NEC ECC: Disallowed Costs - Defect

I have a contract which, at present has a few defects. Some, not all I feel, are as a result of the Contractor method of work.

The Contract is Option C, I am looking at cl11.2(25) which states that a disallowed cost could be for “correcting a Defect caused by the Contractor not complying with a constraint on how he is to Provide the Works stated in the Works Information”.

One of the Defects is, in my opinion, clear cut. Despite being identified in the WI and recieving an EW and PMI they have failed to mitigate an issue which could have been easily avoided (mitigation measure was agreed in EW months in advance of incident).

However, another is as a result of the Contractor not adhering to their own method statement. The specific method statement wasn’t required in the WI, nevertheless I feel that as they didn’t follow their own proposal and ended up damaging units it should be disallowed. Guidance notes on cl11.2(25) states …“by the Contractor not complying with a constraint on how he is to do the works, for example a prescribed method of working or a constraint on timing of work”. Would not following their own method statement fall in this criteria?

Cost of correcting Defects is often a ‘bone of contention’ on projects under the ECC contracts. You rightly state that the cost is Disallowed where ‘not complying with … the Works Information’. However, I don’t believe that the Contractor’s method statement is applicable to this clause as it does not form part of the Works Information.

There is often an issue of ‘not being fair’ when dealing with such matters, although the clauses needs to be administered correctly and to ‘act as stated’. The ethos of the contract is to incentivise the Contractor to complete the works with as few Defects as possible, which should benefit the Employer and also because Defects corrected after Completion are a Disallowed Cost, so benefits the Contractor as well.

As Andrew says, Defects are often a bone of contention, particularly on target contracts. Clients often choose such contracts because they want to benefit from the Contractor’s efficiencies - they need to remember that they will also incur the costs arising from the Contractor’s inefficiencies.

As regards not following a method statement, consider whether you would have been prepared to pay the Contractor more than it had cost him, if he’d made a saving by not following a method statement on another item of work, and it hadn’t resulted in a Defect?