Defined Cost with no alterations to the Programme

NEC3 and NEC4 Contracts
1

We have a situation under the NEC ECC3 option C contract whereby we are encountering a large number of physical conditions that are deemed a CE under 60.1 (12) after considering 60.2.

In a large quantity of these events the time taken is 2 - 4 hours which will not have an impact on the programme as it is programmed in days rather than hours (this is Accepted by the PM). The PM is interpreting clause 62.2 as a reason to imply that if there is no change to the programme then there cannot be an increase to Defined Cost.

As I understand 62.2, we only need to include a programme when alterations to the Accepted Programme has occurred, which on many occasions this is not the case. Also, I do not see anything in 63.1 that states the actual or forecasted impact of Defined Cost is to be measured on changes to the Accepted Programme. Furthermore, my understanding of clause 31.1 and in particular the second to last bullet point is that we only have to provide a statement of Equipment and other resources that are to be used for each operation and not necessarily the quantity of hours for each individual resource.

Is the PM correct in his assertion that we must show an alteration to the Accepted Programme to justify an increase in Defined Cost for People and other resources?

2

As you have said, most programmes submitted for acceptance are based on days, either calendar or ‘working’ days. This creates a bit of a conflict in certain situations, as you have identified, whereby some programme operations are not measured in days. This may occur, for instance, with tunneling operations which may be based upon a 24 hour shift pattern. Any compensation event which occurs may not cause a whole day’s worth of time to be ‘lost’ so may not alter the remaining work. There could be a Defined Cost implication, for example where bonus payments for the mining gang need to be re-structured to account for the ‘lost time’, or where Equipment is used to deal with a physical condition, etc.

In other situations you could have a weekend possession or blockade on a railway. Numerous compensation events may occur during this time but the works are still completed within the ‘isolation’ period, thereby not altering the remaining works, but impacting the Defined Cost to deal with the effects.

I would suggest documenting the ‘lost time’ of all events, tracing the cumulative effect. At some point the remaining work could be altered and you would need to evidence this.