PSC Contract Option A - Hourly Rates for Compensation Event

We are employed on a project under NEC PSC Contract (Option A) with Clause X1 excluded. The project has significantly overrun its original tendered programme to the extent where our services should have been complete 2 years ago. The employer has requested some additional work outside of the original scope which is a compensation event and our sub-consultant has provided a quote with a significantly higher hourly rate than that stated in Contract Data Part 2. In the absence of a X1 clause are we obliged to use the rates in the contract data, or do they not apply as the instructed work sits outside the original scope (It is a specialist report but carried out by an appointed subconsultant)? If the sub-consultant will not reduce his quotation are we at liberty to decline the instruction?

There seems to be a serious issue regarding the delay that has to be addressed, as things will only get more complicated as time passes. If the Employer is responsible for the delay, a CE (or CEs) should have been notified and you could face a time bar issue if the CE(s) did not arise from an instruction (see cl. 61.3). If you are responsible, you could face delay damages (if X7 applies) or general damages when the music stops.

As regards the rates, you are probably referring to the “staff rates” in CD Part 2. Unfortunately you would have to stick to those, unless the instructed work requires staff for which there is no staff rate, in which case a new proposed rate could be included in your quotation - that could be a relief for now.

Lastly, declining the instruction is not an option if the instruction is in accordance with the contract.

It will sound harsh, but you are not in a good position, especially given the current circumstances - try to resolve the delay issue asap.

Thankyou Peter. The delay has been caused by the employer and we have already had a CE approved for prolongation costs but the issue we have now is that as the project programme continues to drift due to employer indecision we have subconsultants who will not stand over their hourly staff rates as they are now over 5 years old.

No problem Ian. What is happening in your case is not uncommon and, especially with the PSC, not an easy situation to get out of.

A deed of variation to amend the staff rates (and anything else in the contract that needs to be changed) - if your client agrees of course - would not be a bad idea. At the end of the day, it will provide both parties with certainty and reduce contentions.