We have agreed say 20 weeks EOT and a subsequent prelim rate to be paid. The contractor has then issued a programme to complete earlier than the extended programme and requests payment of prelims for the weeks not worked.
You have not specified which contract you are working under to answer this. The fact you are using EOT probably means this is not an NEC contract as it doesn’t use that language. It would also depend which NEC contract option you are working under. If it was an NEC ECC option A contract and a compensation event has been agreed including costs for 20 weeks delay which was believed to be a reasonable forecast, then yes they would be paid that agreed cost whether it took then 18 weeks or 22 weeks.
Hi,
The contract is NEC3 option B.
By correct terminology do you mean additional time?
The additional time is due to a culmination of CE’s on the critical path, say amounting to 20 weeks. The contractor then intends to deliver in say 15 weeks and claim the outstanding prelims costs. Is this correct and if so is it referenced in any clause.
Much appreciated for you time.
Yes under NEC there is no “EOT” terminology but if a CE affects planned Completion then there is an entitlement to move Completion Date - which is the equivalent thing. Under option B the agreed (implemented) compensation events will be payable as a series of mini-lump sums. What ever cost and time the CE(s) has been agreed at is what the Contractor is entitled to be paid. It is assessed as a forecast and is not subject to re-measure like a Bof Q item.
Adding to Glenn’s answer…
The assessment of value of a CE is not necessarily directly linked to the assessment of time. They actually serve different purposes and are calculated differently.
The change to the Completion Date is primarily a defence against delay damages (or general damages if there are no delay damages). The changes to the Prices are compensatory as against actual Defined Cost incurred and a forecast of Defined Cost to be incurred. So, if the impact of a CE is to move planned Completion 10 weeks that does not necessarily equate to the same period or full prelims being used as the forecast. The prelims could be forecast at a higher rate for a shorter period so that the contractor creates terminal float. Equally the prelims could be the same or lower over the same or shorter duration (or even a longer duration).
The point Glenn makes which is absolutely correct is that once the CE is agreed that is it, you do not go back and adjust for what actually happened.
Thank you Rob for your comments.
The main reason for my query is the contractor has has multiple CEs that have equated to the additional time on critical path say 10 weeks. A clause 32 has then been issued showing contract completion extended by 10 weeks and then practical completion 5 weeks less. The contractor then states the 5 remaining weeks are now terminal float. No LDs. Is this correct as the original clause 31 didn’t have TF?
We have agreed no prelims in the individual CEs, labour, plant materials only, then generated a CE for the additional time with a separate build up for clarity as the CEs are many and fractional
Craig - it would be correct yes, although under NEC you mean “planned Completion” not “practical completion” (the correct terminology is quite important). If you have implemented CE’s which cumulatively move Completion Date by ten weeks - then that is the new Completion Date. If they are showing planned completion subsequently earlier that is their benefit, and equally if they are showing it beyond Completion Date then that is their liability in terms of delay damages if the reason they are running late is their own fault. Terminal float can be generated during the life of the project even if it wasn’t there on the first programme. Terminal float is simply the gap between planned Completion and Completion Date where planned is earlier.
Very importantly you need to have implemented CE’s equating to the agreement of ten weeks to move Completion Date - not just them moving it and if the programme is accepted thinking that is then agreed.