NEC ECC: Option A, CEs, programmes and terminal float

NEC3 and NEC4 Contracts Compensation Events
1

I am trying to understand how the Contractor can change terminal float when CE’s are raised and which accepted programme they should use when costing CE’s. The duration’s are for discussion only but in summary.

1 - A programme is submitted to and accepted by the PM (Rev A) which shows 10 days terminal float
2 - A CE2 is then issued by the PM which will delay the contract by 3 days.
3 - An earlier CE (say CE1) is submitted to the PM by the contractor with a revised programme (Rev B) that moves the Planned Completion and reduces the terminal float by 3 days. This CE and programme are accepted
4 - The contractor then submits CE2 with a new programme (Rev C) and the terminal float is back to 10 days. This programme also moves the contractual date out by 3 days.

When asked, the Contractor have said that they based CE2 on the programme accepted at the time the CE was raised, IE Rev A, and not any subsequently accepted programmes. The reduction in Terminal Float on Rev B was because CE2 hadn’t been accepted and they couldn’t change the Contractual Date.

So, which programme should the Contractor use when looking at the CE? The one accepted at the time the CE is raised or the one accepted when they actually do their costs?

I understand that Terminal Float is the Contractors’ but the client has (understandably) asked why we are accepting any delay as the Contractor is due to finish 4 weeks ahead of planned Completion anyway even with these delays. As a result, I need to either provide the client with an explanation why the earlier programme is the correct one to use or suggest to the contractor that they change CE2.

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2

NEC Practice note 1 helps explain the intent of the contract. Whilst this practice note expressly states that it is for NEC4, the same principles exist for NEC3 except we do not have the switch point named as “the dividing date” which it has been named as in NEC4. In simple terms, it is the last Accepted Programme BUT taking into account progress and other CE’s that have occurred up until the new CE was instructed/notified.
Any CE assessment evaluates the movement of planned Completion, and Completion Date moves by the same amount. In the example you give, if the first CE moves planned Completion by three days, and then the second CE moves it by a FURTHER three days, then the Completion Date would move by six days. The idea of the CE is the Contractor is in the same position they were before the CE than they are afterwards.

If the Contractor was already running late themselves and there was already a delay to planned Completion of three days, and the CE does not further move planned Completion as the CE runs parallel with the Contractor delay, in this instance there would be NO delay to Completion Date.

Terminal float is owned by the Contractor. I know many Employers/Clients struggle with the concept of “you have four weeks terminal float – if I delay you by just a week why do you need Completion Date moved”. However, the contract has to draw the line somewhere.

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