Expert advice in minutes not days. Register it's free and ask your first question now.
ReachBack is a free community help desk for construction professionals run by Built Intelligence. A library of high-quality questions from real users with answers delivered and curated by industry experts.

Do you want to update your skills in NEC3, NEC4, JCT, Procurement, CDM or Project management?

Sign up for one of our free online courses.

4,754 questions

5,050 answers

907 comments

Register its Free

Download here

NEC ECC: Disagreement about contractual Scope - further steps?

0 votes
48 views
I would like to know how is the right approach concerning the following matter. We have an NEC3, Option A contract but the dispute resolution was amended according to NEC4 (first escalation: Senior Management).

We have to build a power plant but all existing (buried) structures, foundations, service-lines within the area for the new power plant shall be demolished/rerouted within a contractual option as per-works agreed on an open book basis because the as-build drawings are not reliable/complete. The option was commissioned by the Client.

Currently, we have a discussion with the employer about the rerouting of service-lines at a road crossing.  We believe the necessary scope is not part of the main works but rather part of the pre-works. The Client has a different opinion. Both parties have some arguments, but this is not the problem at the moment.

At the first meeting concerning this topic both parties agreed that the cost for this works are a minor issue than the risk of not getting the required permits for the rerouting of the service lines on time.  The Client asked us to continue and we shall collect the costs separately for a later commercial solution.

It seems that also the employer is not very familiar with the NEC procedures.

Question:
What are the next/correct steps according to NEC for both parties?
How we have to proceed to ensure not to lose our right for a later compensation because of formal errors or anything else?

1. Should we (as contractor) send a Compensation Event notification to the Project Manager because of clause 61.3 (in our case 6 weeks) and 61.1 (xx) at first?
After that the PM will/has to reject the request and has to send a Project Manager instruction to continue with the works. How we have to answer on this rejection and the PMI?

or

2. Should the PM send a Project Manager instruction at first to continue with the works and we have to answer according to clause 60.1 (1). After that the PM will/has to reject the request. How we have to answer on the rejection?
asked Dec 5 in Compensation Events by peterg (160 points)  

1 Answer

0 votes
Although you are under an NEC3 ECC Option A, you also say that the demolition and re-routing works is agreed on an 'open book basis', which I am assuming is the 'pre-let' works you describe.  If agreed on an 'open book basis' I am also assuming the 'pre-let' works is either a separate contract, or an instruction by the PM which varies the scope of works, which is a compensation event under the main contract and valued as Defined Cost under the Shorter Schedule of Cost Components.  My answer assumes the latter (main contract).

You say the Employer is not very familiar with NEC, although it is the Project Manager who you should be interfacing with under the contract, so be mindful of any agreements or arrangements that the Employer wants to make as these should be formally confirmed under the correct contract procedure by the PM.

Although you are obliged to Provide the Works in accordance with the Works Information it seems that the disagreement is not whether the 're-routing of service lines at a road crossing' is included in the scope, but whether it is part of the main contract or the 'pre-let' works.

If the scope is clearly included somewhere (main contract or 'pre-let works') then there is no question that you are obliged to do the work.  It seems that the matter comes down to payment, that is as part of the pre-let works (CE procedure) or deemed to be included in the activity schedule.  Consequently, notifying a CE would not be appropriate and what you actually need is clarification.  

The referral to the Senior Management (Representatives) might be useful, but is an optional referral 'by agreement' and does not replace the right to refer a dispute to an adjudicator at any time.
answered Dec 5 by Andrew WI (13,250 points)