Can the Contractor on an ECC Option B NEC4 contract include within the CEQ’s, quotation preparation costs for several of its staff; when some of these people within the quotes are based onsite?
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NEC4 ECC: CE quotation preparation
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NEC ECC: Option C contract - change to Scope
The Contractor has been appointed on an NEC4 ECC Option C contract where the works are design by the Client. The Project Manager instructs the Contractor to stop work on a part of the works because the Client’s designer is considering the implications of a design change. All are keen to avoid any abortive costs if at all possible.
After due consideration, some 2 weeks later, the potential design change is abandoned and the Project Manager immediately instructs the Contractor to proceed with the original design layout, aware there may be a delay and additional costs.
a. Should the Contractor stop work on the part of the works and what should the Contractor do in order to protect its interests under the contract?
b. What sanctions are there in the contract if the Contractor does not notify an early warning in a situation where one should have been given?
After due consideration, some 2 weeks later, the potential design change is abandoned and the Project Manager immediately instructs the Contractor to proceed with the original design layout, aware there may be a delay and additional costs.
a. Should the Contractor stop work on the part of the works and what should the Contractor do in order to protect its interests under the contract?
b. What sanctions are there in the contract if the Contractor does not notify an early warning in a situation where one should have been given?
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Answered: NEC ECC: Option B - Clause 60.4 and BoQ to WI quantity difference
Because there is an "and" as opposed to an "or" between the bullet points, you are correct that all three have to be invoked.
When doing an estimating or compensation event course, I show how a Contractor can present an argument that for pretty much any change in quantity, the Defined Cost per unit of quantity changes. i.e. Bullet 2 can almost always be true if it is in the Contractor's interests for it to be so ... but because of the "and", the other two bullets also have to apply for it to be a compensation event.
However, the same rate x QUANTITY is therefore re-measurable if it falls below the 0.5% threshold and that would also be true if the rate decreased.
When doing an estimating or compensation event course, I show how a Contractor can present an argument that for pretty much any change in quantity, the Defined Cost per unit of quantity changes. i.e. Bullet 2 can almost always be true if it is in the Contractor's interests for it to be so ... but because of the "and", the other two bullets also have to apply for it to be a compensation event.
However, the same rate x QUANTITY is therefore re-measurable if it falls below the 0.5% threshold and that would also be true if the rate decreased.
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Answered: NEC4 ECC: CE quotation preparation
Under NEC3, I would say strictly speaking 'No' as the cost of preparing quotations was specifically excluded from Defined Costs for options A & B.
Under NEC4, this exclusion has disappeared and I cannot find it elsewhere in the contract.
However, in accordance with clause 63.1, there does have to be a change in Defined Costs, so if the relevant people are salaried and just work a bit longer to get the quotes out, but aren't paid anything extra, then there is no change in Defined Costs.
Under NEC4, this exclusion has disappeared and I cannot find it elsewhere in the contract.
However, in accordance with clause 63.1, there does have to be a change in Defined Costs, so if the relevant people are salaried and just work a bit longer to get the quotes out, but aren't paid anything extra, then there is no change in Defined Costs.
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Answered: NEC ECC: Contractor is not replacing a key person
Interesting one. You would like to think that being option C the Contractor is coming up with the most effective way of managing the project which will benefit both Parties and maximise both Parties gain share (or limit pain-share). I would get round the table and discuss if you think that these other people can cover those duties effectively.
Not withstanding that, you could instruct them to have a single person - particularly when that was a specific key person. They are obliged to issue a replacement and you have to accept if they are equally qualified or experienced. You could review disallowed cost definition and see if any costs being incurred for not replacing the Key Person would be applicable.
Above all - both contractual and non-contractual just talk and try to come to a mutual agreement on how this role would be best filled.
Not withstanding that, you could instruct them to have a single person - particularly when that was a specific key person. They are obliged to issue a replacement and you have to accept if they are equally qualified or experienced. You could review disallowed cost definition and see if any costs being incurred for not replacing the Key Person would be applicable.
Above all - both contractual and non-contractual just talk and try to come to a mutual agreement on how this role would be best filled.
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Answered: NEC ECS: What is the purpose of naming the Employer/Client and Project Manager in CD1?
General Information.
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NEC ECC: Assessing CE delays against our own delays
A compensation event was notified in May, but due to getting authorisation etc... it will not be started until August. Our last accepted programme was in April.
In that time we have suffered our own delays.
As the CE came first can we impact the last accepted programme at the time of the compensation event increasing our EoT?
Or do we have to use the most current "as-built" information up to the point we'll start the works, and get no EoT?
In that time we have suffered our own delays.
As the CE came first can we impact the last accepted programme at the time of the compensation event increasing our EoT?
Or do we have to use the most current "as-built" information up to the point we'll start the works, and get no EoT?
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Answered: NEC ECC: Should the Supervisor notify the PM prior to any search of Defects?
Really good question. The practical answer is that you would like to think they are talking to each other as they both are working for the Employer/Client. If they are using one of these on line administration tools (e.g. FastDraft) you would like to think the PM can see all the communications the Supervisor is raising.
So, contractually I don't think there is an obligation for the Supervisor to liaise with the PM first, but practically speaking hopefully they are both up to speed with what each other is doing.
So, contractually I don't think there is an obligation for the Supervisor to liaise with the PM first, but practically speaking hopefully they are both up to speed with what each other is doing.
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Answered: NEC ECC: CE quotation includes for insurance
No, they can't. The provisions related to payment of insurances are very similar in both the Shorter and normal Schedule of Cost Components (see section 7), but both start with "The following are deducted from cost ..."
There is nothing in either SCC about paying the Contractor extra and core clause 52.1 states "All the Contractor's costs which are not included in the Defined Cost are treated as included in the Fee."
So the Contractor does get extra for insurance, but it is in the Fee, not as an identifiable Defined Cost.
There is nothing in either SCC about paying the Contractor extra and core clause 52.1 states "All the Contractor's costs which are not included in the Defined Cost are treated as included in the Fee."
So the Contractor does get extra for insurance, but it is in the Fee, not as an identifiable Defined Cost.
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Answered: NEC4 ECC - X22 Proposals for Stage 2
No, because:
- the changes to the Accepted Programme can cover a multitude of things mainly, I would argue from the Contractor having had time to look in detail at stuff in Stage 1. That changes sequences, timings etc.
- it does not specifically mention a change to the Completion Date.
Note that other clauses in X22.3 or the notice to to proceed to Stage 2 - as per clause X22.5 (1) - does not change the Completion Date either.
- the changes to the Accepted Programme can cover a multitude of things mainly, I would argue from the Contractor having had time to look in detail at stuff in Stage 1. That changes sequences, timings etc.
- it does not specifically mention a change to the Completion Date.
Note that other clauses in X22.3 or the notice to to proceed to Stage 2 - as per clause X22.5 (1) - does not change the Completion Date either.
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Answered: NEC ECS: How are incurred costs recoverable due to subcontractor fault
Hi,
Not sure I agree with Jon here.
First, you cannot take work out of a package of contracted work to give it to someone else, for any reason, unless there is a precise and explicit agreement to do so. Such an action will usually amount to a repudiatory breach of contract. The contract makes clear the right to correct defects and damage to the subcontract works at 82.1. Arguably however this is not damage to the subcontract works.
Second, this sounds to me like a subcontractor risk has occurred. To the extent a relevant insurance does not cover the cost arising from that risk occurring then the subcontractor bears the cost (clause 85.4). That cost is met by the subcontractor firstly through a deduction to the account (50.2 amounts to be paid by or retained from the subcontractor) or, at law, as an abatement to the value of the work. Either way will end up in the same position of a payless notice being issued against the subcontract account explaining the reason for and calculation of the deduction.
Not sure I agree with Jon here.
First, you cannot take work out of a package of contracted work to give it to someone else, for any reason, unless there is a precise and explicit agreement to do so. Such an action will usually amount to a repudiatory breach of contract. The contract makes clear the right to correct defects and damage to the subcontract works at 82.1. Arguably however this is not damage to the subcontract works.
Second, this sounds to me like a subcontractor risk has occurred. To the extent a relevant insurance does not cover the cost arising from that risk occurring then the subcontractor bears the cost (clause 85.4). That cost is met by the subcontractor firstly through a deduction to the account (50.2 amounts to be paid by or retained from the subcontractor) or, at law, as an abatement to the value of the work. Either way will end up in the same position of a payless notice being issued against the subcontract account explaining the reason for and calculation of the deduction.
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Answered: NEC PSC Time Charge - Removal of Scope item not yet started
It is a feature of NEC contracts that the starting point for the evaluation of compensation events is cost rather than rates and prices, even where the contract is one based on rates and prices.
So, when you remove work (whether under the PSC or the ECC) you value that as a compensation event, albeit a negative one. The valuation is based on the Time Charge principle of hours incurred (or here would have been incurred) at the relevant rates. If the Consultant had included more or less allowance against this items in the Activity Schedule is irrelevant, it is the Time Charge which is deducted, and under 63.12, removed from the Prices.
The question then is how much time should properly be spent, at what rates, to deliver the service now being omitted. Once calculated that is the value of the negative compensation event and the reduction in the total of the prices. If a value other than the amount in the Activity Schedule is generated you will end up with a balancing payment, one way or the other, once the services have been fully delivered, as interim payments will be based on completed Activity Schedule item values.
So, when you remove work (whether under the PSC or the ECC) you value that as a compensation event, albeit a negative one. The valuation is based on the Time Charge principle of hours incurred (or here would have been incurred) at the relevant rates. If the Consultant had included more or less allowance against this items in the Activity Schedule is irrelevant, it is the Time Charge which is deducted, and under 63.12, removed from the Prices.
The question then is how much time should properly be spent, at what rates, to deliver the service now being omitted. Once calculated that is the value of the negative compensation event and the reduction in the total of the prices. If a value other than the amount in the Activity Schedule is generated you will end up with a balancing payment, one way or the other, once the services have been fully delivered, as interim payments will be based on completed Activity Schedule item values.
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Answered: Employer instructed inclusion of TRA
Firstly, I have no idea what you mean by "the nutshell answer" !
Assuming this is for original work, as the Contractor owns both the TRA and terminal float, in terms of calculating delays due to compensation events, it does not matter where the TRA is put, although in terms of understanding the programme, transparency etc. it does !
If the Contractor does not use up the TRA in a critical activity, it will be reflected in greater terminal float in the next programme submission. Likewise the opposite if more time is needed than is allowed as TRA.
So if a compensation event occurs and puts back Completion by say a week, then according to the contract rules, the contractual Completion Date will be put back a week, regardless of whether the Contractor is ahead or behind on its original programme. And the Employer/Client would pay for this week delay only. So I do not see how the Employer is paying twice.
Assuming this is for original work, as the Contractor owns both the TRA and terminal float, in terms of calculating delays due to compensation events, it does not matter where the TRA is put, although in terms of understanding the programme, transparency etc. it does !
If the Contractor does not use up the TRA in a critical activity, it will be reflected in greater terminal float in the next programme submission. Likewise the opposite if more time is needed than is allowed as TRA.
So if a compensation event occurs and puts back Completion by say a week, then according to the contract rules, the contractual Completion Date will be put back a week, regardless of whether the Contractor is ahead or behind on its original programme. And the Employer/Client would pay for this week delay only. So I do not see how the Employer is paying twice.
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Answered: NEC3 ECC: Can the Employer use the works past the Completion Date but before Completion?
It could be a compensation event under 60.1 (5), but the circumstances would have to much the bullet points in in 60.1 (5). There is not enough detail in your question to answer this, but use of the word "work" in all three bullet points implies they are doing something to the works, rather than using it.
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Answered: NEC3 ECS: Damages to be levied
It would appear that the Contractor has changed the standard entry in the Contract Data to say damages are charged at a weekly rate. All other things being equal, as the Contractor has created the ambiguity, it would be interpreted in the way least favourable to the Party who created it i.e. the Contractor.
Therefore, damages are charged at the weekly rate per week stated in the Contract Data.
Therefore, damages are charged at the weekly rate per week stated in the Contract Data.
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Answered: NEC3 ECC - Option B - CESMM Filling v Backfilling Payment Working Space
the issue of excavating and backfilling work space is a matter for the Contractor to consider and include within its rates. If it is clear that imported material will be required then that should have been allowed for. I have assume that the Contractor is not seeking a cl 60.1(12) CE.
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Answered: NEC3: Should you Implement 2 Contract Datas with one Form of Tender
sounds messy, there should be one Contract Data, Part 1 completed by the Employer, Part 2 completed by the Contractor
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NEC ECC: Use of rates and lump sums to assess a compensation event
A Contractor has submitted a quotation for a CE using rates from the BQ. The contract is an NEC3 ECC Option B. The PM has not disagreed to the use of rates.
The quantity is incorrect and we have assessed the CE by changing the quantity and leaving the rate the same. The contractor has replied that the agreement to use rates only applies to their quotation, and that they do not agree to the use of rates in our PM assessment.
We believe cl. 63.13 concerning agreement to use rates and prices is a principle that can be applied to all assessments of that specific CE. It would not be equitable if the PM couldn't assess an incorrect CE on the same pricing basis as a contractor.
What would your views be?
The quantity is incorrect and we have assessed the CE by changing the quantity and leaving the rate the same. The contractor has replied that the agreement to use rates only applies to their quotation, and that they do not agree to the use of rates in our PM assessment.
We believe cl. 63.13 concerning agreement to use rates and prices is a principle that can be applied to all assessments of that specific CE. It would not be equitable if the PM couldn't assess an incorrect CE on the same pricing basis as a contractor.
What would your views be?
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Answered: NEC ECS: Not received signed option A subcontract
You are both in contract when both Parties start acting as if you are in contract: the problem comes if the written draft contract has been going back & forth between the Parties and it is unclear when both Parties starting acting as if they were in contract and hence which 'draft' is actually the contract.
So if you respond and authorise the payment, you would definitely be in contract, but you may well have done actions before this and hence be in contract.
So if you respond and authorise the payment, you would definitely be in contract, but you may well have done actions before this and hence be in contract.
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Answered: NEC ECC: Where in option C can I establish who holds responsibility for the design? (I.e D&B or Traditional)
The clause 21.1 of both NEC3 and NEC4 ECC makes it absolutely clear that it has to be clearly stated in the Works Information/Scope what elements of the design Contractor is to do.
This would be further reinforced by whether clause X15 has been specified: if it has not, then the Employer clearly does not intend you to do design.
This would be further reinforced by whether clause X15 has been specified: if it has not, then the Employer clearly does not intend you to do design.
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