NEC4 - Assessing CEQs

Option A Subcontract which has been amended to remove time scales of accepting/assessing/implementing compensation events.

Subcontractor has submitted a CEQ to provide Scope which involved hiring in a third party.

The Scope has now been completed but the CEQ hasn’t been agreed. The main contractor is requesting actual invoices from the third party. At the time of the CEQ this was a forecasted amount which is higher than the actual invoice as it included risk.

Does the Subcontractor have to submit this information? or is the risk that the Main Contractor could assess this value below the invoiced amount?

Thanks in advance

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Firstly, the answer is ‘no’ under the normal unamended ECC, but check all the Z clauses and the Scope to see if they have introduced the obligation somewhere.

When you say the timescales for responding to quotes have been removed, I presume that it is under a Z clause, if so does it just remove the timescales and the treated acceptance and/or does it replace them with something else?

As it removes the timescales then clause 13.3 will apply to all of the Contractor’s required responses under the CE section, i.e. the period for reply. If they have not replied within the period for reply you should notify CE 60.1(6) [provided it hasn’t been removed from the subcontract].

The problem will be if they have also removed the treated as acceptance, because you have no remedy to force them to act other than notifying a CE under 60.1(6) which probably won’t help.

Secondly, you are correct, the CEQ should be based on a forecast from the dividing date - see clause 63.1. They do not have the right to audit actual costs unlike an Option C to F.

Unfortunately the Contractor holds the purse strings so they will likely insist on what they want and not pay until you comply - totally against the contract and you could refer a dispute to adjudication if you felt strongly enough about it.

Happy to discuss further.

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Hi Steve,

Correct, these have been amended via a Z clause and removed both the ‘timescales’ and ‘treated acceptance’ and is not replaced with anything.

My thoughts exactly regarding the dividing date and could be required under Options C to F.

If the contractor does believe the CEQ is high then their only route if we’re unwilling to provide actual invoices is to make a Contractor’s assessment? However, this is a catch 22 as if we don’t provide (as we don’t think we should) the assessment could well be below our actual costs with the next steps leading to dispute. I suppose the Contractor is trying to confirm that the CEQ value is over inflated by trying to use the actuals.

The relationship between both parties has been great so far and hopefully this is just a speed bump in the road.

Thanks for your initial response’s and look forward to further comments.

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Hi Christian,
if the relationship is good then it should survive honest and professional interaction, i.e. point out to them that while you can provide an invoice it is not required by the contract main option and should not affect the CEQ. Hopefully they will agree and you can avoid a dispute.

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