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Answered: NEC ECC: Final Account time frame.

August 7, 2017, 1:54 am
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The normal payment timescales - i.e. the assessment interval - and mechanisms continue on after the Completion Date. So if you make an application and claim the full amount, the the PM will, in his assessment, have to give reasons for deducting those amounts.

If you disagree with those amounts, a dispute has crystallised, so you could go to Adjudication, which I would only advise doing so after trying to escalate it to the PM and then the Employer.

A more fruitful avenue might be this : you are entitled to interest on the amounts from when they became due provided you applied for them i.e. a mistake by the PM (see clause 51.3) , so you could include in your application interest on these outstanding amounts from the time that you starting applying for them. That - along with a word to the PM -  might nudge the QS in the direction you want.
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NEC3 ECC: 11.2 (22) - Inclusions of preparing a quotation

July 13, 2017, 2:58 pm
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Under NEC3, the Project Manager has rejected compensation events and is carrying out his own assessments for compensation events on the basis the Contractor has included amounts for people for preparing a quotation within his assessment.

What does 11.2(22) extend to? Is it limited for example to preparing the quote and arranging for prices etc from supply chain? Or does it also include activities such as carrying out additional procurement, setting out, raising EWNs / NCEs?
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Answered: NEC ECC: Option B, Contract Data part 2 fee percentages

August 9, 2017, 9:47 am
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By :
- 'plant' I assume you mean 'Equipment' in NEC speak
- 'materials' = Plant and Materials.
and staff and about are both counted as People

The calculation would be :
Staff + labour = £4,000 x 1.15 (15% percentage for People O/H) = £4,600.
Plant & Materials = £2,000 (there is no percentage)
Equipment = £2,000 x 1.15 (15% percentage for adjustment for listed Equipment) = £2,300
Sub-total = £8,900
Total = £8,900 x 1.15 (15% direct fee percentage) = £9,245
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NEC3 PSC Expenses - Target Cost

July 13, 2017, 2:56 pm
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I'm looking for some practical advice on how expenses should be managed under an NEC3 PSC Option C contract. I see from previous answers on this forum that expenses, as stated in Contract Data Part 2, form part of the Total of the Prices. How are these recorded in Contract Data Part 2. Is the intention to state estimated values? Secondly, how are these handled with respect to the Contractor's Share calculation?
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Answered: NEC ECC: Providing additional Site Information

August 11, 2017, 7:29 am
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You can issue them the new Site Information which they will be able to use to take into account future compensation events in assessing risk.

However, the original contract works and price were based upon the original Site Information and therefore if it shows ground conditions that the Contractor could not have expected then this will be a compensation event under 60.1(12) as you highlight.
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NEC ECC: Can One Event Result in Two Compensation Events?

July 13, 2017, 2:58 pm
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A contractor is disrupted for approx. two weeks during the first quarter of a project, but still ahead  schedule. This results in direct field labour working inefficiently for the two week period. The client also agrees to compensate for the direct field labor for working inefficiently during the period that has already come into effect.

However, this event of disruption creates an assumption that the two week delay, automatically results in a two week extension of time, which seems impractical if the contractor is ahead of schedule. The contractor is asked to provided a quotation for the extended period, which only forecasted at the time of the disruption event.

In terms of NEC ECC can the above seen that one event caused two compensation events. Or is it one compensation event ? What if the compensation event is agreed but the extension of time has not yet come into effect. Does the client still compensate the contractor for the DFL and preliminary and general costs under one compensation event? What is the correct way to deal with such an event?
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NEC ECC Option C - Does the Contractors 'Risk Allowance' reduce the Target Price if it is not used?

July 16, 2017, 11:00 am
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If a Contractor has priced a sum of money for risk into the Target Price and they do not expend this, is it removed from the overall Target Price?

Also, does the Project Manager have the right to reject and sums that are taken from the Risk Allowance?

Is the above clearly stated in the Contract or Guidance Notes?
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NEC ECC: Cancelling Compensation Events

July 16, 2017, 11:01 am
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1. CE was notified by Contractor (p 1), PM requested quotation (p 2), Contractor submitted quotation (p 3). Employer not in agreement and it was discussed to "cancel".  Do I do a part 4 and state the PM will do his own assessment and then do a zero assessment and close the loop that way?   

2. CE was notified by Contractor, PM requested quotation and before the quotation could be issued by the Contractor, another Contractor from Employer's vendors list did the work. In essence the CE is "stuck" at Part 2. In order to close the loop do I request the Contractor to submit a zero rated quote and then do a part 4 accepting the zero quotation?

3. CE was notified by Contractor, PM requested quotation.  There already was the same CE in the system. In essence the CE is "stuck" at Part 2. In order to close the loop do I request the Contractor to submit a zero rated quote and then do a part 4 accepting the zero quotation?
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Answered: Using CECA rates for plant equipment.

August 18, 2017, 2:26 am
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I have to make a lot of assumptions here :
1. That you are under option A or B as a standard schedule is only used for the Defined Cost of Equipment under these options and then adjusted by the percentage for adjustment for Equipment.
2. Therefore, Defined Cost only comes into play when there is a compensation event.
3. The key clause for assessing change in Defined Costs (plus Fee) due to a compensation event is 63.1. Here the change in Defined Cost + Fee has to be due to "the effect of the compensation event".

So the answer is a typical experts response : it depends ! What was the "effect of the compensation event" ? I.e. if they were standing but you were having to pay, then that is an effect.
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Answered: Option X7 Delay Damages

August 18, 2017, 2:37 am
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To quote 'Keating on NEC3': if "no sum is inserted in the "amount per day" column then it is probable the Employer can recover neither liquidated delay damages or general damages".
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Answered: Claiming for losses when scope of work is reduced

August 18, 2017, 2:43 am
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Yes.

For a start, I assume that the date for issue of the drawings was either in the Works Information &/or the Accepted Programme. That would be a compensation event under clause 60.1 (5).

You could also argue that the PM is changing the Works Information. That would be c compensation event under 60.1 (1).

Finally look at option B clause 60.4, for a reduction in quantities. While its application would mean that you receive less overall, it may well entitle you to a re-rat to recover the overheads included in your original rate.
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Answered: NEC Clause 60.1(12)

August 18, 2017, 2:49 am
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Physical conditions is not limited to just ground conditions and, for instance, may apply to an existing building for; the discovery of asbestos, dimensions not being as shown on as-built drawings, structural materials being different to that expected, etc.

I don't believe that access prohibited by a third party would constitute a physical condition compensation event, as it is not, by it's nature, a physical aspect of the works.
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NEC3 ECC: Option E Fee on Fee

August 21, 2017, 11:26 am
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I am currently managing an Option E Main Contract which has a 15% Subcontract fee percentage in. We have Subcontracted a company to provide labour costs. Their direct fee percentage is 15%. They apply for their costs each month. Defined Costs + 15% Direct fee percentage. Do we then apply our 15% on top as I have always thought option E allows fee on fee as the first 15% is included within the amount owed to a Subcontractor. Is this correct?
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NEC ECC: Defined Cost - Plant - Held in wait for start

August 21, 2017, 11:26 am
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Background: main Contract is ECC Option C, each Project is a CE:

We have a project (CE) that had a critical start date which was delayed after the CE was accepted by the client. An EWN was raised stating this could effect time and cost.

Subsequently this project (CE) was then withdrawn under a PMI advising work no longer required.

During the delay plant was held by our sub contractor ready to meet the imminent start date.

Our client has refused this cost stating it is not defined cost as no work has been carried out and also that we did not advise them they were at risk.

My take is that the EWN raised advising it could have associated cost and time. No formal instruction came from the client to price this and in fairness neither party discussed this at various meetings as it was always felt the work would start the following week, (repeatedly) until the project (CE) was pulled.

In the spirit of the contract I approached our client before submitting these costs to agree them upfront once I became aware of them after the works were withdrawn.

They say that as we did not inform them at the time what the costs of delay might be (to allow mitigation) and the fact that we have not applied for them within our applications, they are not defined cost and they will not pay them.

Any thoughts on this, if positive what clauses should I quote.
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NEC3 ECC: Can the Employer terminate for budget cuts?

July 18, 2017, 12:58 am
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You are the Project Manager on the construction of a new asset. The tendered total of the Prices was approximately £10m, ECC Option A was used with secondary Options X1, X2 and Y(UK)2 incorporated. The Contractor started works on the Site some 3 weeks ago and has set up his site compound, commenced site clearance, started erecting some temporary fencing and arranged a number of subcontracts. On Monday of the fourth week, as part of budget cuts, the Employer wishes to terminate the Contractor's obligation to provide the Works.
a. Can the Employer terminate for budget cuts?
b. What needs to happen to put the termination provisions into effect?
The Project Manager issued the termination certificate later that day.
c. What is the procedure for this termination and what is the role of Employer, Contractor and Project Manager in this?
d. Who determines the payment on termination and how is this done?
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Answered: NEC ECC: Is a PMI always a Compensation Event?

July 19, 2017, 9:57 am
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Examples of PMIs which are not compensation events :
- an instruction to attend an early warning meeting (clause 16.2 of NEC3 ECC)
- an instruction to remove a person (clause 24.2 of NEC3 ECC)
- an instruction to submit a programme for acceptance (clause 32.2)
- an instruction for a quotation for acceleration (clause 36.1)

Further, just because it is a compensation event, does not mean it results in a change to the Prices if the reason for the CE arises from the fault of the Contractor. See clauses 61.1 and 61.4. whereby the Contractor does not proceed to supply a quotation.
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NEC ECC: When is a defined cost a defined cost

August 23, 2017, 8:43 am
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Background: Option C contract each project is a CE, each with sectional completion.

Project (CE) value was agreed with client and an approx 2 1/2 month duration into project before project was stopped and withdrawn.

On agreement of CE (project) the work was issued to our sub-contractor as an Option A contract, which would require a number of items of specialist plant, with an agreed start and finish date.

Our client then required some additional surveys done before works could proceed and we issued a EWN advising this could delay time and the risk of extra cost.

As we had a completion date that the client needed us to meet, we advised our sub-contractor to stop but advised this should be only a short delay.

Meetings were held with the client to discuss the delay which at the initial time was expected to be days and turned into weeks. However, neither us or the client talked around any costs or how to mitigate them.

Eventually the job was pulled and we have been requested to put costs to date in. We then had a claim from our sub-contractor for the plant he had stood waiting to start. We had not asked them to hold it but they were aware that we need a quick start, so we agreed in principle that we would except 50% charge as long as the client agreed.

As we felt we had a good working relationship with our client and to avoid paying our sub- contractor and then getting it disallowed I approached them with the breakdown of charges, but have not applied for them on any application.

Initially the client showed interest and we agreed a format and date range, subject to some evidence being provided. (This we feel we have now done).

However, the client has now a new cost consultant, and his take is that we did not inform them we were holding the plant and the potential cost. In addition as we have not applied for it, it cannot be a defined cost and therefore can not be viewed as one. Should we apply for it now it will be disallowed.

My view is we issued an early warning, but were not asked to provide costs to mitigate them, we have made them aware of a defined cost but not applied as we wanted to work with the client before applying.

Should our client pay for these charges due to them stopping the CE (project)

I would really welcome some help here, with NEC3 clauses that I could use.

If viewed as disallowable I would like to understand why.

Thanks for any help provided.
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Answered: NEC ECC: Defined Cost - Plant - Held in wait for start

August 23, 2017, 8:44 am
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I think firstly, although you state that each Project is a compensation event, they are still just a part of the overall scheme of works under the main contract and as such can't be treated any differently, although there may be discrete reporting requirements in terms of cost, budget and progress etc.

You correctly notified an early warning relating to the delay to the critical start date.  You don't state what 'follow up' actions were taken, although when the matter started to impact upon delivering the works then a compensation event should have been notified.  You don't state what the cause of the delay was, but I am assuming that it was for reasons beyond your control, hence the Subcontractor holding 'plant' (NEC Equipment).

The Project Manager then instructed a PMI removing this part of the works.  This is a further compensation event, presumably under clause 60.1 (1).

I am not sure what the status of the initial compensation event is with regard to the quotation etc, but the subsequent compensation event (PMI) would allow you to include any such 'abortive' costs within a quotation, where they are incurred as Defined Cost.  As it was incurred via a Subcontractor, then they also don't need to be incurred in the Working Areas for it to be treated as a Defined Cost.

Technically speaking, ANY compensation event under Main Option C could incur an element of Defined Cost, even if it was simply for the preparation of a quotation, where applicable, and no actual works were undertaken.

I would advise preparing and submitting a quotation, consequent to the PMI, and include costs which you believe are appropriate. This allows the quotation procedure to be followed.  It is possible that the Project Manager may make his own assessment under clause 64, but you have the right to refer the matter to dispute resolution where you formally disagree for valid reasons.
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NEC ECC: Using CECA rates for plant equipment.

August 23, 2017, 8:44 am
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Should CECA rates be used for the productive time on site or the time actually whilst on site during working hours?
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Answered: NEC ECC: Should I lose the opportunity to improve on programme dates as a result of the Client not providing something by dates shown on the Accepted Programme?

August 24, 2017, 2:33 am
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The simple answer is that it IS a compensation event, if shown on the Accepted Programme and the Employer is required to provide what is shown.

The time effect is then calculated in accordance with clauses 62.2 and 63.3, which may not impact upon the planned Completion, although has caused remaining work to be altered by the compensation event.  This would be calculated from the date when the event actually occurred, which must be the day after the Employer was due to provide the license, as shown on the Accepted Programme.

It sounds like this produced a disrupting effect whereby your progress was disrupted by a compensation event, resulting in non-productive working.  You don't state how the milestone date for providing the license and the associated works are linked in the programme, so I can't comment on any assessment under clause 63.3 in terms of delay.
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