Lets create a scenario that has been bothering me for a while on Core clause 35.
The Contractor is ahead of schedule and has completed the project 3 months in advance the client now wants to take over the site and issue a Clause 60.1(15)
The problem/Question i have is there any clause in the NEC3 that will compensate the contractor for early completion?
As there is no cost impact to the contractor there can be no quote for proven cost + fee percentage on 60.1(15) thus no incentive to finish.
The way i understand it is that there is none. In fact the contractor will lose a part of his time related P&G’s if its an option B. Thus the NEC3 only promotes on time delivery and punishes late delivery leaving no incentive for the contractor to finish early in my opinion barring i am not misinformed.
Thus my question what can the Contractor do in this scenario?
- Does he admit defeat and hand over the project giving away potential profit and no financial recognition for finishing ahead of schedule.
- Leave out 1% of the work and reduce the crew for the remainder of the 3 months to ensure he receives his profit on his management porting of his quote (Time related P&G’s).
Or is there another Clause that I missed or one i am misunderstanding
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The fact that the Contractor achieves Completion early should not reduce his payment on an Option B.
Depending upon the Method of Measurement that is used, the principal preliminary items are generally lump sum items that should be assessed in proportion to the amount of work that has been completed. Therefore once the work is completed the full lump sum is payable.
Reversing your question, would the Contract be paid additional prelims if he was late completing due to his own performance – no he would not.
Whilst technically early takeover is a compensation event under clause 60.1(15), in Option B there are only two instances where rates / prices are reduced.
Clause 60.4 deals with reduced rates in the event that the Defined Cost per unit quantity being reduced, subject to the three tests stated.
Clause 63.10 deals with reduced Prices (note defined term) in the event that the compensation event reduces the total Defined Cost. Early takeover could do this as your prelims will be on site for a shorter period, however neither of the two tests has occurred, the Works Information hasn’t changed, and there wasn’t a correction to an assumption.
Therefore no compensation event and you are entitled to be paid in full for all lump sums in the BQ, but only the final total quantity for time related items.