NEC ECC: Prolongation and Christmas Expenses

NEC3 and NEC4 Contracts Compensation Events
1

Currently working on an ECC Option A contract that has three Compensation Events that have an affect on the programme, however there was also a Contractor delay. The planned Completion for the project has as a result of these matters extended into 2019 and the contractor is seeking to claim additional costs incurred over the Christmas period (mobilisation, demobilisation, extra security, call outs, plant on and off hire). Given the following who is responsible for these additional costs.

The implementation of the three Compensation Events has pushed the Completion Date beyond Christmas and into 2019, irrespective of any Contractor delay.

If the Contractor delay is taken in isolation (assuming no CE’s affecting time), the planned completion is still before Xmas 2018.

When the CE’s and contractor delay are assessed as and when they occur it is the third tranche of contractor delay that extends planned completion beyond xmas, i.e. the implementation of the 2nd CE does not extend planned completion or the completion date beyond Xmas, accepted programmes issued prior to the implementation of the 3rd CE however show planned completion extending beyond Xmas.

2

You need to assess these events in the order that they occurred. You assess the first CE and measure its effect on planned Completion, which is how much then Completion date should move by. Then you assess the second event (either Contractor delay or the next CE) and see what effect that had on planned Completion, which if down to a CE will again move Completion Date by the same amount. The event that moved planned completion beyond Christmas if a CE will mean the additional entitlement of security/call outs etc to be assessed as part of that CE.

If it is the Contractor delay that moved beyond Christmas, anything that you agree they could have done to mitigate should also be considered before the final CE is then assessed to see how much planned Completion would have moved by.