I am just trying to follow the logic to fully understand the process of reducing scope on an NEC4 Option C contract. Why does a scope reduction not bring the contract Completion Date forward? Surely this is a far more favourable outcome to the Contractor than the Client?
Hello SaintNEC,
In my view, the Planned Completion Date can come forward resulting in an earlier completion of the project if those descoped activities do indeed impact the Completion Date. There will be float created as a result.
Whilst not an answer to your direct question, why doesn’t the Completion Date change, my only suggestion on this is would be that if the Compensation Events could bring the Completion Date forward, this would create further complexity in the event of a Project Managers Assessment. For example, uninformed PM’s could force the Contractor into completing earlier than possible, or forcing Contractors into a position where they will be liable for LD’s should they choose to assess the Compensation Event themselves.
I think restricting the forward movement of Completion Dates by the acceleration clause is very good and protects both parties from dispute.
I can’t say for certain why this is but I presume that one factor to consider is that any delay damages which might be stated in the contract would be based on any delay occurring to the original Completion Date. An earlier Completion Date might have an impact upon them and there is no mechanism for changing delay damages other than under clauses X7.3 and.or 12.3.
I’m sure there are other reasons but I am not privy to them.
Where planned Completion is earlier than planned Completion as shown on the Accepted Programme because of a CE which changed the Scope i.e. an omission, the Prices can be reduced (63.4) but the Completion Date cannot be brought forward.
Also a quick note to ‘SA’, Completion is a defined term under 11.2(2), the insertion of the word ‘planned’ is not in the definition and so shouldn’t have a capital initial, it is used simply to identify when the Contractor plans to complete and is included in clauses such as 63.5, 31.2, etc.
You are correct the omission of work is likely to bring forward planned Completion and that of course introduces float between planned Completion and the Completion Date, also known as terminal float. Terminal float is indeed owned by the Contractor, this is implied through the logic of clause 63.5, the effect of a CE upon planned Completion changes the Completion Date by the same amount of time, but only in terms of setting a later Completion Date.
There clearly is a benefit to the Client in that they will hopefully be able to take over the works earlier and they will hopefully pay less.
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