NEC3 ECC: Could excessive amount of Compensation Events be deemed to be a breach of contract as 60.1(18) thus enabling recovery of QS time for quotes?

Under an Option A contract (Circa £5m) we have encountered over 300nr compensation events on the contract. Would it be reasonable to argue that the Employer is in breach of contract for the amount of CE’s and therefore enable the contractor to activate clause 60.1(18)? Would this therefore enable recovery of the time/money spent preparing the quotations?

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No, operation of the contract mechanisms in accordance with the terms of the contract cannot amount to a breach of contract.

You would have to look at whether the CEs are properly arising under the contract etc which can be much more difficult to ascertain as it will be fact and context specific.

There is no limitation within the contract for the amount of change that may occur.

This is not to say that there may not be some common law rights.

If you can demonstrate that due to the number of compensation events and change that this has had an effect upon your Defined Cost for your QS resources e.g. employment of additional resources then this is something for which it would be reasonable to be compensated for.

These additional costs in theory should be allocated into each compensation event.

A much cleaner way would be to notify a compensation event however in itself additional resources without being linked to one of the compensation events is not a compensation event!

Barry, the consideration might be whether an event might trigger more than one compensation event. Would this not allow separate quotes for the future additional resource demand? If the event can demand additional labour on site for the whole remaining period to completion, why could the same not be demonstrated for additional admin resources? I’m not very hopeful regarding this logic, but there might be justification for it? Question would be impacted by the “Working Areas”. Then the QS must maybe shack up on site? Alternatively the actual desk space may be justified to be added to the Working areas.

The definition of Defined Cost under Main Option A excludes the cost of preparing quotations but does not expressly exclude the cost of administering the commercial activities associated with the compensation event. This could be included within a quotation as a ‘preliminaries thickening’ assessment, where it is clear that there is a ‘higher than expected’ number of compensation events. Obviously the issue of working in the Working Areas would apply, which could justify the request to add to the Working Areas, as you have suggested.