Our client recently instructed us to carry out additional works to the contract and subsequently submit a quotation.
The additional works didn’t affect our programme and some of the labour and equipment resources allocated to carry out the additional works were already mobilised to site to carry out the contract works.
On that basis, our client is insisting that if the programme wasn’t affected by the instruction to carry out the additions then we are only entitled to the cost for additional resources mobilised to site to carry out said additional works.
What is our entitlement?
Under clause 63.3 (NEC3 ECC) or clause 63.5 (NEC4 ECC) if, due to the compensation event, there is no effect on planned Completion compared with that in the Accepted Programme, then there is no change to the contractual Completion Date. I think you are in agreement on this.
Under clause 63.1 (both NEC3 & 4 ECC), you are entitled to the change in Defined Costs and resulting Fee due the compensation event. So are you entitled to the additional mobilisation costs of the resources which were not previously ‘mobilised’.
I put ‘mobilised’ in inverted commas because to me that means the costs of getting them into the Working Areas. If that is the same as your meaning, then for both the existing and newly mobilised resource, you would also be entitled to the extra Defined Costs of doing the additional works e.g. existing resource will now be on Site one week longer so that it is an extra cost along with the additional resource. Further, there might well be an additional cost in de-mobilising the additional resource
Thanks for your response Jon.
So would we only be entitled to the cost of ‘mobilising’ existing and new resources to the working area(s) and not for carrying out the works if the works were completed within the same period as the contract works e.g. say a machine and driver and banksman were temporarily stood due to an issue of our own who were then allocated to carry out the instructed works which took 10 hours, 1 hour mobilisation and 9 hours excavating and back filling?
It depends on when the instruction to do the work was given as that is the point at which a forecast is made for the quotation and when the ‘issue of your own making’ became apparent. This is because the quotation should be based on a forecast of what was known at the time. So if the issue of your own making was not known about at this time, you would have had to being in extra resource &/or used existing resource for something other than the original works i.e. extra cost. If it it was known and you slotted in the extra cost when they resources would otherwise be doing nothin but costing you money, there would be no additional forecast Defined Cost and hence change to the Prices.
So for the avoidance of doubt, had we forecast and subsequently quoted that we envisaged either having to bring in new resources or use the ones on site, then we’d have a stronger case, but if we retrospectively issued a quotation which included existing resources being ‘made of use’ or so to speak, then there’s not entitlement to a change in the prices?
Have a look at clause 63.1 and the last paragraph. This gives the timing which divides what is forecast from what is based on records. Strictly by the contract, even if the work has been done and both Parties know it has cost nothing, you and the PM should take themselves back in time to his dividing date and asessthe compensation event as a forecast if they did not know what actually happened. Who’d have thought you could time travel under NEC !
Thank you Jon, that makes sense.