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Non payment of Activities NEC3 Option A

+1 vote
In an NEC Option A contract I have an issue where I am not being paid for activities that are not complete even though these activities do not form part of the Works Information and as such not part of the scope of works. They are effectively erroneous activities. There is an argument that as these activities are without defect and do not delay following works then they could be defined as complete but this argument has not been accepted.

I understand the activity schedule could also be revised as it no longer matches the planned method of works or the programme. However when this is done i.e. the activity is removed, where should the money associated with this task go? Should it be added to any other activity by choice or should a new activity be created and the money assigned to this? Overall there will be no increase to the prices I am just trying to release 100% of the lump sum price.
asked Aug 11, 2016 in NEC3 Payment by Nick  

1 Answer

0 votes
The Activity Schedule is just a payment schedule as clause 54.1 advises it is not Works Information. If the planned method of working has been changed then the Contractor should submit a revised Activity Schedule to the Project Manager for acceptance Clause 54.2. which aligns with the Accepted Programme.
answered Aug 11, 2016 by Barry Trebes (21,740 points)  
does Nick's question raise another question of whether an Option A is lump sum or not ie if money is assigned to "erroneous activities" that can't be completed then does the contractor lose the amount assigned!!
No Dave - they do not lose entitlement, but the Contractor would need to revise their activity schedule to reallocate those monies elsewhere and get that accepted. These do not need to be "erroneous activities" but change in sequence/plans. For example - if you had an activity "install temporary works", but then somehow install the works without them but the works are a bit slower/more costly as a result, the money against temporary works needs to be reallocated to the install activity. If a Contractor over or under estimates their Price at tender stage that is their benefit/risk.
thanks Glenn, that would be my view but there are others who think otherwise.
The loss of entitlement is what I am currently struggling with. The revised activity schedule will be submitted but as the project is about to reach completion it seems an unecessary administrative piece of work. Surely once the completion certificate is issued then all activities are deemed to be completed as the total of the Prices cannot change except by way of a Compensation Event.
Nick, I agree with your comment and believe that upon Completion the PWDD is the total of the Prices (assuming there are no works to complete after Completion). There are others who consider the PWDD would be the completed activities and since the activity has not been completed then its value would not be included. I think the simple work around would be to submit a revised activity schedule for the full amount for the PM to accept. It may be unnecessary admin but it would remove any doubt.
Nick, you haven't lost entitlement.  It's just that your current Activity Schedule doesn't comply with the Accepted Programme.
With reference to Clause 54.3, your revised Activity Schedule:
 a.) will comply with the Accepted Programme,
b.) will have reasonably distributed Prices between the activities and
c.) will not change the total of the Prices
so the Project Manager will not have a reason for not accepting a revision of the Activity Schedule.