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NEC ECC: Clause 63.1 - CE Assessed as Actual or Forecast Defined Cost (Option A)?

+1 vote
Clause 63.1 states that 'If the compensation event arose from the Project Manager or the Supervisor giving an instruction... the date which divides the work already done from the work not yet done is the date of that communication. In all other cases, the date is the date of the notification of the compensation event'.

Can this be interpreted to mean that if the PM gives an instruction and notifies a CE for a change in the works information i.e. additional work to be carried out, and the quotation is submitted and assessed after the work has been completed, it is contractually correct for the contractor to base his quotation on forecast defined cost as opposed to actual defined cost.

If so, then presumably the PM cannot insist on the contractor providing timesheets, invoices etc. to substantiate the quotation.
asked Jun 28, 2017 in NEC3 Compensation Events by Jonathan Graham  

1 Answer

+1 vote
Yes you are correct - this should be assessed as a forecast, and therefore timesheets/invoices should not be necessary as it should be based upon what would have been reasonable to have allowed for it.

However - it doesn't stop PM's from asking. Whilst you should not need to do it, if such paperwork would prove that your assessment was correct I might provide it just to speed up the process - but you are not obligated. They should not be using the benefit of hindsight to prove your quote was wrong - just assessing if that was a reasonable forecast in the first place.
answered Jun 28, 2017 by Glenn Hide (33,670 points)  
I agree with Glenn's comments above, although for me one of the issues to consider is what methodology was used to produce the forecast.  When a quotation is assessed, the forecast element cannot be completely made up using vague, subjective opinion, otherwise you could reasonably argue that it wasn't assessed correctly.  This is especially true when a Contractor has a significant amount of data and information upon which to base a forecast, for instance several months of historic, project specific, cost information.