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NEC ECC: Should the Employer pay for defective works?

+1 vote
175 views
Under NEC3 ECC Option A contract Cl. 11.2 (27) "The Price for Work Done to Date is the total of the Prices for
•    each group of completed activities and
•    each completed activity which is not in a group.

A completed activity is one which is without Defects which would either delay or be covered by immediately following work."

A Contractor has completed some external works involving surfacing of an area which is proven to be a Defect. The surfaced area will not either delay or be covered by any immediately following work other than some line marking which is a separate activity. The Contractor has completed the line marking. Should they be paid for the surfacing Activity?
asked Dec 3, 2018 in Testing and Defects by Client1 (130 points)  

2 Answers

0 votes
Your logic is fine to a point although you concede why shouldn't be paid for the surfacing. By your own admission there is a Defect that will delay immediately following work i.e. if you've got to to relay some of the surfacing this will inevitably delay the line marking works. So no, you shouldn't be paid to my mind.
answered Dec 4, 2018 by Neil Earnshaw (20,050 points)  
0 votes
As a general point you do not  need to (and indeed should not) use the payment process to ensure any item is defect free. They are contractually obliged through section 4 to deal with any defects and you have sufficient remedies to make sure they are corrected without simply withholding money. This could also be detrimental if you are withholding money at a point where they need cash flow to finish the works and it could affect their ability to finish by the date you as a client want/need.

If it is a major fundamental defect that means you would not be able to use it as it is then I could understand you not paying for the line item on the activity schedule - which brings up another point. The likely hood is that this would have been broken down into smaller work items rather than "construct road" and it would only ever be the individual line item that this covers that could be withheld.  

Not clear from your question if it is the whole surfacing that is wrong and needs to come up - in which case I would not pay them. If it is patch repairs that need correcting then I would not with hold the payment of the surfacing knowing you have sufficient remedy to get the work corrected.
answered Dec 4, 2018 by Glenn Hide (71,060 points)  
Glenn et. al.

What about the cost to break out, remove and disposal of the defective work?  Would that be withheld? I presume the PM can only withhold the amount of the activity and unless he evokes cl. 45.1 then the costs associated with the removal, preparation etc. need to be bankrolled by the employer until contra charged.
The only way you can be paid anything extra under option A other than what is in your activity schedule is through a compensation event. You would have to get this agreed as a compensation event and then quoted/assessed/implemented before you can gte paid anything for a CE under option A. You only get paid for completed items on the activity schedule under option A, and an item only makes the activity schedule once it is implemented.