On a design and demolition contract using ECC option C (where the Contractor designs the entire process to demolish and then implements it) an EWN has been received from him stating additional design costs have been incurred following the Employer requesting further underpinning work is done to assure safety of the demolition rig. This request has not come from the PM via a formal instruction, rather a design engineer acting on the Employer’s behalf at a meeting. Firstly this shouldn’t be an EWN but an NCE from the Contractor, however what liability has the Employer to pay the cost which is defined (as it’s done to Provide the Works) without a formal instruction from the PM. For reference the design engineer has no delegated authority under the contract.
You are right - this should have been notified as a compensation event rather than an early warning, but even then only if this is a valid reason for being a compensation event. If it is agreed it is a CE, the target cost will increase. If it is not agreed it is a CE, whilst you will pay the Contractor for the costs that they have incurred for this item (as it is unlikely to be something that you can disallow) this will not increase the target and hence this cost is in effect shared.
If this thing was needed to meet the requirements of the Works Information then it did not need to be instructed. If they have done something that was not needed at all then this could potentially be a disallowed cost under the definition within clause 11.2.