NEC4 Option A Subcontract. The Subcontractor is contracted to form 4 no. large concrete structures from the levels provided by the Contractor. The ITT and contract documents state that the contractor was to reduce levels using an open cut method with good access for the subcontractor to the work locations via stairs for operatives.
However the Contractor changed his construction methodology and used sheet piles instead of the open cut method. This meant that instead of using stairs the subcontractor had to use ladders. And this meant heavy use of the contractor’s crane to move all his plant, equipment and materials. Operatives could no longer use stairs to move any of these items and all operations became significantly slower.
The only aspect of the contract that did not change was the subcontractor’s materials as these quantities did not change. The programme took 24 weeks instead of 12 weeks and twice the amount of labour was required. All hired plant ie formwork and prelims to deliver the works were required for twice as long. The subcontractor has raised a CE based on the change in the Contractor’s Construction Methodology.
As option A is really meant to be used where very little change is expected, what should the subcontractor do? Almost all aspects of the subcontractor’s methodology has changed and the programme has extended from 12 to 24 weeks.
The Subcontractor should notify a Compensation Event - Cl.60.1.(5) - “The Client or Others - do not work within the conditions stated in the Scope”. In this instance it sounds like the main Contractor (“Others”) carried out works using a method not stated in the Scope. The change in methodology has had a clear cost/time impact on the Subcontractor, it would be unfair to expect them to swallow the cost for this. The Subcontractor may have missed the opportunity to notify the CE, sounds like they may be past the “8 week” time bar given in Cl.61.3.
Thanks for your reply. The subcontractor will be finished their works soon having started in August. When should the subcontractor have issues the CE? Also - I was thinking as this is directly rated to a change in the works information - albeit that has not been instructed, I had thought that the time barring element would not apply
They should have notified a CE when they first became aware of the change on site. As this was not instructed as a change to the Scope by the PM then the “time bar” rule applies (Cl.61.3). However, it sounds like the Subcontractor has moved the project forwards, it would seem pretty harsh to apply the time bar in this instance. If I were the Subcontractor I would notify a CE, “if” the PM accepts the notification (at their discretion in this example) then the quote would be for the prolongation costs (12 weeks) and an extension of time (12 weeks).
I recommend the PM accepts the CE notification, and works with the Contractor to determine a fair prolongation cost/time extension. Once agreed the Subcontractor needs to submit a CE quotation, impact programme and revised activity schedule, the PM can then implement the CE.
That’s great, your comments are very helpful. Another thing I should mention is that although the draft contract was sent to the subcontractor, the parties did not actually sign the contract. I don’t suppose this helps the subcontractor though.
Working with an unsigned contract puts ALL parties at significant risk. The Contractors PM needs to call an urgent risk reduction meeting and ask the Subcontractor to sign the contract ASAP. If the Subcontractor defaults then the Contractor would be responsible for completing all the works at the Contractors costs, see Cl.26.1. This needs resolving quickly.
Hopefully the Contractor obtained prior written consent from the Clients PM to Subcontractor the works? If not then the Contractor is at serious risk, this is a Cl90 termination reason, see Cl.91.2 (R13).