NEC3 ECC: Option D - Total of the Prices

Under the option D contract I understand that the “Total of the Prices” would be the quantities of work completed for each item in the Bill of Quantities. We are working under an amended version of the contract where cl. 60.4 and 60.5 have been deleted. Without these two clauses is there still a clause that would allow the target to be reduced if the quantities were different?

A working example is that extra concrete has been required (increase to quantities) in order to comply with the Works Information, due to the previous foundation (which has been removed) being of a greater depth than stated in the standard detail. Therefore we should get an increase via a Compensation Event for a change in Works Information (in order to comply with them).

On the flip side there is less excavation required in certain areas and therefore less sub-base will be required. The employer believes this should be a negative CE. I believe this reduction in quantities could only be implemented after satisfying Cl.60.4 which has been deleted from the contract.

Please could you clarify if my interpretation is correct?

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A change in the Works Information is a compensation. Main Option B clause 60.4 and 60.5 are for compensation events which arise by virtue of using a Bill of Quantities.

Clause 60.4 is essentially a clause which sets out the parameters for changing the Defined Cost per unit of quantity. This could be either an increase or decrease in an affected rate. A threshold of 0.5% of the total of the Prices at the Contract Date is set so that small changes in quantities do not trigger a change to the affected rate.

In your example you have extra concrete and less excavation work which has arisen due to a change to the Works Information. This should be dealt with as a compensation event and Prices assessed on the actual Defined Cost of the work already done and forecast Defined Cost of the work not yet done and the Fee.

In main Option D Defined Cost are the components of cost in the Schedule of Cost Components. By agreement clause 63.13 you can agree to use rates and lump sums instead of Defined Cost to assess the compensation event or agree to use the Shorter Schedule of Cost Components (63.15).

So in this instance as it would appear to be a change in the Works Information this is a compensation event then clause 60.4 does not apply.