NEC4 ECC: Option A Clause 63.4

NEC3 and NEC4 Contracts Compensation Events
1

The scenario – Adding in an ATM Machine into a brick wall and therefore the bricks are to be omitted from the Contractors Scope.

NEC 4 Clause 63.4 bullet point one how I read it is that a Compensation Event which is a change to the scope instructed by the client omitting works then the Prices are NOT reduced, the only way the prices can be reduced are by the Contractor proposing a VE option (63.12) that is then accepted by the client and the relevant VE % is applied.

Is this correct or am I reading this wrong?

2

Clause 63.4 allows for the Prices to be reduced in the following situations;

  • a change to the Scope,
  • correction to a PM assumption.

The ‘qualification’ in the first bullet point refers to a Contractor proposal which has been accepted by the PM, which is then dealt with under clause 63.12 as a ‘value engineering’ proposal.

If the net effect on Defined Cost is that the Prices are reduced then they ARE reduced.