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NEC ECC: Project Manager instructs the Contractor to stop work on a part of the works as, following instructions from the Employer,.

+1 vote
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On an ECC Option C Employer-designed contract, the Project Manager instructs the Contractor to stop work on a part of the works as, following instructions from the Employer, the Employer's designer is looking at the implications of a design change. All are keen to avoid any abortive costs if at all possible. After due consideration, some two weeks later, the alternative is abandoned and the Project Manager immediately instructs the Contractor to proceed with the original design layout, well aware there may be a delay and additional costs.
a. What should the Contractor do in order to protect his interests under the contract?  marks
b. What sanctions are there in the ECC for where the Contractor does not notify an early warning?
It turns out that the next day the Project Manager does notify this as a compensation event and instructs the Contractor to submit a quotation. The Contractor informs the Project Manager, two weeks after being instructed to submit a quotation for a compensation event, that it is impossible for him to meet the three week deadline.
c. How should the Project Manager respond?
The quotation is finally submitted in the end within the three week period for submission.
d. The Project Manager fails to meet his two week deadline for replying to this and the Contractor notifies the Project Manager that his quotation is deemed accepted. Is he correct?
asked Jul 18 in NEC3 General by anonymous  
   

2 Answers

+1 vote
a. If the PM did not notify of a CE then the Contractor should have done so (immediately)
b. The sanctions are that the CE is assessed as though the Contractor did give an EW. However note that an EW is not required if the event as been notified as a CE. It would also be difficult to see how the Contractor would have been aware that the PM was going to give an instruction to stop.
c. The PM should discuss the situation with the Contractor to try and understand why the Contractor considers it impossible. It may be that the PM can state certain assumptions that would enable the Contractor to prepare the quote.
d. No. After the 2 weeks, the Contractor can notify the PM that he has not replied within the 2 weeks see clause 62.6. Should the PM not reply within a further 2 weeks from the "reminder" then the quote is deemed accepted.
answered Jul 18 by dave bates (5,050 points)  
+1 vote
The instruction from the Project Manager is a compensation event under clause 60.1 (4), so this should have been notified by the PM at the time of giving his instruction.  If the PM did not notify, then the Contractor may notify the matter as a compensation event which the PM is required to respond to.

The above issue doesn't seem to be a matter for which an early warning would be appropriate, as when the PM decided to instruct the Contractor to stop work, this is a compensation event.  If, however, it was a matter which the Contractor could (and should) have notified as an early warning, then the PM can notify this at the time of instructing the Contractor to submit a quotation.  The compensation event is then assessed as if an early warning were given.  This essentially stops a Contractor from withholding information to his advantage, and to the detriment to the Employer, as there may be appropriate mitigation measures which could have been taken to minimise the effect(s) of the event.

Although the PM is not obliged to agree to an extension of time to submit a quotation, it is a procedure incorporated into the NEC contract to allow for the fact that circumstances don't always allow things to occur in a timely manner.  If the PM agrees to the extension then he should notify this to the Contractor.  If he doesn't agree to the extension then I would expect the PM to state the reasons why.

Where the PM does not respond to a submitted quotation, then, following the Contractor's notification of this, the PM must reply within the period stated or the quotation will be deemed accepted.  So the PM has to be given a 'second chance' to respond before deemed acceptance.
answered Jul 19 by Andrew WI (2,160 points)