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NEC ECC: Option A - Clause 34.1, who pays for the management costs during the stoppage?

+1 vote
138 views
We are under a NEC3 ECC Contract Option A -
The Employer has issued a stop notice under Clause 34.1 and referred to it as a De-scope.
He has 13 weeks to advise us to re-start the works.
Who pays for the site establishment and Management Costs within the period from the stop notice to the notice to restart?

The Employer has intimated he will give the outstanding works to another Contractor at a later date to complete the outstanding works, does this amount to a repudiation of the Contract?

The reason for the stop notice is two fold, he cannot give us access and he doesn't have the funds to pay for the delay until access is available.

Any advise on how to proceed and what our entitlements are would be appreciated.
asked Jul 14 in Compensation Events by carlo Mullen (150 points)  

2 Answers

+2 votes
This would be a compensation event and any costs incurred as a result of this instruction to stop and then to restart or subsequently have the works de-scoped would be assessed as part of the compensation event quotation. The Project Manager obviously has the opportunity to make own assessment if they don't agree with the quotation.

I assume you have already notified that the instruction to stop work is a compensation event. They would have to respond with yes or no, and then invite you to produce a quotation. If it is unclear when they will able to get you to re-start they could/should give you a Project Manager assumption on which to base it on so at least you can ring fence the cost/time affect, and if it ends up being later than that it would be a new compensation event. You will then submit your quotation and they will assess it.

If the works are terminated altogether then you will follow the process within section 9 of the contract. Clause 90.2 summarises the reasons for termination and the resultant procedure process to follow and the amount due.
answered Jul 16 by Glenn Hide Panel Member (77,810 points)  
+2 votes
You haven't explained why the de-scope is happening which does have a bearing on the answer, non-the-less the clause 34.1 instruction is a compensation event under clause 60.1(4) unless the reason for it was the Contractor's fault. Provided the works that have been stopped are on the critical path then you are entitled to include prelim type costs in your compensation event quotation for the delay. Since you don't know if / when you will be instructed to re-start work the PM should state an assumption about this under clause 61.6 which allows you to quote with some certainty.

If the PM fails instruct the Contractor to restart within 13 weeks the Contractor may terminate provided it was not at fault in the first place. However if, prior to termination the Employer awards the work to another contractor this may indeed be seen as a repudiatory breach however your remedy is the same, termination for R19 at clause 91.6 which in addition to other amounts entitles you to recover the direct fee percentage on the work that was de-scoped.
answered Jul 17 by Neil Earnshaw Panel Member (23,220 points)