The contract is NEC3 Option A, with options X2, X7, X16, X18 and Y(UK)2, W2.
The Contractor raised an Early Warning 0n 20th March that Coivid-19 may affect the works. Following the lockdown announcement they subsequently stopped works on 24th March initially for 3 weeks. No PMI has been issued to Stop the works on this contract. A PMI was later issued to incorporate the CLC guidance into the Works Information as a minimum and a quotation requested, with works not able to restart until the relevant RAMS and CPP were in place and accepted. The site was eventually closed for almost 7 weeks.
A Risk Reduction meeting was not held until 20th May. Subsequently the Contractor has submitted a quotation including their full labour costs for the 7 week shutdown qualified that this is less any furlough payment received from the government. The Project Manager response is that these costs are not allowable as the resources were not working as due to being furloughed and are not in the working area or providing the works.
Contractor responds that their understanding is that when the site was instructed to close due to the Covid-19 situation (under clauses 60.1.4 & 60.1.19) they are entitled to claim for the people who are directly employed and who were in the working area of the time of shutdown for the duration of this shutdown. As all works were suspended and the people could not be re-employed elsewhere they believe these costs should remain as claimed.
It is appreciated that a risk reduction meeting could and should have occurred earlier than stated, notwithstanding this point,
Is the contractor entitled to any payment, under the contract for labour costs of people in the working area at the time of shut down?
How is this affected if staff are furloughed, including any top up amounts paid to staff?
What obligations does the contract place on the Contractor to minimise labour costs during a site close down?