NEC3 ECC Option A - Clause X7.1 Delay Damages

We are the Contractor engaged in a project that is currently delayed, as Planned Completion, on the accepted programme, is now after Completion.

The PM has informed us of the provisions of Clause X7.1 and the activation thereof. My question pertains to the entry in the Contract Data and how to interpret how the delay damages will be calculated.

The entry in the Contract Data states:
“Whole of the Works - 0,2% per week to a maximum of 10% of the Total of the Prices per day”

My question is:

  1. Will the amount be calculated using the Total of the Prices (Contract value) or Total of the Prices per day, meaning the cost of damages incurred by the Employer per day due to the delay?
  2. If so to the latter, would this amount have to have been stipulated in the Contract data or will the Employer inform us of the amount per day now that delay damages are applicable.

Regards

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I don’t think I have ever read a sentence so packed full of ambiguities in such few words ! Hence, there are multiple ways in which this can be read.

Firstly, the comma in ‘0,2%’. Should that be a full stop in which case it is 0.2% or is it 02%. Especially if it is a written, as opposed to typed entry, my interpretation would be the former with the tail being due to a smudge or poor writing.

Secondly, the “per week”, viewed in isolation, implies that they are only applied for each full week of delay.

the “Total” (with a capital ‘T’) “of the Prices” only applies to option D, not option A. However, assuming they just mean the Prices, the Prices changes during the contract, so it would be the current Prices, presumably at the time of application i.e. original Prices as tendered plus implemented compensation events, but I can see this is open to discussion.

Does the “per day” apply to their application i.e. the whole sentence and hence the damages are applied on a daily basis (which contradicts my second point) OR is it the '10% of the Total of the Prices" the maximum that can be applied per day, which is significantly more than the likely 0.2% or 2% per week as per my first bullet, which makes it redundant.

All of the above may be informed by pre-contract correspondence, but ultimately if not resolved, by the various rules of interpretation, come down to the contra proferentum rule i.e. on a reasonable reading, it it i interpreted in the light least favourable to the party which wrote or proposed it. I assume this is the Employer.

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Jon, what about the interpretation ‘Whole of the Works - 0,’ to confuse matters even more!!

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Hi Jon & Dave,

Please see below from the contract data. The comma was a typo from myside, apologies.

X7.1

The ambiguity is certainly confusing!

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@Jon_Broome @dave_bates Slightly different issue but I reviewed a contract last year where the damages were £8.000 per day, how do we think this should be interpreted? Is the error the extra 0 or should the full stop be a comma? Answers on a postcard …

@Neil_Earnshaw I don’t see how you can interpret that other than being £8 / day. It is fair to speculate that the drafter intended £8,000.00, but that’s not what it says. Thinking around it, how do you deal with more-than-two decimal places in a payment application or a quotation? By either ignoring the later decimals, or rounding them off. It wouldn’t occur to you to move the decimal, so why do that here?

I would also say that it would have been clear until the abolition of the half penny in 1984, but I’m guessing your contract is newer than that!

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@andy.thompson that was my argument too, it didn’t go down well with my client’s client but they weren’t playing very nicely so got what they deserved!

On the original question, I struggle to reconcile the ‘per week’ and the ‘per day’ in that statement. I could make partial sense of:

0.2% per week to a maximum of 10% of the Total of the Prices per day
or
0.2% per week to a maximum of 10% of the Total of the Prices per day

But it doesn’t say that, so this is interesting but academic.

As such I can only fall on it being 0.2% per week for each day of delay - which is about 0.03% per day. - with a cap of 10% of the Total of the Prices - but there is then the question of what the 0.2% is of.

@Jon_Broome’s point about Total of the Prices not being in Option A (unless you have some Z-Clause) is spot on. There is also the interesting prospect of something called the ‘Total of the Prices per day’. I’m not sure how you would calculate that. The total of the Prices divided by the time for completion? Whatever the resolution of that, the 10% is of something. But I think it would be possible to construct an argument that we just don’t know what the 0.2% per week is applied to.

In summary, its a mess. My suggestion would be to issue early warning either setting out the most favourable to you interpretation, or saying that you can’t understand it, and have a grown up discussion with the Employer and the PM.