NEC4 Subcontract: Subcontractor knew there was an issue with the existing installation, which has required a change to the Scope. Could this fall under clause 60.2?

NEC3 and NEC4 Contracts
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We have a situation where the MEP subcontractor carried out the yearly inspections and ongoing maintenance on an existing building, plus the partial new fit-out works about 5 years ago. The building was sold and we are main contractor carrying out the fit-out for the new building owner. We are working on nec4 Option A and we are providing the design. We asked an MEP consultant to carry out a non-invasive survey (the building was occupied) and they made recommendations that - based on the visible services - the existing underfloor services could be reused and modified.

We started on site and the MEP subcontractor has now come to us (within 3 days of signing their subcontract) to suggest the existing underfloor services are not serviceable and should all be replaced.

We do have some work to do to establish whether it actually needs replacing (it’s easier for the subcontractor to put in new, which we think is the driver for the suggestion) but if it do need to replace it, we will need to issue an instruction to change the Scope.

On the face of it, it seems unethical of them at the very least but contractually, do we have any recourse? The main contract and subcontract are both unamended so I feel like clause 60.2 could be a possible argument? They likely won the contract based on their previous knowledge of the building so it seems they are manipulating that to their advantage by not raising the potential for issues that they had knowledge of.

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It is clear to see your frustration with this situation, especially as the MEP subcontractor has prior knowledge and understanding of the building systems. Notwithstanding this, however, the matter should be addressed in accordance with the conditions of contract, without applying any ‘emotive bias’.

Sub-clause 60.2 is a good reference point as that provides further ‘tests’ in relation to a physical condition compensation event, in addition to those stated at sub-clause 60.1 (12). The difficulty is that the ‘experienced subcontractor’ test should be applied in a consistent manner. In your case you would suggest that the MEP subcontractor has knowledge in excess of this ‘benchmark test’ although the compensation event limits the test to an ‘experienced subcontractor’ in determining the scope of a corresponding ‘physical condition’ compensation event.

The test is, therefore, an ‘experienced subcontractor’ at the Subcontract Date making a considered judgement of what would be reasonable to have allowed for, factoring in how likely such a physical condition is to occur. The information sources at 60.2 assist with this decision making process, but the test should be purely objective.

Hopefully the design process should determine whether any of the underfloor services need to be replaced.

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