We placed a contract around 4 weeks ago on NEC4 ECC Option A and have just received a draft Programme for Acceptance. This shows an 8 week slip against all the Key Dates and Completion Date. I am just trying to work out our best course of action and remedies available to us. Unfortunately we have not included X5.
Our overall priority is to complete the works on schedule as we do have some budget available through savings made through negotiation and tendering process. A back shift is available that could be used to accelerate the work, but the Contractor’s tender was not priced on utilising this time.
Although I indicated to the Project Manager that 25.3 sets out our sole remedy, my thoughts are that we should, following a risk reduction meeting, instruct the Contractor to utilise the back shift but not raise a Compensation Event Notification on the basis that, under 61.2 ‘the event arises from a fault of the Contractor’. Would you agree with this approach or should we agree a CE and then recover the ‘additional cost in carrying out the work’ under clause 25.3?
As this was the first programme submitted for acceptance, may I suggest notifying an early warning and discussing the matter at a corresponding early warning meeting. Examine the submitted programme in detail beforehand to understand how the programme is constructed and what is causing the dates to be ‘pushed out’.
Secondary Option X5 relates to Sectional Completion Dates so not sure if you meant X7 Delay damages as you say that clause 25.3 is the sole remedy. Remember that unliquidated damages could apply in your situation, although the process for claiming these maybe a lot more complicated than for a contractual remedy (Delay damages).
Any instruction to ‘utilise the back shift’ would be a change to the Scope (constraint on how the Contractor Provides the Works) so would be a compensation event under 60.1 (1), although 61.2 would not
At this stage of the project I would suggest trying to engage with the Contractor in a collaborative manner and resolving the issues sensibly This does not mean compromising your commercial position, but taking decisive contractual action before fully understanding and discussing the situation could lead to a disputed matter escalating into a conflict, which would negatively impact the entire project.
Thank you for your advice. To clarify on instruction to utilise back shift, as this is to mitigate the Contractor delay/being at fault and as 61.2 applies, can the PM therefore make that instruction to implement but it won’t be a Compensation Event? OR should the Contractor be requesting through the Compensation Event process so it is not a PM instruction?
As this is the first programme submitted for acceptance, understanding the reason(s) why the dates moved out, and discussing these, would be far better than just instructing the Contractor to utilise the ‘back shift’, especially by stating that the matter arises from a ‘fault of the Contractor’. In a sense the Contractor hasn’t actually done anything wrong yet, just submitted a programme that doesn’t align with the required dates. Even if the PM instructed use of the ‘back shift’ would the Contractor be obliged to incur additional cost in actually using it, especially if the PM said it was due to the Contractor’s fault? The instruction changes the constraint on how the works could be provided (extended hours of working) but doesn’t necessarily ‘force’ the Contractor to use it.