NEC3 ECC: Disallowed cost

NEC3 and NEC4 Contracts Payment
1

Under Options C, D & E clause 11.2(25) has three main bullet points and then five further ones. The phrase in between them reads “and the cost of”. Does that mean that to disallow a cost it first has to fall into one of the first three AND THEN fall into one of the subsequent five or can it just be one of the overall eight bullet points?

An example on the project I am on is that a weld defect has been identified, from off site fabrication at a sub-contractor’s workshop, and the Contractor (who is also responsible for the whole design) has to put that right in accordance with the defect notice now issued in line with clauses 42 & 43 respectively. This clearly involves additional unexpected cost, additional testing and inspection by the subcontractor and client, all of which could be disallowable under 11.2(25) fifth bullet “correcting defects caused by the Contractor not complying with a constraint…” However these occurrences cannot be attributed to any of the first three bullets.

Also I assume a “constraint” in the WI could be attributed to “providing the works that are fit for purpose…” as an example of something that fits into that category of “constraint” because in the case of weld defects the “works” clearly are not fit for purpose?

1 Like
2

Good question but no the second batch of five is NOT dependent upon one of the first three being achieved. The first three are “costs that the Project Manager decides”, and the latter five are "costs of ". It would not make any sense if correcting a Defect after Completion was not disallowed if it did not meet the criteria of the first three bullets as most would not.

3

Glenn, based on the limited information, what is your view on whether or not the cost would be disallowed cost if the Defect was corrected prior to Completion.

4

Dave - only if the defect specifically meets one of the reasons to disallow. Only one it might fit is of the Employer included within WI a specific constraint on how they were to provide the works that they had not followed (and I don’t mean a statement that says all welds should be good!)

5

Appreciate the answer and can concur with what you are advising