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NEC3 ECC Option D: Change in Works Info initiated by PM vs. initiated by the Contractor

+1 vote
I would like to clarify the effects on time and cost of the following scenario under an NEC3 ECC Option D Contract.

1. If the Project Manager reduces the scope of work (not proposed by the Contractor), he issues an instruction to the Contractor. In effect, this will be negative CE, which could move the PLANNED Completion Date earlier. However, as stated in the guidance notes of Clause 63.3, the Completion Date is unchanged. This will also cause reduction in the Target Cost per Clause 63.11.

2. However, if the reduction in the scope of work is due to the Contractor proposing a value engineering to the PM, and PM accepts it, this would not cause reduction in the Target Cost.

In the aspect of movement of Completion Date under scenario 2, I am of the understanding that only acceleration can cause movement of the Completion Date.

The Z clause of the contract states that: " The Contractor may at any time, submit to the PM a written proposal which will, if adopted, (i) accelerate Completion....". Based on the choice of word "accelerate", if a proposed VE is accepted by the PM, and the Contractor stated in his proposal that the VE will accelerate the Completion by a certain period of time, the Completion Date is then adjusted by the same period of time.

Please provide your thoughts if the foregoing is correct. Thank you very much!
asked Oct 15, 2015 in NEC3 Time by Elvin Cruz (300 points)  

1 Answer

+2 votes
No I would not agree with this.

Acceleration is bringing forward the Completion Date to meet an earlier date. That Z clause seems to be saying at any point the Contractor could propose an acceleration - that is propose to commit to meeting an earlier Completion Date to which the PM will pay the Contractor a sum of money as they have quoted. Just because they have proposed a value engineering solution does not automatically make this an "acceleration".  

Under option D both Parties share in the benefit of value engineering. The target cost is not adjusted, but the Contractors costs will go down and both Parties will share in the under spend at the percentages stated in contract data part 1.
answered Oct 15, 2015 by Glenn Hide (33,040 points)