NEC ECC: Accepting Defects cl 44

NEC3 and NEC4 Contracts Testing and Defects
1

As the Contractor, we have been closing Defects as per the contractual requirements.

We have a situation where in some instances, in order to close the Defect we have been required to submit a change proposal to change the Works Information.

To explain this process I have provided an example below;
The half landings of a stair core were to be a natural screed finish. However during inspection it was jointly agreed (Contractor & Supervisor) that the finish to the screed was not acceptable.

This had 3 actions for the Contractor;

  1. We submitted a change proposal to coat the screed with a concrete re-surfacer to achieve an acceptable finish. (Under cl 21.1). This was accepted by the PM.
    2.) We submitted revised floor finish drawings for acceptance, showing the concrete re-surfacer. This was accepted by the PM.
    3.) We completed the works and offered them to the Supervisor for acceptance. The works were accepted by the Supervisor, who, following the Design acceptance by the PM of items 1 & 2, then closed the Defect.

However…
The PM has now responded stating that previous change proposals are to be treated under cl 44 and the Contractor is to submit a retrospective quotation for each for reduced prices or an earlier completion date. This would mean retrospectively raising 20 quotations for work which is accepted. (Please note we are not yet at our Completion date).

Clearly we disagree with this interpretation and we are not going to submit the quotations. We are in an unusual position as both the Supervisor and Employer are in agreement with the Contractor.

The question is, what is the appropriate way to respond to the PM so that we are covered contractually?

We had wondered whether it would be appropriate to send an EWN to the PM stating that we don’t consider his decision to be fair or impartial as implied by the requirements of cl 10 and is therefore invalid. We would go on to state that we have followed the requirements of cl 43 and that we are not going to provide the quotations as part of cl 44 as this is not appropriate.

We would be grateful for your advice.

2

My preferred angle would be that he has changed the Works Information under the second bullet of clause 60.1 (1) - i.e. it is not a compensation event - and that the works now comply with it. Therefore if he wants to change the WI back to the original, it would be a compensation event for which the Employer would have to pay the Defined Cost of ripping out the revised solution and installing the original.

However, from your description, this does not quite fit the facts, so you would need to look at your submissions and his responses to see if they did.

The second angle would be to quote 60.1 (8) at him i.e. he appears to be changing a decision previously communicated - a compensation event - and that to rip out the work and install will cost you and hence the Employer money.

3

Like Jon I am a little confused with the scenario.

Is this a defect in the first place? If you have complied with the Works Information and now they have decided they want something different, then there should have been an instruction to change it (and hence the WI) which would then be assessed as a compensation event.

Or are you saying that the works you had done were defective, and whilst you were doing the defect they decided to change the Works Info?

4

From what I understand within your question, there seems to have been an agreement to deal with Defects by submitting a ‘change proposal’ which was accepted by the PM. This ‘change proposal’ is to correct a Defect and as Jon has stated comes under the 2nd bullet of clause 60.1 (1) and is not a CE.

It seems, however, that the PM has now decided that they want the outstanding Defects dealt with under clause 44. However, clause 44 is by agreement only.and the PM cannot unilaterally enforce this course of action.

Your obligation is to correct notified Defects by the end of the defects correction period, which commences at Completion, and until after then the PM has limited involvement with the Defect correction process.

An early warning would at least facilitate discussions with the PM to clarify what the obligations and rights are under core clause 4.

5

Dear Jon, Glenn and Andrew

Thank you for your responses.

To clarify.
A Defect did occur. In this example, the bare screed to the half landings did not achieve an acceptable finish as required by the WI, hence why we offered to use the concrete re-surfacer on top of the screed to achieve a suitable finish.

We believe this change to the WI was accepted through the acceptance of the Design (Drawings) and acceptance of the Contractors Proposal.

Reading your comments;
I have previously assumed that in this instance a specific PMI would not be required as we had in effect been ‘Instructed’ through the Design (Drawings) acceptance and Contractors Proposal acceptance. Is my assumption correct? Or at the time of requesting a change should we have pushed for an instruction under 60.1 (1) 2nd bullet point?

In a normal situation I would say that this should be treated under cl 60.1 (1) 2nd bullet point. However although this is how the Employer tells us he would like it resolved (i.e. they are happy with the concrete resurfacer), the Employer & Contractor relationship with the PM has collapsed and the PM is working to his own agenda. This is why we are looking to protect ourselves prior to completion.

I think 60.1 (8) is technically correct, but would risk antagonizing what is a good relationship with the Employer.

Rgds cl 44, I had read, but missed the point, that it is ‘by agreement’ and we don’t agree with the PMs decision, so it appears that in this instance that the PM cannot use cl 44.

Rgds the PMs involvement with the Defects Process, the PM has made numerous attempts to get involved with the Supervisors process, we have previously issued an EWN asking for him to clarify whether his involvement in the Supervisors process is working as ‘stated’ in the Contract? We have had no reply…

So in summary, we believe we have worked in accordance with cl 10 and cl 43 and the Employer is happy with the product, however… the PM appears to be setting up to make completion difficult.

Any further advice would be gratefully received.

Kind regards