NEC ECC: Can advanced works carried out under a 'letter of intent' result in a compensation event?

If advanced works are carried out by the Contractor under a ‘letter of intent’ such as the pre-order and off-site fabrication of structural steelwork, does this in any way change the Works Information and become a compensation event once the full contract is entered into?

The issue centers around programme, with the tasks originally sitting on the critical path of the programme identified in the tendered Contract Data Part 2. Now that the main contract has come into effect these works have commenced and therefore have come off the original critical path. This reduces the overall programme duration.

Whilst the time cannot be taken from the Contractor should or, could there be a reduction in the Prices? I suspect not, as I believe the correct approach would have been to ensure that the final programme incorporated within Contract Data Part 2 was updated to reflect and show the effect of works already complete at the Contract Date.

I’d appreciate your thoughts.

Very difficult to say what will happen with something the contract does not ever expect you to do. There is no contractual mechanism to deal with this. Ideally the answer would always be don’t start work on a letter of intent, push for the signed contract so both Parties know where they stand and what the rules are. If there is a letter of intent make sure both Parties are very clear what it means and how this affects the contract. In my experience these are not done very well or thoroughly and it leads to all sorts of problems like the one you describe.

With the question you ask, I assume the actual contract will signed be later so not sure there will in most cases be an improvement on the programme. I assume the letter of intent will allow the early critical path items to commence without the signed contract just to maintain original programme.

For both Parties the message will be to try to avoid these, and put the effort you will have to do to agree letter of intent wording to getting the contract itself done and signed.