NEC ECC: Change in Client design due to unforseen ground conditions (which have been deleted in contract)

On a contract clause 60.1(12) has been deleted so unforeseen ground conditions is a Contractor risk.

A Contractor encounters an unchartered service that means the Clients route of pipework can not be achieved. This is a Client designed scheme. To change the Scope requires a Project Manager instruction as to what the route should now be, This is now a change to the Works Information and hence a compensation event under 60.1. Can the Contractor now claim the full cost of the impact of this change of design, even though this is due to unforeseen ground conditions which is a Contractor risk?

Yes, unless there is a Z clause to amend 60.1(1), the change (in Works Information) is compensation event.

If clause 60.1 (12) has been deleted then the Contractor cannot claim for a ‘physical condition’ compensation event in constructing the works in accordance with the Client’s design.

For example if the design required excavation, then any obstructions encountered, such as brick or rock, or where any ‘soft spots’ required additional excavation support, this would not constitute a compensation event and it would essentially be ‘more difficult’ (time and cost) to construct.

It is the Client’s risk that the works can be constructed as per the design and if the design is required to be changed, then that would be a CE, as you say, under 60.1 (1). The corresponding ‘value’ of any CE is the additional Defined Cost which is specifically due to the CE, with the assessment essentially based upon the total Defined Cost, including the CE, less the total Defined Cost, not including the CE.

If the location of the ‘unchartered service’ is the cause of the CE then take this out of the equation when assessing what the Defined Cost would have been, to determine what time and cost are ‘due to the CE’. Always a difficult assessment to make although if you start with a programme assessment and conclude with no additional time for these programme operations, the corresponding cost assessment should reflect this.

The contract does not operate on the basis of ‘trading off’ one risk against another but on assessing each matter on the basis of who is responsible for doing what. In this instance the Client has responsibility for design although that also means that if there are ‘easier and simpler’ ways to achieve the construction by changing the design then any corresponding CE can also lead to reduced Prices.