NEC ECS: Contractors failure to respond to a CE

Following the Main Contractors PM accepting our programme in September 2018, we issued an Early Warning Notice stating that the revised accepted programme would change the prices due to our prolonged involvement, we followed this up with a Compensation Event showing the cost due to the delay. We did not feel that the delay was associated with any of the Compensation Events issued but was due to the predecessor activities not being completed by the Main Contractor. We did not receive any communication from the contractor on this matter until April 2019.

We did not issue him a reminder relating to any of our CE’s and therefore I understand that we can not time bar him on acceptance of the quotation, can you advise if he is time barred on the principle of the CE as he failed to respond? In which case the CE would need to be valued.

If the Contractor hasn’t replied to your notification of a CE, your only recourse is to notify him that he has not replied within the time allowed. There is nothing preventing you doing this now even though it’s been a long time since your original notification. Thereafter if he still does not reply within 3 weeks the CE is deemed to be accepted and you can then issue a quotation assessing the time and cost impact of the event.

You said you have already provided the Contractor with the costs, but you were under no obligation to do so. It would be advisable not to issue any costs with a notification of CE and only to provide a quotation when instructed to.

If you feel that you have been delayed by the Contractor or others it could be that a CE has occured in accordance with Clause 60.1(5). However its important to remember that you would have to have notified the CE within 7 weeks of when the event occurred.

You suggest that the realisation of delay may only have become apparent when your programme was accepted so be mindful that the clock may have started ticking at an earlier date.

Also you won’t be able to notify a CE for a “catch all” delay claim. Each individual event should be notified separately.

Hi Phil,

Your response is focused on my potential failings, however, I have issued a notice under the contract and the Main Contractor has failed to respond. If I issue a reminder now he will only reject the CE and value it at zero. The project has finished, he had left it to 3 weeks before the project completed to advise us he was reducing our target cost. Prior to this he was paying 100% of our actual cost and not commenting on our revised target cost. All in the Spirit of Mutual Trust and Co-Operation.

You have to follow the contract, and it is hard to now say what happens if the rules have not been followed.

Spirit of mutual trust and cooperation is not there to be be used to say when the contract hasn’t been followed in some kind of nice way you should now be able to claim - but no doubt you will feel neither party has followed the contract here.

You don’t notify an early warning for something that is already a problem. If there is an issue that means you will be kept on site longer then you have to be able to notify that as a compensation event. It has to fit one of the reasons in 60.1 otherwise it is not a compensation event. You are only time-barred on the compensation events that the Subcontractor is obliged to notify.

If anyone is paying cost “on account” you should be worried as they can change their mind at any stage if they decide it is not in accordance with the contract.

If nothing else, hopefully there are some simple useful rules here you will have learnt to avoid this from happening again on future contracts. You need to get round the table here I suggest to see if you can come to a compromise (in the spirit of the contract).