X29 – The Construction Industry’s Most Powerful Climate Change Tool Under NEC

Every day we see the impact of climate change in the media – and all around us when we have more adverse weather for example.

The construction industry often talks about putting sustainability and climate change goals “at the heart of projects”, but the way we approach contracts has the potential to truly embed it from the outset – and ensure the delivery without elements being value engineered out of designs.

Our series of NEC webinars put this topic under the microscope, with host and NEC expert Dr Stuart Kings taking a deep dive into an element of the contract specifically designed for climate change outcomes. Watch the episode back here.

What is Option X29 and why is it important in construction?

X29 is a Secondary Option, introduced in July 2022 for all NEC4 forms of contract and intended to foster collaborative efforts between parties to deliver the best climate change benefits. It is specifically designed to address climate change and sustainability, keeping pace with the ever-growing focus on this within society.

While available under all areas of NEC4, the clause is particularly important and powerful under the ECC form of contract. Every week, the development we build accounts for the same size as the city of Paris, and when considering that 39% of global carbon emissions come from the built environment, it’s easy to see the power this Secondary Option holds.

X29’s objectives are broad, with its use aiming to “reduce the impact of the creation, operation, maintenance and demolition of the works on climate change.” It’s important to note that this addresses the whole lifecycle of schemes – which is especially important when breaking the 39% emissions statistic down further to see that 28% is from building operation.

Ultimately, the construction industry is delivering on what clients want and need through demand, and while tackling climate change is increasingly considered within project plans, X29 provides the ability to embed sustainability goals into the contract.

What do I need to know about using X29?

Tackling climate change is still such an evolving topic, with new learnings emerging every day. The industry is still developing measures and KPIs for minimising carbon outputs and overall impact on the environment – but it’s still important to start.

There are defined terms important to understand in order to effectively utilise X29.

Climate Change Requirements. These will be stated in the Scope, outlining what the Contractor has to provide or comply with – failure to do so attributing a breach (20.1). These requirements could be set by the client, but in a world where so much is still evolving on this front, it may be better to set climate change requirements jointly with a bidder through early engagement or a pre-construction agreement.

Especially when considering there is a role for consultants and companies within the supply chain are often those with the cutting-edge technology or solutions to meet requirements, joint development with the Contractor and supply chain can be a sensible route forward. It can also help reduce the chance of requirements dictated that later simply cannot be met.

Climate Change Plan. This is how the Contractor will meet the Climate Change Requirements laid out in the Scope. It can be required as part of a bid, or within a fixed period of time after the Contract Date. This will need to detail the strategy, naming stakeholders, key milestones, roles, timescales, tools, and tasks – so it’s important for clients to consider with the level of collaboration and effort that needs to go into its development.

Climate Change Partners. These can be companies or individuals, but they will be identified in the Climate Change Requirements in the Scope. X29.2 introduces a requirement for the Contractor to collaborate with these parties.

Performance Table. Where the Climate Change Requirements will be monitored throughout the project.

Using the Performance Table

Firstly, it must be recognised that the Performance Table is not Scope and cannot be changed unilaterally by the Project Manager. If the Scope is changed, a compensation event will need to be enacted – only when there is a significant instance that would impact the Performance Table and measurements would the project team look to re-address targets, for example in the instance of programme acceleration or significant building footprint increase.

Inclusions within the table should have reference to the Climate Change Requirements and may include:

• Issue to be addressed
• Target
• Unit of measurement
• Date measured
• Adjustments to the amount due
• Any limits or caps

The Performance Table may be used with incentives, punitive measures, or simply for monitoring – and caps on positive or negative performance can be applied. With work to tackle climate change being such an evolving area as already stated, a pragmatic approach is always advised and working in the collaborative nature outlined by the NEC should always be done as far as possible.

Early Warnings

X29.3 requires an early warning to be notified if any matter could adversely impact the achievement of the Climate Change Requirements. Sypro’s early warning notifications will flag to the Project Manager and Contractor in such instances so that issues can be addressed before disputes arise – adding an extra level of protection when using X29.

Disclosure clause

Finally, a new disclosure clause allows information to be publicised. It allows the Client to report on progress, and from this best practice can be shared with the wider industry. As well as truly embodying the collaborative nature of NEC, this also works heavily towards the ongoing knowledge building going forward in this space – creating both industry betterment and accelerated progress in tackling climate change as a result.

A final note

Ultimately, X29’s development is recognition that globally and corporately climate change is an important feature that we need to address as an industry – and that we need to collaborate to do so.

There are plentiful statistics available from various sources, but we all understand the industry has a significant impact on carbon emissions in its role as orchestrators of demand. Within this lies the biggest opportunity to make a difference – and X29 is a powerful tool to do so. It’s more than a contractual tool – being a catalyst for change, driving the industry towards a more sustainable and resilient future.

Whether you are a contractor, member of the supply chain, client, or consultant, understanding and implementing the X29 clause will be essential for meeting the environmental challenges of the 21st century.

Want to understand more about Main and Secondary Options under the NEC suite of contracts? Download our guide.