NEC3 Option C
Under our contract, the Contractor is required to submit plant which will form a permanent part of the works for acceptance.
We withheld acceptance of some plant for a long time which has resulted in the quotation the Contractor had acquired through its supply chain to expire. We issued an CE (60.1(9)) for the withheld acceptance.
The Contractor obtained a refreshed quote from their supply chain and included the difference between the original quote and the new quote in their quotation.
My current view is that it shouldn’t be in the quotation at all and should be dealt with using X1 to adjust the target. The Contractor thinks this is the correct way to administer the target adjustment (including in the CE).
I’m struggling to get a clear view of this in the contract so I’d be grateful for guidance.
Thanks
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Alan, first things first; you have an accepted CE for withholding acceptance and the defined cost impact resulting from such delay needs to be assessed. Therefore I do not agree with your view - although I understand the logic behind it - and it seems to me that the Contractor’s approach is correct. Had you not withheld the acceptance, such price difference would not be there.
As regards the X1 application, if you have an index chosen for the specific activity (or group of activities) you would then apply the price adjustment in every assessment (see clause X1.5) regardless of the CE.
With the above said, I draw your attention to clause X1.3 regarding the CE assessment and the adjustment to the base date required (see 1st bullet point) - in simple terms, the CE assessed sum would have to “go back” to the base date (provided you have an index) so that it can then be adjusted in your monthly assessments.
I hope this helps.
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Thanks Peter.
One other angle on this - we don’t believe our Contractor would have ever been in a position to award the contract and place the order for the plant in good time, notwithstanding the withheld acceptance from ourselves.
In short there’s a view that if the acceptance was never withheld then they would have been delayed anyway because they hadn’t submitted the subcontract for acceptance and were clearly still in the progress of agreeing Ts and Cs.
There’s a feeling of concurrency to this which brings to mind Glenn’s excellent article on the matter.
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I understand Alan - however, this sounds like a hypothetical situation (Contractor’s culpable delay) which did not materialise because you withheld acceptance, as you said.
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