Implementation of a CE and Proceeding the works

NEC3 and NEC4 Contracts Compensation Events
1

Does the Contractor has the right to refuse to carry out the works of a PMI before acceptance of a quotation for the PMI?

2

In a word ‘No’. The commercial process leading up to the implementation of a compensation event is a separate process, albeit started by the PMI which I presume is a change to the Works Information / Scope. Within sub-section 63, it is assumed that the Contractor reacts competently and promptly. Consequently, if the Contractor does not, it will incur some Defined Costs fo which it is not entitled to reimbursement for.

2 Likes
3

Thank you for your kindly reply

4

Just to add to @Jon_Broome’s excellent answer.

Clause 27.3 also places an obligation on the Contractor to obey an instruction from the Project Manager or Supervisor provided that the instruction is in accordance with the contract. This means the instruction has to be one of the instructions that the contract states can be given and also that it must be given by the right person.

2 Likes
5

Thank you for the useful advices.

However, the Contractor considers that according to Clause 60.1(1), the Project Manager’s instruction for changing the Works Information is a compensation event. As such, implementing compensation event according to Clause 65.1 shall also mean implementing/execution of the Project Manager’s instruction. As a result, before acceptance of a quotation, the compensation event as well as the Project Manager’s instruction shall not be implemented/executed. Is it true?

6

As stated by @Jon_Broome and @Neil_Earnshaw, an instruction given in accordance with the contract by the PM is to be obeyed by the Contractor, unless it relates to a proposed instruction. This is regardless of whether the matter is considered to be a compensation event.

Where the instruction IS a compensation event, then the associated procedure should be followed, including notification, quotation etc, up to implementation, which usually occurs when the PM either accepts a submitted quotation or notifies the Contractor of their own assessment.

The ‘implementation’ of a compensation event is an administrative function and should not be treated as a ‘hold point’ for the Contractor to Provide the Works, even though payment under certain main options is dependent upon this part of the compensation event procedure.

2 Likes
7

thank you for your valuable advice