We are a Contractor working on a NEC3 Engineering and Construction (ECC) Option B Contract. There has been a number of compensation events agreed in accordance with clause 60.1 and quotations have been submitted on a SSoCC Defined Cost basis (Clause 63.1). The Project Manager has not yet implemented the CE quotations and is re-measuring all SSoCC line items within each quotation build-up retrospectively based on actuals after works are carried out. (I.e., Before they will implement the CE)
My question is whether the PM’s approach is correct in respect of the re-measurement of compensation events in this manner. My understanding under clause 63.13 is that the CE quotation should be assessed as a new priced item or new lump sum, dependent if work is done or not done, but is this then subject to later re-measurement based on actuals?
Please could you clarify?
The PM is most definitely wrong in doing this. The CE quote should be implemented and the remeasurement is a completely separate issue, taking place after completion of the works based on the actual quantity completed. You can’t remeasure before implementation. Under a standard contract the PM has 2 weeks to assess/implement the quote, are they taking longer ?
Yes, they are taking longer and effectively using the actual resource levels as a check against the original SSoCC quotation. Once satisfied they then implement, which is obviously not how the contract is intended to operate.
Notwithstanding the PM’s behaviour on implementation, my question was really whether compensation event quotations on Option B (built up based on the SSoCC defined cost) should be implemented as lump sums and claimed on this basis, or should they be backfit into a new BoQ line item and then be subject to remeasurement against the implemented amount. (there appears to be conflicting past answers on the BI website regarding this specific point)
By way of example, if the CE quotation built up on defined cost (Incl PoH and Fee % etc) and was agreed and implemented at £60k, for installing 6 no widgets, then providing the work was all fully completed then my understanding is that this would be the sum claimed.
This sum could obviously be backfit into a BoQ format i.e. 6 no widgets x £10k = £60k and then be remeasured at £50k if only 5 no. widgets were completed. Is this the intention for CEs under option B or should the £60k implemented sum just be added as a new single line addition at the bottom of the bill and claimed in full on this basis? How should the CE be presented?
Either way, I don’t believe the term “remeasurable” is intended to give the PM scope to revisit every line item that makes up the SSoCC defined cost quotation build-up and remeasure the actual people hours, equipment hours/shifts and plant and materials item after the event which is their current approach!
Hello David - Cl.11.2.(21) requires the BoQ to be amended to include implemented Compensation Events. The BoQ forms the basis of the “remeasurement”. In your example the CE is implemented at £60k. The “remeasurement” would adjust the final quantity, in effect paying for the 5No, not the 6No. The “remeasurement” is normally (not always) a Compensation Event, as detailed in Cl.60.4. To qualify as a CE, the change in quantity must meet the three bullet points of this clause. The “remeasurement” is not as simple as just “quantity x rate” for the final amount and a reduction in the Total of the Prices. The Contractor may be able to demonstrate the unit price rate has increased due to a reduction in quantity, this would be detailed in their CE quotation i.e. planned to install 5000 roof tiles, completed 4000, the Contractors price reduction may not simply be a case 1000 tiles x original roof tile unit rate.
Your response makes sense.
I assume the detailed quotation (based on the SSoCC build-up) would be provided to the client along with the rolled up line(s) summary version to add onto the bottom of the existing Bill of Quantities.
I am trying to understand the presentation of the detailed CE quotation and roll up into a new bill item(s).
There is a lot wrong with your current situation.
- If you are submitting your quotations on time, the PM should be assessing prospectively and implementing the events ahead of works commencing or during the works, ignoring what is actually taking place. He is breaching the contract by doing what he is doing. You should notify the Client of the PM’s breach and ask the Client if he supports the PM’s breach of contract.
If he wants to pay based on actuals, he should be issuing a PM assumption stating that you are to assume the effect of the CE is no change to the defined cost and ask you to submit records for assessment. He can then retrospectively assess the records and you can stop wasting your time doing quotations that he will ignore anyway. However, in that scenario, you are entitled to quote a financing cost as his behaviour requires you to fund the work while he delays assessment.
- CE’s don’t become remeasurable unless the PM issues an assumption to state that the quantity will be subject to remeasure.