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.
@Neil_Earnshaw any thoughts on this?
The answer will depend on what the issue is and who’s 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.
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 “co-operation” 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.
I posted a reply…
The answer is a firm NO! The PM does not need the Contractor to agree with the instruction, once it’s issued it triggers a compensation event which will compensate the Contractor cost and time for complying with it. Where consensus can’t be reached (which is surely what we try to do as maybe that’s 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.
Regarding the question raised by BigAl and Neil_Earnshaw’s 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 Contractor’s ‘consent’ 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 ‘avoided or reduced’ the the Contractor’s 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 ‘consent’ 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 ‘action’ - the 14.3 instruction without being in breach of clause 16 which is itself a compensation event and possibly a (material) breach of contract.