NEC ECC: Costs associated with changing the Employers risks within instructed works

Prior to contract, the envisaged design used an ‘open cut’ technique to form a structure. A redesign has been incorporated after contract award which now uses a pipejack, the approach for which has been instructed by the PM and agreed NCE at £0 value. The forecasted cost (and future defined cost) is deemed to be mutually beneficial on a NEC 3 Option C Target Cost contract being used.

A dispute has arisen over a handful of obstruction that are identified in the GBR, and WI, at either end of the proposed length of the structure.

The Contractor, informed via the GBR and WI, will be conducting trail holes in the areas of the identified obstructions to remove them before pipejacking. By exception the other areas are assumed to be the PM/ Employers risk, via NCE, but have indicated they do not wish to instruct the remaining area of the structure for early site investigation.

Can you advise on the basis:

  1. That the GBR is not methodology based/ dependant to be valid for an NCE.
  2. The PM/ Employer deems the Contractor is liable for the additional costs to remove an ‘unforeseen’ obstruction due to the changed methodology or having increased the Employers risks despite the approach being instructed for the mutual benefit for the project

Can you clarify what ‘GBR’ is ?

My apologies Jon, I refer to the Geotechnical Baseline Report (GBR). In our contract the ‘physical condition’ compensation event is conditional on the issue being outside the GBR.

The GBR (Geotechnical Baseline Report) needs to be determined as to what status it has under the contract. Usually it is included as Site Information but where it is included as Works Information then that may be to the disadvantage of the Employer as any changes would effectively be a change to the Works Information.

Notwithstanding the above, however, the GBR usually provides a mix of factual, empirical and interpretive information. A GBR may state an assumed methodology but if it is Site Information then the responsibility to Provide the Works remains with the Contractor who may or may not adopt any recommendations.

Any physical condition CE’s would be assessed under clause 60.1 (12) taking account of the further tests under 60.2, based on an assessment at the Contract Date, although any changed methodology may alter the actual affect, it wouldn’t change what would or would not have been considered to be encountered.

My reply fits with Andrew’s below. So put simply the PM/Employer is wrong : any ‘unforeseen’ obstacles are assess against the GBR for whether they are a compensation event under 60.1 (12). If the PM/Employer want the risk to be included in the target prices, then that should be stated explicitly as an assumption for which you would then price, leading to an upward adjustment to the Prices, not a zero value CE.

Consequently, I agree with both your points.