The contract is NEC 3 ECC option E. I represent the Contractor. On the back of the COVID-19 pandemic the PM instructed us to demobilize 80% of our work force upon the implementation of a national lock-down. Some measure have now been reduced and the PM wants the Contractor to remobilize 50% of the original work force pre lock-down. Note: Employer included a Z clause to only take the effect of time into consideration when a 60.1(19) event occurs.
Context and Questions.
- We have notified an event in terms 19.1 and 60.1(19).
- As per the PM’s instruction of how to deal with the event the Contractor demobilized 80% of its work force.
- With some restrictions lifted the PM wants the Contractor to remobilize 50% of the its original work force pre lock-down.
- Will this remobilization be considered as part of the 6.1(19) event or should it be a separate instruction?
- The concern is that if falls with in the ambit of the 60.1(19) event that the associated remobilization costs will not be assessed as only the effect of time is assessed. (Z clause).
6.Where will the time and cost impact of reducing the work force be assessed if a separate instruction is not warranted? Will time be assessed in the 60.1(19) event and cost will be reflected in the forecast?
- Lastly, the PM is not only restricting the number of the work force but the skill mix as well. What can we do to protect ourselves should we feel the skill mix might not be sufficient to complete the works or should that risk be included in the revised programme?
This is slightly strange for the Project Manager to do. Whilst I think the instruction is sensible in this situation, I would leave it to the Contractor to ascertain what level of resource and what type of resource they need to remove or keep to optimise the numbers to carry out the works that are available during the restrictions of Covid-19. If you feel their instruction results in the wrong type or number of people then notify an early warning and discuss this in a risk reduction meeting (that you as the Contractor have the power to instruct)
As a Contractor I would be instructing this event under 60.1(1) as this is an instruction to change the Works Information - there was no such restrictions in the Works Information that restricts your working times or level of resources. Or, it may be a CE under 60.1(4) where they are instructing you to stop certain works. These two compensation events reasons do not have the same restrictions on being time only not cost with your Z clause amendment.
Not withstanding all that, the most important element to your question is the fact that you are working under option E which makes this all largely irrelevant. Under option E the compensation event process is only really to give an indication of the cost of a CE, as the Contractor’s is paid “actual cost” anyway. If the Contractor assessed it would cost £30k, but it ended up being £20k or £40k, providing there was nothing that constituted a disallowed cost as part of that assessment they would be paid the £20k or £40k it actually cost accordingly. The only real part of a CE that is being assessed is time entitlement under option E, as if the Contractor overruns they can still be liable to delay damages under this option.
Therefore under option E, I see little reason/benefit from the Employer writing a Z clause to make 60.1(19) a time only CE not cost, as that is really the case for all CE’s under option E. It would be a different case for options A-D where the forecast has a clear change to assessment of the Prices.