We are many months over the projects completion date due reasons that are our fault. We received a PMI from client instructing us to change installation suppliers as the one we had contracted to use could not complete the installation when we originally needed them to. The new installation suppliers cost more than the original installation suppliers.
A CE was accepted, however our quote for the cost of the difference between the 2 installation suppliers was not and it was assessed as zero. The reasoning given was that we are behind schedule and the PMI was a fair request to achieve project completion.
Where do we stand on this? Are we unable to claim because we are behind schedule?
Charlie, I am assuming it is an ECS or ECSS, what main Option is it? Either way there is not a CE for what you describe neither is there a provision for instructing you to change suppliers. The CEs are only the events listed under clause 60.1, new ones cannot be added or invented once you’re in contract.
Apologies in advance for the bad news about to come but you are clearly in default and you have been notified of that default by the Client/PM and you have to stop defaulting, otherwise it could lead to termination but you are certainly not entitled to be compensated.
The main Option may make a difference if it is an ECSC. If it is Option E you will be reimbursed your Defined Cost, if it is and Option C or D you will also be reimbursed but only to a point, look at the pain/gain share. If it is A or B you will not be reimbursed at all other than the Prices.
Happy to discuss.
Could it not be a CE under 60.1.8? The contractor has changed their decision regarding which supplier we are allowed to use?
Further to this, are you saying that they cannot instruct us to change suppliers?
Hi Charlie, I’m afraid it is not that one either, but that tells me that you’re looking at the ECC not the ECS or ECSS, which main Option is your contract.
The fact that you are in default means you cannot be compensated, you must stop the default and if that means employing other Subcontractors then that is what you have to do.
Clause 26.1 of the ECC states that if you subcontract any parts of the works you are responsible for performing the contract as if you had not subcontracted.
Under 26.2 & 26.3 you submit the details of any new subcontractor you propose to use to the Pm/Contractor for acceptance and you cannot appoint them until they have been accepted.
If you can confirm the form of your subcontract I can make sure clause references are relevant.
there is no provision in the contract under which you can be instructed to change supplier or subcontractor but, as you are in default they have the following powers:
Clause 24.2 - they can instruct you to remove people from the contract, this includes subcontractors and sub-subcontractors.
Clause 25.2 - they can recover costs from you if you do not provide services and things as required by the WI/Scope.
Clause 34.1 - they can instruct you to stop work - this will not be a CE under 60.1(4) because it arises from your fault - see 61.1 & 61.4.
Defects can be notified if any of the work does not comply with the WI/Scope or any design accepted by the PM/Contractor
Clauses 91.2, 91.3, 91.6 - if you continue to default the contract can be terminated, if this happens you must be aware of the provisions under 92 & 93.
Please check your contract and if you can confirm what it is, whether it is NEC3 or NEC4, etc, because they are different and likely to have an affect on any advice given.
How is the contractor in breach in this example?
Delivery of the programme after the completion date is not a breach of contract.
Missing the completion date usually has an inbuilt remedy for the Employer - application of delay damages
The PM issuing an instruction to change supplier who is more expensive is changing the contractors defined cost to do the work - therefore it is a compensation event.
If the employer has signed up a contractor whose delay damages are not high enough to motivate him to incur increased costs to meet the completion date. That is the deal they have agreed (for good or for bad).