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NEC3 ECC: Option C - Incomplete activities and how to assess them

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I have a Contractor that has failed to completed several activities against an Option C ECC Contract (various reasons) by the Completion Date. I’m trying to reconcile the Target Price and removing these activities is leading to a difference in opinion between the parties with regards how they should be assessed. Since the majority of the activities have not been delivered through no fault of the client I believe they are not Compensation Event therefore should not be assessed using updated quotes / forecasts of Defined Costs and instead the original Price/s should be used, particularly in the absence of EWN’s. Is this a fair and reasonable approach in accordance with the Core Clauses?
asked Mar 7 in NEC3 Compensation Events by ASimpleQS (120 points)  
   

1 Answer

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It might be a "fair and reasonable" approach, but is it what the contract says ?

The Contractor's obligation is to do the work in the Works Information, NOT the work in the activity schedule. Switch it around : if the Contractor had missed items off his activity schedule and not priced for them, would you be making a fair and reasonable assessment and adding it back into the target Prices ?

So - to quote politicians - the question you should be asking is something like "has the Contractor failed to deliver work in the Works Information ?" If "Yes", you have two options :
1) Charge the Contractor delay damages until they do the sufficient work to achieve Completion; &/or
2) Remove some or all of the work from the Works Information which would be a negative compensation event.
answered Mar 7 by Jon Broome (16,120 points)  
Thanks for the response Jon. Removing the work from the Works Information as a negative compensation event is likely to enhance the Contractor's Share as an updated forecast of Defined Cost to underpin the Compensation Event would be a much lower value than that originally included in the Target Cost. I appreciate that shouldn't necessarily influence a decision as I should be administering the Contract regardless but it seems unreasonable for the Contractor to benefit from incomplete works. There is nothing in the Contract for delay damages.
Well, there's always the nuclear option if they just won't do the work:
inform that they are in substantial breach of their obligations (a reason for termination under R11) and that unless they finish off the work you will terminate, whereupon they get for the work done (A1) minus the cost of getting someone else in (A3). As they will never achieve Completion, there is no pain / gain reconciliation.

However, that presumes that the work they have not done is sufficient to not achieve Completion i.e. the Employer cannot use the works. If this is not the case you could change the Works Information to state they have to do everything in the Works Information to achieve Completion.

All this is not to be done lightly to say the least !
Would it not be possible to notify the incomplete work as a defect and then use Clause 45 to deduct the cost of having that work completed by others?