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NEC ECC: Value Engineering - NEC3 ECC Option C

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I'm working on an Option C contract.

Our Subcontractor has submitted an EW proposing the use a different type of hoarding surrounding the building works in lieu to what was stated within the Works Information.

We've reviewed their proposition with our client and against our H&S policy and proposed that they use a different form of hoarding which would be quicker to erect and cheaper to procure & purchase. We have stated the specification / design of that hoarding.

A CE was then instructed by us; The Contractor, to change the Works Information (60.1). The Subcontractor has assessed as zero change to the Target Cost as this in their opinion s an example of Value Engineering thus a reduction to the Defined cost.


My questions are;
Is this correct assessment by the Subcontractor?

Has the Subcontractor notified us correctly of a Value Engineering exercise and,

Is simply making a suggestion considered Value Engineering according to the contract?
asked Dec 14, 2017 in NEC3 Compensation Events by QS007 (440 points)  

1 Answer

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Best answer
In Option C there is no procedure for the Contractor to propose changes to the Works Information as 63.11 only deals with the commercial impact of such a proposal. Whilst technically a value engineering proposal is unlikely to pass the tests at clause 16.1 to make it an early warning, in the absence of a formal mechanism I'm not sure what else you could have expected the Subcontractor to do. Therefore I doubt there's much merit in progressing an argument down the failure to give correct notification route.

What else is a proposal from the Subcontractor if it isn't a suggestion? There is no detail given in the contract as to the content of a proposal. Given that it sounds like the Employer has designed the original hoarding it would make sense that you wouldn't expect the Subcontractor to fully design his proposal, suggestion of an alternative is probably enough.

For me the real question is if it hadn't been for the proposal from the Subcontractor would anything different have happened or would you have been happy with the original hoarding? Sounds a bit like you're wanting your cake and you want to eat it as well. Remember the Employer and Contractor will still benefit if the target cost isn't reduced, whilst the Subcontractor won't benefit from his proposal if it is and therefore won't be motivated to make any further proposals!
answered Dec 15, 2017 by Neil Earnshaw (16,490 points)  
selected Feb 7 by QS007