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could be argued it was an instruction changing the works information under clause 60.1(1) as it stops part of the works rather than not starting them. There is no specific mention in the contract that


any relevant prices shall determine the assessment of items omitted, other than the wording of clause 63.1 for assessing compensation events. This states the changes to prices are assessed as the effect the actual defined cost of work already done, the forecast defined cost of work not yet done and the resulting fee. The change does not infer anything which


could not have been contemplated by parties at the outset of the contract as the compensation event clause was always part of the conditions of contract. As the omission was a valid compensation event under the contract, the assessment has followed the contract using the fee as stated in the contract data, which is not subject to re-assessment for this. The fee includes the contractor’s profit, so assessment of the compensation event clearly includes an element of profit – albeit negative in this situation. As none of the express provisions specifically


mention loss of profit, and the contract has been applied consistently (for both positive and negative compensation events which have both had the fee percentage applied as per the contract data), does ECC support the contractor to claim for an entitlement of direct loss and expense incurred by reason of loss of profit?


Answer The right to issue an instruction to stop or


not start any work is under clause 34.1; clause 60.1(4) only deals with the consequences of that instruction. However, this facility covers only instructions for a temporary stop to the work. If you permanently remove this work, you must issue an instruction to delete it from the works information, otherwise the works will never achieve completion, or will have a permanent defect. The practical results of this are the same in that it is still a compensation event, this time under clause 60.1(1), and that compensation event is still valued in the same way. As you have rightly pointed out, the


compensation event is valued based upon an assessment of what the defined cost to carry out the omitted work would have been (see clause 63.1). To this is added the fee and the total is then deducted from the total of the prices. There is therefore no contract provision that entitles the contractor to recover loss of profit. Since the contract allows you to do this, and deals with its consequences that is the end of the matter legally, in the sense that you have not breached the contract. Even if you had of done so, clause 63.4 makes it clear that the only rights the contractor has to a change in the prices are those in the contract. This is what is called a sole remedies provision, which prevents the contractor recovering by means other than the contract.


the contractor’s claim for loss of profit... is doomed to failure.


In summary, the contractor’s claim for loss of


profit, for which there is no such provision in ECC or any other NEC3 contract, is doomed to failure. There is just one final point. The assessment of


the compensation event needs to take into account all of its effects upon defined cost for carrying out the work. If this meant that other works had to be carried out less efficiently, for example equipment was not being used that was still needed, but only part time, or the cost of material increased because the contractor was purchasing less, then all of that should be taken into account when assessing the compensation event.


Compensation events arising during contractor-delay Question In an ECC contract, does the fact that the


contractor was already behind its contract programme before an inclement weather period was advised in a compensation event have any bearing on the period to be assessed? For example, if the contractor had hit its original key date of watertightness in mid-November, then the inclement weather would have had less of an impact.


Answer The accepted programme is not a preserved


original programme, it is merely the latest one accepted by the project manager – see clause 11.2(1). The parties are supposed to use the latest information they have to assess compensation events. The contractor is required regularly to update its programme and submit it for acceptance (clause 32.2), and that update has to show actual progress achieved (clause 32.1). This accepted programme is then used to assess compensation events (clause 63.3). If project managers do not accept the latest


submitted programme, or if contractors do not submit one for acceptance when they should, project managers should make their own assessment using their assessment of the programme for the remaining work (clause 64.1 and 64.2). The programme should obviously include for any delays to date (for whatever cause) – that is clearly what the wording in clause 32.1 and 64.2 means.


Time to reply to notified early warnings Question In an ECC contract, if the contractor notifies an


early warning to the project manager, does the project manager have to reply within a certain time?


Answer Early warnings are about risks of things happening


in the future. As such they are too important to be ignored, or left to correspondence. Firstly, when you notify an early warning of anything that is of any importance, you need to be instructing the project manager to attend a risk reduction meeting – see clause 16.2. And at that meeting both of you should be sitting down and agreeing how this future risk is going to be managed – see clause 16.3. Project managers’ responsibility is firstly whenever


they receive an early warning to put it in the risk register (clause 16.1). They then have to get involved in managing the risk at the risk reduction meeting you or they have called, and finally they have to record all of that on the risk register and re-issue it to you (clause 16.4).


Calculating weather delays Question We have obtained weather data for a particular month and it shows the contractor is entitled to 5 days for air frost and 8 days for lying snow. Are these figures added together to give 13 days, or is it just the 8 days as each show day coincides with a frost day?


Answer I am afraid it is not as simple as that (as it is also


not with other forms of contract). Two separate compensation events have occurred and you need to decide what effect those have had to both the time to carry out the work (clause 63.3) and the defined cost (clause 63.1). But it is not a simple case of adding the number of days together and saying that the contractor is entitled to them, you have to decide what effect that weather had on time and money. For example, with frost, what work was delayed


(if any), and what did that cost? That will depend upon the work being carried out at the time, and when the frost occurred. For example frost overnight may have no effect at all, especially if there was no frost-susceptible work being carried out at the time. Equally the snow may have little or no effect if it was lying at a time when work was being carried out inside the building, or when the contractor was not working, for example weekends or over the Christmas break. Once you have decided what the effect of each


compensation event is then you need to check for, and eliminate, any double-counting, for example the snow and frost both delaying the same work at the same time. I say ‘you’ but in reality this is, at least at first,


the responsibility of the contractor and it needs to provide whatever records and information is necessary to show what the effects were of the these compensation events. If you do not agree then you should make your own assessment, all in accordance with the procedures set out in clauses 61 to 65 of the contract.


Local Democracy Act Question Will there be changes to W2/Y(UK)2 as a result


of the new UK Local Democracy, Economic Development and Construction Act 2009 Act?


Answer The new Act contains a substantial number of


provisions in the broad areas of local democracy and involvement, local authority governance and audit, boundary and electoral change, local and regional economic development and construction contracts. It received Royal Assent on 12 November 2009. Part 8 of the Act amends the Housing Grants,


Construction and Regeneration Act 1996 to improve payment practices and dispute resolution in the construction industry. The new Act is enacted but not in force, which commentators consider is now likely to happen mid-2011 or in October that year. The NEC panel has been monitoring progress


and have produced most of the necessary changes to NEC3 contracts which will be issued when this finally comes into force as they will not be needed until then.●


For further information please email the NEC helpline at info@neccontract.com


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