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NEC3 ECC: Assessment of CE's Option B

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Thanks for taking time to reply to me it's greatly appreciated, you are correct the drawings are part of the works information. I've told out client that I wish to price each CE as an individual item under clause 60.4 as they have increased more than 0.5% for an example we have a bill rate for gully's with known connections within the new drawings we have additional gully's with unknown connections I have priced these up using CDP2 some are retrospective using actual time and resources and some have yet to be completed and have been predicted. All of the changes are going on to the updated programme and being forwarded to the client.

The problem I now have is our client is saying he can value the additional items under 63.13 using Bill Rates can he do this.
asked Nov 9, 2016 in NEC3 Main options by Pete.conway (290 points)  

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Pete

Apologises but I have not seen the previous discussions on this matter.

You say that you are pricing the CE under clause 60.4 which is confusing me. This clause provides for a CE should the quantity of work for a bill item vary to that stated in the BoQ to such an extent that the unit cost changes and the final quantity at the bill rate is greater than 0.5% of the Prices at the Contract Date (tender sum). The clause does not deal with work introduced by a CE.

Your comments appear to be in relation to new instructed work (albeit it may be similar to work in the original Works Information and BoQ). In that case you are at liberty to base the quotations on Defined Cost + Fee or by agreement you can use bill rates. Should you use bill rates then you will not be able to rely on 60.4 for any adjustments

The PM can only value the change(s) using bill rates with your agreement.

Please note the above is based on standard NEC and you may have Z clauses that introduce amendments.
answered Nov 10, 2016 by dave bates (10,500 points)  
Thanks for taking the time to reply Dave, it's a real help.

I'm trying to get away from using the bill rates as under a competitive tender some are good and some bad, they seem to be instructing more works for the bad ones. they tell me that under 63.13 you have to used bill rates. At the bottom of 63.13 it says: If the Project Manager and the Contractor agree, rates and lump sums may be used to assess a compensation event instead of Defined Cost. and we don't agree.

Thanks once again.
No worries Pete.

Rates and lump sums can be used by agreement however in the lack of agreement the default is Defined Cost + Fee. The intention being that you should be in no worse position due to Employer's change and equally the Employer should be no worse off.

Therefore if additional gullies have been instructed (drawings changed) then you can not agree to bill rates and instead use Defined Cost + Fee to assess the change.

Please double check to see that you don't have any Z clauses that make use of bill rates mandatory.
I suggest you refer them to Clause 63.1: "The changes to the Prices are assessed as the effect of the compensation event upon the actual Defined Cost of the work already done, the forecast Defined Cost of the work not yet done and the resulting Fee.

Clause 63.13 only relates to how you incorporate the changed Prices for the CE into the BQ - most usually in my experience it's as a new lump sum for the CE - and, as you note, the last sentence of 63.13 is based on agreement.  If the Contractor does not agree to use bill rates then the assessment is based on Defined Cost.