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NEC ECSC: PM's responsibilities with regards to insurance disputes

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I am currently the PM on a commercial project using the NEC3 Short Form. This project comprised the construction of an extension to and minor refurbishment of an existing office building. During the works, a leak in one of the roofs over the existing building caused damage to a couple of computers within one of the offices. This leak was a result of work carried out by the Contractor on another part of the roof.

The Contractor accepts that the leak occurred as a result of his work to the existing roof. However, he is not willing to pay for replacement of the computers as he maintains (after collecting & examining them) that they are obsolete, are at least 8-9 years old and would not have been of any use to the business considering the software/hardware requirements for modern ICT use. The Employer wants the computers replaced with new modern type ones.

I am currently stuck in the middle of this argument. My question is what responsibilities do I, as PM under the NEC Contract, have with regards to this issue?

Am I responsible for resolving it or does this become an issue that the Employer and the Contractor have to resolve themselves?

If neither party can resolve their differences with respect to this matter, is the 1st course of action adjudication under Clause 93?
asked Mar 4 in General by FrustratedPM (120 points)  

1 Answer

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Strictly speaking it's for the Employer or Contractor to notify the insurer, usually the Employer would tell the Contractor to do this however as the insurance is in joint names the Employer could notify the insurer themselves.

As to your role, it will depend on your terms of reference with the Employer. However, I suggest that unless you have specialist expertise in dealing with insurance claims in construction contracts, you advise the Employer to deal with it.

It is the insurer who will assess the claim and decide how much the policy will pay out, it's not a matter for the Parties to negotiate between themselves. In fact the Contractor might invalidate the policy by entering into negotiations over an insured loss which could mean the liability would fall on their shoulders.

If the Employer was unhappy with the settlement offered by the insurer then they could litigate against them, however in this instance the value of the claim is going to make it unlikely for this course of action to be taken.
answered Mar 6 by Neil Earnshaw Panel Member (31,140 points)