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NEC ECC: Breach of Contract and the assessment of CE's

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Clause 61.3 is clear on when a CE should be notified. This doesn’t stop some Parties from not complying and should either side believe they haven’t complied then a dispute can be raised. In that case the Adjudicator will decide upon not the event itself but the compliance with the notification rule and that subsequent decision will presumably dictate whether the event itself will be eventually judged. So non-compliance with clause 61.3 could be seen as a breach.

What would happen in the case of the Project Manager being accused of a breach of clause 65.2? Presumably the Adjudicator has an easy job since either the PM revised a CE assessment or he didn’t, however what if the following scenario occurred:

The Contractor issues a series of CE’s over a period of time which quite clearly are related to one of the Employer’s risks. After let’s say a year and say 12nr incidents, the Completion date and Target price have moved a considerable amount because the last hour of those affected days have been delayed due to the Employer’s risk event occurring. It then comes to light that the Contractor’s personnel have been leaving the job an hour early virtually every day within the last year and continue to do so even though the event that prevented them working no longer occurs. Further there has been no improvement in productivity which makes the PM think there was no real delay on those 12 days in the first place. The risk event that occurred 12nr times is an event that is extremely difficult to evaluate in real time and one must revert to a theoretical calculation based on norms to arrive at a reasonable estimate of lost time and it was the only way we could agree this with the Contractor. The PM is also considering disallowing cost of those one hour periods where the scope was not being delivered when the risk had not occurred citing the 7th bullet of clause 11.2(25).

Now I know this may seem very unlikely for many reasons however it is a real world example and involves remote working, trust, collaboration and working patterns.
asked Oct 16, 2018 in NEC3 and NEC4 Contracts by APW (1,240 points)  

1 Answer

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From what you have described, it sounds like an event occured which prevented working for the last hour of each day, which was a CE.  This occured on 12 occasions.  I can see why the effect would be difficult to assess, although it looks like the quotation was based on the value of lost time, with a corresponding time assessment.  It now looks like the actual effect on the progress of the works is different to what has been implemented.

Although the PM may feel 'aggrieved' by the outcome, they are an intrinsic part of the CE procedure and whatever was implemented would have been with their input.  Clause 65.2 (under NEC3) also seems to say that if you estimate something in advance within your assessment and the subsequently recorded outcome is different, then the original estimation is not changed.  If this event occured on 12 separate occasions I am surprised that there was not a 'learning curve' to assess the affect of the event and understand the implications each time.  This understanding could then have been used to assess subsequent CEs.

The problem with working hours is that productivity is not just related to actual time on Site but a number of other factors.  Also, measuring productivity on a construction project is difficult because the schedule baseline is usually a 'best guess' and may even be worked backwards to fit a specified Completion Date.  It is clear that the PM may feel like an injustice has occured, but if matters have been concluded under the contract then it should be a case of looking forward not backwards.
answered Oct 17, 2018 by Andrew W-I Panel Member (24,000 points)