NEC3 ECC: When does uncompleted work become a defect

ECC Option A - A Contractor has carried out some refurbishment work to a residential care home.

The Contractor has failed to complete all of the work outlined in the Works Information, but these omissions have not prevented the Employer from using the Works.

There is no specific wording in the Works Information to state what the Contractor has to do before Completion (11.2(2)).

Given the urgency to re-open the care home - the Project Manager has certified completion.

The Contractor has stated that the value of the unfinished work can be taken out of the retention money. The Project Manager is reluctant to use the retention money in this way, believing it to be for unforeseen defects which may emerge during the Defects Period - rather than uncompleted work.

As the uncompleted work is not strictly a Defect, (and has not been notified as one) the Project Manager is unsure how to proceed. The Employer (rightly) wants all of the works completed as soon as possible.

Although Completion has been certified, the Defects Date stated in the Contract Data is 52 weeks after completion of the “Whole of the Works”.

Does this mean that the Contractor’s liability for the works extends into the future until he completes all of the Works - and assumingly retention does not have to be released until this point (if indeed this point ever occurs)?

Clearly the Contractor has breached his obligation to provide the Works in accordance with the Works Information (20.1), however Termination of the Contract (90.1) seems impractical at this late stage.

Your thoughts on how to get uncompleted (non-Defective) work completed, (hopefully without jeopardising retention sums) would be very much appreciated.

Kind regards.

Under Clause 11.2(5) a Defect is a part of the works which is not in accordance with the Works Information, so this covers the situation you describe.

If the Contractor has indicated that he does not intend to correct the Defects then Clause 45.1 sets out the procedure to be followed - the PM assesses the cost of having the work done by others, and deducts that sum from payments due to the Contractor. I don’t believe it is really relevant whether this comes from retention or any other amount due.

Firstly, if work hadn’t been completed then the Contractor should not have been paid for it. Under Option A the PM should only have included completed activities in his assessments of the amount due. If the PM has not done this and certified 100% complete for incomplete activities he should correct this in his next assessment of the amount due, even if this results in a negative amount due i.e. the Contractor owes the Employer money.

The incomplete work is a Defect, however you need to be careful with this as technically the entire works are then defective until Completion. However, if the Contractor has no intention on completing certain works then the only way to move forward is for the Supervisor to notify them as Defects.

The situation is no different If for example the Works Information states that the skirting boards needed 3 coats of paint and they’ve only had two coats, or if the skirting boards needed replacing and they have not been. Both are Defects which the Contractor has an obligation to correct, if he refuses to do so then Employer has two potential remedies - either accept the Defects (clause 44) or notify uncorrected Defects (clause 45). In this situation it’s more likely that clause 45 would be used, so the PM would have to make an assessment of the cost to the Employer of having the Defects corrected by other people. This amount would then be deducted from the Contractor in the next assessment of the amount due which should continue after Completion up until 4 weeks after the Defect Certificate (clause 50.1)

Remember the NEC ethos is to absolutely avoid the situation where the project is left incomplete indefinitely! The PM is contractually obliged to take action, be proactive and manage the project to a conclusion.

Thanks for both answers, Neill. Very much appreciated.

I agree with your views throughout, and particularly with the NEC ethos to not allow projects to be regarded as incomplete indefinitely.