ECS3 – Delay due to site deferment
We have been instructed by the Contractor, under a Proposed Instruction, to quote storing our manufactured equipment (the SC works) at their premises for an additional 3 year period and to regularly operate our equipment at their premises under a planned maintenance regime until it can be repackaged and delivered to the Employer’s site for installation in the factory.
The Contractor has advised the 3 year is a flow down for their head contract as it is unlikely the Employer’s factory will be available when expected.
Q – Is the change administration process under the ECS3 contract (PMI/CE/PI) empowered to allow the Contractor to introduce a change of such magnitude without the issuance of a deed of variation to the subcontract. We consider the PMI/CE/PI is a vehicle to administer changes to the works information.
We very are concerned the Contractor will reject our PI Quote (there is a lot of work for us involved) but instruct us to proceed with the PI works and undertake their own Contractor’s Assessment. Would a deed of variation give us some common ground rather than a potential unilateral one-sided ECS3 assessment. No one wants this to escalate to dispute, so would a deed of variation be a way of mitigating this happening.
Any thoughts greatly appreciated.
@Badgerbitter I’m minded to agree with you, the ECS is fundamentally a construction contract used for constructing the subcontract works as defined in Subcontract Data part one, and it is not designed for the purpose that the Contractor now requests. Usually when the subcontract works are complete and Completion is certified, the Contractor takes them over and liability for loss, wear or damage transfers from the Subcontractor to the Contractor. How will this work with the Contractor’s proposal, who will be liable to insure and what will be its effects on commercial aspects of the contract such as delay damages and retention?
When read together clauses 20.1 and 27.3 constrain the extent of instructed change under the subcontract. Clause 20.1 states "The Subcontractor Provides the Subcontract Works in accordance with the Subcontract Works Information. The term "Provides the Subcontract Works is defined at clause 11.2(13) as “to do the work necessary to complete the subcontract works …” which means the Subcontractor does not have an obligation to do work which is not necessary to complete the subcontract works as defined in Subcontract Data part one. Further, clause 27.3 requires the Subcontractor to “obey an instruction which is in accordance with this subcontract” which again means there is no obligation to obey an instruction which is not in accordance with the subcontract. Therefore an instruction requiring the Subcontractor to do work not necessary to complete the subcontract works would not be in accordance with the contract.
I suggest you discuss your concerns with the Contractor and as you suggest seek to amend the subcontract or enter into a new subcontract to incorporate this new requirement.
Thanks Neil. very insightful.
Worth also bearing in mind the insurance provisions and title might not work as you might expect in this scenario and you’d need to factor this into the CE quote if you did go down the route of a CE quote. As you cannot overwrite the clauses of the contract with assumptions in your quote, it would all need to be costed in.