Hi
Looking for a bit of clarity on previous answers.
We’re in the situation where a Physical Condition CE was notified for a river level overtopping some temporary works. Due to some exceptional river levels caused in part by the clients actions upstream releasing water from a temporary dam without warning.
Originally the CE was accepted, quotation submitted and a PM assessment made of the quote.
Concluding the final implementation.
Subsequently the PM has changed a couple of times and the new PM believes that the event is not a CE
They have issued a new CE under 60.1(8) for correcting the previous PM’s decision.
NEC3 ECC: Can Project Manager go back on an agreed compensation event?
This answer states that an “implemented” CE cannot be revised. Which makes sense.
NEC ECC: Acceptance of CE quotation and subsequent realisation it was not a CE!
Makes it clear the PM has the option to correct the original CE if they believe it is a contractors risk and issue out the new CE under 60.1(8)
NEC3, ECC Clause 65.2 - Assessment of Compensation Event is not revised
Reading the assessment of the new CE (63.3)(NEC 4) wouldn’t reduce the prices because it doesn’t fit the metric of (63.4) ?
So it seems like the original CE is correctly implemented and should form part of the assessment.
The new CE can correct the implemented event.
But it wouldn’t reduce the prices, is this correct ?
Thanks
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If the approach adopted by your replacement PM was valid, it would entirely derail the compensation event mechanism by giving the PM the ability to open up implemented CEs.
Yes the PM can change its decision that the physical condition CE should not have been accepted. Yes this would trigger a new CE under clause 60.1(8).
However, under clause 63.3 and 63.4, the Prices would not be reduced as a result, nor would the Completion Date be brought forward if any time was awarded as part of the original physical conditions CE. So the net result would be a CE that doesn’t achieve anything.
The 60.1(8) CE is only designed to work in the other direction e.g. where the PM decides that a CE that it rejected should have been accepted.
If the replacement PM is correct that the original physical conditions CE should not have been accepted, then the only way to correct this error is either by:
(1) the Client referring a dispute to adjudication, and having the Adjudicator revise the original action of the PM i.e. an Adjudicator’s decision to say that the PM should not have accepted the physical conditions CE in the first place - see clause W2.3(4), which I assume applies here if you are in the UK; or
(2) the Contractor and the Client agreeing to set aside the original PM’s decision via clause 12.3.
In addition to the hard contractual remedies above - this is a scenario that calls for co-operation. I would notify an early warning, and get everyone around the table to discuss this. No one wants to end up in adjudication.
I hope this helps!
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