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NEC ECC: Under option C can CE's reduce the Target?

+2 votes
112 views
The Contractor has priced for working in a restrictive condition within an existing building (generally adds 50% to time and cost above normal working) and this is included in their Target Price. If that restrictive condition does not materialise, either in whole or in part, can the Employer issue an NCE stating this and ask for a quote which would have the effect of reducing the Target Price and associated fee? I am assuming so because of what clause 63.11 states however I believe time cannot be reduced so terminal float would exist.

As an aside to this situation, what does the Panel think as to whether this should/would be included within a Target Price at tender stage? If working in a restrictive area is virtually unquantifiable (and is then clearly an Employer's risk) during the creation of the WI and other tendering documents, it would appear best to "ring-fence" this out of the Target Price however I can see pluses & minuses in both cases.
asked Jun 29 in NEC3 Compensation Events by APW (620 points)  
edited Jun 30 by APW
   
The PM would only be able to do this if the restrictive condition was stated in the Works Information. If it was part of the Site Information, then it is not a CE which can reduce the Prices.

If it was in the Works Information, it would not only be unethical to try to reduce the Prices and I do not believe that the contract allows this for work which has been done. I.e. A change to the WI is one of two CEs which can reduce the Prices, but clause 63.1 assesses "the affect of the compensation on ... Defined Costs". As the work has already been done, there is no effect.

1 Answer

+2 votes
I think it depends upon what access restrictions and conditions are stated in the Works Information for a start.  If the Contractor has priced his tender based upon an assumption that he will be working in restrictive conditions and the restriction does not actually materialise then it is to his benefit and (hopefully) to both parties benefit with a reduced Defined Cost.

Where such access restrictions are detailed in the Works Information then this can be changed by the Project Manager and treated as a compensation event accordingly, with the likelihood that the Prices are reduced (clause 63.11).  The programme assessment under 62.2 and 63.3 only mentions delay, although where any remaining work is altered by the compensation event then this is to be shown in a revised Accepted Programme.  Bear in mind also that if a Contractor completes early then this means a reduced Defined Cost for time related preliminaries.  That works in theory but in practice they may use any surplus time to retain resources for business reasons.

Because of the likely uncertainty created by the access conditions you describe, I would suggest that the Employer makes detailed assumptions about what the Contractor should price for within their tender and take the risk for any changes, bearing in mind that it is for the Employer to provide details of access in the Works Information.
answered Jun 30 by Andrew WI (3,160 points)