NEC3 ECC: Prolongation claim under ECC Option C

NEC3 and NEC4 Contracts Compensation Events
1

I am working on an ECC option C contract. I have received a prolongation claim from the Main Contractor. The background to the claim is as follows:

Phase 1 works were progressing as planned. Phase 2 works (which are part of the overall scheme but under a separate contract) were scheduled to commence towards the latter part of phase 1 works – an overlap of 104 days, thus inviting a saving on prelim costs (even though phase 2 was a separate contract). Due to employer delays, phase 2 works did not start until 11.5 weeks later.

As part of his evaluation, the Main Contractor has merely used his weekly prelim cost that was being incurred during phase 1 works (when there would have been an
overlap) and multiplied this by 11.5 weeks.

My contention is that whilst the delay period off 11.5 weeks is correct the calculation should be based on phase 2 prelims (not phase 1) as it is phase 2 works that were delayed. The sticking point however is the saving that would have been made by the Contractor as a result of the overlap. This has now been lost and the Contractor is incurring full prelim costs in the last 11.5 weeks of the phase 2 works.

What is the correct method of calculating the prolongation cost, especially in light of the fact that phase 2 was a separate contract but prelim costs would have been less had works coincided with phase 1 works (which was the original plan), but which were under a different contract?

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2

The correct way for the compensation event to be assessed is for the Contractor to demonstrate the actual effect on Defined Cost (61.4 and 63.1).

It is not usual to use the Contractors weekly prelim cost unless of course you are happy that this does indeed represent the actual effect on Defined Cost, which is probably unlikely.

This simplistic approach does not take into account any Contractor time risk allowances (63.8) or utilise the Accepted Programme to show what other operations/activities have been affected.

The whole purpose of using the SCC and the Accepted Programme is that this is a fairer way of assessing the impact of change.