I have a question about what happens to sectional completion dates when scope is removed from a project. I’m starting a project that has 9 phases, each having their own sectional completion dates at the end. Each sectional completion date has a bonus attached to it for finishing early.
It’s very likely that some phases will be removed from scope and if my understanding is correct the only way to bring a SC date or Completion date forward is through acceleration, not by removing scope. So if we remove some scope and the SC dates don’t change the contractor will get a lot longer to deliver the remaining scope and get their bonus!
First of all, is the above correct and secondly if it is correct is there a way around this, Z clause maybe?
you are correct about the changing of the Completion Date it cannot be brought forward through the assessment of a CE, only acceleration or accepting Defect allows for the setting of an earlier Completion Date.
I don’t know what magnitude of bonus you expected to pay but certainly by reducing the Scope the Contractor is likely to finish before the Completion Date and thereby earn a bonus based on X6. I can’t see any way around this, if the Client makes the changes to the Scope they will have to pay the bonus.
On the flip side, the Contractor will not be doing the amount of work they had priced to do thereby reducing their turnover and of course profit, they are not compensated for that through the assessment of the CE.
I find it difficult to know what a Z clause might say in this circumstance unless you are thinking of including a Z clause to allow for the section Completion Date to be Brough forward due to a CE but that would go against the principle in the NEC.
It is not clear whether you are in contract yet or not?
So Sectional Completion Dates are definitely treated the same as the Completion Date?
We are not in contract yet and are just discussing different scenarios and how to deal with them.
The bonuses total €5,000,000 with roughly €800,000 per phase. We aren’t trying to avoid paying the bonuses, we want to pay them as it means they have completed a phase early but it doesn’t seem right if they are under performing and behind programme but because we remove some scope they are all of a sudden back on programme and end up getting the rest of the bonuses.
I had thought that maybe the planned Sectional Completion submitted with the CE response could become the new Sectional Completion.