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NEC ECC: Is our interpretation of a compensation event correct.

+1 vote
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An early warning is given to PM regarding change onsite to implement a CE, a confirmation of verbal instruction is issued to PM with two working days of CE, at present, CVI's do not get accepted or rejected and then PM has seven working days to review. Due to the non acceptance or rejection of the CVI's within the seven day period we encounter problems obtaining payment as currently the PM will verbally instruct the additional works to be completed but upon application for payment this will be contested. Are we correct in our interpretation that once we have issued an early warning that we could "stand" until we obtain an accepted or rejected CVI confirming the verbal instruction by the PM? This document accepted or rejected would then support our application for payment.
asked Jul 27 in NEC3 Compensation Events by anonymous   1 4
   

2 Answers

0 votes
If the early warning was notified in relation to a matter that is a compensation event, then a compensation event should have been notified instead.  The CVI procedure, although a practical method of dealing with such issues, is not formally recognized under the contract and an appropriately recognised contractual notification should be given.  An early warning stating a matter is a compensation event, is not a notification of a compensation event, which is separate.

With regard to payment, you don't state what Main Option you have.  If a lump sum form then the matter would need to be formally added to the activity schedule or Bill of Quantities to facilitate payment.  This would require an implemented CE, although I know that 'on account' payments are often made to recognise the fact that the CE procedure can take some time.  If a Target Cost approach then payment is not dependent upon agreement of the issue.
answered Jul 27 by Andrew WI (3,510 points)  
0 votes
From what I understand of your question, if the PM is (a) not following the contract in giving written instructions and (b) then playing silly buggers around what they said, then :

- you need to early warn in writing that until you receive the instruction to do something different, you have to contractually carry on as other wise (a) you would not be providing the works in accordance the contract (one of your main obligations under clause 20.1) and hence be in breach of contract and (b) the longer you carry on doing what is no longer wanted, the higher the costs to the Employer of taking out what you were doing and doing something different.

- you carry on doing what you were doing until your receive the email / piece of paper which instructs you to do something different. If the PM does not notify this as a CE and instruct a quotation, you then then notify.
answered Jul 27 by Jon Broome (25,100 points)