NEC3 Option A - PM Instructs Use of Alternative Sub-Contractor

Following discovery of asbestos on site there was a delay to the programme, and subsequently I had to delay various works and my piling sub-contractor was unable to meet a revised start date. The PM deemed the delay unacceptable and instructed me to terminate my sub-contractor (who had carried out design and calculations which had been submitted and approved for use) and procure another who could meet the start date. I have followed this instruction, but the initial sub-contractor wants payment for their design work, which I believe to be a reasonable request given the situation. However, I believe this is a CE and I am looking to issue an NCE in accordance with the contract, but I am at a loss as to which Clause under 60.1 would be suitable to reference in this situation?

The starting point here for me is where does the PM get the power to instruct you to terminate a subcontractor. I don’t think that is right, once appointed it is for the contractor to deliver the works. That to one side, if I were approaching the situation I would say this is a 60.1(1) change in Scope/Works Information as the PM has imposed a constraint on providing the Works, ie don’t use that subcontractor. While it isn’t a perfect fit given the circumstances it is close enough. You then have your CE to which you can attach costs, for example abortive design costs as you mention.

There is no obvious compensation event for this and it is not envisaged that the PM has the authority to do this.

However, given that you say this was an “instruction” from the Project Manager, a good argument could be constructed that the Project Manager was adding a constraint into the Works Information - i.e. you are not allowed to use this Subcontractor any more - and this is therefore a change to the Work Information and a compensation event under clause 60.1 (1). Overcome this hurdle and then we can have a discussion about compensation !

Jon, Rob. Thank you both for your comments, most helpful. I am of the same opinion that 60.1 (1) is the most relevant Clause to reference. I would also point out that this came about after a risk mitigation meeting was held and was agreed as the most pragmatic approach to not cause any further delays to the programme or incur unreasonable costs.

14.2 14.3 sets out the clients flexibility to remove and delegate scope on the basis the contractor has been notified which in this instance it appears so.

I have a similar problem whereas the client has instructed us the contractor to procure the services of a sub contractor. The sub contractor never performed and is refusing to correspond, the client has now subsequently informed us of its intention to reallocate the works (we originally received a CE for the procurement and supply of the specified sub contractor from the client) in addition the associated delay and costs (procuring an alternative) any ideas would be welcome