Answered: NEC ECC: Option C - Instructing works without agreed prices.

No this is not allowed under the contract. the bit that is correct is that the works can proceed without first agreeing the quotation. However, the compensation event should be assessed as a reasonable forecast at the point in time at which the instruction was given - including a forecast as to what risk would have been reasonable. The target price should be increased (or decreased) by this amount. Under option C the Contractor will be paid actual cost they have incurred, but the target should have gone up by the amount the quote was agreed (clause 63.1).

In your example they would have to pay the £125k as this extra cost could not be disallowed (unless you have a very bad Z clause) but I suspect they are planning on only moving the target by £100k? This is wrong on two levels.

The contract does not allow the PM to sit on a quote and change the target by the actual cost when it was cheaper than the quote, and use the quotation when the actual cost was more. Many clients ask the question "why should I pay for risk or cost I can see hasn't occurred?". The answer is that under the same clause if extra risk occurred the Contractor had not envisaged and the quote is not yet agreed then the same client does not have to take that into account within the assessment.

If you cant convince them otherwise, the only remedy to overturn this would be through adjudication.