Compensation Events - Extension of Time

I am using an NEC3 Option C Contract which has numerous Compensation Events requiring significant amount of detail and input.

In some cases, Extension of Time requests on these CE’s can be requested months after the original quotation required by date.

My understanding is that even after an Extension of Time request, the way in which the Compensation Event is assessed does not change, it will still be assessed when the Project Manager Instructed and that will be the dividing point between actual and forecast cost.

Am i correct in saying that in theory, if an EOT was put in for 1 year and the Project Manager Accepts, is the event still assessed from when the Project Manager Instructed.

If so, if i had received a quotation from a Subcontractor for 100k due to the Compensation Event, but waited a year and then knew it was 10k, would i be entitled to submit the CEQ with the 100k cost under the contract.

Obviously there is an Ethical question here, but i’m curious what the Contract allows in this instance.

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@QS007 the Contractor has no right to request an extension of time in the way you describe. All assessments for compensation events must consider both the cost and the time as there are no separate extension of time provisions of the kind you find in JCT contracts for example.

Technically, if a compensation events has been assessed without time and implemented then there is no extension of time relevant to that compensation event and the Completion Date is not changed.

Assessments of time for a compensation event use the Accepted Programme which is by definition always the latest one accepted by the Project Manager, presumably at the time the compensation event quotation is being prepared. There is an issue with the drafting in NEC3 that was resolved in NEC4 so there is a question mark over this point.

Cost is treated differently from time, as you rightly say the boundary between actual and forecast is when the instruction etc was given however for other compensation events this boundary is when then compensation event is notified. So boundary for a clause 60.1(1) compensation event is the date of the instruction and the boundary for a clause 60.1(12) compensation event is the date the different physical conditions were notified as a compensation event.

Once a compensation event is implemented it is not revised if a forecast is wrong, so the cost and time are fixed at that point. In Option C however the Employer does not pay the Contractor based on the compensation event assessment, payment is based on Defined Cost plus Fee which may be different from what was in the compensation event assessment. Any difference will therefore be taken account of in the Contractor’s share.

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