NEC3 - Accepting a Time Barred Event

When it comes to Compensation Events that should be time barred, if the Contractor accepts the CE in principle and requests a quotation, can they then value the CE as zero because it wasn’t submitted in time?

We have an event where we submitted the event for an obstruction in the ground which was over the 8 weeks allowed in the contract. The Contractor accepted the CE and requested a quotation but have now carried out a Contractors Assessment at zero cost as they said they hadn’t realised it should have been time barred. Is this allowed?

Thanks all in advance.

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I am assuming you are working under the NEC3 Engineering & Construction Subcontract (NEC3 ECS) given that you are talking about the Contractor making the assessment.

Just one thing on that front, please note that the timeframe under the NEC3 ECS for notifying CEs is actually 7 weeks under clause 61.3. It is only 8 weeks under the NEC3 ECC.

Strictly speaking, the Contractor should have rejected the the CE under clause 61.4 and cited that the event “has not been notified within the timescale set out in these conditions of subcontract” as the reason why.

There is nothing within clause 64.1 of the contract which permits the Contractor to make a nil assessment in this scenario. But the Contractor did any way.

Let’s consider the practical repercussions of this scenario. The remedy for the Subcontractor here would be to adjudicate under clause W2 to have the Contractor’s nil assessment revised.

If I was the Contractor in this scenario, I would simply ask the Adjudicator to revise my original instruction for the Subcontractor to provide a quotation, because the CE was not notified on time, and the instruction should not have been given. The Adjudicator is permitted (and should in my view) do this in accordance with clause W2.3(5).

So in short, there would be little sense in the Subcontractor pursuing as the Adjudicator would just put right the original mistake.

Probably not the answer you were wanting to hear. That said, make sure your operations team learn a lesson from this. Get a proper procedure in place for notifying obstructions as and when they arise.

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