NEC ECC: Float generated by Compensation Event

NEC3 and NEC4 Contracts Time
1

Hello BI community,

Standard NEC3 (opt C) where the Contract Data’s SC1 and Completion Date incorporate liquidated damages. Consider a situation where in the Project Manager accepted programme the origin of the Contractors critical path to planned SC1 and planned Completion Date is access to an area subject to completion of works by Others (this access does not feature as AD in Contract Data).

The Project Manager has over time intermittently provided revised (delayed) access dates to relevant area by way of PMI (inclusive of CE under cl14.3). It stands to reason that the associated CE’s are assessed inclusive of associate costs (prelims/resource/subby) and extension to SC1 & Completion Date.

Works by Others is seemingly ahead of programme from the Project Manager assumptions provided at PMI-010, as such the Project Manager instructs PMI-011 with forecast access to these works 4 weeks earlier than provisions of PMI-010.

When the Contractor is assessing the impact of associated CE to PMI-011 the critical path albeit 4 weeks earlier to planned SC1/Completion Date remains originating at the PMI-011 access provision. With consideration to the now earlier access there is still enough time/float for 3rd party mobilisation without delaying the Contractors critical paths. 4 week betterment to planned SC1 and planned Completion Date will be reflected in the Contractors upcoming programme update.

The Contractor assesses this negative CE with associated reduction for the costs. The Project Manager will undoubtedly want to improve SC1 and Completion and the Contractor will undoubtedly want to maintain this float.

I understand the Contractor now own this float by way of terminal float - is this correct?

1 Like
2

Must admit not quite clear on the specifics of the question as you describe it with PMI10/11 etc. However, when assessing this the rules of the contract are relatively clear.

If planned Completion is ahead of the Completion Date, or planned Sectional Completion is ahead of the Sectional Completion Date on an Accepted Programme then this is terminal float. This terminal float is owned by the Contractor(for ECC), and is retained when assessing compensation events. If there is a three week terminal float period on an Accepted Programme, and a two week compensation event moves planned Completion by two weeks – Completion Date should move by two weeks once it is implemented (and same rules for a Sectional Completion).

3

As Glenn has said, terminal float is owned by the Contractor. Clause 62.2 deals with alterations to the Accepted Programme and 63.3 deals with delay to the Completion Date. As there is no delay to the Completion Date, then alterations to the programme under 62.2 (earlier planned Completion) would effectively increase terminal float.

4

Hi both,

I was attempting to offer some context and perhaps it ended up being a bit long winded.

The basic premise is that PMI-011 is granting earlier access to the critical path works which in turn offers earlier planned Sectional Completion and planned Completion Date.
This float is not resultant from the Contractor beating its programme but of the Project Managers PMI.
The PM expectation would be that they have created this float by way of negative CE.
Any further thoughts?

5

In that regard it makes no difference who creates the terminal float - Contractor owns it! Employer may feel hard done by here but that is what the contract says.