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NEC ECC: Risk Allocation

+1 vote
Under an option A - If the Contractor has allocated say 20K risk against a risk in the risk register at contract stage (breaking through for instance). When the work is commenced a compensation event is raised due to a 60.1(12) for say 60K. If agreed with the CE who is liable for payment?

Do you pay the CE minus the contractors risk allocation?

Does this mean risk pots need to be allocated at contract stage?

Surely there is no benefit in the Contractor pricing this risk?
asked Apr 11, 2017 in Risk and Insurance by anonymous   11 63 91

1 Answer

+2 votes
Best answer
Contractor prices their own risks under option A and spreads that across their activities within the activity schedule items. The "Risk Register" as currently called under NEC3 but soon to be called "Early Warning Register" under NEC4 does not exist until post contract. It includes risk identified in CD part 1&2 and then all early warnings raised on the project as it progresses.

This is a compensation event only if it is something you can prove was not what you would have expected to pass the test of 60.1(12). It is about what you should have allowed for rather than what you did allow for. therefore it is very important that you price the risk accordingly at tender stage. There are no such things as "risk pots" as part of the contract.
answered Apr 11, 2017 by Glenn Hide Panel Member (79,020 points)