NEC3 ECC: What is the process for dealing with unexpected ground conditions?

NEC3 and NEC4 Contracts Compensation Events
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Beta contractors has an NEC3 ECC Option A ‘traditional strategy’ contract to construct a bypass which includes a new bridge over the River Avon designed by Cheta consultants. Warwickshire County Council (WCC) is the Employer and the Site Investigation was carried out for WCC by Missit Ground Engineering.

Whilst excavating a rock formation is found which was not shown in the Site Information.What would be the contractual process and the arguments that should be raised to gain P.M’s agreement for a compensation event?

The bridge has two abutments. Whilst excavating the first one, the South abutment, Beta encounters a rock formation which is not shown in the site information.

The Completion Date is 15th September 2016 and Beta’s Planned Completion, shown on the accepted programme is 20th August 2016. The Defects Correction Period is three weeks. Dates are very important on this contract, because the new bypass must open before the 20th October 2016 for the start of the 2016 Stratford carnival.

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  1. The Contractor should notify that they believe this to be a compensation event stating why. It looks like this would be a CE due to clause 60.1(12) which is ground conditions that would have been unreasonable for the Contractor to have expected.

  2. The Project Manager needs to decide if they agree it s a Compensation Event. They need to consider the Site Information that was available to the Contractor and see if they indeed agree that it is something that the Contractor could not reasonably have foreseen from the information available to them. They also need to consider any Z clause amendments (changes to standard contract) as to whether these change the associated risks for this particular element. They then need to respond to the Contractor (within one week) as to whether they agree it is a CE and therefore request a quote, or that they do not believe it to be a CE (stating why).

  3. If PM has agreed then the Contractor goes ahead and produces the quote. If PM states it is not a CE, Contractor has to either accept it and move on, or beef up their argument/evidence, or ultimately consider adjudication to overturn the decision if they believe the PM to be wrong.

May also be worth having a risk reduction meeting here to discuss the fact there is more risk on the end date not being achieved and what the Parties want to do about that (if anything). (Depending on what is instructed as a result of that meeting may or may not be a further compensation event)

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