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Is a delay caused by inadequate contractor investigations a CE?
A contractor with full investigation and design responsibility has submitted his offer (NEC3 Option A) which has been accepted and a contract entered into. On arriving on site they have been advised by the client Estates Department that they are not permitted to make temporary supply connections from where they want to due to health and safety issues (presence of asbestos) and an alternative route has been agreed via the EW risk reduction process. However, this is taking time and they have advised additional time and cost. Their original assumed route as part of their proposals is outside of the site area and advise on this was never sought from the client. It turns out that they assumed it would be acceptable. Some advise on where the client stands on this would be gratefully received.
Nov 13, 2014
NEC3 Compensation Events
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Very difficult to answer this question generically without looking at the specifics of the wording of your Works Information and specific contract. As ever, the test as to whether something is entitled to be claimed as an extra in terms of time and/or cost by the Contractor is if it fits one of the reasons stated within clause 60.1 for it being a compensation event.
I think the only category that this could fall into would be:
60.1(1) – if you are now instructing a different route than that stated in the Works Information that the Contractor had based their price upon. From what you described this does not sound applicable here as it sounds as though you were not that prescriptive as to how they carry out these works.
60.1(12) – Contractor experiences physical conditions that an experienced Contractor would have had such a small chance of occurring that it would have been unreasonable for him to have allowed for. If their proposed route would have been considered by most to be sensible and achievable and it would never have been envisaged that it was a viable route they could try and claim it as a compensation event here. Would that connection point in 9 out of 10 cases be what everyone would have assumed would be ok and they had no way of knowing that in this rare occasion that there is an issue with asbestos? What is in the Site Information may also strengthen or weaken the case as to whether this is something that should have been assumed as acceptable.
Just because a Contractor priced something a certain way and they can no longer do it that way does not mean that automatically they are entitled to additional cost. They have to provide the Works in accordance with the Works Information (20.1). You were right to collectively review this through the EW process and risk reduction meetings, but this process does not (need to) consider liability, just what needs to be done. The fact they have advised additional cost well they need to notify this event as a compensation event which then allows you to respond as to whether you agree or not that it is one, and only if you agree it is would you then instruct the Contractor to provide a quotation. I think this will come down to whether you believe their assumption was a reasonable one at tender stage based upon all the information that the Contractor had at the time.
If you decide that this is not a compensation event, then the Contractor may decide to go to the Adjudicator for a second decision. This is not necessarily a bad thing – as it will draw the process to a conclusion once and for all and is not intended to be an arduous/drawn out/expensive process/failure that many people treat this process as.
Nov 14, 2014
Just to refine Glenn's answer. You say that " Their original assumed route as part of their proposals is outside of the site areas". If this is outside the 'Site' as contractually specified by the Employer in Contract Data pt 1, then it cannot be a compensation event under clause 60.1 (12) as the physical conditions have to be encountered within the Site.
He is absolutely right in everything else he said.
Nov 14, 2014
Thank you to both Glenn and Jon. Extremely helpful and quick.
Nov 18, 2014
If the route outside of the site was clearly indicated and thus forms part of the WI, then an enforced change for whatever reason does indeed change the WI and thus becomes a CE per 61.1(1).
whether it has a cost implication is another matter - from what is described due to the resultant difficulties, there is a time impact which usually means additional costs.
Also the mention of Asbestos and the fact that the Client ( read Employer) has advised a different route. This is the same Employer who must have accepted the original offer, purportadly knowing full well that the planned route had a safety implication and could not be used! So perhaps clause 19 is applicable here although as mentioned, without detailed insight to the contract docs, it is not possible to judge.
Nov 19, 2014
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