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NEC ECC: Can payment be withheld for a time related activity that can never be completed?

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The Option A activity schedule had site accommodation costs spread over the contract period as monthly activities. The site establishment was not in place until the second month of the contract. The Project Manager will not pay for this item for the first month of the contract as it was not completed. How does the contract deal with a time related activity like this that can never be completed?
asked Jan 14 in Payment by NECSCOT (120 points)  

1 Answer

+1 vote
You have to be very care full when listing such a time related activity as an activity schedule item. Either such costs should be spread across other activities so that recovery will be progressive as other activities are completed, or you could break that item down into monthly milestones such as "Feb site establishment costs", "March site establishments costs" etc. There are no real hard rules here - just by agreement you can agree how these are best dealt with.

Even then, if an item is not completed or ever going to be completed then the Contractor can issue for acceptance a revised activity schedule reallocating that cost accordingly. Providing the revised activity schedule is in line with the current programme, adds up to the correct number and is suitable distributed (i.e. not front loaded) then there should be no reason not to accept the revised activity schedule. If say you had a line item to provide scaffolding and then you do not provide that scaffolding (but it makes the installation more difficult) then you should be able to redistribute that cost to another activity be revising the activity schedule (clause 54.2/3).
answered Jan 14 by Glenn Hide (71,250 points)  
Agree with Glenn. Richard Patterson and I co-wrote an article for the User Group newsletter on a better approach to time related costs. Think it was in the November edition.
Agree with Glenn, let's try to DWISITC ("do what it says in the contract" as Richard Patterson says), and if that isn't possible (not just that it's difficult or we're lazy!), then consider using a Z clause.