Whilst the PM agreed that a delay occurred the subject NCE was rejected on the basis that the Contractor was not ready to start the works due to their fault and as such no entitlement existed, however this delay would have impacted the existing agreed programme, was the PM correct to reject this NCE on this basis due to their interpretation of no impact on defined cost ?
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I assume the Project Manager’s rejection was based on no impact on Defined Cost because he considers that a Contractor’s delay occurred first, and there are no other cost implications of the compensation event. Clause 63.3 is relevant here. It states “A delay to the Completion Date is assessed as the length of time that, DUE TO THE COMPENSATION EVENT, planned Completion is later than planned Completion as shown on the Accepted programme.” In order to assess the delay DUE TO THE COMPENSATION EVENT current industry best practice involves the following steps:
- Identify the Accepted programme that was in place at the time the event occurred.
- Update this programme for actual progress up to the date that the event occurred. (This will incorporate any Contractor delays into the programme and may move the start date of future activities.
- Insert the compensation event activities into this programme.
Doing this exercise makes sure that you can assess the delay that is DUE TO THE COMPENSATION EVENT, and discount any effects that are not relevant to the compensation event.
If, when you carry out this exercise, the compensation event doesn’t affect the future activities then the Project Manager is correct.
In order to resolve this matter it may be worth asking the Project Manager for his assessment, carrying out this exercise yourself, or carry out a joint assessment with the Project Manager.
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