NEC3 – Who is at Risk?

The risk register is a prominent feature of the NEC third edition, and is intended to reinforce the pro-active approach to the management of risk which the contract seeks to encourage. The Contractor should proceed with a degree of caution in relation to the risk register, as the risk register unless expressly incorporated via an additional Z clause is not a contract document, as such the listing of individual risks on the register has no bearing on either party in relation to that individual risk.


Arrange a FREE Consultation on-line

The term risk has numerous meanings depending on which context it is being used, in the terms of the NEC a risk is an uncertainty – “an event or a class of events which might happen”. Uncertainties in a project are things, which if they occur might make the project more difficult or might make the project fail in its objectives such as additional costs or a failure to meet completion.  Each risk is carried by one organisation in the supply chain for the project.  “Carrying” a risk means that, if the event identified as a risk was to occur, the organisation carrying that risk would be responsible for all costs associated with that risk and would also be responsible for dealing with the consequences of any resulting delay.  This sounds good in theory, however Clause 80 lists all the Employers risks and makes reference to any additional Employers risks stated in the Contract Data.  Clause 81.1 states “From the starting date until the Defects Certificate has been issued, the risks which are not carried by the Employer are carried by the Contractor”. So, unless there are additional Employers risks listed in the Contract Data, the Contractor will carry the burden of all risks, other than those listed within clause 80 regardless of any risk allocation identified on the risk register.

As such the Contractor will be responsible for the costs and the consequence of any delay if the risk is not carried by the Employer under clause 80 or is not listed within the Contract Data Part 1 as an additional risk, regardless of whether or not he is the carrier of that risk on the risk register.

It is important to remember that the risk register does not replace the Early Warning system for the early identification of risks. Other than at clause 16 there is no specific provisions elsewhere in the contract in relation to the risk register and no particular contractual consequences flow from a risk being identified in the risk register or indeed the absence of a particular risk in the risk register.  As such the risk register is intended to be a practical aid to the parties in managing risks as they arise during the course of the project and is maintained and amended, following agreement by the Project Manager.