If there was a compensation event that delayed works that meant that they would be more expensive, or maybe carried out in a different season so they will take longer, the effects of that have to be captured/predicted at the time as part of that compensation event. The full effects of any CE has to be assessed at the time. Therefore it is likely that they have missed the boat on this EVEN if there was an entitlement, as either they will be time-barred on notifying if they haven't already, or there is an element they did not price within a CE at the time that will by now be implemented and therefore full and final.
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Answered: NEC PSC: Programme extension effect on rates
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Answered: NEC ECC: Assessing a quote involving a Subcontractor
I am assuming that this is NEC3 rather than NEC4, as Subcontractor costs are treated differently under NEC4 as an cost component in their own right.
Assuming that this matter is also a CE under the corresponding Subcontract then you would take the Subcontractor's costs and apply them to the components in the SSCC. If the Subcontract was NEC ECS Option A, the Subcontractor should have also included the subsubcontractor costs within their quotation, applied to the components in the SSCC.
You would apply the subcontracted fee percentage to the Defined Cost of subcontracted work (including subsubcontractor's costs) and the direct fee percentage to the Defined Cost of other work.
You don't have fee on fee under NEC3.
I would suggest an instruction to submit a revised quotation, stating the reasons why.
Assuming that this matter is also a CE under the corresponding Subcontract then you would take the Subcontractor's costs and apply them to the components in the SSCC. If the Subcontract was NEC ECS Option A, the Subcontractor should have also included the subsubcontractor costs within their quotation, applied to the components in the SSCC.
You would apply the subcontracted fee percentage to the Defined Cost of subcontracted work (including subsubcontractor's costs) and the direct fee percentage to the Defined Cost of other work.
You don't have fee on fee under NEC3.
I would suggest an instruction to submit a revised quotation, stating the reasons why.
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Answered: NEC ECC: Amendment to secondary clause wording such as X22
As Neil said above, it is not clear what you are asking.
If your question is along the lines of whether an amendment to a standard clause by the Client is 'acceptable', then the answer will be yes, providing the other party agrees to it (and subject to any law that would make any resulting clause void).
If your question is along the lines of whether an amendment to a standard clause by the Client is 'acceptable', then the answer will be yes, providing the other party agrees to it (and subject to any law that would make any resulting clause void).
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NEC ECS: Option A ECC X7 not identified in contract, can the Contractor still apply for delays?
We are a sub contractor on a project and under NEC 3 ECS option A of the ECC. within contract data, the contractor has not applied the option for delay under X7, however, on our final application for payment, has now sent a pay less notice deducting funds for delay. the breakdown of the claim is very basic and one that draws question, however, can the contractor place delay claims against ourselves without X7 in place. for clarity, there is no reference to inclusion of X7 and no data provided within the contract data section.
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Answered: NEC ECC: Programme and time risk allowance
Jon, I suggest that you ask the Project Manager to provide a Project Manager’s assumption as to when access will be provided. That will enable you to consider the new date(s) in both the clause 32 programme (assuming you have an accepted programme) and in the clause 62 programme to support the CE quotation. Should the new date(s) change then you will be able to raise a new CE to consider the change between the assumption date(s) and the revised date(s).
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Answered: NEC ECC: Interpretation of term physical condition under 60.1(12)
I would say yes it can be classed as a physical condition. Clause 60.1(12) refers to physical conditions within the Site and 'Site' is defined as the area bounded by the boundaries of the site and the volumes above and below. So as long as it passes the test of being unreasonable for it to have been allowed for (are those type of nesting birds typical of the area) then it should be a compensation event.
As an alternative, if it is a protected species, it may fall under the event at 60.1(7) being of 'other interest' providing you issue an instruction on how to deal with it.
As an alternative, if it is a protected species, it may fall under the event at 60.1(7) being of 'other interest' providing you issue an instruction on how to deal with it.
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Answered: NEC ECC: Contract Date
I'm not a big fan of this particular definition as contracts can come into existence in many ways.
You will need to apply the law on contract formation to establish when a particular contract came into existence. It could be when the parties sign the contract or it could be when one party makes an offer which is accepted by the other (such acceptance could be by conduct).
In your example, it would be when the Employer has accepted the Contractor's offer, but more would likely be needed than just sending the contract to be signed as that may be seen as a counter offer.
Each will turn on the particular facts.
You will need to apply the law on contract formation to establish when a particular contract came into existence. It could be when the parties sign the contract or it could be when one party makes an offer which is accepted by the other (such acceptance could be by conduct).
In your example, it would be when the Employer has accepted the Contractor's offer, but more would likely be needed than just sending the contract to be signed as that may be seen as a counter offer.
Each will turn on the particular facts.
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Answered: NEC ECC: Resource levels and impact of delay on programme
This is always a difficult question to answer. There is a general obligation to mitigate where possible/practical but mitigation I would generally describe as doing things a different way at no particular extra cost or risk. That being the case, another gang would clearly be an additional cost - so could be argues as more than mitigation, but equally if it is the type of resource that would be easily sourced and not increase risk particularly then it would be expected to be done.
There is no obligation to always increase resources no matter what as clearly no planned Completion/Completion Date would ever change. I would base this on what I plan to do. If I would definitely get extra resources then I would base it that way and point out that you are helping the Client here. If it doesn't particularly suit then show planned Completion date moving and the entitlement to move Completion Date once implemented - with the option for the Client to then ask for a separate quote to accelerate it back.
There is no obligation to always increase resources no matter what as clearly no planned Completion/Completion Date would ever change. I would base this on what I plan to do. If I would definitely get extra resources then I would base it that way and point out that you are helping the Client here. If it doesn't particularly suit then show planned Completion date moving and the entitlement to move Completion Date once implemented - with the option for the Client to then ask for a separate quote to accelerate it back.
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Answered: NEC ECC: Programme and time risk allowance
There has been some amendments to NEC4 in Jan 2019 (see 63.5) that now clarifies that when assessing a compensation event you consider the effects of the CE already shown in the programme. That means that if you have shown a programme with a four week delay, and then later can prove that it was down to a compensation event you have not missed the boat. However, these words were only added in 2019, and prior to that you only had the equivalent guidance note that got that same message across.
I agree with Dave that a Project Manager assumption would be good here to state when they should assume access would be given to allow you to reflect that on a programme including any change to TRA that you can justify.
I agree with Dave that a Project Manager assumption would be good here to state when they should assume access would be given to allow you to reflect that on a programme including any change to TRA that you can justify.
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Answered: NEC ECC: Option A - Interest due on Late Payment
Interest is assessed from the date the payment should have been made until the date the payment was actually made. As you say, the PM should include this amount in the next payment assessment, although they clearly haven't.
Your situation does seem extreme, but the question is what can you do about the PM default, under the contract? The suspension right under Y(UK)2 is restricted to amounts due, which correspond with a valid payment notice, although I assume that interest hasn't actually been included on a payment notice.
Outside of the contract there is a legislative remedy in the form of the Late Payment of Commercial Debts (Interest) Act 1998, as amended by subsequent legislation. This allows you to charge a fixed amount in relation to the size of the debt and to also charge interest on the qualifying debt, which I believe is 8% above the Bank of England base rate. There is also the right to recover costs of debt recovery but I believe this is related to SME's.
As NEC contracts don't specifically provide a mechanism for what happens in your situation I suggest you also pursue matters through this route, which creates a further debt (original interest amount under the contract and a 'statutory amount ' under the above legislation). Calculate what you should be owed as a 'statutory amount' and notify the Employer directly, indicating that the amount is subject to amendment the longer the 'contract interest' payment remains outstanding.
Your situation does seem extreme, but the question is what can you do about the PM default, under the contract? The suspension right under Y(UK)2 is restricted to amounts due, which correspond with a valid payment notice, although I assume that interest hasn't actually been included on a payment notice.
Outside of the contract there is a legislative remedy in the form of the Late Payment of Commercial Debts (Interest) Act 1998, as amended by subsequent legislation. This allows you to charge a fixed amount in relation to the size of the debt and to also charge interest on the qualifying debt, which I believe is 8% above the Bank of England base rate. There is also the right to recover costs of debt recovery but I believe this is related to SME's.
As NEC contracts don't specifically provide a mechanism for what happens in your situation I suggest you also pursue matters through this route, which creates a further debt (original interest amount under the contract and a 'statutory amount ' under the above legislation). Calculate what you should be owed as a 'statutory amount' and notify the Employer directly, indicating that the amount is subject to amendment the longer the 'contract interest' payment remains outstanding.
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Answered: NEC ECC: Option B - CE Assessment, Extra Over or Complete Rate Review?
As this is for an instructed change, it is a compensation event under clause 60.1(1) and is therefore assessed in the normal way as per clause 63.1 i.e. the original rate for the original work still stands and it is the change that is assessed i.e. the CHANGE in Defined Cost + Fee is assessed.
So in your language, it is the "extra over".
So in your language, it is the "extra over".
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Answered: NEC ECC: Project Manager issuing a termination certificate?
Read section 9 of the contract and if you have any specific queries, get back to us.
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NEC PSC Time Charge - Removal of Scope item not yet started
As the Employer, I need to remove a scope item under PSC option A contract as it is no longer required. The work on this item has not started. The guidance notes imply that whilst the scope can be omitted, this does not automatically lead to the associated cost being deleted. The guidance notes then go on to say that the forecast Time Charge ought to be used to assess the value which the consultant is entitled to retain, and the value which can be taken out of their contract through a negative CE; however, this Time Charge assessment is not very well explained. What costs is the consultant entitled to if the work on this scope item has not commenced and how is this value assessed. I am also struggling with the definition of Time Charge, as again, this does not appear to be fully explained in the notes.
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Answered: NEC ECC: If a quotation has not been accepted can we re-issue revised quotation?
That is why it is important to make sure that compensation events become implemented as they cant be revisited once they have been. If they don't respond to your quote or make their assessment within the contractual timescales you can notify their non-response, and two weeks later it would be deemed accepted. Therefore there is no reason not to have an event implemented.
As to whether you can submit a revised quote if they have not responded or done their own assessment - there is no reason why you can't. Whether they take any notice is another thing - but they should as they should assess themselves if they think you have assessed it incorrectly. That would be if it is too low as well as if it as too high. Therefore if you have submitted a quote proving the first one was too low, they couldn't (shouldn't) ignore it and therefore assess it in accordance with the contract.
As to whether you can submit a revised quote if they have not responded or done their own assessment - there is no reason why you can't. Whether they take any notice is another thing - but they should as they should assess themselves if they think you have assessed it incorrectly. That would be if it is too low as well as if it as too high. Therefore if you have submitted a quote proving the first one was too low, they couldn't (shouldn't) ignore it and therefore assess it in accordance with the contract.
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NEC ECC: Contractor is not replacing a key person
The contract is an NEC3 ECC Option C
The Employer insisted on a certain person to fill the project control manager role was to be named as a key person. The Contractor has subsequently removed the key person and decided that the role is not needed and therefore, no replacement is being offered. However, the role will now be spread across 3 people already on the project the QS, Cost Engineer and the Planner
24.1 says the Contractor is to employ each key person or employs a replacement, but in this situation the replacement is a group of persons.
What can the Project Manager do in this situation?
The Employer insisted on a certain person to fill the project control manager role was to be named as a key person. The Contractor has subsequently removed the key person and decided that the role is not needed and therefore, no replacement is being offered. However, the role will now be spread across 3 people already on the project the QS, Cost Engineer and the Planner
24.1 says the Contractor is to employ each key person or employs a replacement, but in this situation the replacement is a group of persons.
What can the Project Manager do in this situation?
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Answered: NEC ECS: Pricing risk in a compensation event
The quotation is in most situations a forecast not actual (see clause 63.1) so the actual cost for the first two weeks for the Subcontractor is irrelevant as is the response time from the Contractor. It should be a forecast at the point when the works were instructed, or for all other events when the compensation event was notified.
Incidentally if the actual costs were more than the Subcontractor had planned would you have paid them more than the quote? (no - i didn't think so...)
Incidentally if the actual costs were more than the Subcontractor had planned would you have paid them more than the quote? (no - i didn't think so...)
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Answered: NEC ECC: Option C contract - change to Scope
If the Project Manager instructed the Contractor to stop work then this would be an instruction under clause 34.1, which is a compensation event at 60.1(4). The PM should have notified the matter as a CE at the time of the instruction but if they did not then the Contractor can notify the event as a CE.
In response to your questions;
a. The Contractor is obliged to obey an instruction given by the PM in accordance with the contract (27.3). To protect their interests the Contractor is required to take reasonable action to address the effect of the instruction (63.9).
b. There is no requirement for the Contractor to notify an Early Warning in this instance as the matter is a CE, although the sanctions for not notifying an EWN generally under a Main Option C are related to Disallowed Cost (11.2(26) 3rd bullet 2nd part) and assessment of a CE quotation (61.5/63.7).
In response to your questions;
a. The Contractor is obliged to obey an instruction given by the PM in accordance with the contract (27.3). To protect their interests the Contractor is required to take reasonable action to address the effect of the instruction (63.9).
b. There is no requirement for the Contractor to notify an Early Warning in this instance as the matter is a CE, although the sanctions for not notifying an EWN generally under a Main Option C are related to Disallowed Cost (11.2(26) 3rd bullet 2nd part) and assessment of a CE quotation (61.5/63.7).
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Answered: NEC ECC: Instructed works carried out in a different calendar month?
This sounds too much like an exam question for us to answer..
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Answered: NEC ECC: Under the NEC what does "Access Date" mean
Unless there are either a number of access dates giving access to different parts of the building, your interpretation is correct.
However, there may be further constraints on access stated in the Works Information (NEC3) / Scope (NEC4), which you would need to comply with. If there are not, then the Project Manager need to issue an instruction changing/adding the constraints or instructing you to stop parts of the works. Both of these circumstances are a compensation event.
However, there may be further constraints on access stated in the Works Information (NEC3) / Scope (NEC4), which you would need to comply with. If there are not, then the Project Manager need to issue an instruction changing/adding the constraints or instructing you to stop parts of the works. Both of these circumstances are a compensation event.
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Answered: NEC ECC: Under the NEC what does "Access Date" mean
Taking the PM's views to the extreme - wouldn't it be crazy to think they can give you access on day one and tick the box, then basically stop you working until the day before Completion and then make it your problem that you have to do all the works in a day?
As well as any compensation events I would recommend some clear early warnings along the way emphasising that any restrictions could be causing issues to make sure they understand and see what collectively can be done.
As well as any compensation events I would recommend some clear early warnings along the way emphasising that any restrictions could be causing issues to make sure they understand and see what collectively can be done.
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