NEC4 ECC Compensation Events and effect on Prelims

An NEC4 ECC Option C contract has been let at essentially zero value and when works require undertaking a PMI is given and CE raised. Following the raising of a PMI and associated CE to undertake a scheme the contractor has provided a price for these works.

Upon undertaking these works some design changes occured and a further PMI and CE given which has added some scope.

The planned Completion date in the Accepted
Programme is far out as the contractor is allowing for upcoming schemes to be added once instructed so there is always no impact on planned Completion.

How should preliminary costs be captured if there’s no impact to planned Completion but there has been an impact to the length of time required on one of the sites instructed? I assume this is still classed as an effect to Defined Cost and therefore should be included rather than there’s no impact to planned Completion and therefore prelims won’t increase?

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It does seem a strange arrangement that you have however if all parties have mutual understanding of it and the intention that is fine.

Regarding your question, yes. The basic principle for assessment of a CE is two fold, in simple terms, the effect of the CE on time and the effect of the CE on cost. The Defined Cost + fee of “preliminary costs” can therefore be calculated based on the additional Defined Cost + fee due to the CE with time considered separately. The effect on time, ie change in Completion Date is based on the change in planned Completion due to the CE. The question of the effect on time is therefore has the CE impacted planned Completion. I suspect that this will depend upon whether the CE is related/part of the “upcoming schemes” if not then the Completion Date should be changed to maintain the terminal float however it will really depend upon the intention of the contract given what you say about the programme.

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