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NEC ECC: Option C contract - change to Scope

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The Contractor has been appointed on an NEC4 ECC Option C contract where the works are design by the Client. The Project Manager instructs the Contractor to stop work on a part of the works because the Client’s designer is considering the implications of a design change. All are keen to avoid any abortive costs if at all possible.

After due consideration, some 2 weeks later, the potential design change is abandoned and the Project Manager immediately instructs the Contractor to proceed with the original design layout, aware there may be a delay and additional costs.

a.    Should the Contractor stop work on the part of the works and what should the Contractor do in order to protect its interests under the contract?
b.    What sanctions are there in the contract if the Contractor does not notify an early warning in a situation where one should have been given?
asked Aug 1 in General by Hemen Wong (280 points)  

1 Answer

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Best answer
If the Project Manager instructed the Contractor to stop work then this would be an instruction under clause 34.1, which is a compensation event at 60.1(4).  The PM should have notified the matter as a CE at the time of the instruction but if they did not then the Contractor can notify the event as a CE.

In response to your questions;

a.   The Contractor is obliged to obey an instruction given by the PM in accordance with the contract (27.3).  To protect their interests the Contractor is required to take reasonable action to address the effect of the instruction (63.9).

b.  There is no requirement for the Contractor to notify an Early Warning in this instance as the matter is a CE, although the sanctions for not notifying an EWN generally under a Main Option C are related to Disallowed Cost (11.2(26) 3rd bullet 2nd part) and assessment of a CE quotation (61.5/63.7).
answered Aug 2 by Andrew W-I Panel Members (21,010 points)  
selected Aug 2 by Hemen Wong