NEC3 Option C main contract. A large volume of CE’s have been instructed or notified and some events have impacted on the programme. Both parties have failed to adhere to the mechanisms and failed to quote or assess or implement. As a result planned completion has been tabled at a significantly later date than the contract completion date (say 6 months) (i.e the works have been / are being progressed with Quote to follow but CEs have not been implemented). As a result contract completion has not moved from the original date. Having discussed mitigation options with the contractor the employer comitted to spending circa £1m on additional scaffolding material to facilitate more concurrent working & to bring the planned completion date back towards contract completion (resulting in about 2 months of over-run or 4 months of improvement). The contractor provided a programme for acceptance showing this which was Accepted. Following that the employer raised a PMI instructing the contractor to work to this Mitigation programme. Following this the contractor proceeded to work to the mitigation programme but stated that this should have been instructed under clause 36 (Acceleration) and raised what the employer considers to be an unrealistically high price against this. This includes the cost of 6 months prolongation & all mitigation measures.
The employer has confirmed a willingness to assess the total of the prices in consideration of a.) prolongation (2 months) and b.) any additional & reasonable additional resource to support concurrent working.
The contractors price sets aside the option C contract target & is a request to re-set the target completely. The price is based on what appears to be a worse case scenario “end out forecast cost” and a proposal that cost should equal the new target i.e zero pain zero gain. Some of the contractors key subcontractors are also working under option C (option c SCs under option c main contract) & it was evident that contractor was in significant pain prior to this predicament (multiple millions) and the pain / gain share is onerous.
I would appreciate any comments on this especially when considering that both parties failed to adhere to the CE implementation mechanism and effectively time & target are at large.
What’s the remedy / fair interpretation of this?
This is a very complex scenario and it seems to me you need some detailed advice on it. The pricing of acceleration is never quite as simple as looking at the end result as the risk profile of the project has been altered quite dramatically, for both parties, and this needs to be reflected. That in turn will require an understanding of where the contract should have been had the contractor adn PM been carrying out their respective obligations properly.
I concur with Rob that this is far too much detail and will depend on so many variances including what your contract says and what happened when.
In simple terms the only way to evaluate this is to see from the original programme what the series of events were in terms of compensation events and what effect they had (or would have had on planned Completion. Once you can ascertain what the Completion Date was you can then ascertain how much you had to accelerate. It is worth noting the process for quoting and accepting a quotation for acceleration is in accordance with clause 36, which is not the same as the method of reviewing and accepting a compensation event.
The trouble with any project that has not followed the contract is that any retrospective delay analysis will be subjective and open to interpretation.
Would agree with Rob and Glenn that the solution all turns on the facts
Thanks for the answers it’s a good start. In the first instance valuing the over-run including Fee & Risk is fair enough. When looking at the mitigation measures to bring the planned date back in would it be fair to adjust the fee accordingly? (I.e reduce the Fee to reflect the shorter over run but add Fee to whatever mitigation resource was used to bring the planned date back in.)
You will have included fee in the assessment that moved out the planned Completion/Completion Date. If you are now being asked to “accelerate” the Completion Date then it is up to you how you assess it. It will include increased risk in meeting the earlier date, increased cost, but also offset by the potential “prelim savings in not being on site as long”. What fee you want to include in that is your prerogative, but make the quotation too high and you may lose out on the opportunity altogether. All of this assumes that you do not have an amended clause 36, which sometimes states that the PM will assess a quote for acceleration as a compensation event which will then change the rules and the answer to this question again…