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NEC ECC: What can Contractor can do if the Payment Assessment by Project Manager is incorrect in previous month

June 14, 2019, 7:50 am
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The Contractor manages to submit an application for payment to the Project Manager just prior to the assessment date. This highlights that the previous amount due for payment was incorrect and low by a significant margin.

Should the Project Manager take account of the application for payment? How should the shortfall in the amount due be dealt with and what are the implications?
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NEC ECC: How to deal with the compound problems due to Contractor's Defects?

June 14, 2019, 7:50 am
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A Contractor experiences two problems on Site.
A steel staircase has been positioned incorrectly and is misaligned with the first-floor stairwell by 0.5m. This results in expensive remedial work.

To compound problems, the Contractor has tiled walls when the temperature was too low for the grout to set properly and some tiles have cracked and are coming away from the wall. The Scope provided by the Client expressly stated that tiling should not be undertaken unless the temperature exceeded 5 degrees Celsius but the Contractor (to overcome time pressures) ignored this constraint on several cold days.

How are these two issues dealt with in the contract and how will they affect the amount due?
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Answered: NEC ECC: How to calculate the Gain Sharing when Contractor Defects are involved

June 14, 2019, 8:00 am
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The gainshare through out the life of the project is only a forecast. The Client has no guarantee on their share (and neither does the Contractor for that matter) until the final calculation. The cost of correcting defects if corrected before Completion is not disallowed so that if defects have occurred that the Contractor has corrected prior to Completion then that will reduce the gainshare pot for both Parties. Option C is a shared risk contract. Correcting defects after Completion would however be a disallowed cost.

An preliminary assessment of gainshare is made at Completion and the amount included within the next assessment after Completion. The final assessment is made using the final total of Prices/final Price for Work Done to Date which would be at the assessment following the Defect Date.
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Answered: NEC ECS: Option A – Extent of Subcontractor’s Liability under Clause 82.1.

June 14, 2019, 5:03 pm
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The Contractor is correct unfortunately.

Clause 81.1 says that all the risks that are not the Employer's or the Contractor's are yours. The Employer's and Contractor's risks are listed at 80.1 and none of those are for loss or damage to your works during the course of the works.

In additional clause 84.2 states that loss or damage to the subcontract works is a matter for insurance taken out by you.

If it is something that becomes out of control you could claim the contractor is in breach of an implied term to manage its subcontractors which could potentially be a compensation event under 60.1(18) and if the Contract says it is out of his control then it could be a compensation event under 60.1(19), but in either case it is only if the damage is significantly more prevalent than would be reasonable.
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Answered: NEC ECC: Correction of Defects and Design Limitations

June 14, 2019, 5:45 pm
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The Contractor has to design and construct the works in accordance with the Works Information and the Law. In carrying out the design, the Contractor is obliged to apply his reasonable skill and care. Unless the requirement for cable management is expressly stated in the WI (and it seems it isn't) or expressly required by the Law (and it seems it isn't (unless there is a requirement in the Workplace Regulations) then you need to consider whether the C has used reasonable skill and care.

The test for that would be whether a typical contractor would have allowed for cable management. To ascertain that you could look at any guidelines, recommendation etc that may be relevant. A risk assessment from the C is a good starting point as the C should have addressed the hazard whether by design or otherwise.

If it is determined that the C should have installed cable management then it is a Defect and it needs to be corrected. There is no need for a compensation event to arise as nothing is changing.

If the defects correction period has expired, and it looks like it has, then the E can engage others to carry out the work and the C pays the amount of the cost as assessed by the PM. This can be deducted from any amount otherwise due to the C.

However, if the C later demonstrates that he did not have to include for it, then the E would have to repay that amount.
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Answered: PM responding to a quotation from a subcontractor

June 14, 2019, 6:13 pm
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There is no provision in the NEC to provide a quote or respond to one provided in connection with an early warning notice. If the quote provided following a compensation event notification then clause 62.3 requires the C to respond by either instructing the S to provide a revised quote, accepting the quote or notifying that the C will make an assessment. If the notification is to provide a revised quote, then the C also states reasons for requiring a revision.

There is no standard NEC template.

Your question header mentions the PM. He has no power to accept or reject quotes from the S under an NEC3 ECS.
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NEC ECC: Defects arising from poor workmanship

June 15, 2019, 1:14 pm
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New build project on a greenfield site over a 90 week contract period. Procured using a two stage open book approach and let under the NEC3 ECC Option A. C responsible for design and build of the development. Project now certified as complete but prior Completion a Defect was notified concerning quality of workmanship associated with asphalt surfacing, kerbs, level control, etc.  On reflection we were not satisfied with the extent of open joints, fretting of material, open coarse surfacing, surface or regulations, ponding, finishing to ironworks, excessive joints, etc. Core samples undertaken showed air voids in excess of County design guides (not stated in the WI) and British Standards (only covers designed mixes).

Five months after notification, after much pursuit of a solution, the C decided he wished to contest the notifications concentrating his efforts on the air voids whilst dismissing the workmanship as a matter of opinion.

NB: The E's WI was generally void of specific requirements but the C's WI contained plans and sections detailing surface finishes and a note that "all works were to comply with the relevant British Standards" and it so happens there is a BS for the transporting, laying and testing of asphalt surfaces.

The C has argued that the BS is only relevant to designed mixes and because the mix specified is a recipe mix it is except from compliance with the air void levels contained within.  Any thoughts on this?

An industry expert was commissioned to undertake a condition survey and has verified that the workmanship demonstrated does not fully comply with the BS due to the reasons stated above. Verifying our opinions.

Complicating matters, it is evident that the S/C we accepted under cl. 26 to do these works only laid the base courses. This S/C was Sector Scheme Approved and compliant with BS. Providing quality assurance documents including test certificates e.g. Nuclear density tests.  The need to be Sector Scheme Approved was, we believe a requirement of the specification between the C and S/C. This is not a contract document between E and C.  The binder and surfaces were subsequently let to another (presumably cheaper) S/C who don't have the same QMS procedures.  Proposals for correction have been presented although they are no more than a patching plaster. Does the E have a right to insist that the surface course is removed and replaced? Can we insist that the previously approve S/C undertakes the corrections? The C is so embedded financially with the non approved S/C they are insistent they do any repairs but why should the workmanship be any better? Can we refuse? Should a Defect notice be issued for lack of compliance with cl. 26?

We have repeatedly requested S/C conditions of contract, dip sheets, sequencing plans, material certificates and all have been refused. What can the PM do in this instance?

A level survey also shows that the as-built differ to the levels in the WI. Again, this is being dismissed as design development.
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Answered: NEC ECC: Data for Both Schedules of Cost Components Option C

June 17, 2019, 12:43 am
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If the rate in Contract Data Part 2 specifically refers to 'category of employee' then it would be a directly employed resource, with the rate reflecting this status and inclusive of the components in 11, 12 and 13 of the SCC..

A 'labour only' resource may have the same categorisation, for example 'sub agent', although their cost would be included under component 14 of the SCC.

You may end up with a similar hourly rate but an 'employee' and 'labour only 'supplied resource represent different components of cost and should be treated as such under the SCC.
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Answered: NEC PSC: Should a forecast of expenses be included within the tendered Prices under option A?

June 17, 2019, 5:13 am
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The Prices does not include any expenses as the Price for Services Provided to Date is the total of the Prices for completed activities.  Expenses sits outside of PSPD as a separate part of the amount due under clause 50.3.

Whether an estimated amount of expenses is provided at tender stage will probably depend on what was required to be provided with a submitted bid.  Regardless of this, however, the Consultant is obliged to submit a forecast of the total expenses, at the interval stated in the Contract Data,
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Answered: NEC ECC: What can Contractor can do if the Payment Assessment by Project Manager is incorrect in previous month

June 17, 2019, 5:58 am
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You don't say whether this is NEC3 or NEC4, as there is no requirement under NEC3 for a payment application to be submitted, although this is a common amendment, however the Project Manager is required to consider any application submitted on or before the assessment date.

From what you have said it looks like the Contractor expressly disagrees with the amount that the Project Manager previously certified.  The Project Manager, however, makes an assessment based upon the Price for Work Done to Date, the definition of which is different depending on what main option is used.

Under the requirements of the 'Construction Act' the Project Manager is acting as a 'specified person' and is obliged to notify the amount due and state the basis upon which that sum has been calculated.  Provided that has occurred then the only recourse for the Contractor is to formally dispute this, although hopefully you will be able to meet to discuss the difference between the amounts applied for and the amounts certified.
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Answered: NEC3 ECC, Assessment on delay to Activities - Option A

June 17, 2019, 7:07 am
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I would suggest that the most equitable solution would be for the Contractor to pay for the completed work either by certifying the activity or the group of activities the work is in (assuming the other items have been completed) or by advising the Subcontractor to submit a revised Activity Schedule (this would allow the subcontractor to redistribute “the money”).
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Answered: NEC ECC - Unapproved Drawing Changes

June 17, 2019, 7:19 am
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Your tendered price is deemed to have been based on the provisions of the contract and the Works Information in existence at time of tender. You will need to check the Instructions for Tender and/or Form of Tender or similar to be sure of the actual cut off date eg 1 week before tender submission.

Any changes to the Works Information are, by definition, compensation events that entitle a change to the Prices and Completion Date. The tenderer is not expected to be prescient, if it was it would be doing the lottery not bids!
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Answered: NEC ECC: Sectional Completion / Taking over with non essential uncorreceted defects

June 17, 2019, 10:35 pm
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Yes there is no problem with that. Completion is when the works have been done in accordance with Works Information/Scope and it is free of defects that would allow the Employer/Client to use the works. Same definition stands for any sectional completion. They are not off the hook in anyway as they are still obliged to correct their defects in accordance with section 4 of the contract.
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Answered: NEC3 PSC - Programme with rejected CE

June 17, 2019, 10:45 pm
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You have to decide if this is a compensation event. Clause 60.1(11) is typically for more force majeure type events - it does not sound like your example fits that description. Did they manage it properly?

IF this is a compensation event, then you consider the effects on the Accepted Programme that this brings. If this event moves planned Completion or planned Sectional Completion then there is an entitlement to move the Completion Date/Sectional Completion Date accordingly once the CE is implemented. If it is a CE but doesn't move planned Completion then there is no entitlement to time as it is using up total float which is shared under the contract.

If this is not agreed as a compensation event and they are delayed, then yes planned Completion will be moving beyond Completion Date and they would be potentially liable for delay damages under X7 if they can not recover this time back.  

Point of note there is no such thing as precedent under NEC contracts. Each time you make a decision it is in accordance with the rules of the contract. If a decision is made that was not in line with the contract, that does not reset the rules going forward. The next time it should be decided in accordance with the rules of the contract - not what was (wrongly) agreed last time.
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Answered: NEC ECSC: Fee percentages applied to NEC short contract

June 17, 2019, 11:32 pm
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In the ECSC  there are only two percentages, as you have stated, for people and  other Defined Cost.

Although you have fee percentages under the framework contract, these are not specific to the call off contract and as you have included the appropriate overhead and profit (fee) percentages in the ECSC Contract Data, then these should be applied to Defined Cost..
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NEC ECC: Sectional Completion / Taking over with non essential uncorreceted defects

June 17, 2019, 10:31 pm
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Can you take over on sectional completion and carry over simple defects to be corrected by the Completion Date?
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Answered: NEC ECC: Option A quotation for an Option E contract?

June 18, 2019, 11:40 am
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It is not part of the contract but like most things anything is possible by agreement. If there is a specific element of work that you agree you will do for a fixed sum and you mutually agree that in writing and they they will pay you that sum as a fixed price then I do not see that as a big problem. I emphasise if both Parties agree - as this is outside of the option E rules so not something that can be forced.
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Answered: NEC ECC: Clause 62.6 Notice Issued and PM Failed to Reply within 2 weeks

June 18, 2019, 1:32 pm
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Q1 - technically clause 13.1 requires all communications to be in a form that can be read, copied and recorded, the PMs request was not as as such should not have been complied with. However the PMs claim that your further quotation was unsolicited is false, even though you don't have written evidence, have you got witnesses that will vouch for you? If so then the PM is in breach of clause 10.1. A lie is a lie is a lie, if this is what's happened I'd be tempted to report this to the Employer. Otherwise next time, don't trust the PM (as you have evidence that justifies this position) and advise that you will comply with the "request" (which should be an instruction) when it has been put into writing.

Q2 & 3 - your clause 62.6 notice was unfortunately technically incorrect and should have been a clause 64.4 notice which gives the PM a further 2 weeks to reply, after which the original quotation would have been treated as accepted. The PM has capitalised on your error to his advantage. Your only recourse now is to be able to demonstrate the PM's assessment is wrong and adjudicate on the matter which, unless there is tens of thousands of pounds at stake, won't be worth your while.
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Answered: NEC ECSC: Short Form, omission of works

June 18, 2019, 2:05 pm
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It sounds like both parties are applying a JCT approach to a NEC!

There are no other provisions for dealing with change in the NEC other than compensation events so all "claims" must be related to a reason at clause 60.1 so in your situation you must demonstrate that either the Works Information changed under clause 60.1(1) or that the quantity changed at clause 60.1(13). NEC contracts do not provide for separate loss and expense or delay and disruption claims, compensation event quotations must therefore factor in all cost associated with the event.

Clause 63.1 explains how you assess the cost impact of the compensation event "by multiplying the changed quantities of work by the appropriate rates in the Price List". If there is no appropriate rate in the Price List then the assessment is based on Defined Cost plus Fee. You would need to demonstrate that the rates in the Price List are not appropriate to justify not using them. Also you haven't mentioned the effect of this omission of work on planned Completion, if you're now going to be on site for a shorter duration then the Defined Cost of your prelims would be reduced and you have no entitlement to be paid the full prelims or to recover the profit you anticipated making.
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Answered: NEC ECC: Use of wording "Approval" vs "Acceptance"

June 19, 2019, 1:48 am
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The  only time the word approval appears is in relation to the Contractor obtaining approval from Others, for example for his design, where appropriate.

use of the word 'acceptance' is probably more similar to 'no objection' and doesn't mean that responsibility passes from the Contractor to the Employer upon acceptance, as confirmed by clause 14.1. .

There may be certain 'approvals' required, even from the Client / Employer, such as obtaining certain rights of (restricted) access, which would probably form part of the Scope / Works Information requirements, rather than the conditions of contract.
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