refer to these types of contracts as a maximum guaranteed price agreement (or „GMP“), again depending on how the agreement is structured. There is currently no model ECI agreement in Australia.
This is partly due to the fact that different principles attempt to structure ECI commitments in different ways. Therefore, although all ECI agreements have similarities, there will always be differences. And for this reason, ECI agreements are usually project-specific. Most AIC agreements provide for a fixed lump sum payment to the contractor for AIC services, but this is not always the case. For example, ICE fees are sometimes based on tariffs. Where a fixed lump sum is used, deviations are generally not allowed unless the scope of the entire project changes significantly and obviously. Similar to a contract that provides for a two-stage AIC process, an „initial engineering and design agreement“ or „FEED agreement“ typically provides for the development of initial engineering and design proposals to the extent sufficient to facilitate the client`s obtaining of the necessary project approvals and the determination of indicative investment costs for the project. The FEED design process will also focus on technical requirements that include the employer`s requirements for an EPC contract. The perceived benefits of a properly constructed FEED process are very similar to those of a two-step ECI tendering process. It should: The ECI Agreement specifies the amount to be paid to the contractor for the provision of ECI services, including when and how it is to be paid and when adjustments are allowed.
An ECI agreement focuses on the ICE phase and explains how the project will move to the construction phase (assuming it continues). The review of this article describes what you normally expect from an ICE agreement. The results of the ECI will contextualise the balance of the ECI agreement and serve to shape the scope of ECI services.