Adoption of New Engineering Contract for procuring E&M works services

New Engineering Contract (NEC) is widely adopted in the private and public sectors of the UK construction industry, and with great success. The Government of the Hong Kong Special Administrative Region (the Hong Kong Government) has selected a number of projects in various works departments to adopt the NEC form of contract. The first successful NEC pilot project is Fuk Man Road nullah improvement project in Sai Kung managed by the Drainage Services Department (DSD). To promote a wider adoption of the NEC in Hong Kong, DSD selected a direct electrical & mechanical (E&M) project to be one of the NEC trial projects, which will be the first direct E&M government contract adopting the NEC in Hong Kong. In this paper, the six main options among the NEC3 Engineering and Construction Contract (ECC) have been preliminarily analysed. Option C – target contract with activity schedule is considered more appropriate for this proposed E&M works project. Furthermore, this paper also addresses possible challenges when the NEC form of contract is implemented. The cultural change, particularly establishment of partnering and collaborative working attitude, will be the biggest challenge. Challenges on management of compensation events and financial management of target cost contract (e.g. open-book accounting) during the course of contract are also addressed. The recommended tender assessment for this NEC E&M contract is also given in the paper. Standard marking scheme instead of formula approach is recommended to be adopted because the quality of services becomes a major consideration.