We have a subcontract, let on option A NEC 3.
When producing the tender and scoping documents, the Contractor provided quantities for each item. This was then priced and grouped by activity to form the activity schedule.
On completion of the works, the actual quantities varied significantly in some cases, both higher and lower. would these changes be captured under a CE? Or does the subcontractor take the risk of the change in quantities and only wholly additional works that would be an extra?
Does the fact that the Contractor provided the quantities initially affect this, or is it the subcontractors responsibility to check the quantities?
Firstly there shouldn’t have been any quantities in the Activity Schedule, as you say this risk sits with the Subcontractor under Option A. Also we are told at clause 54.1 that information in the Activity Schedule is not Subcontract Works Information (SubWI) or Site Information. The Subcontractor is therefore entitled to the lump sum price for each activity regardless as to the actual quantity of work that was carried out (less or more).
Yes the Subcontractor should have checked these quantities as one of their main responsibilities in the subcontract is to Provide the Subcontract Works in accordance with the SubWI" (clause 20.1). So the function of the Activity Schedule is purely commercial, it doesn’t specify what is done or how it is done, it’s the SubWI that has this function.
All changes are dealt with as CE with the relevant one in this case being clause 60.1(1) “the Contractor gives an instruction changing the SubWI”.
So if the SubWI said remove topsoil from area A the Subcontractor has taken all quantity risk, however if the SubWI said remove 300m3 topsoil from area A the Contractor has taken the quantity risk and there will be a +/- CE for the difference.
Hi Neil, thanks for your answer it is really helpful.
Using your example, in the event the works information said “remove topsoil in area A” would the subcontractor only be due a compensation event for a change in quantities if the drawings changed? Changing the works info under 60.1(1)
This can be summarised as follows:
- Subcontractor expected to produce the activity schedule.
- Subcontractor takes risk of errors in the activity schedule - which includes any quantities.
- activity schedule under option A is the Subcontractors payment mechanism, as they are paid upon completed items
- Why does Contractor want to produce an activity schedule and restrict how the Subcontractor will get paid? They should make it clear at tender stage that if the activity schedule is done to produce some consistency across the tender submissions they get from each Subcontractor they should make that point clear. They should state Subcontractor is free to add additional items or break existing items in to more detail.
- Activity schedule is not Works Information (or Scope under NEC4). A change in quantity on an activity schedule is NOT a compensation event.
- Subcontractor should have ensured that they were happy with the activity schedule before signing the contract.
It’s difficult to give a definitive answer without seeing exactly how the contract was out together e.g. where is the drawing, Site Information or Works Information as this will affect which CE is triggered (changed physical conditions or changed Works Information).
However assuming there was a drawing in the Works Information that clearly described what area A was and how deep the topsoil was in area A then yes there would be a CE under clause 60.1(1) if the drawing changed.