NEC ECC: Compensation for owned plant not used due to delay in access date

NEC3 and NEC4 Contracts Compensation Events
1

On an option A contract, the Employer does not allow access to site as planned on the accepted programme, through the CE procedure a quotation is provided, however the costs for the specialist equipment reserved for the original planned date are not agreed.

This equipment is owned by the Contractor and relies on minimum utilisation per annum in order to cover the costs of designing, fabricating and maintaining this equipment in the 1st instance.

The access date was subject to further delays meaning the ability to mitigate cost by hiring the equipment elsewhere was also denied, the extent of these delays by instalments essentially denies any utilisation of the equipment.

The quotation is not accepted on the basis they are considered consequential losses and not related to providing the works.and since the equipment isn’t owned a 3rd party there hasn’t been paid a reservation fee or a cancellation cost which no doubt would be paid, however as its owned by the Contractor it cant be substantiated even though it has evidently caused direct loss!

Any thoughts?

2

I can see the injustice from your - the Contractor’s perspective - of this.

However, from a strictly contractual perspective, you are paid in accordance with Equipment 27 of the Shorter Schedule of Cost Components, namely “at competitively tendered or open market rates”.

Agreeing what this ‘principle’ means in practice might be tricky for specialised Equipment, but that is the contract you signed up to.