When approaching construction projects in Norway, the choice of contract is crucial for proper risk allocation, cost management, and avoiding disputes. The Norwegian construction sector relies heavily on various standardized contracts, designed to govern different project deliveries. Understanding the scope of these standards is essential to ensure a well-balanced contract for your project. In this blog we look at Norwegian Standard (NS) contracts and highlight the differences between them.
Two main types of construction models
Before delving into the different types of standard contracts, it is important to understand the two main types of construction models in Norway, which is a key for selecting the right contract:
- Design-bid-build model
- Design-build model
These models differ in how responsibilities are allocated between the client and the contractor.
In a design-bid-build contract, the client is responsible for preparing the design, including descriptions, drawings, and specifications, while contractor carries out the construction work based on this design. In a design-build contract, the contractor handles both the design and the performance of the construction work.
The right choice of NS standard for the project, depends on whether the parties are entering into a design-bid-build contract or design-build contract.
Also read: Development and construction agreements: Effective and important tools
What is Norwegian standard (NS) contracts?
Commercial parties in Norway have the freedom to manage their projects using any contractual framework they prefer. However, there is a long-standing tradition of using Norwegian standard (NS) contracts, which are developed by Standard Norway in collaboration with experts from the construction sector. These contracts are designed to provide balanced rights and obligations for both clients and contractors.
NS contracts are typically complex and consist of a contractual form, following written materials outlining the scope of the work, design and specifications, together with correspondence between the parties, and the NS standard itself. These documents are typically prepared over time and there is a risk of conflict between the documents. Thus, a thoroughly and systematically review of the contract is important to ensure clarity and balance.
DOWNLOAD NS CONTRACT OVERVIEW
Which Norwegian Standard construction contracts are most used? Download the overview to learn their purposes.
NS 8405 – Norwegian building and civil engineering contract
NS 8405 is the most used standard for larger construction projects in Norway. This standard is generally advised where the client shall provide the majority of the design, and the contractor shall carry out construction work on basis of the design (design-bid-build).
It is important to keep in mind that NS 8405 stipulates strict rules for notifications and change orders during the project. Both the client and the contractor have short timeframes to react, typically a couple of days. Failure to meet the deadlines and requirements will normally result in loss of claims, which may lead to significant losses that impact the profitability of the project.
Thus, approaching a construction project governed by NS 8405 without knowledge of, and carefully respecting, the detailed rules, represents a significant risk.
NS 8406 – Simplified Norwegian building and engineering contract
NS 8406 is a simplified version of NS 8405 used for smaller construction project with a design-bid-build model between the parties. NS 8406 differ from NS 8405 primarily with less strict rules on notice requirements and deadlines for claims. This does not mean that the parties cannot lose their claims, but it takes more than with NS 8405.
NS 8407 – General conditions of contract for design and build contract
NS 8407 is tailored for EPC projects (Engineering, Procurement and Construction projects). In short, the standard is advised where the contractor shall be responsible for both the design and the construction work (design-build).
This standard implies that the contractor takes overall responsibility for the project within the contractual scope. The client will often set requirements to functions, methods and materials and the starting point is that the client shall bear responsibility for own choices. However, keep in mind that the contractor has a general duty to control these choices.
NS 8407 also stipulates strict rules for notifications and change order with short timeframes to react (same as for NS 8405).
NS subcontracts (NS 8415, 8416 and 8417)
In a contract chain, the contractor should ensure that the client’s requirements and expectations are forwarded to subcontractors. Thus, Standard Norway has developed the following standard subcontracts: NS 8415, NS 8416 and NS 8417. These are – as their names imply – corresponding to NS 8405, NS 8406 and NS 8407, and is generally advised to use when engaging subcontractors to the project to ensure responsibilities back-to-back.
However, keep in mind that any deviations from the agreed standard with the client, should be reflected in the subcontract. Thus, a systematic review of contractual obligations in the contract chain is essential to avoid financial loss in the construction project.
NS 3420 – Specification texts
NS 3420 is commonly used together with the above-mentioned NS contracts to provide specification text with descriptions, requirements and quantity lists for the materials to be used and execution of the construction work, including technical installations.
This is in fact a standard of significant importance for construction projects as the specifications and descriptions are crucial to ensure clarity for the agreed deliverables. Based on our experience, the project descriptions often lead to discussions and disputes.
Thus, the parties should indeed invest time in preparing detailed descriptions for the work, ensuring corresponding expectations moving forward with the project.
Other NS standards for design, consultancy and supervision
For design, consultancy and supervision services, specialized NS standards are advised:
- NS 8401 – design services (fixed price)
- NS 8402 – consultancy services (normally time-based)
- NS 8403 – supervision services
- NS 8404 – independent control of compliance with Norwegian construction regulation
These standards are commonly used between the client and consultants for project based on design-bid-build, where the client has the responsibility for the design, or between the contractor and the consultant for projects based on design-build, where the contractor has taken the overall responsibility for both the design and construction.
Norwegian offshore contracts
NS standards highlighted above applies to onshore construction projects. Separate standards are also developed for offshore projects. The most important ones are Norwegian Fabrication Contract (NF) and Norwegian Total Contract (NTK), which applies to:
- NF 15 – fabrication / construction related to the Norwegian continental shelf
- NTK 15 – components for the production of petroleum resources (EPC contract)
- NTK 15 Mod – modifications of platforms (EPC contract)
As stated above, NF applies where the contractor is responsible for the construction based on the design prepared by the client, while NTK are EPC contracts where the contractor is responsible for both the design and construction.
Furthermore, keep in mind that it is common to use customized versions of these offshore standards, which may impact the balance / risk allocation between the parties.
Choosing the right construction contract is key
Understanding the different types of NS contracts is essential for foreign contractors entering the Norwegian construction market. Whether you are engaged in a traditional design-bid-build contract (NS 8405 / 8406), assuming full responsibility under a design-build contract (NS 8407), or working as a subcontractor (NS 8415 / 8416 / 8417), understanding the standards will help you navigate the Norwegian construction industry effectively, and reduce the risk of financial loss or disputes.
Be cautious. Due to the principle of contractual freedom between commercial parties in Norway, it is essential to exercise extra care when deviations from established standards occur or when the standards are not used at all. Clearly defining responsibilities and mitigating risks is crucial for creating a well-balanced agreement.
DOWNLOAD NS CONTRACT OVERVIEW
Which Norwegian Standard construction contracts are most used? Download the overview to learn their purposes.
