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NEC ECC: Is the Client obliged under to pay for offsite materials if Vesting Certificate is provided?
Our project includes a large amount of offsite works as it is modular buildings. We have an agreed Activity Schedule which includes items for 'offsite modular building works'.
The modular units are fully complete in terms of their offsite works and I have provided a vesting certificate and photos to the Client to prove this.
The Client refuses to acknowledge or pay for these units until they are on site stating that NEC3 does not allow for Vesting certificates.
Is the Client correct in this?
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I presume that you are working on an Option A contract.
Under the standard Option A, payment (PWDD) is based on the completed activities shown in the Activity Schedule.
You will therefore have to refer to the actually wording of the activity “offsite modular building works” and whether or not that item is 100% complete.
It is the description of the item in the Activity Schedule that is key not that you have a vesting certificate.
If the item refers to installation, or similar, then strictly the item is not complete and therefore not payable.
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Technically the Employer is correct, NEC3 ECC does not provide for vesting as a concept.
There are three issues here, firstly your entitlement to be paid, secondly who owns the items if paid for, and thirdly who insures the items.
You are entitled to be paid for completed activities, the definition of PWDD in main Option A states this at clause 11.2(27). So the question is can you categorically say that the activity described in your Activity Schedule complete? Remember no % complete is allowed it's either 100% and paid or <100% and not paid. Also does the activity pass the Defect test in the last sentence under clause 11.2(27)? If the answer is yes to both questions then you are entitled to payment.
Ownership, or title is dealt with at clauses 70 and 71, these clauses refer to the term Working Areas so you need to look at your Contract Data to understand if where the modular buildings are being stored is part of Working Areas or not. Reading clauses 70.1 and 71.1 together, the Supervisor has an obligation to mark items outside the Working Areas and when this happens title passes to the Employer provided that the Contractor has acquired title. If the items are already within Working Areas then title will pass automatically. If I was the Employer I would be seeking evidence that you owned the items by asking to see the Ts & Cs that you have with the supplier and looking to see if you've paid for the items.
Finally the insurance issue, in the insurance table you are required to provide insurance for loss of or damage to the works, Plant and Materials (first insurance) until the Defects Certificate has been issued. The Employer carries limited risks in respect of loss of or damage to Plant and Materials (refer to the third main bullet point) and loss of or wear or damage to parts of the works (refer to the fourth main bullet point).
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