Capabilities of the Contractor

NEC4 Option C

The Client has instructed a change to the Scope which is an activity our resource does not have much experience in delivering but also, a resource which is currently stretched. That said, we have raised our CEN and priced based on our capabilities and resource availability.

Our quote has come as a surprise to the Client as the hours are much higher then they expected, our reasons mentioned above have been explained in more detail

The Client is stating that they could deliver this in less hours / expense (because they have the expertise and resource).

Am i correct in saying that the Client must assess the event on the basis of the Contractor’s capabilities and cannot refer to say their experienced staff ?

Hi, firstly it is not the Client that has a say over a CE quotation, so hopefully you mean the PM? The PM should be following the rules of the contract, particularly 10.2 and they must be even handed in doing so.
So the assessment rules are set out under clause 63 and it should be noted that in most cases the quotation is a forecast but there may also be an element of actual cost if work has been done. The forecast is made on the following basis; clause 63.9 - that the Contractor reacts competently and promptly and that any time and cost are reasonably incurred; clause 63.8 - the assessment allows for risk allowances for time and cost for risk which are not compensation events [i.e. carried by the Contractor] and which have a significant chance of occurring.
With regards to the resources being stretched - remind the Client that this is a compensation event the Contractor is entitled to be compensated and both time and cost are assessed. Clause 63.9 does not impose an obligation to accelerate in order to minimise time or cost incurred, the Client [PM] has triggered the CE in the first place.
With regards to the skill or experience, if the Contractor doesn’t have it then I would imagine they are having to subcontract, in which case under Option C it is ‘open book’, so if there is a quotation from the subcontractor it should be included within the CE quotation and the actual cost incurred will be identified at some point. Remember that C & D contracts incentivise the Contractor to beat the target and gain a benefit if they do, it is not a cost reimbursable contract.
At the end of the day if the PM does not agree with the Contractor’s quotation the PM can either instruct a revised quotation but must give details of why (62.4) or make a PM assessment under clause 64 but in doing so, must also follow the rules under clause 63 - the same as an Adjudicator would have to if a dispute were referred.
Happy to discuss, good luck.


Great answer Steve, much appreciated.