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NEC ECC: PMI issued in relation to change to Works Information but not compensation event

+1 vote
148 views
Under Option B, Client has issued PMI for change of Works Information but has stated that Instruction is not a compensation event. It is our opinion that the change is a clear compensation event to the tune of approx. £50k.
Contractually are we obligated to proceed with this Instruction knowing that the Client will not pay? We can clearly demonstrate that these additional works have not been priced for. Is this not a case of Client getting something for nothing?
asked Jun 27 in Compensation Events by Mario (210 points)  

1 Answer

+3 votes
Yes you are obliged to follow the instruction, but if you believe this event to be a compensation event then you can notify that fact explaining why you strongly believe it is one (knowing you know they don't think it is one). If they still don't agree then you could go to adjudication (and normally the threat of going is enough for them to change their mind if you are right).

The fact you did not price for this is irrelevant - it is whether you SHOULD have priced i.e. was it in the original Works Information. If they are instructing something that was already part of the Works Information then this will not be a CE.
answered Jun 27 by Glenn Hide (66,350 points)  
Thanks Glenn,
Difficult one for us as threatening adjudication with an important client could jeopardise future work stream.  
On another note is it not a fundamental of the NEC that Client should not get something for nothing? Or did I dream this up!
Mario - I don't believe they are getting something for nothing here. If you are entitled to a compensation event then you will get it - it just might need to go to adjudication (but rarely will as if you are right they will not want to go to adjudication).
The only other way would be for all quotes to be agreed before you do the works - which would be impractical from a timescale perspective and also would mean you have them over a barrel as the Contractor as you will not do the work until they have agreed it which would not be fair to the Employer.   

You might not like it but I think the contract has this correct.