NEC3 ECC Option A - Unistructed works carried out by the Contractor

Under NEC3 ECC Option A (Fixed Price), we placed an order with the Contractor for c£25k, when the Contractors Application for Payment was submitted- they were claiming c£50k. We had a meeting to discuss this, and it turns out that one of our engineers (not named in the Contract Data) was informally instructing additional work.

Contractually we know the additional work should have been notified by the contractor as a Compensation Event, but it never was. We also know that some of it is genuine additional work, and some was deemed to be included in the Contractor’s fixed price quotation.

In theory, our Project Manager was not aware of the additional work, so could not have notified the Compensation Event- so does this mean that the Contractor has effectively become time-barred, and is entitled to nothing, or could the Contractor notify us now?


Note- we are 12 months beyond the completion of this work, and just want to settle this fairly, as we will be continuing to work with the Contractor.

Under the contract, only the Project Manager can instruct a change to the Work Information or Scope (under NEC4), unless an individual is delegated authority to act on the PM’s behalf. So contractually, unless this delegation happened the Contractor should have ignored the engineer or ideally, early warned the PM saying ‘do you want me to do this and if ‘Yes’ you either need to delegate powers to the engineer or instruct yourself … and going forward, can you sort out your project organisation so this does not happen again!’.

Assuming the engineer, did not have the authority, if you wanted to be hyper contractual, you could dismiss this additional work as never being instructed. However, you do have to bear in mind effect on relationships and whether this work was actually needed i.e. would the PM have given the instruction in any case. Otherwise, the Contractor could dismantle the additional work to salvage some cost.

By saying you want to assess this fairly - if you agree that the instructed work was something you wanted and will benefit from (even if not communicated correctly) then simply instruct a change to the Works Information in line with what they have done, confirm it is a CE and request a quote. You can then assess their quote of you do not agree with it. Everything Jon has already said is 100% correct - the Contractor should not be in this position but equally the Client team should not have put them in that position either.

If you agree it is fair they should have been paid for it then I am sure you will find a mutual agreeable way of paying them.

Thank you for taking the time to respond- you’re response is very helpful. In short, the contract was set up and managed poorly from both parties- but seeing as though we are in a long-term contract with the contractor, we wish to maintain good relations, and pay them something for the works that they have completed. We both also need to learn from this debacle, as it’s something that has been set up too casually with the attitude that ‘nothing will go wrong’.

Thank you for taking the time to respond- you’re response is very helpful. Yes, we will probably ask them to notify what the additional work was and then to submit a quotation for it (which is what should have happened in the first instance). As always, even though we are talking a small amount, there are always lot’s of event’s building up to the ‘dispute’.