Contractor has submitted their first programme showing they will miss Key Dates and Completion.
I understand the remedies under X7 delay damages and 25.3 (recovery of direct costs for missing Key Dates).
Can the PM instruct the Contractor to work additional hours, state under 61.4 this is not a CE as it is due to the fault of the Contractor and therefore they are not to submit a quotation and cannot recover those costs. Or is that not the correct process to follow?
We don’t want this instruction to run the danger of being a change to the Scope and therefore a CE irrespective?
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I believe this is still a CE.
The delay arises from the fault of the Contractor. However, changing the working hours itself is not a direct effect of the Contractor’s fault, but an instruction given by the Project Manager under Clause 14.3. This constitutes a CE under Clause 60.1(1) - change of works information.
Or put it in this way: the Project Manager may keep silent and do nothing for the delay but only deduct the Contractor’s payment according the Clause 25.3 and X7. However in this case, the Project Manager decides to give instruction to deal with the delay, then the Contractor may ask for compensation because of the additional requirement / instruction given by the Project Manager.
Thank you. So how are the working hours changed then if it mitigates the delay that is a Contractor fault? Should the Contractor be raising this through the Compensation Event process and not the PM which will mean it is not a PM instruction?
You need to look at what the Works Information says with regards to working hours to see if the PM’s instruction requires the Contractor to do something different or not. This is a CE which the PM should notify however if the PM has not done it then the Contractor should notify in order to recover additional costs.
Not wanting to overlap with existing comments but the PM has no authority to instruct the Contractor to work additional hours as this would be an instruction to accelerate the works. The PM can change the Works Information to ‘extend’ the working hours where they are specifically stated (which is very likely), which will also probably require a revised s61 approval from the Local Authority.
Notwithstanding the above, the Contractor, however, is under no particular obligation to work any additional hours even if they are not likely to meet any Key Dates or (sectional) Completion Date(s). The contract should provide for what happens if this doesn’t occur.
Thank you again for your comments.
To reiterate:
- The Contractor is at fault for not being able to meet Key Dates and Completion
- We are not looking to ‘punish’ and wait for it to go wrong and then apply delay damages and enforce clause 25.3
- We are looking to work with the Contractor and enable additional hours
- However we don’t want to instruct such if it represents a Compensation Event and as the Client have to pay for it
- This would be a change to the Works Information, but under the CE process as it is due to a fault of the Contractor it appears the PM can request this but not ask for a quotation however comments so far state it is a CE and we would have to pay.
Therefore it seems there is no facility in the contract to instruct a change to help avoid a delay and mitigate a Contractor fault without the client paying for it which makes no sense.
I also understand that the Contractor is not obliged to undertake the additional hours, however if following the Early Warning risk reduction meeting it is agreed that this is the best solution I would have thought that such a PM instruction to work additional hours would be needed…
If the Works Information constrains the Contractor to only working within certain times, then the PM can change this using a PMI to permit evening, night, weekend working. There is a big difference between removing a constraint from the WI and instructing the Contractor to work additional hours as the PM does not have authority to do the latter.
If you remove the constraint the Contractor can choose to work additional hours, but it’s their choice / risk with no liability for the Employer as the reason for removing the constraint was the Contractor’s fault and the Contractor has chosen to work longer hours of their own free will.
You cannot force the Contractor to complete on time, they have to mitigate the effects of delays, but that doesn’t mean that they’ll finish on time. It may not be in their commercial interest to finish on time and may prefer instead to incur delay damages.
That is very useful, thank you once again.