NEC3 Subcontract Option A Clause 63.5

Apart from assessing an event as normal, are there any other ramifications of this clause. Can the Contractor deduct costs incurred as a result of not having the opportunity to mitigate the potential event, i.e. loss and expense incurred by others as a result of the Subcontractor failing to comply with Clause 16?

63.5 If the Contractor has notified the Subcontractor of his decision that the Subcontractor
did not give an early warning of a compensation event which an experienced
subcontractor could have given, the event is assessed as if the Subcontractor had given
early warning.

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Great question Leslie @Neil_Earnshaw what do you think?

CE assessments are based on Defined Cost plus Fee with Defined Cost being described in the Schedules of Cost Components. Under Option A it’s the Shorter Schedule of Cost Components that is used and at the end of the first paragraph it states that:

“An amount is included only in one cost component and only if it is incurred in order to Provide the Subcontract Works.”

The term “Provide the Subcontract Works” is defined at clause 11.2(13) as “to do the work necessary to complete the subcontract works and all incidental work, services and actions which this subcontract requires.” So this means that the Defined Cost assessed in a CE must be related to your work, not the work of others or loss and expense incurred by others.

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