If a quotation for a compensation event is accepted and it is subsequently noticed that the fee percentage used was incorrect, how can this be resolved?
Hi. Firstly, the quote should have been more thoroughly checked before it was accepted, once a quotation has been accepted the changes to the Prices and Completion Date have been implemented and clause 65.2 states that it cannot be changed. This clause is designed to freeze both cost and time and give both Parties cost and time certainty.
The only ways in which it could be changed would be if the Employer and the Contractor agreed to change it, this needs to be a mutual agreement and would need to be confirmed in writing and signed under clause 12.3 or, an Adjudicator might change it if it was referred as a dispute but, they might not.
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@stevebrownassociates whilst I agree that that may have been the drafters intent with clause 65.2 the NEC3 wasn’t quite so clear cut, hence the amendment made for NEC4. The only circumstance in NEC3 when a CE cannot be revised is “if a forecast upon which it is based is shown by later recorded information to have been wrong”.
In this case it is the fee percentage that was wrong, not a forecast and as such I think the CE should just be corrected by the PM using the right fee percentage. Also, it could be argued that the fee percentages amount to recorded information that was available before the assessment was made which again creates circumstances in which the PM should revise the assessment.
The NEC4 is much clearer in its meaning and therefore my answer only applies to NEC3.
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Hi Neil, yes I agree the wording under NEC3 is loose and I would say that the tightening of the wording under NEC4 is a clear indication that an implemented CE is not changed even to correct the application of an incorrect fee percentage. Changing it could create uncertainty and a difference of opinion between the parties which in turn could lead to a dispute, this makes me think that it should not be done under NEC3 either. Whilst I appreciate that the suggestion that the PM should just change it, sounds like common sense, it is not expressly supported by the contract and it is then of conjecture as to how it would be resolved but would you agree that unless the Parties agree to the change, it would be better for the PM if they acted as stated in the contract and leave it as the implemented quotation?
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