NEC 3 Opt A Physical Conditions Existing Plant

Contractors perspective, currently on a D&B option A job to build a solar farm.
Works information is a performance specification which both indicates existing ducting is to be used as part of the works, however it also includes words to the effect of the contractor is to make an assessment of the suitability of the ducting for re-use and make allowances for its repair where required.

The site information at tender indicates the ducting is reusable.

Works were tendered on the basis the assessment of the ducting’s suitability would be made post-award. Assuming the Employer would be taking the risk of the physical condition of the existing plant, however this was not clarified.

A CNCE was raised and accepted once an assessment was made and we were advised by the specialist contractor the ducting was wholly unsuitable for reuse. A quote for replacement ducting was submitted.

The PM has made their own assessment of the quote and valued it at nil, stating that the condition of the ducting is a contractor’s risk.

It’s our view that the physical condition of the plant is an employer’s risk and that if the ducting was wholly unsuitable the WI would have not indicated it could be re-used. And instead would have made provision that replacement in its entirety is required as part of the works.

Struggling with this one a bit, is our position reasonable?

John from what you describe if the event is a CE then it could only be a physical condition, 60.1(12) unless the Employer’s WI needs to be changed as a result of the condition of the existing ducting. Clearly the Employer’s WI foresaw the problem but obviously was not expecting that it would be the whole of the ductwork that needed replacing. Was there an early warning and risk reduction meeting?
There’s a couple of things wrong with what the PM has done; they should not have accepted the event in principle if they thought it was the Contractor’s risk under the contract. Clause 61.4 requires the PM to decide at the time of receiving the Contractor’s notification whether the event is a compensation event or not and whether the Prices and/or Completion Date are going to be changed or not. Having instructed a quotation clause 62.3 dictates the PM’s reply to the quotation, in your case the PM decided to make an assessment therefore they should have assessed the effect upon Defined Cost plus Fee and any change to the Completion Date, all as per clause 63; having accepted the principle under 61.4 how could the effect be zero? So for a start the PM would appear to have some explaining to do as to why they haven’t acted as stated in the contract.
With regards to their decision about risk, I think you sound like you know about clause 60.2 and the judgement that the Contractor is assumed to have made about the physical conditions of the Site, and it sounds as if the test of clause 60.2 will determine that it was unreasonable to have assumed that all the ducting would have to be replaced. Finally, what allowance did you make? Clearly there was likely to be some replacement, 10%?, 20%?, what did the Site Information lead you to assume? Only the difference between what it would have been reasonable to assume and what was actually found will be taken into account in the CE assessment. Hope that helps?

Thanks Steve,

Does help, for clarity, site information is a schedule of as-built drawings that show the ducting as ‘existing ducts to be reused’. Completed in 2019, so can assume its relativly modern and should be in pretty good condition. There are areas identified on the plans that need to be upgraded but these constitue circa 15% of the gross measure.