Webinar - Getting to grips with Compensation Events under ECS and How they work with the SOCC

This topic is for all questions raised on our webinar “Getting to grips with Compensation Events under ECS and How they work with the SOCC”. If you haven’t already attended it, you can sign up here Webinar - Getting to Grips with Compensation Events Under ECS and How | Built Intelligence

What’s it about?

This one-hour webinar session introduces you to the compensation event process for managing change under the NEC3 Engineering and Construction Subcontract (ECS). This webinar provides an overview of the main provisions of under section 6 of the ECS Contract. After completing this webinar, you’ll understand the compensation process of ECS inside out.

Attendees of this webinar will have a much clearer understanding of the intent of the specific contractual clauses and in practical terms begin to see how they should administer them for the benefit of all parties on a particular project.

You will learn

By the end of this webinar you will be able to:

  • Explain what Compensation Events are
  • Outline and follow the key steps in the Compensation Event Process (Notify, Quote and Assess)
  • Explain the method of assessment
  • Be aware of the sanctions for non-compliance

I have one query in relation to clause 62.3, can client ask contractor to reduce the period from 4 weeks to 2 weeks?

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I don’t understand the point regarding paying on forecasts if the event has occurred in the past and we have actual costs on a cost reimbursable contract - why would we pay on a forecast which may be higher cost if we know the actual cost of the event?

As part of the Contractor’s assessment he should therefore assess impact of the event to the S/C’s programme to assess delay effect if any. This in my experience is something the Contractor doesn’t do or substantiate if they do assess. What are your thoughts?

No, the Client is not a party to the ECS so has no right to force the Contractor to respond quicker.

The time periods in the ECS work hand in glove with the ones in the ECC to allow for associated actions under the main contract. Time limits for sending information to the Contractor are less than the times stated in the main contract for sending information to the Project Manager in order to allow time for the Contractor to incorporate or process information. Time limits in the subcontract for transmitting decisions or payments to the Subcontractor are greater than the equivalent times stated in the main contract for similar reasons.

The periods in one contract should not be adjusted without consideration of the effect this will have in the other contract. Any adjustments would need to be made using Option Z and included in the relevant contracts before they are signed.

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The whole idea of NEC when it comes to change management is to take us away from retrospective assessments carried out after the event and move us towards prospective assessments carried out before, during or soon thereafter depending on circumstances.

Basically rather than sorting everything out in the final account at the end NEC requires us to sort things out progressively and hopefully whilst the people who have the greatest understanding of the circumstances surrounding the event are still involved.

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That’s a good point. Subcontractors need to ensure they include both cost and time in their quotations and if making an assessment Contractors need to consider both. I suspect many parties to ECS subcontracts treat them very traditionally and assume any extension of time, loss and expense will be picked up in the claim at the end. If the ECS is managed correctly this shouldn’t / wouldn’t happen. Unfortunately the only recourse open to a Subcontractor if they disagree with an assessed amount is adjudication.

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