Expert advice in minutes not days. Register it's free and ask your first question now.
ReachBack is our free community help desk for construction professionals. A library of high-quality questions from real users with answers delivered and curated by a panel of industry experts.

4,200 questions

4,375 answers

511 comments

34,509 users

Register its Free

Download here

NEC3 ECC: Can Employer bring the current knowledge into picture to assess the CE's and expect the Contractor to mitigate

+2 votes
177 views
My employers is late in assessing a  CE's and the current programme show mitigation from the last accepted programme, the Employer is assessing one of the time impacted CE's and of the opinion that the Contractor need to show the recent mitigations to the CE programme as per the current programme, but the impact of the CE was based on the last accepted programme where in some critical path activities were over estimated, this over estimation was result of the unknowns at that time and now we realise those durations are on higher side, will this allow the Employer to resubmit the quote or CE programme based on the current reduced durations , will this request be valid and acceptable?
asked Sep 20, 2016 in NEC3 Compensation Events by wazsaber (200 points)  
   
Please clarify:
(1)      by "Employer" you mean "Project Manager" (perhaps the Employer is also the Project Manager)?
(2)  In the penultimate line should "Employer" be "Contractor"?
(3) if in the penultimate line Employer/PM is correct, do you mean the PM makes an assessment?

2 Answers

+2 votes
This is a little bit of a grey area in the contract, and not 100% sure we will ever get to an absolute 100% unchallenged answer. I believe it is fair to say that it is not as simple as using the last Accepted Programme and ignoring everything else you know has happened since. The conclusion of my article (link copied below) was that you take the last Accepted Programme, bring it up to date with all other changes and progress that you know had occurred up until the point the compensation event was instructed (or notified). Following the same logic I can't see why that would not include errors or under/over estimations in the programme as well.

At this point I would be recommending that both Parties sit down and try to do this assessment jointly so that you have the vaguest chance of coming to an agreement that both Parties can agree is as fair/sensible/contractually correct as possible.

Article link:
https://gmhplanning.co.uk/publications/which-programme-to-use-when-assessing-compensation-events/
answered Oct 9, 2016 by Glenn Hide (29,340 points)  
The key for me here is consistency – that any such events are always assessed for a project using the same set of consistent rules. Neither Party should try to assess one event ignoring progress and other things that have happened in one instant, but wanting to use it in another situation. The article goes into more detail about how it can not be as simple as simply using the last Accepted Programme and ignoring anything else you know – particularly when that programme may be several months old.
The fact they are assessing it late they should not really be able to take those elements into account. It should be a forecast at the point of the compensation event being notified that is the cut-off point – both for actual up until that point and what the forecast should be based upon going forward. I am sure that same Employer would be very quick to ignore the fact that critical path activities were too
Without trying to 'play games' with the wording in the contract, what you are trying to do is isolate the impact of the compensation event and assess this within the quotation.

Any programme assessment cannot be realistic unless the programme is up to date, as Glenn states above and in his excellent linked article.  This allows the impact of the compensation event to be assessed without being 'contaminated' by other issues which are not directly related to the event.

Remember that any programme assessment must consider mitigation measures, which is a common law obligation, notwithstanding any specified contractual requirements.
0 votes
The first question that springs to mind is how late is the PM in providing his asessment on your CE submittal? Is he indeed assessing the CE in line with the time scale provisions of cl 61.4 ? Did you give him notice of his lateness and agree to an Extension of time for his assessment?

The assessment by the PM has to be made and based on the submittal you made. If it is not, then the PM by all accounts is making his own assessment as per cl. 64.1 . In doing so, he is obliged to explain why he feels obliged to do so. This is very dangerous ground for him to tread for he must justify his Action through one of the four given bullet Points therein. Failure to do so and moreover, if his reasoning is not 100% accurarate, lends him liable to lose in a subsequent adjudication.. An assessment by the PM really only gives you this one option of adjudication - note however, the time Limits for notification.

You mention a resubmittal which presumably the PM may ask for, based on the newer accepted Programme.? This is definately a no-no. The original CE notifiation must have stated particular criteria upon which the contractor's Quotation should be based and the then currect accepted Programme ( or the contractor's submitted Programme) in the CE Quotation) is the valid document.

The "over estimations" you refer to are no doubt meant to reflect the provisions of clause 65.2 where such a forcast, if subsequently shown to be wrong cannot be revised. However if the assumptions on the Programme activities were based on assumptions provided by the PM at the time then he does have the right to notify a correction subsequently through CE 60.1 (17). but this must be a separate exercise, no matter how appealing it may be to lump it into the same one.
answered Oct 9, 2016 by AntoniaN (450 points)