On an NEC3 Option A contract - if an ‘event’/ or a number of ‘events’ happen a long time ago (in project terms), but were never quoted, what view should you take in terms of impact - forecast or actual (prospective or retrospective)?
My gut reaction is you should use actual data, (both Time and Cost), espcially when refering to Clause 63.1 - “Actual Data for work already done”.
Is this the best approach?
Firstly I ask if this event was notified at the time that it was a compensation event, otherwise the Contractor would be time-barred (unless it is one the Project Manager should have notified).
Assuming it passes the first test - then 63.1 in full says you assess the CE using:
- actual defined cost of the work already done,
- forecast defined cost of the work not yet done, plus
- the resulting fee.
Importantly it then goes on to say that the boundary between actual/forecast is either when the PM gave the instruction or for other events when the compensation event was notified. This means that a vast majority of CE’s should be based upon forecast cost (back at the point it was ascertained it was one) rather than actual.
I do get here it would seem logical you use actual cost, but that is not what the contract says. That is for good reason as well - as if I feel the Contractor’s actual cost was more than it should have been, then I can still base it upon a forecast as to what I think it should have been.