NEC3 ECC - CE cost actually incurred, or forecasted under option A?

NEC3 and NEC4 Contracts Compensation Events
1

In a concrete repair contract- original Scaffold period 12 Weeks.

Week 6, additional work has been instructed which will result in increased cost to both concrete works and extra-hire to scaffold. Should the compensation event be submitted once the extra hire cost has been incurred by the Contractor ? or forecasted as soon as Contractor becomes aware.

An early warning has already been served.

2

The early warning is probably of little benefit here as this is something that has already been instructed so WILL be an issue rather than might. Under clause 61.1 the Project Manager should state the fact it is a CE at the point of instructing the change, and request a quotation. Under clause 63.1 this should then be a forecast of what would be reasonable to allow for this event at the point of the instruction being given. You should be able to forecast the the additional cost it will be (which includes an allowance for risk that has a significant chance of occurring and is the Contractor risk under the contract.

3

Thanks. Is there a specific way that the PM is required to declare a CEN, or is the words ‘compensation event’ in writing enough ? If he has not stated this as CEN in writing - even though he has agreed verbally- does the eight week time limit for a costed CEN from the contractor still apply.

4

Derek - to answer your second question would be as follows:

  1. A notification that the Project Manager agrees it is a compensation event and requests a quote should be in writing (13.1) and separate from any other notification (13.7). There is NO such thing as a verbal instruction. Under 61.1 they should have given the notification and requested the quote AT the time of giving the instruction (and to make it really practical ideally on the same piece of paper!)
  2. The eight week time bar is a red herring in this instance. This 8 week time bar is the time in which the Contractor needs to notify a compensation event within (61.3). Don’t forget that if the PM does not notify then the Contractor can (again 61.3).