Frequently Asked Questions

We are the employer on an NEC3 Engineering and Construction Contract (ECC) Option B (priced contract with bill of quantities) but have reached a stalemate with our contractor over our unwillingness to let our project manager issue an instruction to carry out a contentious item of work. We view it as part of the works and the contractor views it as a change to the works information and therefore a compensation event. What is the solution? 
Your contractor’s main obligation is in clause 20.1, which requires it to provide the works in accordance with the works information; see clauses 11.2(13) and (19) for the definitions of those terms. In addition, information in the bill of quantities is not works information – see clause 55.1. Therefore, the bill of quantities does not describe what work is to be built; all it does is set out what will be paid when it is built. Your works information should therefore include all the information the contractor needs to build the works. The contractor does not have to second guess what you may want, all it needs to allow for is the works stated in your works information.

If the works information does not include everything you want, your project manager will need to issue an instruction changing it. That instruction will be a compensation event – see clause 60.1(1)). In addition, if the works information is ambiguous or inconsistent, your project manager will need to instruct a change to remove that ambiguity or inconsistency – see clause 17.1. Again, that instruction will be a change to the works information and, as such, a compensation event which will be dealt with in accordance with clause 63.8. In your case this will probably be in the contractor’s favour. The only exception to this is if the event falls within one of the categories set out in the four bullet points at the beginning of clause 61.4. 

Only your project manager can issue an instruction to change the works information, see clause 14.3. Therefore, if this instruction is needed to construct the works, then it can only be because the information is not in the works information. In that case the contractor is not obliged by the contract to carry it out unless and until your project manager issues an instruction to change the works information to include it. 

Finally, it is also important to understand that the processes to deal with compensation events are set out in clauses 61 to 65, which require matters to be dealt with within the timescales set out in those clauses. The value of compensation events is based upon their forecast effect on the defined cost to carry out the work plus the fee – see clauses 63.1, 11.2(22) and 11.2(8). The rates in the bill of quantities are not used to value compensation events unless both parties agree to do so – see the last sentence of clause 63.13. 

In addition, the quotation for the compensation event must include its effects upon the programme, and the defined cost of any of those effects – see clauses 62.2 and 63.3. There are no such things as separate ‘delay and disruption’ or ‘extension of time’ claims in NEC contracts. All of the effects of a compensation event are dealt with in the quotation for that compensation event.

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