The Principal Contractor has been in dispute with a sub contractor over the amount of their final SC account for many months. This is making the PC unwilling to agree to a final account with the client even though this has been requested several times by the PM. The PM is pushing to bring the issue to a close and agree a final account (defined cost + fee with pain/gain) with the PC. What steps can the PM take to force the PC to agree the final account with the client?
If the PC believes he is correct, in his dispute with the SC and in the absence of being able to reach agreement, should he not have taken the issue to adjudication before now?
If there are are suitable ADR provisions in the contract e.g. mediation, then use as a means of settling between the PC and SC. If not, adjudication would provide swift resolution before PC can settle FA with the PM.
Assuming that the main contract is an NEC3 ECC Option C, the PM has an obligation to assess the amount due to the Contractor at each assessment date, which will include a forecast of whatever he expects the Contractor will pay the Subcontractor by the next assessment date. If the amount the PM assessed/forecast was different to the actual, this would be rectified at the next assessment interval unless the difference is deemed to be a disallowed cost under 11.2(25), second bullet point.
A final account agreement doesn’t exist in NEC3 as such (neither the ECS or ECC). The PM should make a preliminary assessment of the pain/gain at completion, and include this share in the next payment due, and then when the final PWDD and ToTP are known the PM should make a final assessment of the pain/gain and include this share in the final payment.
There are no steps or actions the PM can take to force the Contractor to agree a final account/payment with the Subcontractor. Once the final amount due to the Subcontractor is known however, whether that results in the Contractor’s defined cost increasing or decreasing, the payment due to the Contractor in turn will follow simply in accordance with the payment provisions of the contract as noted above.