NEC ECC: Assessing Compensation Event: additions and omissions

NEC3 and NEC4 Contracts Compensation Events
1

ECC Main Option A.

The Employer has requested the omission of circa 40% scope on a live project that is 20% complete at this time. In addition, the Employer identified additional works via requests for quotation, which may or may not be awarded to the Contractor. However, should the Contractor be awarded the additional works, it would basically return the 40% worth of value lost above, but via different similar type of works.

Is the shorter schedule used to assess the adds and omissions or would the activity schedule be used in the first instance and the shorter schedule for that which the activity schedule does not cover?

The shorter schedule under this Contract consists of no staff or labour rates, but does reference CECA for list of Equipment. The activity schedule includes prelims breakdown including weekly staff rates, but no labour rates. The rates used to price the original works are 18 months old.

In the event the activity schedule is used to assess adding and omitting the same type of work, the Contractor loses as actual costs in this instance result in a loss of 18%. Should the shorter schedule be used, the Contractor loses more than was originally priced on omitted works, but gains on additional works.

2

The contract, and more specifically clause 63.1, is quite clear :
The change in the Prices due tot he effect of the co pension event = change in Defined Cost + Fee.

Defined Cost + Fee (under NEC3, options A&B) = Shorter Schedule of Cost Components + Fee.

Therefore, you use the Schedule of Cost Components to assess the change in costs (although by agreement, you can use rates and lump sums as a basis).