Query RE Dividing date in NEC Contracts

NEC3 and NEC4 Contracts
1

Needing some help on the concept of the dividing date, forecasts etc. We are a subcontractor contracting in to a main contractor using an ECS NEC 4 arrangement. We are near the end of the project and we are still debating actuals vs forecasts for our CE’s. A theme I wanted some feedback on was the following scenario

  1. Work added on date X, let’s say 15th May 2023 via an emailed instruction with new structural engineers drawings
  2. No contractor CE notified
  3. Subcontractor (us) notifies CE on 25th May 2023 believing it to be a change under 60.1.1. with a narrative and forecast of estimated costs
  4. Contractor ignores it for months on end but it is inferred that it is accepted in principle
  5. Subcontractor proceeded with the work anyway for fear of bursting completion, knowing that the price would eventually be sorted out
  6. Contractor thinks they can use actual costs and we are being “obstructive”, we similarly believe the client is being obstructive and is seeking to have their cake and eat it and prolong the process to make us give in and give our entitlements a haircut prior to final account when we don’t need to.

When interpreting the dividing date at clause 63.1, it seems to me that almost all CE’s should be based on forecasts because at the date of the communication, no work should have been done. Even if we proceeded with the stair (which we did) and had actual records 9 months later, there’s nothing obliging us to use these actuals which may end up higher or lower. If it was lower, we don’t give the savings to the client in this regard. Similarily, if the stair ends up costing more, we don’t pursue additional money as our understanding is the forecast isn’t adjusted

One question I have regarding the dividing date. Is the dividing date the 15th May 2023 or is it 25th May 2023? and why wouldn’t the client issue the CE with their original instruction?

Thanks

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2

reading this, i feel like you understand it all quiet well. you are correct in that the dividing date should be the date of the initial communication (15th May) and anything from that point forward should be in forecast.

cant answer why your client wouldn’t have issued the notification of compensation event at the same time as the initial instruction but they may not understand this requirement under the contract. or maybe theyre just trying it on to set you up for a time bar :slight_smile:

i’d say carry on as you are and hold your ground.

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3

Thank your for your response. Yes, I normally err on the side of pragmatism and think the client instructed and didn’t notify it as a CE in the hope we miss it and they use the time bar argument to nullify our entitlement and try to get it for free. I generally take this line of approach.

We will carry on and hold our ground. Nearing final account and there’s an inevitable haircut due on many which we are more than happy to discuss when the time is right.

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4

LeroyS - in future consider using clauses 61.4, 62.6 and 64.4 to force the CE process to a conclusion rather than allowing it to drag on.

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5

Hi Steve,

thanks for this. I have used the time bars and cited these in a previous life and they rarely got listened to. All too often we find out at payment notice phase and then we’re left having to debate it which isn’t how it is supposed to work but is often the reality of the situation.

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6

Hi Leroy, yes I understand, however if you wanted to enforce it through the dispute process, you could.

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7

Steve,

Just on this, and using 64.4, the time period to respond to our CEN has long since passed. Is our CE automatically accepted without issuing the reminder or is the acceptance conditional on us issuing the reminder? I note the language says “may notify of the failure”.

We’re having a hard time pinning down the PM on these formally with the reality being both sides are just picking and choosing which part of the contract to follow.

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8

Leroy, in order to invoke the sanction against the PM, the Contractor has to serve the notice because it states that the additional time only starts from receipt of the Contractor’s notice. The word ‘may’ is used in order to give the Contractor discretion as to whether they serve the notice or not and when they serve it. There is no time limit placed upon the Contractor so they may wait until some much later date to notify, whenever they do or if they do, then the additional time for the PM to act will start.
In NEC4 there are only two time sanctions against the PM which do not require the Contractor to serve a notice against, clauses 50.9 and 53.2 - if the PM misses the time allowed they go straight to treated as accepted.
Happy to discuss.

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