JTC has awarded a collaborative contract for infrastructure works at CleanTech Park in Jurong Innovation District (JID) to Eng Lam Contractors Co (Pte) Ltd. The contract, adopting the New Engineering Contract 4 (NEC4), is the first public sector project in Singapore to implement this collaborative contracting framework.

One of the main challenges faced by the construction sector is risk management, including cost overruns and project delays. Traditional contracts allocate risks and rewards separately, often leading to inefficiencies and disputes. NEC4 aims to address these issues by encouraging collaboration and allowing risks and cost savings to be shared more equitably among contracted parties.

Originating from the UK, NEC4 contracts have been successfully adopted in other regions such as Hong Kong, where projects have achieved overall time and cost savings, and contracting parties have also evolved to be more collaborative and cordial.

In Singapore, the Building and Construction Authority (BCA) started looking at NEC4 in 2024 with NEC, and local adaptations were made to the contracts to align them with the country’s legal and industry requirements. Prior to this, other forms of collaborative contracting under the Public Sector Standard Conditions of Contract (PSSCOC) have been piloted in other projects.

Greater collaboration and mutual trust

Unlike traditional contracts, which often allocate risks and rewards separately, the NEC4 contract emphasises on collaboration and mutual trust. It incorporates three key features:

• Pain-gain share: NEC4 allows for a target cost approach where project parties share cost savings or overruns as they occur, rather than relying on a fixed lump sum contract. This promotes transparency and shared incentive for all parties to work together. It also drives innovation and teamwork to resolve project challenges.

• Early warning: NEC4 includes an early warning system for potential issues to be identified at an early stage, enabling proactive action to resolve them before they escalate. This approach enhances risk management, helping projects to stay on track and within budget.

• Holistic dispute management: NEC4 promotes openness and transparency through clear communication. It provides platforms for early identification of potential issues, allowing parties to collaborate on resolutions before they escalate.

The NEC4 contract will be piloted by JTC through an infrastructure project at CleanTech Park in JID. This project involves extending CleanTech Loop from The Potter’s Garden (formerly Jurong Eco Garden) to the upcoming MRT station and building an elevated walkway linking the station to the northern part of CleanTech Park. It will improve access to public transport and enhance connectivity for commuters and road users. The works are scheduled for completion in the second half of 2027.

JTC will assess the effectiveness of NEC4 in managing risks, controlling costs and identifying potential time savings through this pilot. In collaboration with BCA, lessons learned and insights from this pilot will be shared with other public sector agencies to promote more adoption of NEC4 for future public projects.

Nelson Liew, group director, new estates at JTC, said, “NEC4 emphasises mutual trust and collaboration between the contracting parties. The tender award gives construction stakeholders the opportunity to experience collaborative contracting first-hand, providing feedback to refine the model and contribute as first-movers to progressive industry transformation. JTC will share our learnings on the use with the sector to ease their collaborative contracting and NEC4 journey.”

Ang Lian Aik, group director, business development group at BCA, further highlighted that collaborative contracting “results in better project outcomes, such as building trust, strengthening communication and facilitating a more balanced share of risks among contracting parties.”

“We’ve been working in close partnership with JTC, who has stepped forward as the first public agency to implement a NEC4 project in Singapore,” added Mr Ang. “It will demonstrate how NEC4 and collaborative contracting can help to address the current industry challenges and serve as a valuable reference for wider implementation in the BE sector.”

“This landmark project demonstrates the transformative potential of collaborative contracting in delivering complex infrastructure projects,” commented Rekha Thawrani OBE, global director of NEC contracts. “The NEC4 framework’s emphasis on early warning, transparency and shared problem-solving creates the foundation for better project outcomes and stronger relationships between all parties.

“Singapore’s thoughtful approach to adapting NEC4 with localised clauses while maintaining the spirit of collaboration sets an excellent example for the region. We look forward to supporting JTC and BCA as they lead this important shift towards more collaborative and efficient project delivery in the public sector.”

Image: JTC