Should the Employer pay additional preliminary costs resulting from a NEC3 Defect?

NEC3 and NEC4 Contracts Testing and Defects
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The contract is option C.

A defect was found during the implementation of the works. The contractor acknowledged the defect and put right the defect at their cost.

This consequently delayed completion of the works. Should the employer be liable to pay for additional preliminaries resulting from this delay?

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The answer is “it depends”, but can be found in option C clause 11.2 (25) which gives the definition of what a Disallowed Cost is. More specifically, the relevant text is in the first two bullet points after “and the cost of”.

The first of these states (Disallowed Cost is the cost of) “correcting Defects after Completion”. Given what you have said in that Completion was delayed while it was corrected, this bullet does not apply as it was being corrected before Completion.

The second of these bullets is (Disallowed Cost is the cost of) “correcting Defects caused by the Contractor not complying with a constraint on how he is to Provide the Works stated in the Works Information”. In non-contractual speak, this means they have not followed a method stated in the technical documentation.

So the answer is

  • ‘Yes, they should be paid’ if they followed a method stated in the Works Information and it just turned out to be a Defect (for instance, they laid and compacted concrete properly, but the cubes failed their strength tests). In fact, they should also be reimbursed their direct costs too.
  • ‘No, it should be disallowed’ for both their direct and indirect/ preliminaries if they failed to follow a method stated in the Works Information.