In a recent report from NEC Contracts, 72% of all respondents from the public sector said that more projects should include sustainability focused optional contract clauses. Here Rekha Thawrani OBE, Global Director at NEC Contracts, offers further insight and discusses why contractual mechanisms can have such a significant and positive impact on sustainable outcomes.
Climate change is the defining challenge of our time and the construction industry is a key contributor to the current crisis. Approximately 25% of all UK carbon emissions can be attributed to the built environment sector, and, according to the UN Environment programme, this figure reaches a shocking 79% when energy and process-related CO2 emissions are considered globally.
As a result of its contribution to global emissions, the industry has been in the forefront of those finding solutions to reduce environmental impact. In our comprehensive research into collaborative contracting, we found that 76% of all respondents surveyed agreed that the industry was taking sustainability seriously — with the figure increasing to 81% for those in the public sector.
However, in the same survey only 52% of public sector professionals considered themselves to be ‘very aware’ of sustainability focused optional clauses in collaborative contracts. This demonstrates that whilst the industry may be moving in the right direction, there are still key mechanisms that can reduce environmental impact, which are not being explored or taken advantage of.
Facilitating change
Collaboration is at the heart of improving the sustainability of construction projects and it is a theme that runs through national standards like (PAS) 2080:2023 Carbon Management in Infrastructure and Built Environment. In this foundational standard, shared responsibility amongst value chain members is essential for the management of carbon emissions and the delivery of sustainable solutions.
Collaborative contracting provides a way to meet the demands of (PAS) 2080:2023 by providing an alternative to the adversarial relationships of traditional contracts. This approach allows those involved to share risk and work towards an outcome that is best for the project. This strategy also encourages the adoption of new and innovative technology and enables a holistic approach to key issues, such as resource use and waste reduction.
Our research also has revealed that 80% of respondents working in the public sector agree or strongly agree that collaborative contracting has enabled them to see better environmental outcomes. This has been possible despite many local authorities setting net zero targets that are often more ambitious than those implemented on a national level.
Whilst collaborative contracting forms an excellent foundation for improving the sustainability of a project, it is possible to do even more. Additional clauses such as NEC’s Secondary Option X29 go beyond facilitating sustainability and actively build it into the obligations and outcomes of the project.
Available on all NEC4 main and main subcontract forms, X29 enables clients to set out a project’s decarbonisation goals and outline key stakeholders for collaboration. Contractors can then respond with an appropriate strategy that all parties agree on. This approach ensures that all parties share aligned goals throughout the process, and crucially helps to establish both an understanding and confidence in how those goals will be achieved from the outset.
A performance table can also be included in this additional clause, enabling clients to set financial incentives for contractors that achieve the targets. By actively incentivising those involved, optional clauses encourage proactivity from contractors and the supply chain and reinforce the value of collaborating across the construction process.
Optional clauses also have the flexibility to achieve a wide range of environmental objectives. Surveyed professionals revealed that these clauses are most often used to target the carbon impact during production and the operational emissions of the finished building. However, they can also be utilised to reduce the volumes of water used during construction and by the finished building, as well as to reduce embodied carbon. Consequently, these flexible additional clauses enable a holistic approach to be agreed upon that covers all the key drivers for project sustainability.
Looking forward
Our research demonstrated a clear level of support for collaborative contracting and sustainability focused optional clauses. 67% of public sector respondents agreed that more projects should utilise clauses such as X29, with over half saying that they were very aware of them — far higher than the 15% average across the wider industry.
What’s more, the public sector’s uptake of collaborative contracting in general also provides grounds for optimism. 95% of public sector respondents reported that collaborative contracts deliver improved costs, higher efficiency and improved knowledge transfer. This is exactly what they were intended to do when NEC was developed in the early 1990s. Our contract suite has continued to evolve since then and Secondary Option X29 is a relatively recent addition — reflective of the urgent need to address issues of sustainability and deliver better project outcomes.
Today, the NEC suite of contracts is internationally recognised and recommended by UK government. In addition, they have recently been made available via NEC Digital, an intuitive online contract drafting platform that unites public sector stakeholders together and creates comprehensive digital libraries of clauses and terms for future projects. Ultimately, it is there to make collaborative contracting faster, simpler and more accessible.
Finally, with continued education and knowledge sharing, we are optimistic that adoption will continue to grow, and to the point where collaborative contracting incorporates sustainability clauses as standard. After all, a reset in the way we approach working together to achieve our sustainability goals has the potential to benefit everyone.
To find out about NEC’s suite of contracts and optional clauses such as X29 that can improve the sustainable outcomes of your next project, www.neccontract.com
