This is somewhat academic, but what are the implications where the PM and Contractor remain at loggerheads on the solutions and actions required to avoid or mitigate a risk after attending a risk reduction meeting. The wording suggest consensus MUST be reached, but common sense dictates that the PM must instruct as he deems fit even if no consensus.
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The answer will depend on what the issue is and whoâs risk it is as to whether the PM needs to instruct anything or not If you could provide some more context I should be able to give a more detailed answer.
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With some trepidation, since the question is indeed purely academic, but arose as a discussion point (heated!) at a braai (barbeque).
The assumption was that an instruction was required, the works information changed, the additional work to be done by the Contractor and the risk/cost squarely for the employer.The issue was whether the co-operation requirement of clause 16.3 required consensus between the Contractor and PM on what action was to be taken before the PM would be entitled to issue the instruction in terms of 16.4.
My initial reaction of it being in the discretion/purview of the PM has faded somewhat, as it makes the âco-operationâ requirement somewhat toothless, and the co-operation aspect is indeed a cornerstone of the NEC suites. Academic perhaps, but if it ever happens the ramifications are extensive.
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Hi
I posted a replyâŚ
Albert
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Thanks @Big_Al
The answer is a firm NO! The PM does not need the Contractor to agree with the instruction, once itâs issued it triggers a compensation event which will compensate the Contractor cost and time for complying with it. Where consensus canât be reached (which is surely what we try to do as maybe thatâs what mutual trust and co-operation is all about!) we just need to follow the contract which at clause 14.3 gives the PM the right to give an instruction which changes the Works Information and at clause 27.3 obligates the Contractor to comply with that instruction.
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Regarding the question raised by BigAl and Neil_Earnshawâs emphatic response - I would like to comment as follows:
Once it becomes apparent to the PM that a 14.3 instruction is to be given, once formulated the proposed instruction MUST be submitted by the PM to the Contractor as an early warning and the PM must enter the proposed instruction in to the register.
The early warning is however mandatory, the parties (shall) give an early warning on matters affecting time costs or or pereormcane and this is per se true of a 14.3 instruction.
It is correct that the Contractorâs âconsentâ as such is not required. It is incumbent on the Contractor, in accordance with its duty of trust and cooperation to review the drawing and contemplate what it proposes, and should it be apparent to the Contractor that the effect of the proposed changes can be âavoided or reducedâ the the Contractorâs duty to make proposals to that effect is clear.
Although the parties are required to reach consensus in their decision as to whether the 14.3 instruction is to be actioned, this does not per se amount to the statement that the contractor has to âconsentâ as such. The test is whether the instruction will bring advantage to those affected.
The likely outcome in most cases is that
a) the Contractor accepts the proposal, after all he will be compensated, and the Employer will benefit by the instruction,
b) the Employer may even further benefit should the Contractor be able to propose changes that may improve the performance, time and price aspects of the instruction.
However it is clear that is extreme cases the Contractor may disagree (and therefor not reach consensus). An example that comes to mind is a 14.3 instruction that alters the Contractors design rendering it unsafe or undermining design guarantees that Contractor has given. In such a case where the meeting cannot reach consensus, the matter will be resolved though Adjudication, but the Employer would not be entitled to proceed to implement its âactionâ - the 14.3 instruction without being in breach of clause 16 which is itself a compensation event and possibly a (material) breach of contract.
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Thanks for the reply.
In a slightly different format, the same issue has arisen in a bizarre manner.
The contractor has noted a design deficiencies on a major project governed by NEC3ECC,inter alia an absence of provision for waterproofing. The Contractor has notified this but has been advised by the employer that âthere will be no further compensation eventsâ!!
To continue would expose the contractor to inter alia possible future injury claims, and also create an unsafe and unsuitable structure, and probably destruction of any interior equipment and fittings and fixtures.The contractor cannot proceed with any other aspect of the works before this is rectified, cannot get a CE approved and may receive an instruction to proceed .
Now Gavinâs reply ( which I didnât agree with) comes into focus. With this attitude of the employer, what is the contractorâs remedy except to force the issue down the route he suggest?
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Hi Neil
Can you comment on my follow up post. Similar issue with an unusual twist, possibly involving the aspect of mutual trust and co-operation.
Albert
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Firstly early warning of an instruction is not required and in all the years Iâve been advising and training on NEC this is the first time Iâve heard this view. If there is a proposed instruction the correct way of dealing with it is under cl. 61.2 which requires the PM to instruct the Contractor to submit a quotation for a proposed instruction.
The Employer cannot simply say âthere will be no further compensation eventsâ and indeed the Project Manager has a duty to advise them that this canât be the case. Itâs as futile as stating âthere will be no further breaches of contractâ.
The Contractor should not do any work that is not described in the Works Information without an instruction. If it doesnât require waterproofing then they shouldnât do it, they do however have a duty to notify an early warning for this so that should the worst happen they can demonstrate how they as a competent contractor warned the PM / Employer of the risk of proceeding without resolving the waterproofing. There is case law to support this - see for example Plant Construction v Clive Adams Associates / JMH Construction (2000) BLR.
One final note, the Contractor should carefully check the extent of their design responsibility and any other requirements in the Works Information (if any) to make sure the issue isnât related to their incorrect interpretation.
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