I am currently working on an NEC3 (Option E) Contract, on behalf of the Employer, where we placed an order for our specialist contractor to carry out a 16 week programme of works on a reimbursable basis.
Four weeks into the contract, our Contractor has progressed well, but due to other works that we have to carry out (by internal resource), we may have to stand our Contractor down for 4 weeks until this work is carried out. This will be very costly.
We have asked the Contractor if they can re-deploy the resource somewhere else, but they have stated that there is nowhere for them to go, and that we must pay standing costs (if we wish to retain them when the contract re-commences).
What are the best options on a scenario like this one? Would terminating the contract be an option?
Termination is a possibility and under NEC3 the Employer has the right to terminate for any reason. As the Contractor has performed well so far, however, one of the risks is that the works may have to be completed by an alternative Contractor. You would not know how they are going to perform and ultimately you would have to pay for termination (amount due A1, A2 and A4) so not necessarily a ‘cheaper’ option.
I would suggest notifying an Early Warning and making sure all ‘internal resources’ are also in attendance at the risk reduction meeting. That way you can fully understand the impact and whether there are any measures you can take to re-sequence the works or undertake works at different times etc to mitigate the programme and cost.
If you need to go down the route of instructing suspension of the works under clause 34, then I would suggest discussing this with the Contractor beforehand to resolve any potential issues, such as use of resources etc.