Removing a Provisional Sum

NEC3 and NEC4 Contracts
1

We are a Contractor operating under an NEC3 Option A contract. We priced the Activity Schedule to include an item of work, which has now been stated in the contract Activity Schedule as a provisional sum (changed by the Employer (WI has not changed)). It is generally accepted by both parties that the work is not required to be undertaken, but no formal instruction has been issued.

The contract provides Z clauses, which stipulates the Contractor must provide quotations for provisional sums upon request by the Project Manager, if the quotation is agreed then the Project Manager can instruct the Contractor to carry out a provisional sum item. The Z clause states the Project Manager may also issue an instruction to omit a provisional sum at any time. Both carrying out and omitting the provisional sum is to be treated as a compensation event in accordance with clause 60.1(4).

To address this matter contractually and change the total of the prices, we believe the work should be priced using defined cost (SSCC), with this amount then being deducted from the contract value. The Employer however, believes that the provisional sum amount in the Activity Schedule should be omitted, with the change to the prices being this amount accordingly.

Any advice as to how this matter should be addressed under the contract would be greatly appreciated.

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2

Provisional Sums are not contemplated by NEC so the administration of them needs to be clearly set out in Z clauses.

I understand that the work covered by the provisional sum is included in the Works Information and is separately itemised in the Activity Schedule. What Iā€™m not clear on is whether the amount entered is your pricing or a figure given by the Employer. I have presumed it is a figure given by the Employer (based on the requirement to provide quotations).

I assume the process will be to provide a quotation for agreement and if accepted the amount replaces the provisional sum (provided by the Employer). If the quotation is not accepted then a CE is notified to delete the work from the Works Information and the total of the Prices is reduced by the provisional sum. However the process needs to be set out in the contract so you need to check the actual wording and in particular when the Project Manager is required to request a quotation. I would also expect the confirmation of whether the provisional sum work is required or not to be a separate additional compensation event and not administered under 60.1(4).

In summary you need to check what the contract says.

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