NEC ECC: Does the Project Manager's Compensation Event description have to match the Contractors notification

A Contractor is claiming that we have acted incorrectly by our description of an event not being exactly the same as their notification. We believe ours describes the event accurately and have provided this with our instruction to quote.


I have to confess I am slightly confused by this question. One party notifies (either Contractor or Project Manager) and then the Contractor provides the quotation. I am not sure where you(Contractor) are now describing this event other than in the quotation? If the Project Manager does not believe the quotation has been assessed correctly then they can make their own assessment (in line with what they believe the correct description of the event is).

My overriding advise here is talk! If you are having regular compensation event meetings, you should be updating each other on any event that is moving through the notification/quotation/assessment/implementation phases and hence should be no surprises/mis-interpretation.

We are the PM and late in the day post PMA the Contractor is claiming we are contractually incorrect in that our description when agreeing as a Compensation Event did not exactly match theirs. Our answer is, why didn’t you say you disagreed at the time and it could have been discussed, but that it goes against both the letter of the Contract and the ethos to wait until so late in the day.

Their only right at this stage is to go to adjudication if they believe that you(Project Manager) have not assessed it correctly (i.e. what you described and assessed is not in line with the actual event).

Which is where we are at, for future reference, is it your view that it is not necessary for the PM’s compensation event description to match the Contractor’s notification, what matters is that the PM believes it describes the event and should the Contractor disagree, discuss at the time!

The description of a Compensation Event does not matter that much. What matters is what assumptions you consider for a CE. This assumption shall be from the Project Manager and if there is any deviation from such assumptions in the future, the Project Manager should revise the assessment of the CE. Such is in accordance with Sub-Clause 61.6 of the Core Clauses.

It looks very much like the Contractor is reviewing the contract communications with a view to seeing what issues can be notified to increase the total of the Prices. It may be that they have appointed somebody new (either internally or an external consultant) to undertake this process, which is why some of the ‘old issues’ are being re-visited which you believed were contractually ‘closed out’.

Glenn’s suggestion of talking is always appropriate and hopefully allows you to understand the reasons why the matter has been raised so late in the day. Talking face to face is always useful to try and understand what is going on. Informal ‘off the record’ discussions on a project are often as important as formal communications in resolving matters.

Personally I wouldn’t get too concerned about the situation and simply state that the matter has been formally dealt with, suggesting that a formal communication is notified if the Contractor believes that there are any issues that require such a notification.

Turning the situation around, if you were under a Main Option C or D, how might the Contractor respond if you said that the thought of re-visiting issues has prompted the Employer to consider an audit of Defined Cost.