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Channel: ReachBack by BuiltIntelligence - Recent questions and answers in NEC3 and NEC4 Contracts
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Answered: NEC ECS: Verbal instructions

January 29, 2019, 1:49 pm
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This is a prime example of why NO one should ever act on a verbal instruction. 13.1 requires any such instruction to be in writing, and then IF this instruction is a reason under 60.1 as to why it is a compensation event then it can be notified as a CE by the Subcontractor. If the Contractor agrees then you would go ahead and issue a quotation.

All you can do now is get around the table and try to negotiate your position here. You can point out about 10.1 and spirit of mutual trust and cooperation (remembering that clause also starts by stating do what the contract says - which includes only following an instruction if it is in writing).
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Answered: NEC ECC: Quotation for a compensation event notified under Clause 60.1(4)

January 29, 2019, 2:15 pm
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The Contractor should ask the Project Manager for a PM assumption (under 61.6) as to when they are to assume the access will resume again, otherwise how can they issue a quotation. Even if it was given as a date that is then exceeded, they can base the quote on that date and then when it moves again give a new quote for the extra over delay. You don't just want to leave it open and say we will agree it retrospectively when access resumes as there are so many other things that could happen that would then make the original delay effects subjective.
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Answered: NEC ECS: How to build a global claim

January 29, 2019, 2:29 pm
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This is a great question to play "spot the errors" with.

Can I summarise with a list of errors:

1. There is no such thing as a global extension of time claim
2. Contractor shouldn't give the Subcontractor a programme - Subcontractor should create their own programme in line with the Contractors requirements
3. Three week look ahead programmes are not the same as issuing a full programme for acceptance.
4. Not sure what a global programme is but assume it is a "full" programme and that should not take until month 5 to issue
5. Contractor should have responded with acceptance/non-acceptance and Subcontractor should have chased
6. there is no such thing as an "extension of time" - you need to show what the effect of individual compensation events has been on planned Completion on the Accepted Programme.
7. There is no such thing as a deadline date that can not be moved.

You have no choice but to go back to the original programme and try to justify what the effects of individual compensation events has been progressively on the programme.

Easy to say now but neither party should have allowed to get into this state.
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Answered: NEC ECC: Single or multiple communications for CE's?

January 29, 2019, 2:37 pm
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If you are using an online administration tool for managing the flow of NEC communications such as FastDraft then the system will kind of keep the Parties on the right path. Clause 13.7 states any notification has to be communicated separately, and in the electronic system you would need each of these notified separately to trigger the requirements for individual quotations.  

So good practice and transparency says yes, and contractually it is probably also a yes. However, a single communication is still probably making it clear that they agree they are compensation events and quotations requested.
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Answered: NEC ECS: When does incidental works become non-incidental?

January 30, 2019, 12:02 am
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Firstly you haven't stated which main option you are working to, as you mention both A (Activity Schedule) and B (Bill of Quantities).

Apart from this, however, the valuation of work completed in accordance with the defined scope would be based on completion of either the stated activities in the activity schedule (option A) or items in the Bill of Quantities (option B).

Any 'incidental' work is a reference to the CECA Daywork rates for work which is 'incidental to contract work', so is not part of the scope.  Under NEC you would use the Shorter Schedule of Cost Components to calculate the price for such 'incidental' work, which would be work directly associated with a compensation event.

You could use the CECA rates if these are stated in your Contract Data, although otherwise you would need to build up a People cost based essentially on 'cost to employ'.

To be clear, there is no 'default' list of rates to refer to, unless they have been specifically stated in your Contract Data which you would have filled in as part of your tender submission.
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NEC ECS: Verbal instructions

January 29, 2019, 1:34 pm
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When a Contractor verbally instructs a Subcontractor to de-mob part of work force ( and the Subcontractor issues a CE to coincide with this )

The Contractor then states that they didn't officially instruct the subcontractor in writing to do this therefore are rejecting the CE in question,

How would the Subcontractor reply to above?
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Answered: NEC ECC: Is a Contractor paid for CE works that are not yet agreed?

January 31, 2019, 12:54 am
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It depends on what Main Option you are using.

If option A (priced contract with activity schedule) or option B (priced contract with bill of quantities), then payment is made against implemented CE's only, as they are then added to the activity schedule or bill of quantities, respectively, which is the document used to assess interim payments.

For option C (target cost with activity schedule), option D (target cost with bill of quantities) or option E (cost reimbursable) then the payment mechanism is based on 'actual' cost, so would include any costs expended against CE's whether they are implemented or not, as the CE assessment is used to adjust the target or budget (Prices).
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Answered: NEC ECC: How does clause 25.2 work in practice under option C?

January 31, 2019, 5:37 am
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Yes that is correct, although entered on a payment certificate (notice) as a 'below the line' adjustment, in that it is not included in any calculation for retention or VAT.

As it is not PWDD it would not be included in a share calculation either.
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Answered: NEC4 ECC Clause X22 (ECI)

January 31, 2019, 5:56 am
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The Professional Service Subcontract would be most suitable as the timescales would fit in with the main Engineering & Construction Contract (ECC).

Neither the NEC4 PSC or PSS has an X22, but it would be relatively easy to take the ECC's X22 and adjust IF the Contractor is willing and the project circumstances fit. As a general comment on X22, I do not think it has sufficient termination provisions if a Client decides not to proceed to Stage 2, especially if they wish to use another contractor.

Alternatively, the Contractor - who is not subject to EU rules for procurement - could let one PSS contract for Stage 1 and once Stage 2 is confirmed, let another PSS contract to the same Consultant for Stage 2.
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Answered: NEC ECC: Option D Remeasurement

January 31, 2019, 6:05 am
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I was explain this in training yesterday and it is complicated !

Under the 3rd bullet point of 60.4, the threshold for musing Defined Cost + Fee to calculate the change to the target Prices is 0.5% of the Prices at the Contract Date but it is the FINAL quantity x original rate, not the CHANGE in quantities. What does this mean ?

1. If final quantity x original rate < the 0.5% threshold the adjustment to the Prices is the change in quantities x original rate. I.e. the Prices element is on re-measurement

2. If the final quantity x original rate > 0.5% of the Prices, then the original quantity x original rate still stands as a component of the Prices, but the adjustment is on change in Defined Cost + Fee, which can also be negative and therefore reduce the Prices.

However, if the operation is on the critical path, then any increase in quantities will delay Completion and hence will be a compensation event under 60.5. This will be assessed as the change in Defined Cost plus Fee.

Clear as mud (and that's not going into other bullets / clauses) !
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NEC ECC: If the Employer instructs a stop work Cl.33.1

January 31, 2019, 2:53 pm
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If the Employer instructs a stop work under clause 33.1 with a view to restarting at a later date, is this a Compensation Event with costs attached?
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Answered: NEC ECC : What can be included within quotation?

January 31, 2019, 3:00 pm
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Basically any extra cost that the Contractor will incur as a result of this event that they would not otherwise have incurred is what they can claim for.

If the existing management team who were going to be there anyway can also do this work then they can't claim extra. If they have to bring in additional resources over and above what they originally priced for to manage the procurement and management of the additional works then yes they can.
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Answered: NEC ECC: Should an NEC3 Option C Contractor be applying for Inflation (X1) to their NEC3 Option A Subcontractor's 'costs'?

February 1, 2019, 1:22 am
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The answer is NO as X1 operates to add an inflationary adjustment amount to the Prices (target) based on the value of an interim assessed amount of PWDD due.

The adjustment to the Prices is made based on when cost is actually incurred, by applying a Price Adjustment factor (PAF) calculation, which compares the current indices  with the Base Date Indices (as stated in the Contract Data).
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Answered: NEC ECS: Whose liability are items not on the B of Q?

February 1, 2019, 2:01 am
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This is one where the exact wording is important, but on the face of it :

- the Contractor has passed down their contractual obligations in terms of not putting them in breach of contract under their main contract. This does NOT mean you have to do all the work in their contract if they have not specified it (because that would be ridiculous !);

- there also seem to have a clause which expands the coverage of any bill rate to include "associated ancillary work as may be described or reasonable inferred from the documents forming the subcontract";

- however, the contract docs do not explicitly state you have to do the CCTV work, but it could be "reasonably inferred".

However, without seeing the wording in the contract, I don't know.
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Answered: 10 % fee on dayworks labour

February 1, 2019, 2:16 am
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I don't quite understand what you are asking. Can you confirm that you are under an option A or B NEC3 Engineering & Construction Subcontract and what the Contractor is arguing.
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NEC ECC: Does an ambiguity in the BoQ permit the Contractor to notify a compensation event?

February 2, 2019, 3:35 am
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Excavation depths not identified in BoQ as method of measurement requires
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NEC ECC: Delayed start

February 2, 2019, 3:35 am
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Hello All,
Last August we tendered for a public project in ROI - all went quiet for some time until December when the client decided to proceed to site.
We therefore got a letter of acceptance and instructions to start.
However our tender form clearly states that the tender is open for acceptance within 120 days. Obviously we are now outside this- I was wondering if; 1 we are entitled to increased costs due to all materials increasing in January. 2  Are the clients likely or within their rights to withdraw the offer if we ask for these costs?

I know this is not strictly NEC - but how would it under NEC and hopefully we can apply same rules/logic.
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NEC ECC: Project Managers Assessment of a CE is clearly at odds with clause 63.1 provisions, what is the Contractors remedy?

February 2, 2019, 3:36 am
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Our Contract is NEC3 Option A with additional clauses allowing a reduction in prices for omitted works instructed by the PM

The PM has accepted a quotation for additional work in 2 areas. The work was completed in area 1 but found not to be required in area 2.

PM has since only valued a proportion of the implemented CE within the account. When challenged that the implemented CE changes the Prices and therefore he should be valuing all of the implemented CE, he proceeded to issue an instruction omitting the work and requesting a quotation under 61.1. (Additional clauses added to Contract allowing for a reduction in Prices). This instruction is over a year after the work would have been carried out if it had been required.

This was provided as per Cl 63.1. This assessment did not take into account the back up to the originally implemented CE quotation

PM has rejected the new quotation for the omitted work stating that it bears no resemblance to the original quotation.

My view is that this is similar to using the Activity Schedule to assess a compensation event (i.e. only by agreement) and that the PM cannot reject the quotation for this reason.

Other than Adjudication, are there any other remedies available to me?
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Answered: NEC ECS: Acceleration of Programme under Option B

February 2, 2019, 3:41 am
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You have to assess acceleration on its own merits. You need to consider the extra cost it will now cost you to complete the works by the earlier proposed Completion Date and any extra risk that brings. It should be pointed out that Acceleration first assumes you have assessed the entitlement to move out the Completion Date with implemented compensation event(s) and the cost that goes with that, before separately agreeing an acceleration quote under clause 36 to bring it back. Acceleration hast to be by agreement i.e. Contractor can not assess acceleration quote themselves.

Speeding up to maintain a date that has not moved is not "acceleration" under the contract so be careful!

Programme is going to be key in all of this - showing where you were, and what it now means to justify associated costs.
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NEC ECC : What can be included within quotation?

January 31, 2019, 2:54 pm
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PMI has been issued by the Project Manager for works to be carried out by the Contractor. The new works were not known of at the start of the contract.
Within the quotation for the new items the QS has included for additional time for all management and the procurement of these works. Should these be included for even though these are the duties of the Contractor?

These have been let under an Option A contract.
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