We have studied low-energy electron impact excitation of Ne-like Fe16+ with emphasis on relativistic and resonance effects using a Breit-Pauli R-matrix code. Processes with one electron excited into the M shell, i.e. involving the closed-shell ground state and 36 more fine-structure levels (37CC), are compared with those from a target extended to the N shell (n = 4, 89CC-CC indicating a close coupling approach to a partial wave expansion). In contrast to previous work the 37CC and the 89CC collision strengths exhibit far richer structure. All N-shell levels give rise to Rydberg resonant states dipping right to all M-shell thresholds. This will modify all 37CC collision strengths down to every excitation threshold, not merely over the extended target energy range, thus significantly affecting the collision strengths for the primary x-ray and EUV transitions among the first 37 levels. Extensive study of other effects on the collision strength is also reported: (i) electric and magnetic multipole type transitions El, E2, E3 and M1, M2, (ii) J-partial wave convergence of dipole and non-dipole transitions, (iii) high-energy behaviour compared to other approximations. Theoretical results are benchmarked against experiment to resolve long-standing discrepancies-collision strengths for the three prominent x-ray lines 3C, 3D and 3E at 15.015, 15.262 and 15.450 Angstrom are in good agreement with two independent measurements on electron beam ion traps (EBITs). Finally, line ratios from a collisional-radiative model using the new collisional rates are compared with observations from stellar coronae and EBITs to illustrate potential applications in laboratory and astrophysical plasmas.