NEC ECC: Project Manager acceptance of implemented CE under clause 65.1

NEC3 and NEC4 Contracts Compensation Events
1

We are in a NEC ECC Option B contract.

At pricing stage but not in the contract, the employer insists on breakdowns of the rates which we supplied in goodwill but replied it is not to be used in the contract or to be reviewed in future works.

There is an area /rate on site that requires up to 140mm thick material. On site the PM thinks it maybe less. To help we both agree to remeasure to another bill rate of 100mm thick and remeasure the extra material to a tonnage rate on CE.

PM forwards an EW for this ,we respond with acceptance of using 100mm bill rate and supply CE with tonnage rate for extra over.

PM accepts the tonnage rate however then wants to remeasure the full depth to the tonnage rate.

We refuse and ask PM to stand by the original agreement .

PM agrees but sets the tonnage rate to the material purchase price only! ( they want it delivered and laid FOC)

We disagree. The PM refers us to our breakdown sheet which was not to be used and not put together for this section.

We request a risk meeting. In the meeting he says as PM his decision is final. Also mentions we will not have any increased costs compared to the breakdown sheet. Again we remind him it should not be used however inform him of the extra cost we will have which he was surprised & unaware of. We asked him if he had carried out an assessment / comparison of the CE offer and the cost to remeasure the full depth to tonnage which he replied no, but asked us to send him our comparison which we did.

The PM asked if we would stop the work the next day due to this issue. We respond we are in a contract and have a duty to carry on.

He then says he will carry out a PM assessment 64.1 (2)

We refused and mention we will have to appoint the Adjudicator ( W1.1) which they agree. Meeting Ends.

The PM then sends an email notifying us he will be undertaking a PM assessment.

The question is. Does this behavior comply with the NEC ?

Many Thanks.

2

Firstly I’ll note that neither party appears to have been operating the contract correctly, the early warning procedure is designed to be used to decide what is required to be done from an operational point of view, you have both been using it to decide commercial matters.

Assuming you’re talking about NEC3 ECC with Option B then it sounds like you are correct that this is a CE - clause 60.4 describes the situation you appear to be in. Again, it doesn’t seem like the CE procedure has been followed correctly either - notification, quotation, assessment and implementation - whereas this appears to have been done via the early warning procedure.

The PM does have the right to assess the CE in certain circumstances (clause 64.1) and once they have done this and the CE is implemented (clause 65.1) then the assessment is not revised if a forecast is wrong. However, this can be interpreted to mean that assessment can be revised for other reasons. If the PM refuses to accept this then your only recourse is to adjudication, which you should do if you stand to lose a significant amount of money, otherwise you may just have to live with it. The fact that the PM has been assertive in exercising their rights in the contract does not automatically mean that mutual trust and co-operation has failed either.