We are using an NEC3 ECC Option D Contract. We have requested a quotation from our Contractor under Clause 61.2 (proposed instruction). Are we required to accept the quotation before the Contractor can proceed with the work, or can we already instruct the Contractor to proceed with the work and issue our assessment of the quotation on a later date?
My understanding of Clause 61.2 is that the PM is not yet sure whether he wants the Contractor to proceed with a proposed instruction so he obtains a quotation first to have a basis on his decision and that’s why the Contractor does not proceed with the work yet.
On the other hand, when a PM instructs a quotation under Clause 61.1, he is already very sure that he wants the Contractor to proceed with the work (regardless of its possible effect on the target cost) and that’s why the Contractor can proceed with the work.
Also, I understand that after a quotation has been submitted under Clause 61.2, and the PM is already decided he wants the Contractor to proceed with the work, he then issues an instruction to the Contractor to proceed with the work. Then, the PM or the Contractor may now raise the Compensation Event under Clause 61.1 (compensation events which arise from the Project Manager or the Supervisor giving an instruction). Since the quotation has already been given by the Contractor, he need not instruct the Contractor to submit a new/revised quotation until he is done with his assessment.
I hope to be enlightened on the matter. Thank you!
You correctly state that under 61.2 the Contractor does not proceed with the proposed instruction.
To clarify, when the Contractor submits a quotation (under both 61.1 and 61.2) the procedure moves to 62.3. Here the PM has to reply in one of 4 ways:
- Instruct a revised quote
- Acceptance of the quote
- Notification that a proposed instruction or decision will not be made
- Pm notify that he will make his own assessment.
These are your only contractual options available. Note that from the outset the PM doesn’t automatically assess the event or quotation. It is the Contractor who assesses the event and submits his quotation. Only if the PM are not satisfied with his quotation, does he notify under 62.3 that he will make your own assessment, which then moves to clause 64.1.
Taking the above into consideration, the Contractor can only proceed with a 61.2 proposed instruction once the PM gives the 62.3 acceptance. Until then, the Contractor should not proceed.
There is no mechanism in the contract that convert a 61.2 to a 61.1 scenario and vice versa.
One should avoid trying to use the procedures to create some tactical chess game with quotations by delaying acceptance to try and monitor the situation, etc.
Clause 62.3 gives the 4 options for the PM to reply to the Contractor and if the compensation event quotation was instructed under 61.2, the Contractor may only proceed on the PM’s acceptance.
Now, should the PM only give an instruction to the Contractor to proceed with the same work that was proposed under the original 61.2 proposed quote, it would constitute a new instruction under 61.1 and hence create a new compensation event under 61.1. The Contractor is then required to submit a new quotation (albeit this quote may look the same as the previous one) and the PM is obliged to proceed with that quotation under 62.3 (four options).
This will also obviate the first quote or at the very least create quite a dilemma on how to proceed further. I’m merely using the scenario to indicate the “chess game” scenario that probably only ends in frustration.
61.1 - Contractor quotes and does the work
61.2 - Contractor quotes:
waits for PM acceptance of first quote or revised quote,
PM’s own assessment, or
that Contractor doesn’t proceed at all.
Just one point to change about Jaco’s very thorough and comprehensive answer. If a quotation is requested under clause 61.2 and the Project Manager wants to proceed you indeed loop back to clause 61.1 and need an instruction to proceed from the PM. That same clause states that the PM requests a quotation, but then importantly says “unless a quotation has already been produced”. This means there is no new loop required and they can jump straight to assess/implementation.
I personally don’t think the contract is as clear as it should be on this specific process. In particular, the quotation will be based upon the PM deciding within a certain timescale (i.e. minimum two weeks response period) if they have taken four or six weeks to decide there might be a reason that the quotation would now be higher, and I don’t think this is specifically covered well enough.
I agree with Glenn’s comments on the correct approach to take following the acceptance of a quotation submitted under Clause 61.2.
I believe It would be beneficial to have the general consensus from NEC3 practitioners on the correct interpretation of Clause 62.3 in relation to acceptance of such quotations.