Clause 13.7 - CE Notification within PMI

NEC3 and NEC4 Contracts
1

As PM & QS on our current scheme, we have been notifying Compensation Events within PMI’s using the following wording;

As Project Manager, I instruct the Contractor in accordance with clause 14.3, to carry out the following change to the Works Information;
xxxx
I also notify the Contractor that this is a compensation event in accordance with clause 60.1 (1) and 61.1.

Please ensure that your quotation relating to the above is issued within 2 weeks as per clause 62.3 and as per clause 62.2 comprising of proposed changes to the Prices and any delay to the Completion Date and Key Dates assessed by the Contractor.

The Contractor has failed to respond to any of these to date (ll time barred) and is stating the reason for this is that each CE should be notified seperately from the PMI in accordance with 13.7.

My previous understanding was that 13.7 is intended to ensure CE’s are not lost in general communications involving oter matters, not to prevent succinct management of change as I believe we have employed to date, by clear and unambiguous CE notification within the body of a PMI.

Thoughts very much welcome.

2 Likes
2

Keiran, clause 13.7 does require all notifications to be communicated separate to other communications but, does that mean that if you do not follow that rule, you haven’t notified? The answer is possibly but an adjudicator might not ignore the fact that the Contractor acknowledges that they did receive your communication. I think it would be very difficult for the Contractor to claim that they have not been notified when they are clearly corresponding with you, their’s is a very technical point about the nuances of clause 13.7 but that is not really the issue here.
The problem the Contractor has is the fact that they are in breach of clause 27.3, having been instructed to submit a quotation, clearly they should obey the instruction given to them by the PM and get on with submitting the quotation. The fact that the notification has not been communicated properly makes no difference. By the way I assume your reference to 2 weeks under 62.3 means there is an amendment, otherwise the published contract gives the Contractor 3 weeks to submit the quotation.
If the Contractor has not submitted the quotation within the time allowed the PM is required under clause 64.1 to make the assessment of the compensation event, the PM’s time for making the assessment begins when the need becomes apparent - see clause 64.3. If you are looking for a way to resolve this and avoid conflict, you could agree to extend the time for the quotation provided the extension is agreed before the original time for submitting the quotation has not expired, if it has expired then there is no discretion for the PM, they must make the assessment. Good Luck.

3 Likes
3

@keiran.kennedy873 , I’m afraid that I disagree with @stevebrownassociates. It seems that the Contractor has interpreted the contract for what it says and corresponded with you accordingly - to notify you of the error in your process, but at the time of writing you had not addressed the notified error.

  • The contract requires a PMI for the change.
  • The contract requires that the PM notifies a compensation event.
  • The contract requires the PM instructs the Contractor to issue a quotation.
    Each of these are separate pieces of correspondence and should be issued independently of each other. Only then would the time start to run for the two (or three) weeks for the Contractor to submit his quotation.

What you issued was not a valid instruction to provide a quotation as it was not issued independently from the other two points mentioned above. Therefore, contrary to what @stevebrownassociates said, the contractor is NOT in breach of clause 27.3.

I note that your original query was approx. 4 months ago, so the issue may well be resolved now.

4

Hi Neil, it has been a while since this post but I think it is still relevant. I was clear in my response that notifications must be sent separately and that there may be a case to answer here in that the CE was not notified separately however, the contract does not require instructions to be communicated separately as you state in your post. It is wrong to say all three communications should be issued independently, nothing prevents the two instructions from being given in one communication.

It’s not clear from Kieran’s post if the Contractor is ignoring the 14.3 instruction or not but he seems to be referring only to the instruction to submit quotations, if that’s the case why comply with one and not the other?

Clause 61.1 states that the PM instructs the Contractor to submit a quotation unless one has already been submitted, this statement suggests that an instruction may have already been given to submit a quotation prior to the PM’s notification of the CE. It certainly doesn’t expressly prevent that from being the case.

On this basis I cannot see any successful way to argue that the proper notification of the event by the PM is a condition precedent to either, instructing a quotation or indeed obeying such an instruction.

I have made it clear that the PM is in breach by not complying with clause 13.7 and therefore also clause 10.1, nor do I condone ignoring clause 13.7 but, I believe the Contractor is also in breach of clause 10.1 and playing a very dangerous game. It seems clear that the PM has attempted to act in the spirit of mutual trust by communicating what is supposed to be communicated, albeit not in accordance with clause 13.7, but can the same be said for the Contractor’s behaviour?

It is clear to me that the PM has instructed a change to the WI, notified the CE and instructed a quotation, my advice to any Contractor’s in similar circumstances is, do not play games on notices under clause 13.7, I would not feel as confident as you Neil in arguing the Contractor’s case.

As a footnote, I also suggest that everyone looks at clauses 61.4 and 61.2 of the NEC4 ECC which now requires the PM to, include an instruction to submit quotations in the notification of the event, a slight relaxation of the 13.7 rule. As Kieran alluded to, 13.7 is a communication protocol to stimulate good management it doesn’t expressly state that failure to notify separately nullifies the notification. Clause 27.3 on the other hand is clear that the Contractor obeys an instruction which is in accordance with the contract and given by the PM. Kieran’s instruction was in writing and given in accordance with clause 61.1 of the contract, therefore I believe it should be obeyed. Happy to debate further.

1 Like