NEC3 ECC: Clause 63.2 Reduction of Defined Cost

NEC3 and NEC4 Contracts Compensation Events
1

Contract is ECC Option A. Client has an advanced works Contractor carrying out land reclamation works which has delayed the access for the Main Contract works by 6 months which is a straightforward CE.

During the course of the above works however the Land Reclamation Contractor has reduced the quantum of Earthworks to be re-located around the site from 400,000 m3 to 350,000 m3 (there is no offsite).

The PM is intent on issuing a CE under Clause 63.10 reducing the earthworks quantum.

Q1. Is this a change to the Works Information under Clause 63.10 or does Clause 63.2 come into play which precludes him reducing the defined costs.

Q2. If it is a negative situation is the Contractor entitled to re-evaluate the whole earthworks package as the suitable / unsuitable ranges likely will change however as the access dates have been delayed by six months it is impossible to assess the effect of the change to the earthworks and the veracity of the PM’s statement.

2

I believe you have 2 changes here.

Firstly a CE under clause 60.1(2) due to the Employer not providing access.

Secondly I presume the PM will issue revised Works Information to take account of the work carried out by the advanced works contractor. In evaluating this CE the Contractor would be required to consider the whole change in the earthworks operation including the relationship of suitable to unsuitable. If this is impossible at this stage then the Contractor should request the PM to state an assumption.

ps clause 63.10 works in conjunction with 63.2

3

  1. The lack of access is a compensation event under clause 60.1(2) and can should be assessed on its own merits. If you can mitigate any costs then you should, but equally you should not be disadvantaged for something that is not your risk under the contract - so if you have/will incur costs as a result of this delayed access then this is what this compensation event will pick up.

  2. If the Employer is changing the quantity of earthworks to be moved then this will be a a compensation event - and yes this would have the capacity to reduce the total of the Prices. 63.2 says Prices cant be changed except as stated in the contract - and 63.10 is then one of these places. You would assess the cost of the reduced quantity - and if you can prove that somehow the reduced quantity will increase your cost in moving the remaining quantity then all this can be taken into account when you assess this second compensation event.