We are a Subcontractor who has been awarded a bearing replacement scheme, the works information provided to us at tender stated a maximum size of bearing at 50mm, but when we consulted a bearing supplier during the tender process, they suggested 52mm be used for the scheme. We included the specification of the 52mm within our tender submission and incorporated the tender into the Subcontract when awarded the works. However, upon installation of the 52mm bearings, it has been found that the bearings do not fit and smaller bearings are now required. Is this a compensation event?
We specifically stated what our tender included for and it also mentions this within the contract document. Please advise.
Hi Green, The short answer is that this is probably not a compensation event, but it would depend slightly how it was included in the contract. Under NEC3 Engineering and Construction Subcontract, clause 60.1(1) provides for compensation when the works information is changed by the Contractor expect where its done in order to correct a discrepancy between their works information and yours. Theirs is listed in CDP1 and yours in CDP2. The Contractor works info takes precedence. If you included the change in the CDP2 its not a CE as its a discrepancy but if you persuaded the Contractor at tender stage to change the works info listed in CDP1 to 52mm and its been changed back to 50mm, its a CE.
Just including it in the contract is unlikely to be a CE, as you still obliged to do whats in the works info and have limited right to CE under clause 60.1. I’d suggest you also read clause 17.1 which covers ambiguities and inconsistencies elsewhere in the contract.
The same is true of NEC4 ESC.
Thank you for your response, this situation has developed further, as a different bearing supplier has confirmed that the minimum depth achievable is 52mm given the design parameters within the works information. Given that the specification suggests a maximum of 50mm, and the minimum achievable within the specified design parameters is 52mm, could this be an construed as an ambiguity in the works information?
It sound like the works information has created an impossibility: i.e. you cannot execute the works in accordance with the works information
That being the case you should raise and EWN inform the PM and request that they change the works information
That change will be a CE but it will likely be valued at zero as you have already declared that you allowed for the 52mm. The only way the CE will have a positive valuation is if you have incurred a delay which effects planned completion
I think Chris’s reply sums up your position, but to add to it - it looks like a step has been missed in between contract award and completing the bearing works, which in itself would potentially limit what you could recover under in a CE if one were accepted.
As a Contractor you are obliged to notify an early warning, under clause 16.1, for any matters which could effect cost/time or impair the performance of the works. If an early warning is not given, the PM can notify this failure (clause 61.5) and assess a compensation event as if the Contractor had given an early warning (clause 63.5).
In this instance, if an early warning had been given at an early stage, the design could potentially have been reviewed and either an alternative bearing or suitable space for the bearings could have been designed. This would potentially have prevented/minimised any delay (assuming there has been a period of delay after the failed install of the bearings), or re-works (if alterations to structure is now required to suit the deeper bearings).
Unfortunately there is no reciprocal obligation/liability on the PM should they not raise an early warning for a matter which they were aware of.