Programme stated as shift allowances

NEC3 and NEC4 Contracts Compensation Events
1

A subcontractor, working under an NEC4 ESC Option B, did not submit a programme for acceptance but instead worked to a shift allowance, which entailed a number of 10 hour resourced shifts to complete their scope, with minimum required output per shift,
i.e. X total quantity ÷ Y units per shift = Z no of shifts allowed-for.

The contractor appeared to accept this allowance, along with the start date, as being a valid programme. The scope was deemed to be straightforward and low risk, hence the lax approach.

Now the subcontractor has far exceeded those allowed-for shifts, which undertook both measured BOQ work plus additional work - which are CEs in their own right, where elements of the additonal work have been valued using BOQ rates wherever possible, and where not possible, used Defined Cost or Subsubcontractor costs plus fee.

Disregarding the potential time bars for late CE noticing, would the Subcontractor have any weight behind his argument that

  1. The format of a Programme is not dictated/prescribed as being represented by a traditional Gantt chart, therefore,
  2. the start date and duration (in form of shift allowances (and therefore completion date was derived form the start date plus duration)) was determined by those deemed-accepted (implied by Contractor’s action/inaction) shift allowance,
  3. the number of resourced/worked shifts beyond the accepted shift allowance should be treated as prolongation, as the Scope should have been completed within the accepted allowed-for shifts. The main reason being the Contractor not completing their works ahead of the Subcontractor, therefore not allowing the Subcontractor to complete their scope within their shift allowances by achieving their required shift outputs.

I appreciate there is a lot to unpick here.

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First of all, welcome to the group. Regarding your queries and assuming there are no bespoke amendments to the standard conditions:

  1. The programme form would be as stated in the Subcontract Scope - see cl. 31.2. If nothing is mentioned, then I suppose your first argument has merit.

  2. I have to disagree here; the subcontract starting date, access dates and completion date are as stated in Subcontract Data Part One - they do not change just because a programme was submitted and accepted. To make this clear, the Contractor could have accepted a programme where the Subcontractor showed it was and/or would be in delay; that does not relieve the latter from liability or transfer liability to the former. The Contractor would be entitled to notify non-acceptance only by virtue of one of the four bullet points in clause 31.3.

  3. If the Contractor had caused a delay to the Subcontract Works, then a CE should have been notified under the appropriate clause - if an instruction was given in that respect, then there is no time bar. After the CE was accepted, you would then use the Accepted Programme as a basis to demonstrate the delay to the Subcontract Completion Date (clause 63.5 refers), which is essentially what you refer to as prolongation. Therefore, I do not entirely disagree with what you say but with its place in the process.

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Hi Peter, thanks for the quick reply, much appreciated.

Only the subcontract starting date, access dates, key dates and completion date were stated, hence my choice of words. The Subcontractor did not submit any programmes in the common meaning of that word and the Contractor did not pursue, hence no accepted programmes. No applicable z-clauses or bespoke amendments. The Subcontractor simply worked reactively to the Contractor’s progress, being put to work as needed, and as such treated the arrangement as ‘dayworks’ rather than planned works.

Neither party administered the Subcontract correctly due to a high turnover of staff on both sides, which is no excuse but that’s the reality which we’re dealing with now. As I said, it was deemed straightforward and low risk hence the lack of timely notifications and submissions.

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No worries, I totally understand and I would be lying if I said that I haven’t seen such situation before, i.e. both parties having departed from the contract.

However, to your question “…would the Subcontractor have any weight behind his argument that…”; my answers were based on the standard conditions which are supposed to govern your subcontract, and if you say that neither party adhered to them properly then the NEC kite somewhat flew away and is extremely difficult to bring back, especially with the absence of an Accepted Programme.

If this escalates to dispute resolution, I expect a lot of legal arguments to be made by both sides because apparently the Parties, through their conduct, varied the Subcontract - although cl. 12.3 sets out that any change needs to be in writing and signed - and each side will strive to prove its version.

Again, your approach seems logical but is not really compatible with your contract. Any informed view would have to take account of the facts in detail, based on contemporaneous records and correspondence.

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