Under NEC 4, is the Client contractually permitted to delete elements of the original work scope and if so how should it be valued?
Is an instruction to delete work valid, is it a breach of contract and could a Client therefore benefit from the breach, if applicable, if the event was to be valued using the SSCC? Which could potentially exceed the cost of carrying out the work. Also, how would a Contractors loss of OH&P be addressed in relation to any deleted work?
Jason, yes the Client is permitted to omit work from the Scope, clause 14.3 allows the PM to instruct any change to the Scope, it is not a breach of contract.
The PM must notify the change as a CE to the Contractor at the same time as the instruction is given and instruct the Contractor to submit a quotation for it - see clauses 61.1 & 61.2.
The Prices are changed in line with the assessment described under clause 63.1; for work done up to the dividing date it is based on actual Defined Cost and for work not done by the dividing date it is based on a forecast, plus the resulting Fee. The dividing date is described in 63.1, for an instruction from the PM it is the date of the instruction.
You refer to the SSCC so it must be either an Option A or B.
If no work has been done then the forecast of the Defined Cost is for doing the work had it gone ahead, this is assessed in accordance with clause 52.1, i.e. rates and percentages in the Contract Data part two and at open market or competitively tendered prices for all items that can be recovered under the SSCC.
Having calculated the amount of Defined Cost you must then add the Fee by multiplying the total Defined Cost by the fee percentage.
The Prices are changed by the total of the assessed amount, this could be lower or greater than the Prices contained in the pricing document. If the total is greater than the Prices it indicates that the Contractor must have under-estimated the original Prices for doing the work, if they are lower than the Prices then the surplus is retained within the total of the Prices and paid to the Contractor.
There is no provision for the recovery of loss of profit other than as described here.
Hope that helps, happy to discuss.