PM assessment in breach of contract

We are the Contractor under an NEC4 Option C contract.

The scope required us to upgrade some local authority assets.

The existing assets are listed within the scope.

In a preliminary survey, we have found the list of assets to be in accurate and greater in number than the original list.

We have notified the PM but he hasn’t issued an instruction to change the Scope to this new assets list.

We raised a CE (which has been accepted) and priced the effect of the change in accordance with clause 63.

We have valued the forecasted effect of the change using Contract Data Part 2, using the categories of People involved in the contract, and their rates. These rates are undervalued but nonetheless, they are in the contract.

We have also issued a programme as per clause 62, demonstrating that this fixing these additional assets will result in additional time and a delay to planned completion.

We have valued the effect of the delay on the overall management team and included it in the quote.

A small portion of the event had passed when the quotation was submitted, which demonstrated, with sufficient confidence, that there will be a material delay due to the CE.

Most of the delay is forecast, and we have included our assessment on time and Defined Cost with our quotation. In order to do that, we listed assumptions as the PM didn’t provide any.

Our quotation also provided a detailed breakdown of the various contractor risks and the likely impact the even would have on each one.

Our quotation included a seperation of “staff costs” into those associated with overall delay (PM, CM, planner etc) and those involved in managing the activities onsite (foreman, engineer etc).

Our quotation was rejected by the Project Manager without providing specific reasons or asking for a requote.

There are a number of large CE’s on the project which will effect planned completion, but the PM wants to assess all time entitlement as a global wrap up at the end (not stated in writing).

In moving to PM assessment, the PM has omitted to assess the following:

  1. risk allowances - applying a global 10%
  2. Delay to planned completion
  3. Impact on staff costs (neither those directly involved or the prolonged management)
  4. The effect of the change using contract data part 2 rates (they have applied Subcontractor rates instead)

We have instructed a risk reduction meeting on the assessment and asked the PM to raise a new CE to correct their errors. This has been refused, leaving us with adjudication as our only recourse to obtain a fair valuation. This will take time and likely increase our costs (which the PM will disallow).

The question for the forum is as follows:

  1. Is the PM assessment obliged to follow clause 63 in completing his assessment?
  2. Is that failure a compensation event under cl 60.1(18)

We currently have a forecast defined cost well over the original target, which due to the repeated situation above (which is the repeated PM tactic to keep the target down), will result in significant pain to the Contractor unless we can correct the behaviour with an adjudication decision which proves him wrong.

I would note that the PM still has the option to revisit the CE by actually issuing an instruction to change the scope, raising a CE, issue his assumptions for us to quote, and then evaluating that quote. If he actually follows the contract we will not have a dispute. He has rejected this as a course of action and suggested we raise the dispute to the employer via the contracts convoluted dispute mechanism (which excludes adjudication).

I’m assuming you are in the UK.

  1. Assuming no amendments, yes
  2. No, because the breach is not by the Client.

It sounds like you are in dispute. I would normally be pointing at the Senior Representatives under your W clause, but you seem to have a bespoke process.

You also say the bespoke dispute process excludes Adjudication. That surprises me. Adjudication is available under the Housing Grants, Construction and Regeneration Act - i.e. under the Law. I don’t believe the Contract can override that.

I think you need legal advice.