NEC ECS: Option A Subcontract - Standing Time

We are a MWC and have a Subcontractor undertaking works on an NEC3 Option A Subcontract.

The MWC couldn’t provide access to an area of the works so the Subcontractor stood his operatives down for 2 days.

This is a Compensation Event and as such the Subcontractor has quoted for his operatives standing time for 2 shifts.

The activity is not on the critical path so has not affected the Completion Date as programme float has been used. As this is Option A and the Subcontractor has priced from the starting date to the completion date, why would you pay additional cost (standing time) for operatives when there is no extension of time? Wouldn’t you effectively be paying twice for those 2 shifts?

This looks like prolongation of an operation on the programme, which is not on the ‘critical path’, and has resources allocated to it, whereby the compensation event uses ‘programme float’ or ‘free float’.

The issue of cost reimbursement associated with prolongation of an operation depends upon the planned use of the associated resources and whether the operatives involvement on the project is extended due to the compensation event.

For example, if tunneling activities were delayed by a week, due to a compensation event, but this did not impact upon the ‘critical path’ then you would compensate for that extra week, provided these resources were not required for ‘follow on’ operations but were planned to be released upon completion of tunneling operations.

If the operatives’ time could not be mitigated and they would still be paid, then any additional Defined Cost would be assessed and included in a quotation, including any relevant non-productive time.

You are effectively putting the Subcontractor back in the position they would have been had the compensation event not occurred, which is the philosophy of the compensation event procedure.