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NEC ECSC: Increase in sub-contractor costs due to client delays

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I am involved in a project under NEC Short contract which had an initial programme of 31 weeks.  The contract was tendered for in October 2016 and awarded in April 2017.  Due to a series of client delays the contract has been delayed for 32 weeks and as a consequence the specialist sub-contractor's for M&E works will not "stick" to their tendered prices with some of the costs increasing by up to 25%.
The Contractor has notified the Employer of this although has not issued formal Early warning notices.
Are there any possible options under the contract, to allow the Contractor additional costs as a result of the Employer delays?
asked Dec 7 in NEC3 Compensation Events by Sean (170 points)  
   

1 Answer

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Firstly you need to identify which compensation event has occurred under clause 60.1 as "client delays" is vague - what specifically has occurred and how does this relate to any of the stated events? The compensation event procedure is the only mechanism to recover additional cost and time under the contract so you will need to identify the root cause(s) of the client delays first. It may be that a single event has occurred or it could be multiple ones.

Once you've established this you need to submit compensation event notifications for each event (clause 61.1). When they have been accepted then you can look at valuing them. Quotations for compensation events are assessed as the effect of the event on actual Defined Cost, forecast Defined Cost plus OH&P % (clause 63.2). So yes you can recover additional subcontractor costs provided you can demonstrate they were incurred due to the Employer's breach i.e. the compensation event.

Beware though, there is an 8 week time bar that could prevent you from recovering any of your costs (clause 61.1) and if you didn't give an early warning you may not recover all of your costs (clause 61.3).
answered Dec 7 by Neil Earnshaw (7,460 points)