NEC 3 Option A Prelims (People)

A Contractor has been delayed due to the fault of the Employer/Existing Site Information which has resulted in a period of no work/reduced work. As a result, the Contractor raised a CE which was accepted. The Contractor is showing in its quotation a delay to planned completion as a result of the CE which is fair. Within the quotation the contractor has claimed its normal people costs as though it would be working flat out. E.g. project manager, supervisors full time etc. My argument is that people within the Working Areas should be compensated. For example the security, the site manager but not the other members of the contractors team that are not working within the Working Areas and carrying out work. I am certain the Contractor will argue the delay is no fault of their own and the resource has been allocated to this project and therefore should be paid so they do not suffer a loss. Please could you advise if my approach is correct?

The matter has been accepted as a compensation event, so the associated (cost) assessment is made as the effect of the compensation event on the change to the Prices, assessed in the form of Defined Cost.

Under main option A the definition of Defined Cost refers to the Shorter Schedule of Cost Components. This qualifies any amounts as those ‘incurred in order to Provide the Works’. People 1, further qualifies this particular component by making reference to the Working Areas, for all 3 bullet categories of People.

I am assuming that these People (project managers, supervisors etc) are all employed by the Contractor, so come under the 1st bullet. Note that this states that their ‘normal place of working’ is within the Working Areas. Unlike the other 2 bullet categories it doesn’t suggest that these People are required to be working ‘exclusively’ in the Working Areas for their time to be paid, unlike the (full) SCC and People item 11, which links payment to ‘time worked … (in) the Working Areas’.

So the first question is ‘are they Providing the Works’? Well essentially the matter relates to an act of prevention by the Employer in that they would be Providing the Works but for the occurrence of this matter, which is a compensation event. I would argue that they ARE Providing the Works but in a disrupted / inefficient manner, caused by an event which is a compensation event.

Secondly, do they have to be in the Working Areas for their cost to be treated as Defined Cost? Well under the Shorter SCC, apparently they don’t. As to the assessment and the ‘working flat out’, an assessment is based upon amounts paid so disregards any such productivity issues.

Hope this helps.

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