Is there any obligation on the Project Manager when he notifies under X2.1, to provide detail of all legislation that has changed after the Contract Date? For example in the case of Covid-19 a range of legislation including an Act and Regulations have been introduced. Whilst all might be associated with the Covid-19 outbreak, not every piece of legislation may be relevant to a project. Is it for the PM to determine this and notify accordingly?
The PM’s power to notify compensation event is at clause 61.1 and is limited to notifying those events which arise from the PM or Supervisor giving an instruction. As a compensation event under X2 does not fall under that power, only the Contractor can notify such an event (clause 61.3).
The notification from the Contractor should include enough details to allow the Project Manager to decide wether it is a compensation event or not. That detail should include reference to specific legislation and the effect it will have or the Contractor will run the risk of the PM rejecting the event as, if there is no detail, it may be unclear as to whether the event will occur or whether it has an effect on the Prices and/or Completion Date.
Whilst the PM does not have an obligation to notify as a compensation event, he or she will have an obligation to notify the matter as an early warning if it is likely to affect time, cost or quality.
X2.1 states that the PM “may” notify the CE and instruct quotations, in NEC use of the word “may” means is allowed to. So the PM doesn’t have to notify the CE and certainly has no obligation to check all legislation to see if it’s relevant and provide it to the Contractor.
If the PM doesn’t notify then if the Contractor wants to claim cost and / or time as a result of a change in the law then the Contractor should notify the PM stating what law has changed and what the effect of it is.
The difference between who notifies is about timescales, if the PM notifies and instructs quotations the Contractor has 3 weeks to submit a quotation and the PM has 2 weeks after this to accept / not accept it. If however the Pm does not notify, the Contractor could notify at any time.
Just to add to Steve and Neil’s excellent advice, the wording of X2 slightly changes between NEC3 and 4, NEC3 states PM may notify (and Neil has already explained the significance of “may”) that the change in law is a compensation event but NEC4 simply just says a change in law is a CE if it occurs after the Contract Date.
There is no change n liability between NEC3 and 4, but it does imply in both therefore that this would be one of the CE;s that the Contractor is obliged to notify (although either party can) and therefore would be time-barred if they did not notify within eight weeks that the change in law has or will cause them a problem.