We are currently working on a project as Project Manager with a contractor of whom we have never worked with before. The contractor is said to have experience in using the NEC 3 Contract but their lack of understanding of the core clauses suggest otherwise. Throughout the duration of the project we have had several disagreements as to the interpretation of the core clauses and it seems that this is becoming a regular occurrence.
The Contractor has formally written to advise that they had assumed that as the Project Manager did not formally reply that the programme they had submitted was deemed accepted.
We are of the understanding that in NEC 3 there is no deemed acceptance and this mechanism is included in NEC 4, so if the Project Manager does not respond to a programme the last accepted programme is the most relevant and the submitted programme is not deemed accepted.
We would appreciate if you could advise as to whether we are correct in our understanding of NEC 3 in relation to deemed acceptance of the programme and whether this misunderstanding is common.
Yes you are correct it is not deemed accepted under NEC3, and yes this is a common misconception.
However - you do have to ask yourself why you had not responded to the programme like the contract obligates you to. It should be accepted, or not accepted giving reasons why.
Yes you use the last Accepted Programme to assess CE’s against, but first taking into account progress and other compensation events that had occurred up until the compensation event was instructed/notified (see new practice note 1 from NEC which whilst for NEC4 is equally applicable for NEC3).
Just to amplify Glenn’s second paragraph, Clause 31.3 says “Within two weeks of the Contractor submitting a programme to him for acceptance, the Project Manager either accepts the programme or notifies the Contractor of his reasons for not accepting it.”
If you don’t do this, as PM you are in breach of the contract and you need to consider the implications that has on your position and the Employer’s position particularly, perhaps, with regard to future commissions from the Employer, not to mention PI issues.
You are correct. There are no grounds for a “Deemed Acceptance. If the Project Manager does not respond, the Contractor should remind them of their duties for a reply to a communication, if the PM still doesn’t respond then it is deemed a Compensation Event. But in reality there is unlikely to much/ any time or cost impact of this CE.”