NEC ECC: COVID-19: Cl 19.1

Following the Government’s publication of ‘key workers’, many of our clients within the utilities sector have deemed their projects to satisfy the criteria within this publication, despite it being obvious that the continuation of the works in question are not ‘essential’. This is making them reluctant to issue an instruction to stop the works.

To date we’ve raised several EWNs concerning COVID-19 e.g. supply chain issues, not being able to consistently adhere to the Government’s advice, questioning the criticality of the works etc. and yet, we’ve received not instruction from the PM under 19.1 on how to deal with the FME.

Are the Employer’s and PM’s actions correct under the contract?

It is entirely within a Client’s gift to make this assessment. Whilst you may not think the works are essential, if our gas, electricity, and water supplies fail there will be serious consequences that could damage the economy further. Utilities companies are regulated to ensure they invest in the network to protect continuity of supply, some of this investment is emergency / urgent and some of it is medium / long term. To entirely shut down for say 3 to 6 months could have long term effects on security of supply, particular when consumption increases over the winter months later this year.

Clause 19 gives the PM the authority to instruct the Contractor to deal with the event the best interests of the Client. Failure to do so doesn’t prevent the Contractor from being entitled to recover the cost and time as a compensation event under clause 60.1(19), it just means the Client lost the opportunity to control / influence events. You should ensure you notify compensation events quickly and as they occur, do not wait to put them into a global compensation event later once the effects are fully known as you would run the risk of being time-barred under clause 61.3 (8 weeks from being aware of the event).

Neil, you comment that failure on the PM’s part to instruct under Cl. 19 doesn’t stop the Contractor notifying under 61.3 of a 60.1(19) CE. Given that the threshold for prevention is the same within the CE and Cl.19, is it not unlikely the PM would agree to the CE? If conversely he did agree, would he not be required to instruct under 19.1 at that point. - why would the Client have lost the opportunity to control/influence events? Perhaps you simply mean the opportunity is lost up until the point the 19.1 instruction comes?