Mitigation Within Clause 62 Impact Programmes

NEC3 and NEC4 Contracts
1

NEC4 ECS – Option A

Project – New spine road within a greenfield site

Hello,

I was wondering if you are able to provide some further information with regards to mitigation within Cl62 impact programmes, in the following two examples:

  • Additionally instructed works that are offline.
  • Works by others are not complete by the date shown in the accepted Cl32 programme.

Additionally instructed works that are offline.

We have received an instruction (and CE) to carry out works to raise an existing manhole to a new level to tie in with the construction of the new road we are building. These works are offline and have little effect on works around the area of where the road ties in. The subcontractor has produced a Cl62 programme inserting these works within the accepted Cl32 (maintaining exactly the same logic as was previously shown in the Cl32 albeit these works are now included) and showing no mitigation of how other works can still proceed unaffecting this and mitigating the overall impact to planned completion. Is this correct or should they be showing mitigation to calculate the realistic impacts of the event rather than carrying the exact same logic as the accepted Cl32?

Works by others are not complete by the date shown in the accepted Cl32 programme.

Others (installation of site utilities) under the contract are not finished by the date shown. The logic in the accepted programme shows a finish start for the commencement of follow on works from completion of the others works. Others have not 100% completed their works but the works that have been completed allow the subcontractor to carry out works. Should the Cl62 programme have mitigation showing the works the subcontractor is unable to do? Or should the Cl 62 programme maintain the exact same logic as the accepted CL32 programme showing no mitigation?

Other points of consideration:

  • NEC4 guidance notes – Clause 63.5
    • “In assessing the effect, risk allowances and mitigation measures should be included on the basis that the Contractor reacts competently and promptly to the event. The intention is that the logic in the Accepted Programme is used as the basis for determining the effect of the compensation event upon planned Completion subject only to changes required as a direct result of the compensation event assessment. ”
      • I think that risk allowances and mitigation measures apply to the whole of the Cl 62 programme produced to assess the impact. The Subcontractors opinion is this is just in relation to the initial prompt reaction to the event.
  • NEC4 ECC practice note – October 2017 - Assessing delays due to compensation events
    • “It may be that the assessment of delay using the Accepted Programme identifies an obvious error which does not show a genuine forecast effect of the CE on planned completions. In this situation the Project Manager and Contractor should resolve the problem in the logic of the Accepted Programme. To recap, the objective is to assess the effect due to the CE and not due to other factors”
  • Obligation to mitigate under law.
    • I know that under law you have an obligation to minimise loss and to avoid taking unreasonable steps that increase its loss.
      • I am not sure if this is applicable in any way.
2

Morning @Deb_Knibbs, do you know if anyone is reviewing this?

Thank you,
Liam

3

@Neil_Earnshaw @Barry_Trebes @stevencevans any thoughts on this for Liam?

4

The simply answer to your question is that the revised programme must show the entire impact of the compensation event on the programme. You almost need to seperate the programme from the NEC contract. The programme is a record of the facts of what has gone on before the programme is issued and the forecast of what is likely to go on after the programme is issued taking into account anything known at the time and any significant risks that are likely to occur.

In your example, if the works are offline and can be carried out independently of the main works, then they may not have an impact upon the completion of the main works; however, the subcontractor could claim that resources redeployed on the additional work were taken away from the main works and therefore caused a delay to the main works.

In terms of forecasting the effect, you are correct that common law requires the subcontractor (in this case) to mitigate the impact of the additional work; however, that probably is not required as the contract contains a similar provisional clause 63.5 (which you highlighted in your question).

Accordingly, the re-issued programme should be one that reasonably forecasts the delay within these constraints. Remember, clause 62.1 allows the parties to discuss different methods of pricing and undertaking the compensation event works.

Ultimately, you can reject a compensation event quotation and assess it yourself and/or reject a programme submitted for acceptance.

I think that covers everything, if you have any other questions then please comment and I’ll endeavour to respond

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5

Thank you Steven!

The only question question I have with regards to clause 63.5 is how far would you expect this to apply? For example if a site was to become inaccessible whilst additional works were on going but by installing a new haul road this would overcome this problem, would you consider this acceptable mitigation? I understand mitigation to be works that can be done to reduce the impact of the event without significantly increasing a parties risk, unless both parties were happy to agree to a course of action.

I know that in the example above under clause 62.1 we could jointly discuss the method to install a new haul road and then the quotation would be based upon this.

Thank you for your help.

6

You need to differentiate between mitigation (which the subcontractor would be obliged to do) and methodology. Mitigation is generally defined as taking all reasonable steps to reduce a risk (or similar) without spending any money (or without spending significant amounts of money). On that basis, expecting the subcontractor to install a haul road of its own volition to avoid an impact on the main works is not within the realms of ‘mitigation’.

The scenario you described would fall within clause 62.1 insofar as you would discuss with the subcontractor different methods of dealing with the works. Once you had agreed a method (installing a haul road for example) then the subcontractor would proceed on that basis (and under your instruction) and the quotation for the compensation event would include the costs of that road.

1 Like