NEC PSC: Option C - Is this a Compensation Event?

NEC3 and NEC4 Contracts Compensation Events
1

A project was added into a package of other projects under a compensation event.

At the time the consultant undertook to support the client in finalising the scope prior to the consultant finalising the compensation event cost

When the consultant first submitted the compensation event the client felt that the support cost element of the compensation event was too high and there was an agreement between the client and consultant to reduce the fee.

Now we are at the end of this project the consultant has come back to the client requesting this element that was agreed as a reduction, saying it was based on the assumption the project would progress through all the stages and as the project is stopping they are entitled to this reduced fee.

The consultant has no evidence that they informed the client that they agreement to reduce the fee was based on any assumption and I have asked the client and they have no recollection of being told about this assumption.

My view is that this is not a compensation event, as when agreeing this with the client the consultant did not make any assumptions clear, and at the moment the only agreement we have evidence of is that both parties agreed to the reduction in fee for this element of work.

Am I right with this, or can the consultant now come up with assumptions?

2

As described I don’t see how this would be a compensation event. I assume that the original quote was followed through to its conclusions and “implemented” under the contract. that would mean that the time and cost effects would be full and final. Only if the quotation was based on stated “Employer assumptions” could it ever be revisited, but even that would be a new compensation event.

You have said it is option C, so the other thing to remember is that the target will have been increased by the agree amount, If the Consultant spent less or more than the agreed amount, they get paid that, but that will either increase or decrease the pain/gain share at the end of the project accordingly.