PM Refusal to Issue Instruction Under Clause 19.1

NEC3 and NEC4 Contracts Compensation Events
#1

Operating under an NEC3 ECC Option A; the Contractor has issued an Early Warning regarding the potential impact of COVID-19, and has also advised that under Clause 19.1 the PM should issue an instruction as to how to deal with said event.

However, the PM has refused to issue any instruction, stating nothing has changed and that the Contractor is to carry on as usual (although in hindsight, this could be considered the Instruction). This occurred in April/ May 2020 so, at the time, there was a lot of uncertainty surrounding Contractual procedure.

The decision was made by the Contractor, without an instruction from the PM, to close the Site due to health & safety concerns, suppliers closing resulting in unavailable materials, sub-contractors furloughing staff etc. The Contractor has notified a CE under Clause 60.1(19) which was subsequently rejected.

Does the Contractor have any recourse in this situation, other than Adjudication?

2 Likes
#2

The contract does not give the PM discretion over whether or not they issue an instruction i.e. clause 19.1 does not say “may give an instruction”. I’m not sure why there was uncertainty surrounding contractual procedure, clause 19.1 is very clear about what needed to be done, as are the compensation event procedures. In any case, the PM’s argument is pretty weak, they should have issued an instruction, even if that was just “carry on as best you can”. The PM had no obligation to issue an instruction telling you to stop or not to start which is probably what you were looking for however if the effects of COVID-19 meant you effectively came grinding to a stop anyway then your costs and times should be recoverable under clause 60.1(19). Note how this compensation event does not make mention of the PM’s instruction so it doesn’t matter that you didn’t have one, provided the event passes all of the other tests.

Unfortunately if all else has failed e.g. direct negotiations with the Employer then the only recourse the Contractor has is adjudication. You could try a strongly worded letter from an independent third party as a precursor.