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Answered: NEC ECC: Provision of equipment an Employers Risk or Contractors?

June 20, 2019, 12:04 am
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The requirement is what is stated in the Works Information.  It sounds like there have been discussions on how you actually fulfil this, but unless these change the requirement in the Works Information then it is difficult to see how it can be a CE.

Easy to say in hindsight but it shows the importance of defining the allocation of responsibility of the parties and formally including this in the contract documentation.
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Answered: NEC ECC: Remedial options of dealing with a Contractor who does not perform using the NEC3 ECC

June 20, 2019, 9:16 am
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If this was the first programme that has not been accepted then under clause 50.3 you can withhold 25% of their Price for Work Done to Date (which is cumulative). That is only on the first programme however (unless you have a Z clause to say and on subsequent programmes).

If they do not submit subsequent programmes showing the information that the contract requires, the Project Manager makes their own assessment of future compensation events (see last bullet of clause 64.1) which is unlikely to be in the Contractor's interest to allow to happen for reasons Jon has already explained.
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NEC4 ECC Short Contract - Guarantor offering amended wording for Performance Bond

June 20, 2019, 9:16 am
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The Contractor has been asked to provide a Performance Bond of £85k or 10% for this Short Contract.
The Contractor has advised that the Insurer requires the following rider to the standard bond wording for a NEC4 contract.
It would appear that the the clause would impact the Client's cash flow and prevent the Client recoupling under Cl 92.3  the "forecast additional costs to the Client of completing the works"  of termination  within the Cl 92.4  period of 13 week. Payment of costs by the Guarantor would be held until completion of the Contract works.

Could I have some comment on how usual / widespread this wording is and whether our Client should accept it or insist on an un-amended Bond.

Wording as follows:
“…….but, subject to such limitation, and subject always to the provisos that, for the purposes of this Guarantee Bond, no estimate, forecast or assessment of the “Project Manager” (as defined in the Contract) shall be binding on the Guarantor, and that, notwithstanding any provision of the Contract by which, following termination of the Contractor’s obligation to provide the Works, the Contractor might be required to make payment of an “amount due on termination” on the basis of such an estimate, forecast, decision or assessment, the Guarantor shall have no liability to make payment under this Guarantee Bond until such time as the whole of the Works have been completed and the damages actually sustained by the Employer have been properly established and ascertained taking into account all sums due to the Contractor.

Additionally, any provision of the Contract which purports to make an agreement or compromise between the Contractor and “Employer” or “Client” or equivalent (howsoever defined in the Contract) and/or a decision of the Senior Representatives or Adjudicator (howsoever defined in the Contract) conclusive or binding on the Guarantor, shall not be conclusive, final or binding on the Guarantor in respect of any sums due, whether claimed on an interim basis or relating to the final amount due and the Guarantor shall have no liability to make payment under this Guarantee Bond until such time as the whole of the Works have been completed and the damages actually sustained by the Employer or Client have been properly established and ascertained taking into account all sums due to the Contractor.”
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NEC ECSC - omission of works

June 20, 2019, 9:16 am
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We tendered for window replacement scheme (design/build) with local housing authority. We fortunately were successful  and our tender was accepted by the Client and the contract signed (NEC short form ). The tender was based on a Project Price list (PPL) provided by the Client.  

We undertook the surveys and prepared the precontract documentation incl drawings and estimates/PPL (BQs) as required.

The scheme was  given regional approval but when it went to central office for approval they would not approve as they considered  one of our rates was excessively high.  The Client now wishes for us to omit this work (which is essential to fulfill the contract)

The rate could be considered high but this has been offset by the other rates in the PPL been reduced to allow for this

They have indicated that they may give this out to another Contractor after we complete the works and have instructed us to omit this element of works and revise the PPL - to date we have not done this

The Client is insisting  we proceed with the works but we have not complied with this as we cannot agree the costs for the construction phase.

Can the Client just omit works because they believe rates are too high after the Contractors tender was accepted?  Please note this work is essential to fulfil the obligations of the contract.

Can anyone advise on a way forward?
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Answered: NEC ECC - Contractor on option E is in delay

June 20, 2019, 9:29 am
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Not sure how either Party have allowed yourselves to get into a situation where there are no compensation events being managed and no Accepted Programme in place.

Under option E the only Contractor liability is falling fowl of anything defined as a Disallowed Cost, and also they would be liable for delay damages if they exceed the Completion Date and X7 delay damages are included within the contract. You said they are unlikely to meet the Completion Date, but they are not late yet. In the absence of any implemented CE's moving Completion Date, then if they do exceed that date they will be liable for the delay damages identified per day in contract data part 1.

There needs to be an education piece here where they are educated on the contractual rules and understand their contractual liability, and then try to work together to agree an Accepted Programme and understand the liability of any compensation events. Talk to each other!

Last thought - clause 50.3 allows the PM to withhold 25% of their Price for Work Done to Date if they have not submitted a programme showing the information that the contract requires. That could be invoked as part of the next application if the programme is still not issued/agreed.
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Answered: NEC4 ECC Short Contract - Guarantor offering amended wording for Performance Bond

June 20, 2019, 11:38 pm
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The first point to note is that there is no standard bond wording under NEC as the Bond terms are set out in the Scope,.  From my own experience I have encountered a wide range of wording from a 'simple' guarantee to a clearly worded on demand bond.  Most documents fall somewhere in between these raising confusion of whether the document is a guarantee or a bond.  In your case it is actually called a Guarantee Bond, although it does talk about 'making payment' so I can assume it is a conditional bond.

The wording doesn't preclude the Client from claiming amounts, it is just expressly stating that any amounts will be based on 'damages actually sustained', rather than based on an assessment or forecast.  This is actually how a conditional bond would work with the beneficiary (Client) having to prove both the default and direct loss and expense suffered before the Bondsman is obliged to make payment.

I'm not sure about the 'whole of the works are completed' part and whether this  means that you would be unable to make a claim until this occurs, either by the Contractor or somebody else, following termination..

If the bond wording was provided in the Scope at the time of tender I would suggest that the Contractor is obliged to comply with this unless the Employer agrees otherwise.
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JCT 2016: DB performance bond

June 21, 2019, 11:00 am
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What happens if the Contractor has not provided the performance bond while the project already on site and has completed 2/3 of the programmed works?
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NEC ECC: Compensation Event - PM Rejection due to Time Bar

June 24, 2019, 10:01 am
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We (the Contractor) have raised a Compensation Event for a public holiday (bank holiday) which was notified by the State earlier in the year.

The Compensation Event was raised and no response was received according to the 'period of reply' (being 2 weeks). We then notified the PM of the outstanding response and again received no response within 2 weeks (61.4).

We then notified the PM that in accordance with the Contract, the CE was deemed Accepted. Subsequently the PM responded a week later notifying us that the CE was rejected as the Contractor did not raise the CE within 8 weeks of becoming aware (61.3).

If we are in fact time barred, would the CE stand as the PM did not provide his response in accordance with the Contract (effectively time barring himself) irrespective if the Contractor raised the CE in time or not?
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NEC ECC - Clause 64.1 PM Assessing Compensation Events as he will not accept the Contractor's Clause 32 Programmes?

June 25, 2019, 2:36 pm
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We (the Contractor) are submitting clause 32 programmes as required to the Project Manager every 4 weeks for acceptance. The Project Manager has stopped accepting our programmes stating;

* it does not show the information which this contract requires,
* it does not represent the Contractor's plans realistically.

We believe our programme is robust and also meets the requirements of the contract and are doing everything to meet with the PM to find out exactly why he wont accept our programmes. However, the PM will not meet with us to discuss so we continue to update our programme as required and submit it each month for it not to be accepted.

The Project Manager is changing the Works Information by issuing revised drawings and not raising a compensation event. When we notify the CE under clause 60.1 (1) the Project Manager is accepting the CE but is not requesting a quotation and is advising he will assess the CE himself under 64.1. This means we cannot submit a quotation for any CE's that we raise.

Our problem is that the Project Manager's assessments are incorrect as he doesn't have the information he requires. Also, where he has none of the information available to him (i.e. costs for disconnections, connections and transfers of statutory authority works) he is simply not assessing the event at all.

As we have not been in a position to provide a quotation for the events he is not assessing we cannot issue notices under either Clause 62.6 or 64.4 as we cannot reference a quotation rendering these clauses useless to us.

Question 1 - If the Project Manager has not accepted our latest programme, does he have to assess each CE himself contractually, or can he still ask the Contractor for a quotation? The Project Manager is reading clause 64.1 as though it is something he must do despite the bulk of the compensation events not having any change to Planned Completion.

Question 2 - We are using NEC3 online software which wont allow us to submit quotations as the PM has not requested them. Can we submit our quotations as a general communication so that we can rely on clause 64.4 if he doesn't assess the CE timeously or at all?

We fully understand our issues are due to the lack of the PM accepting our programmes but he simply will not meet with us to advise us what he believes is wrong with our submissions despite us Instructing him to attend a Risk Reduction meeting pursuant to clause 16.2
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NEC ECC: Switching price from Option E to Option A

June 25, 2019, 2:39 pm
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Our client wishes to commence a defined part of the works under an Option E contract in order to inform and then determine a fixed price for the remainder of the works. If the initial works are commenced under Option E can the price then be switched to a fixed lump sum?
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NEC ECC: Planned Completion being driven by a third party

June 25, 2019, 2:39 pm
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As a Contractor, we currently have a contract where the starting date and planned completion are being driven by a third party.
The contract data has a start date of 1st June and a Completion Date of 30th October.
However due to restrictions being placed on the works taking place by a third party, we will not be allowed access to the site until 1st July, and all work must be complete by 30th September.
This has resulted in an acceleration of the planned work, with additional resources required to complete the works on time, though there is now no float, with planned completion being 30th September.
My main query is, if we encounter a delay and a CE will push out the planned completion, does this have any effect on the Completion Date? Or what would we be entitled to in terms of EOT. Or should the contract data be changed to match the actual access dates?
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Answered: NEC ECS: Calling Liquidated Damages something else on Final Account Statement

June 26, 2019, 12:37 am
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They are actually termed 'delay damages' under NEC, secondary option X7.

Provided you make reference to X7 and it is clear what the deduction is for then there is less likely to be any ambiguity as to the application and the purpose.  Preferably change the name to delay damages and then there can be no confusion.
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Answered: NEC ECC: Option E inefficient working/non productive working

June 26, 2019, 1:56 am
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The Disallowed Cost clause is one of the mechanisms to determine what is Defined Cost and what isn't.  This includes the 7th bullet point relating to resources not used to Provide the Works.  Note that this is not a measure of how efficient resources are being used but rather whether they are actually being used.  Over a project's lifetime  it is natural for resource usage to fluctuate, for various reasons, although I am unable to comment in your situation.

Note that the Client has no authority to apply the Disallowed Cost clause as it is the Project Manager who administers the payment procedure under core clause 5, unless the Client is advising the Project Manager to treat such costs as Disallowed Costs.  Under NEC3 the right to instruct removal relates to an employee but NEC4 has changed this to person, which could mean a subcontracted resource.  Again this is a Project Manager instruction not a Client one.

I would suggest giving an early warning and discussing the matter.  If any such costs have been disallowed incorrectly then you would be entitled to payment of interest on the 'corrected amount'.

I would suggest that an application of this bullet point is where resources are using the Site facilities as a convenient place to work but who are not actually working on the project, or where particular activities have been completed but  the associated resources are still on Site, although they are no longer required.
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NEC ECS: Calling Liquidated Damages something else on Final Account Statement

June 25, 2019, 2:39 pm
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We have charged liquidated damages against a Subcontractor after a long debate. They have accepted the figure but do not accept the term liquidated damages being put in any documentation. Is there any legal issue with calling this something else? I know I should just push back but getting to this point has been a painful experience so conceding this may be the quickest way to resolve this issue. Thanks
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Answered: NEC ECC: Planned Completion being driven by a third party

June 26, 2019, 10:43 am
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I would add to Ellis's thorough answer that if the PM wants a compensation event quotation to meet the current Completion Date and arguably planned Completion, he or she could instruct a quotation for a compensation event, but only  having had discussions with the Contractor about the practicality of doing that. The Contractor would be entitled to include for the additional time and cost risk allowances as a result of a programme with less free and terminal float.

If the Project Manager wants either or both planned Completion and the contractual Completion Date move forward then we are thoroughly into 'acceleration' under 36.1.
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Answered: NEC ECC: Switching price from Option E to Option A

June 26, 2019, 11:16 am
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In practice "Yes' BUT it would have to be by a Supplemental Agreement to change it, all details would have to be agreed, written down and signed by both Parties. That would include the Prices which would become a meaningful figure for both Parties.

I would suggest that you agree as much of the details as you can now including the criteria for when/what state you make the switch and how the Prices etc are agreed.
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Answered: NEC ECC - Clause 64.1 PM Assessing Compensation Events as he will not accept the Contractor's Clause 32 Programmes?

June 26, 2019, 11:36 am
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Question 1: the Project Manager is correct in what he is doing given that there is no accepted programme. There is no 'may' in clause 64.1, so it is mandatory that the PM assesses the compensation event.

Question 2: You can submit what would be your quotations to the Project Manager as a general communication or by email, but it is not a "quotation" in accordance with the contract. However, the PM, as an "impartial administrator" (I will come back to this) will now have more knowledge and insight into the effects of the compensation event and therefore should take that into account when assessing the compensation event.

However, one could argue - a little idealistically - that if you are submitting a programme as per the contract, he or she would already know one half of the equation in terms of assessing the compensation event i.e. what you were planning to do before the CE, from which the change in resources could be baselined.

You might also wish, in an early warning to the Project Manager (copied into the Employer):
- e instruct the PM to attend a meeting to discuss the issues and that failure to attend is arguably a breach;
- remind the PM of the case Costain limited v Tarmac Holding Limited which gives some legal weight to the 'mutual trust and co-operation' provision.
- remind the PM that he is required to be an "impartial administrator in matters of assessment" of CEs "and certification" of payment "and other residual matters (Costain vs Bechtel)
- and that as an agent of the Employer, an Employer's  breach is a compensation event under 60.1 (18).

Hopefully, the Employer will then tell the PM to stop being an **** and, at the very least, constructively explain his non-acceptance of the programme which 13.3 and 10.1 imply he or she should do.
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NEC ECC: Planned Completion being driven by a third party

June 25, 2019, 2:39 pm
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As a Contractor, we currently have a contract where the starting date and planned completion are being driven by a third party.
The contract data has a start date of 1st June and a Completion Date of 30th October.
However due to restrictions being placed on the works taking place by a third party, we will not be allowed access to the site until 1st July, and all work must be complete by 30th September.
This has resulted in an acceleration of the planned work, with additional resources required to complete the works on time, though there is now no float, with planned completion being 30th September.
My main query is, if we encounter a delay and a CE will push out the planned completion, does this have any effect on the Completion Date? Or what would we be entitled to in terms of EOT. Or should the contract data be changed to match the actual access dates?
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Answered: NEC ECC: Revising Prices in Option B

June 27, 2019, 6:50 am
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In theory this shouldn't happen because the Bill rate should describe the end state that is to be achieved which should match up with the description of what is in the Works Information (under NEC3) or Scope (NEC4). So doing it a different way should not affect either.

But we all know that there will often be a difference between the description in the BoQ and the WI/Scope in which case the clause to look at is option B clause 60.6. I would look here as well and see if the situation you find yourself in matches one of the three criteria in the first sentence. That will allow you to get something, but it will be a reduction in Defined Cost + Fee which reflects your reduced costs. Not doing this I think may result in zero payment.

If under NEC4, you could possibly have proposed the change and then shared the difference under option B clause 63.12.

However, unless I am missing something, NEC does not quite cover your exact circumstances for the 'in theory' reason I gave at the start.
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Answered: NEC ECC: Compensation Event - PM Rejection due to Time Bar

June 28, 2019, 12:44 am
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A similar situation has previously occurred in England for the celebration of a royal occasion such as in 1977, 1981, 2002 and 2012.  These were declared by a Royal Proclamation, which meant that they were added as bank holidays in those years.

I am not sure how your additional  public (bank) holiday is formally recognised and whether this constitutes a change in the law and also whether secondary option X2 forms part of your contract, which would decide if the matter constitutes a compensation event,.

Without option X2, I presume the working hours and times are stated in the Works Information / Scope.  If it just refers to 'public or bank holiday' without expressly stating what these days actually are then there is no change.  If it does specify actual days then the matter would be a change to the Works Information / Scope, so constitute a CE under clause 60.1 (1).

The 'time bar' issue relates to when you notified the matter, regardless of what response you did or didn't get.  I can't comment on this specifically as I am not aware of the particular circumstances and times.

One issue to consider, however, is what difference this actually makes.  Whether a worker is entitled to take the day as paid leave would depend upon their contract of employment, which is regulated in England by the Employment Rights Act and working time directive.

This is one of those matters where it would probably be a good idea to discuss the 'different ways of dealing with the CE which are practicable', providing the PM does actually accept this as a CE of course.
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