NEC ECC: Contractor has not acted on a PM's instruction does this effect the value of the CE?

NEC3 and NEC4 Contracts Compensation Events
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The PM issued an instruction to the Contractor in accordance with 14.3 back in December 2016. The quotation negotiations took several months to agree and during this time the Contractors design changed in a way that virtually negated the CE in its entirety.

During the protracted negotiations the Contractor did not proceed with the instruction in accordance with 27.3 and 61.1 and has only just started working on the reduced scope covered by the CE.

The Contractor is arguing that the CE should be valued in accordance with 63.1 (December 2016 notification date / greater forecast scope of works) which normally I’d agree with however as the Contractor did not act in accordance with 27.3 and 61.1 is there any recourse available?

I’ve suggested that a revised quotation based on the now agreed scope would be more appropriate and reflective of the intention of CE’s not to financially benefit or penalise the Contractor but they disagree with this approach.

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I am assuming the instruction was a change to the Works Information and that a compensation event was notified along with a corresponding instruction to submit a quotation.

The scope of works should be treated as a ‘configuration control exercise’ with contractual notifications and instructions providing a clear auditable trail linking to all the changes from the tendered baseline. The Contractor is obliged to administer the contract in accordance with these instructions, the last of which would be the December 2016 one, so they are right to suggest that the quotation should be assessed on this instruction. This being the case, may I suggest issuing a further instruction / notification to reflect the actual agreed scope of works…