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What Are the Main Contract Options under the NEC?

In this article, Assistant Quantity Surveyor Peter Metcalfe and Associate Director Richard Elston address an often asked question: what are the Main Contract Options under the NEC?


Construction projects require all contracting entities to understand the terms of the contract they are entering into, and to understand the basis of the selected contract model. The Employing party selects a model to suit its needs, whereas the Contracting Party largely has the terms or model prescribed to them.

The NEC suite, developed by the Institution of Civil Engineers (ICE), offer an extensive range of contracting models. The various Main Options supplement the core clauses of NEC contracts, tailored for risk allocation and basis of measurement.  Further flexibility is provided with Secondary Option Clauses and Z Clauses to reflect the complete contracting understanding of the parties.

Understanding the main contract options under the NEC Contracts is crucial when effectively managing construction projects, irrespective of the side of the fence you are sitting. This is because there are six types of contractual framework with different attributes to allocate risk.

Exploring the main options

NEC Contract Option A: Priced contract with activity schedule

Option A merges a priced contract with an activity schedule, ideal for projects with a clearly defined scope of works, and where the Contractor is required to complete activities within a specific period and cost. It promotes transparency through a clear breakdown of prices for each activity. The onus of cost and risk management lies with the Contractor.

This option underscores the NEC’s collaborative ethos and emphasises time management through a pre agreed schedule.

NEC Contract Option B: Priced Contract with Bill of Quantities

Option B is a contract option commonly used in projects where the scope of works is well defined. This contract requires a detailed breakdown of the quantities and prices for various components of the project. The Key features of option B are a priced Bill of Quantities (BoQ), and a defined scope of works with the suitability for competitive tendering.

A BoQ is used to determine the Contractor’s payment based on the amount of work completed against a measure of a particular item within the BoQ. This helps to reduce risk because the activity schedule shows the work to be completed alongside the quantities and costs given in the .

NEC Contract Option C: Target contract with activity schedule

Option C is a contractual option which refers to a target cost with an activity schedule.

The key features of Option C are a target cost, risk sharing and an incentive for efficiency.

The target cost represents the Employer anticipated total payment to the Contractor for completing the works.

Any changes to the scope result in either an addition to or reduction from the Target Cost to ensure the Contractor’s performance remains measurable against the scope.

Essentially this is a cost reimbursable contract, where the Contractor is paid the cost it incurs in executing the defined scope.

If the Contractor expends more than the Target Cost then this is shared between the parties; similarly, if the works are delivered for less than the Target Cost, then the savings are also shared.  The parameters within which the savings or overspend are shared are defined within the Contract Data Part 1, together with the proportion of saving or overspend that sits with each party.

NEC Contract Option D: Target contract with bill of quantities D

Option D provides the cost and saving sharing that is realised through Option C described above, however this time applied to rates used to determine the target cost when pricing the Bills of Quantities. Cost.

Cost reconciliation is at the end of the project where all variations between expected and actual costs are assessed.

NEC Contract Option E: Cost reimbursable contract

Option E is a cost reimbursable contract which manages the project where costs cannot be precisely determined from the outset and the contractor is reimbursed for the costs of the works completed. This Option places the highest allocation of risk with the Employer; the Contractor is paid all its costs and expenses in undertaking the works. Transparency is achieved through the requirement of the contractor to provide detailed records of all costs incurred to pay the contractor, and it allows the client to closely monitor project expenditure. Flexibility within this option allows the scope of work to evolve as the project progresses and allows variations to be amended.

NEC Contract Option F: Management contract

Option F represents a management focused approach to project delivery. The Contractor manages the Contractor’s design, the provision of Site Services and the construction and installation of the works, this adds to the scope of works that are defined in the Works Information under the other options of NEC.


Understanding the main contract options within the NEC suite is essential for successfully managing construction projects commercially.

Whether you are procuring for construction, refurbishment, structures or even services and supply, NEC Contracts offer a range of flexible and effective contract options to suit your needs.

By selecting the appropriate contract option and leveraging the inherent principles of collaboration and risk management embedded within NEC Contracts, construction professionals can achieve true success.


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