NEC ECC: Contractor's proposal to change Works Information

If the Contractor proposes a change to the Works Information which is acceptable in principle this would, by definition, be a compensation event.

If the PM is only prepared to accept the proposal if it results in a reduced prices or cost neutral, how is this dealt with in relation to CE notification, quotation etc?

This is answered differently depending if you are under NEC3 or NEC4, as NEC4 manages this much better now and encourages the correct behaviour. Under NEC3, the Contractor could propose a change to the Works Information. If it was their design, it would not be a compensation event (see 60.1(1)) so the Prices would not change. Under option A therefore, they got the full benefit in the change (so what is in it for the Employer) and under option C it would increase gainshare to both Parties. If it was an Employer designed scheme then this proposal WOULD be a compensation event and WOULD reduce the prices by the full amount and the Contractor would lose their fee that they would have made in doing the work – so not much incentivisation to come up with such good ideas.

NEC4 now has a whole clause 16 for Contractor’s proposals. Irrespective of who’s design it is the Contractor can propose and there is a formal process and timescale for the Project Manager to accept. Under option A, if accepted the Prices are reduced by the value engineering percentage agreed in contract data part 1. For option C it would be shared the same way as before as part of the “gainshare/painshare” mechanism. Much better in terms of encouraging the right behaviours and a shared benefit for such good ideas.