On a recent project we added additional areas to the Working Area within the CDP2 (in accordance to Cl 15.1) which was not challenged by the client and therefore deemed accepted as part of our Target Price submission. The additional areas added included regional offices where staff members related to the project work. Subsequently defined cost has been applied for People (who work in the regional offices) who undertook duties to Provide the Works however the client is disputing the validity of the claimed cost. They say that regional offices does not comply with Cl 11.2(18) as it’s not ‘used only for the work in this contract’ however we have only applied a relevant proportion of cost applicable to the project (People time charge only). Furthermore, as Cl 15.1 has been applied and not challenged, isn’t it therefore contractually deemed that the additional areas to the Working Area are acceptable under the contract and therefore defined costs for those People is allowable cost? Any feedback/suggestions would be much appreciated. Thank you in advance.
Deemed acceptances in NEC3 is for the compensation event process when the PM fails to respond to a notified CE, a quote or they do not make their own assessment. So i’m afraid assuming that that your 15.1 request was accepted is incorrect in my view.
In hindsight, an EWN should have been raised notifying the PM of their non-response which would have prompted a Risk Reduction meeting to discuss.
With regards to the PM’s rejection, i would refer back to 15.1 which states the reason why the Project Manager may not accept the proposed area. Providing you can demonstrate that the staff working in your head office is necessary (you may have certain I.T, equipment) and the staff you are applying as a Defined Cost are contributing to the works in the contract.
I would also consider raising a Compensation Event to the Project Manager for their failure to respond within the period of reply 60.1 (6), but you should check your time-barr here.
Building on the answer given by @QS007 I’m not entirely clear if you’re saying that the regional offices were added to Contract Data part 2 pre-contract or if you are attempting to include them post-contract using clause 15.1. If it is the former then I think the answer is different.
I’d suspect that the Employer is correct in saying that your regional offices are used for work not in this contract, however to overcome this problem you could designate an area within your regional offices specifically for work in the contract. If the Contract Data part 2 already states that your regional offices are working areas then you could suggest varying the contract under clause 12.3 to amend the statement to make it more specific. If you are attempting to do this post-contract under clause 15.1 then you could try re-submitting your proposal to make it more specific. The issue could be discussed using an early warning as this is something that could increase your total cost.
@QS007’s point about deemed acceptance is spot on. It never happens due to the passage of time alone, and it only happens in the compensation event process when the Contractor instigates it with a reminder notification.
I’m not sure where clause 60.1(6) would take you as it wouldn’t open the door to recovering the cost of these people as they still wouldn’t be recoverable as Defined Cost unless they were within the Working Areas.
Thank you both for your comments, just for clarification the additional areas were added at pre-contract stage so the Employer had full visibility of the applied Working Area before works commenced.
Sorry to jump in. It may be worthwhile considering clause 11.2 (18) which defines the Working Areas are those parts of the working areas (italics) which are ……
The Working Areas are therefore not necessarily the working areas (italics)
Therefore the areas you have identified in CE2 as working areas (and have been accepted as such) are not by default Working Areas. You need to satisfy the definition.
sorry I meant CD2 not CE2 !!