Forecast costs in a CE - Forecast from when?

NEC3 and NEC4 Contracts Compensation Events
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NEC Option A Contract.

A PMI and CE was raised several months ago and the contractor submitted a quotation which was rejected with notes as to why, a revised quote was submitted which did not address all matters, this was again rejected and a revised quote requested again. A meeting was held to discuss the points raised and principles were generally agreed. The revised (third) quote was then awaited from the Contractor.

Whilst the 3rd quotation was awaited the Contractors intended sub-contractor entered administration and was no longer able to undertake the works. An alternative has been lined up but is more expensive and the Contractors revised quotation is based on the new sub-contractor.

I appreciate that the principal of NEC is to effectively reimburse the Contractor for the costs incurred where the works change, but this would also effectively mean that the client has taken the risk for the sub-contractor insolvency and also as a result of the initial quotations not being acceptable.

The question therefore is when the contractor is basing a quotation on forecast costs should this forecast be based at the date the CE was raised (or the first quote should have been submitted) in which case it would be based on the original (cheaper) sub-contractor or should it be based at the date that the (3rd) quotation was produced?

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Is this contract NEC3 or NEC4?

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It’s an NEC4 contract

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Thanks Robert. I believe under NEC4 the contract sets out a “dividing date”. This should help you determine the date from which forecasts should be used.

Glenn and others have posted responses on similar questions to this before. Heres a link to one such thread:

Hope that helps.

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Alan,

Thanks i’m aware of the dividing date but to my understanding that is the date which determines whether something should be assessed on the basis of forecast costs or not, the work has not yet been undertaken so there’s no argument that forecasts costs should be used. The question is on what basis should those forecast costs be based. Should they be based on the information available at the time the CE was raised and originally quoted, or should they be based on the information available two months later when the CE was re-quoted?

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