NEC ECC: Under the NEC3 options C - F the Contractor is to provide forecasts of the total Defined Cost under clause 20.4, but it is not subject to an acceptance by the PM.
This seems a little odd to me, because the effect of a CE on the Defined Cost is assessed as the effect on the work already done and the forecast of the work not yet done and the split in time of actual to forecast is the time of an instruction or notification of the CE (63.1), therefore suggesting you are to use the submission at the time of the notification.
Similarly time is assessed as the effect on planned Completion on the ‘Accepted Programme’ (63.3) which is subject to a PM’s acceptance (31.3). If a programme is subject to acceptance and is important in assessing time related CE’s then why is the FTC not subject to the same scrutiny?
I understand that 20.4 does state that it is to be done in consultation with the PM but if there is an unwilling Contractor to do so, what else can be done?
From a contractual perspective, the forecast of total Defined Cost is used to assess a preliminary share amount or possibly to assist with the payment assessment procedure, so this would not be considered a ‘critical’ process under the contract in the same manner that the programme or design would be considered.
From a budgetary and cash flow perspective, however, the forecast IS very important and I’m sure most Clients would want a regular and accurate assessment of this information.
The forecast in Stage One where X22 is used is actually required to be accepted by the PM and further includes a constraint whereby the cost of any work not included in the accepted forecast is treated as a Disallowed Cost. In this instance it is used as an expenditure control mechanism so plays a far more important role, hence the requirement for acceptance.
If the Contractor does not co-operate with the production of a forecast then there is limited redress under the contract, although there can be few complaints where the PM makes their own assessment of such matters…
I get your sentiment, but what actually would it mean if you could reject their forecast? What would it actually achieve - would you be any better off and what could you do with that? They are unlikely to correct it before next month anyway. It is a heads up as to where they think costs are heading, but not something you can hold them to. Whether the forecast is correct or not, it does not change their contractual or financial liability.