I am working under an NEC3 Opt E Contract, and we (Contractor) are currently rectifying Defects in the Defects Period during a series of pre-agreed access dates. The Employer has not provided access to site to allow the Contractor to rectify Defects, and therefore the Contractor has incurred the cost of standing down the supply chain for that shift and associated supervision costs.
My queries are:
- How does the NEC3 deal with Compensation Events during the defects period, if at all?
- Could a CE be raised under 60.1(2) even though we do not have an accepted programme showing the defects works?
- Under an Option E, it is generally only time which concerns the Contractor when dealing with CE’s, so how would we recover the defined cost for the delay caused by the Employer during the defects period under an Option E, as it’s all disallowed cost to the Contractor when rectifying Defects during the Defects period.
The only restriction on notifying CEs is at clause 61.7 which prevents notification after the defects date. The term defects date is in italics in the contract which means it’s an identified term given the meaning stated in the Contract Data. This is expressed as a number of weeks after Completion of the whole of the works, typically 52 or 104 depending on the nature of the works.
Therefore prior to the defects date, the procedure for CE notification is the same before and after Completion.
You could notify a CE under clause 60.1(2) however, as you’ve rightly observed, without an Accepted Programme you run the risk of the PM rejecting it. You may have more success with notifying under clause 60.1(18).
Also, a Defect in the works could be seen to be the Contractor’s fault and therefore the CE could fail the test at clause 61.4. However I wouldn’t agree with this as yes the Defect is the Contractor’s fault, but it isn’t the Contractor’s fault that the Employer didn’t provide access which is the basis of the CE under clause 60.1(2).
Your point re: time being most relevant in Option E is correct, and you’re right to see that the cost of correcting Defects after Completion is a Disallowed Cost. To get round this you could argue that the cost you’ve incurred is not for correcting the Defect as you weren’t given access in order to correct it, and the Defect remains uncorrected! Had access been given you would’ve accepted the Disallowed Cost I’m sure.
It wouldn’t seem to sit with NEC’s generally fair allocation of risk for the Employer to be able to prevent the Contractor from fixing a Defect, have them incur abortive costs, then be able to recover the cost of having others correct the Defect from the Contractor as well.