NEC ECC: Option A: Subcontractor - Standing Time/Mitigation/Remobilisation

NEC3 and NEC4 Contracts Compensation Events
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Main Contract: Option A Amended
Subcontract: Option A Amended

Scenario: Client led changes via PMI’s on site resulting in the main contractors subcontractors changing their programme.

Issue: In the compensation events what cost is allowable.

The main Contractor on site is receiving instructions from the Project Manager which is changing the works information. This has led to the subcontractor having to demobilize and remobilize to site. Three issues I would like to get advice on.

  1. Travelling time - the site is based is a very remote location approx. 1 days drive - the subcontractor is claiming travel time however I believe under the contract this should be included within the rates for people as per SoCC but it is known this has not been - if this is to be removed from the compensation event then it could cause issue with the subcontractor and lead to further delays/issues on the project.

  2. There is also debate to whether the people charging travel time are a subcontractor or people - they are paid day rates while in the Working Area -

“People who are not directly employed by the Contractor [and who are not
Subcontractors as defined], but are paid by the Contractor according to the
time worked while they are within the Working Areas, for example, consultants.”

I found the following article useful yet still confusing:

  1. Mitigation: As the subcontractor has now had to demobilize and remobilize at short notice they are now claiming they cannot redeploy for 5 days to other work projects and therefore are claiming 5 days standing time for 4 men. In terms of the Contract payments are only to be made for providing the works within the Working Areas - I would argue this would not fall under this SoCc but as above if not paid this would strain relationships - would standing time outside of the Working Area costs associated with the Subcontractor from an element which was not their risk be an allowable cost in any form under the Contract?
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Hi I have assumed that there is acceptance that the matter causing this situation is a compensation event.

In respect of assessing the compensation event, the overarching intention should be to agree a reasonable (to both parties) adjustment to the Prices.

If the (reasonable) effect of the CE is to incur the subcontractor in additional travel time then that should be considered in the quotation presuming the travel time is a function of mitigating the additional cost.

Regarding the demobilisation/remobilisation, I’m not clear if the subcontractor has demobilised or if it is saying that due to the fragmentation only being 5 days they are unable to redeploy their resources whilst being confident they could remobilise in time (to avoid risk of further delay). In either event a reasonable view should be taken. Note that payments being related for providing the works within the Working Areas and disallowed cost relates to payment of Defined Cost under target contracts and not the assessment of change.

Assuming you are on NEC3, one factor you need to consider is that the assessment of the CE is based on the SOCC for the Contractor and not payments to the subcontractor.