NEC ECC: Option B - Compensation Event: Change of Rates

I am currently project managing an Option B contract which is in essence a filling of an existing V shape valley to provide a level surface for an infrastructure. As well as the BoQ, the control of the settlement of the area has been made a Contractor design element.

The WI defines the extent of the area of the Contractor design element by an indicative line which is parallel with the existing side slopes of the valley (no benching detail was provided in the WI). The Contractor’s design solution does proposed a benching detail to stitch the new works into the existing and he is claiming that it constitutes a compensation event. I am in the opinion the Contractor is correct, it constitutes a CE because it is a change in the WI and an increase in quantities as per Cl. 60.4.

The Contractor has submitted changes for his rates for additional quantities over and above the BoQ quantities.

Could you please advise how to proceed?

I would suggest that the benching detail is part of the Contractor’s design solution (to restrict the settlement) and therefore is not a CE in accordance with 60.1(1) which directs

"The following are compensation events.

(1) The Project Manager gives an instruction changing the Works Information except

a change to the Works Information provided by the Contractor for his design which is made at his request or to comply with other Works Information provided by the Employer."

The PWDD should be assessed based on the contract drawings and I presume there is a Bill item for the Contractor design element.

Dave, thank you for your answer.
In the case that there was a CE. How would you assess the change of rates in the new volume of the CE?

Timo, if the mater was a CE then the assessment would be, as any other CE, the change in Defined Cost + Fee due to the CE and a change to the Completion Date to reflect outward movement of planned Completion due to the CE. I personally would not change existing Bill rates but would create a new Bill item for CE.


The contract is re-measurable. a performance specification with accompanying activity schedule does not apply. The work item is subject to payment as items are remeasurable. Value engineering should have been carried out prior if there was an issue with design and subsequent cost.

Sorry but I’m not clear what your comment is asking. The original question advised that the control of settlement was a Contractor design element with the area indicated on the drawings.

The Method of Measurement will direct how the work is to be quantified, I would assume it would be a lump sum.