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.

5,168 questions

5,529 answers

1,204 comments

Register its Free

Download here

NEC4 ECC - X22 - Quotations for proposed instructions

0 votes
56 views
We are working on a project as the Contractor during ECI stage 1 and the PM has instructed us to submit several quotations for proposed instructions.

Is it correct to say that during ECI stage 1 we should only agree changes to the budget and that this mechanism under Clause 65 would only apply in stage 2 when the compensation event procedure comes into effect?
asked Jul 4 in Secondary X, W and Y options by philjbrady (1,140 points)  
reshown Jul 24 by philjbrady

1 Answer

+2 votes
 
Best answer
The X22 provisions work alongside the core clauses and main Option clauses just like with any other secondary Option.

So firstly you need to deal with the proposed instruction under clause 65 just like you would under any ECC, submit a quotation then the PM decides whether to accept it or not. If the quotation isn't accepted it would trigger a compensation event under clause 60.1(20), and if the PM also issues the instruction it would trigger another compensation event under clause 60.1(1) assuming the instruction relates to changed Scope.

If the instruction isn't issued then there's no change to Budget, however if it is issued and it changes the Client's requirements then the PM and Contractor have up to 4 weeks to agree the change, failing which the PM has the right to make an assessment.
answered Jul 5 by Neil Earnshaw Panel Members (21,690 points)  
selected Jul 25 by philjbrady
Thanks Neil, however I can't see any merit in using the CE procedure in addition to changes to the budgets during ECI.

What good is a CE in ECI stage 1 when you are essentially working on a cost reimbursable basis and fundamentally you don't yet have a total of the prices that an implemented CE would change. And neither do you have the notice to proceed to stage 2, which will ultimatley determine whether the instruction is actually put into effect or not.

Surely the logical thing to do would be for the PM to instruct the change and for the Contractor to include the change in the forecast of the prices for stage 2 and for a budget change to be agreed. That's the point of ECI isn't it?

I appreciate in usual circumstances the secondary clauses act alongside the core clauses but X22 is a special case; you almost have to treat it as a separate contract.
The question is do the core clauses apply or not? I can't see how you can pick and choose which ones you want to apply since the contract doesn't provide for that. Stage 1 can be Option C or E, so whilst I understand the sentiment of what you say (which has always been the case for ECC Option E contracts without X22) it's impossible to conclude that the PM is in breach of contract for acting as they are. The PM in your case is merely trying to understand the implications of the instruction before it is issued. Alternatively the PM could issue the instruction, then technically you still have to follow the CE procedure for quotation as well include the effects of it in the forecast, then if the effect is greater than anticipated it could later be removed from Scope with another instruction. Note that forecasts are of Defined Cost for Stage 1 and Project Cost and don't deal with the time effects like compensation events.

Whether the Budget changes or not is a separate matter, the PM's instruction might change the Budget, but not necessarily so.
I don’t disagree that the core clauses still apply and certainly not arguing that the PM is in breach, just questioning the logic of administering CE’s in stage 1. I appreciate that this is to understand the impact of the potential event but not convinced a quotation for a proposed instruction is prudent when this procedure is intended to, strictly speaking, result in a CE. I don’t see any merit in administering CE’s in stage 1 because until stage 2 has been reached there is no total of the prices that an implemented CE would change.