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Answered: NEC ECC: Under option C can CE's reduce the Target?

June 30, 2017, 8:34 am
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I think it depends upon what access restrictions and conditions are stated in the Works Information for a start.  If the Contractor has priced his tender based upon an assumption that he will be working in restrictive conditions and the restriction does not actually materialise then it is to his benefit and (hopefully) to both parties benefit with a reduced Defined Cost.

Where such access restrictions are detailed in the Works Information then this can be changed by the Project Manager and treated as a compensation event accordingly, with the likelihood that the Prices are reduced (clause 63.11).  The programme assessment under 62.2 and 63.3 only mentions delay, although where any remaining work is altered by the compensation event then this is to be shown in a revised Accepted Programme.  Bear in mind also that if a Contractor completes early then this means a reduced Defined Cost for time related preliminaries.  That works in theory but in practice they may use any surplus time to retain resources for business reasons.

Because of the likely uncertainty created by the access conditions you describe, I would suggest that the Employer makes detailed assumptions about what the Contractor should price for within their tender and take the risk for any changes, bearing in mind that it is for the Employer to provide details of access in the Works Information.
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Answered: NEC ECC: Under option A is common law , is contract breach recovery better than capping with X17?

June 30, 2017, 8:53 am
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The first thing to say is that Low Performance Damages are notoriously difficult to implement as more often than not the Contractor can point to one of the following :
- the input to a process is not exactly as stated in the Works Information, hence the out put is not stated;
- the Employer has changed something e.g. we want you to use component X rather than Y and here's a CE, but the C can then say well the reason the performance isn't achieved is because you said we had to use Y. If you stuck with X it would have been fine etc etc

Having said this, Contractors like the security of known damages and, as a result, may add the risk premium to your contract.

So it comes down to :
- how likely will we be actually be entitled to damages (it's easier if specified);
- how likely is it that we will actually be able to recover the damages off the Contractor (it's easier if it a contractual provision versus in general law)
- how much will the Contractor increase their Prices if we do / don't specify X17 and that will be partially dependent  at what level we specify them at..

This is ultimately a commercial decision.
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Answered: NEC ECC: Valuing a change of Works Information CE from refurb to replace

June 30, 2017, 9:02 am
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For a CE, you assess the effect of the CE on Defined Costs (DC) and the resulting Fee - see clause 63.1.

This includes the reduced DC's with Fee applied and the increased DC's with Fee applied.

The overall change is applied to the Prices for the original work - see clause 63.1 !
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Answered: NEC ECS: Under option E, can contract data part 2 change by Contractor?

June 30, 2017, 9:34 am
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To answer this question, can you expand upon what you mean by 'un-aware' ?
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Answered: NEC4 ECC: Option A - can you use options X15 and X21 together?

June 30, 2017, 9:38 am
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NEC3 does not have X21, but NEC4 does. Please can you clarify what your X21 is for ?
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Answered: NEC ECC: Re-measurement under an Option D form of contract

June 30, 2017, 10:36 am
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Using Option D in conjunction with Contractor design is a debatable procurement strategy for the scenarios you have set out.

Regarding your queries, my view is that:

1.    Yes, the original Works Information should be remeasured and the quantities adjusted if necessary including correcting of any mistakes under 60.7. Compensation events may come out of this exercise under 60.4.

2.    Yes, provided that the Contractor has not provided any WI that needs changing to align with the Employer’s WI.


1.    In accordance with 63.11 that type of value engineering would not reduce the Target – it would be a change in WI which the Contractor proposed and the Project Manager has accepted.

2.    Soft spots would generally be outside of the design line. If the soft spots, and how to treat them, was not identified in the WI then an instruction is required to confirm how to treat them which is a change in the WI and hence a CE. If the obstructions are encountered within the design outline then arguably there is a mistake in the BoQ which needs correcting as a CE.
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NEC ECC: Removal of scope

June 2, 2017, 8:08 am
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Under option C if there is a removal of scope I would usually raise a negative CE to reduce the scope.

What about option A? The job was priced as a lump sum, however a section of scope is being removed by the client. Should a negative CE be removed to reduce final cost? Or as it was lump sum project should that be the final cost?
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Answered: NEC ECC: Option 3 contract Contract Data missing "The percentage for people overheads is"

July 3, 2017, 5:07 am
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They cover different things - see clause 41 of the Shorter Schedule of Cost Components for what the percentage for People O/Hs is. While it can vary hugely, it is "typically" in the low teens.

Whereas direct fee percentage is more typically in the high noughts e.g. 5.5% to 12%'is range, so you would probably get a good deal by accepting it.

However, I would ask whether the Contractor actually understands what this percentage covers and then work through it with them to get a figure which works for both Parties. Signing up to a contract where the commercials are not understood usually leads to problems down the line.
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JCT: Can a contractor working under JCT refuse a works instruction if costs are not agreed before hand

July 4, 2017, 6:56 am
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NEC ECC: Would strike action be considered as a compensation event?

July 4, 2017, 11:57 pm
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Under an NEC3 ECC Option C Contract, which has clause 60.1 (19) deleted and replaced with "The works are affected by a Force Majeure Event", is unofficial strike action by the Contractor's operatives and their Subcontractors operatives a Compensation Event?

The operatives who went out on strike have not been paid for the time which they were "out" but the Contractor is seeking a Compensation Event relating to the associated delay.
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NEC ECC: Equipment costs for delay

July 6, 2017, 3:20 pm
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If a compensation event causes a delay of 30 days to a section of work and a specific piece of equipment ( jack up barge)  was required for a delayed task, the Contractor claims the costs for the equipment (jack up barge) during that period.

If however, the original submission showed that an alternative piece of equipment was going to be used for the delayed task, should we assume that the piece of equipment ( jack up barge)  was not required to provide the works, and no delay costs are associated with it, even when the Contractor has changed their approach but did not notify their change in approach

Should the assessment be made based on what was known at the time of the CE and the information was available, ie the delayed task did not require the jack up barge? Or based on the contractors revised approach which they did not communicate?
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NEC ECC: Clause 31 Programme Status

July 6, 2017, 3:20 pm
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Currently a NEC3 Option C contract which is circa 1 month in doesn't have a Clause 31 accepted.

Despite numerous submissions the Principal Contract has not addressed issues and acceptance has been withheld on ground of the programme not being practicable or in accordance with WI.

Most importantly it has been highlighted that the programme has negative float. After the 3rd attempt the Principal Contractor has acknowledged that there is an issue with the programme and it having negative float.

Whilst addressing this it appears that all terminal float will be lost. They propose to change the programme altogether as a result. Is this the correct approach. Should they first get the Cl31 accepted based on what the tender programmed was (with corrected logic and links) and then look to recover and/or resequence works in Cl32 submission.

It feels that allowing them to change the programme completely means there is no record of the original intention, the programme they won the tender on, nor any trail of the problem if wholesale changes are accepted on the 4th Cl31 submission.
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Under an NEC PSC Option E do you still get paid if you go past the completion date

July 6, 2017, 3:21 pm
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NEC PSC: Change in skill level of a resource

July 6, 2017, 3:21 pm
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A consultant has requested to increase a skill level of a resource in an option G contract since he has taken up more responsibility in the project, how does one handle this change within the contract
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Answered: NEC ECS: We are Subcontractors - how do we progress if Contractor rejects a CE?

July 6, 2017, 3:21 pm
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At this stage, based on what you have said, it appears that the Contractor's PM has only commented against a notified early warning.  Consequently you should notify a compensation event, which is a separate notification to an early warning.  If the compensation event is not accepted by the Contractor's PM, then you have the right to notify the matter as a formal dispute.
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NEC ECC: Physical Conditions Compensation Event and 'experienced contractor'

July 6, 2017, 3:21 pm
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This question relates to a compensation event under clause 60.1 (12) for a physical condition, more specifically the assumptions under clause 60.2, with the 4th bullet point referring to 'other information which an experienced contractor could reasonably be expected to have or to obtain'.

Although the guidance notes and commentary do not really explain what this means, my understanding is that it refers to the knowledge and understanding which is gained by a contractor, through experience, having undertaken works of a similar nature.

Any comments or feedback would be very welcome to clarify the above.
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Is the project manager entitled to deduct more advance payment repayment from IPCs than what is stipulated in the contract?

July 6, 2017, 3:22 pm
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Say the advance payment repayment is pegged at $128 000 per month, can the Project Manager increase this figure to say $220000 and this is done without consultation with the contractor.
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NEC ECC: cl 50.1 - assessing the amount due

June 2, 2017, 8:08 am
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The Contractor has not submitted an Application for Payment prior the assessment date

Under 50.1 it is the PM's responsibility to assess the amount due at each assessment date (even if no AfP has been received)

PM has made an assessment of the interim payment which is zero

Question is.. Does the PM still need to raise a Payment Certificate for the amount of Zero or can the PM inform the Contractor there will be no payment by email communication.
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NEC ECC : Option A - Lack of detailed information listed within the SSCC

June 2, 2017, 8:08 am
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We have recently received a Compensation Event Quotation from our Subcontractor for an instructed change to the Works Information. The Subcontractor upon submission of his quotation has pro-rata the Activity Schedule. This is something i don't agree with considering the complex changes involved. My next step was to refer to the Defined Costs within the SSCC. However, this is lacking a comprehensive list of relevant activities to enable me to undertake a meaningful assessment.
What would you suggest be a appropriate compromise?
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NEC ECC: Working area SCC People (14)

June 2, 2017, 8:08 am
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The question is regarding Section 14 in the People section of the Schedule of Cost Components;

“The following components of the cost of people who are not directly employed by the Contractor but are paid for him according to the time worked while they are within the Working Areas”

Can I have an example of who this would apply too? We have many different cases where site labourers are working within the working area however are employed via agency or sub-contractors.

Who is entitled to the WAO %?

I would personally say that labours working for the contractor via agency would be entitled to the WAO%

However I would argue that if the labourers are supplied by a sub-contractor with a contract in place then they would not be entitled to the WAO% due to the opening line off the SCC

“In this schedule the Contractor means the Contractor and not his subcontractors.”

We have a Sub-Contractor providing a labour only service – would these be entitled to WAO%. My view would be no entitlement due to the above (they are sub-contractors with a subcontract contract in place)
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