NEC ECC: Consequential Delay under NEC3

Within an NEC3 ECC construction contract the contract states one of Employers Risks as being “ any asbestos material affecting the works”. The Employer directly engages a specialist asbestos subcontractor to carry out his survey and asbestos removal as required. Two boilers are to be repaired.

Once the first boiler work is complete and has run for a set period of time without problem, the second boiler work can be commenced – the first task being the removal of asbestos by the Employers directly employed asbestos subcontractor prior to the Contractor’s boiler works.

Believing the first boiler would work correctly, the asbestos removal date for the second boiler was planned and agreed with the asbestos subcontractor.
A fault then arose on the first boiler which took 4 weeks to clear. Once the fault was cleared the asbestos removal was reprogrammed for 4 weeks later than originally planned.

The Employer however, was informed by his asbestos subcontractor that, being busy, he could not carry out the asbestos removal for a further 8 weeks.
The works have slipped by 12 weeks and prolongation costs are being .debated.
The Contractor is accepting 4 weeks delay are his liability due to the fault on the first boiler.

  1. Who is liable for the additional 8 weeks delay by the asbestos removal subcontractor assuming no change to X18?
  2. Who is liable for the additional 8 weeks delay by the asbestos removal subcontractor given that X18 has been amended to read "“The Contractor shall not be liable to the Employer for any Indirect Losses”

Can you clarify whether whether the specialist contractor is a Subcontractor to you or direct Contractor to the Employer.

The asbestos removal subcontractor is directly employed by and managed by the Employer.
(There is a case that the delay could have been mitigated if the Contractor had been permitted to seek an alternative asbestos remover, but this did not happen, and the Contractor accepted the Employers’ statement that there were no other companies who could carry out the work any quicker)

I think you’re looking in the wrong place for your answer. The delay hasn’t been caused by the presence of “asbestos material affecting the works”, it has been caused by firstly the Contractor’s Defect, and secondly by the asbestos subcontractor. Also, my reading of how X18 has been amended is that it’s saying you won’t be liable for any of the Employer’s indirect losses, this has nothing to do with the Contractor’s prolongation costs and means the Contractor could be liable for the Employer’s direct losses depending on whether or not X7 has been used.

What you’re looking for is an extension of time and the recovery of your preliminary costs during the delay period, this is achieved through the compensation event procedures. There are two separate events, the Defect and the late subcontractor. As you say, you are liable for the Defect and as such are not entitled to a compensation event for it. What should have happened is that the revised date for the asbestos subcontractor to clear the second boiler should have been agreed, included in the Contractor’s programme and accepted by the Project Manager. Then when that date wasn’t achieved a further revised date should have gone through the same procedure. Why? Because clause 60.1(5) entitles the Contractor for a compensation event if the "Employer or Others … do not work within the times shown on the Accepted Programme. So if the dates weren’t shown on the Accepted Programme, the Employer or Others cannot be in breach of them. Now look at clause 61.4, the first bullet point states that if an event … is the fault of the Contractor … there is no recovery of cost and time. We’ve established that the first 4 weeks were the Contractor’s fault, however the next 8 weeks were not provided the revised date was shown on an Accepted Programme. I’ve assumed that Key Dates or Sectional Completion Dates weren’t used.