Frequently Asked Questions

We are the employer on an NEC3 Engineering and Construction Contract (ECC) Option C (target cost with activity schedule). A clause 34.1 instruction to stop work was issued by our project manager in relation to an element of construction as an issue relating to potential contamination had not been resolved by our contractor prior to starting excavation. The contractor is responsible for the design of the works. What sanctions has our project manager got if a clause 34.1 instruction is ignored? Also, can the costs associated with the earthworks be disallowed on an Option C contract?
Your contractor is required to obey a valid instruction issued by your project manager in accordance with the contract, see clause 27.3. However, it is probable that if the contractor had obeyed this instruction it would have been a compensation event under clause 60.1(8), unless the works information clearly states that such matters must be ‘resolved’ (we are not sure what you mean by that) before work commences. In addition, if such contamination was unexpected, the cost and time of it being dealt with could be a compensation event under clause 60.1(12).

The contractor will be in breach of contract if it does not obey the project manager’s instruction, but we doubt that you will have suffered any material damages you will be able to recover. Indeed, in the case of an Option C contract, you have shared the savings resulting from the contractor not obeying the instruction. If this was a serious issue, you may be able terminate, but that would only be possible after the contractor had been notified and the conduct continued for a further 4 weeks, see clauses 91.2 and 91.3.

As to the costs being disallowed costs, that will only be the case if they fall within one of the definitions in clause 11.2(25). That will depend upon whether or not there was an acceptance procedure in the works information that the contractor has not followed. We doubt that that is the case given that this is not really about you ‘accepting’ something and, in any event, this will have probably led to a reduction of costs not an increase. Therefore, there will be no, ‘cost which…was incurred only because the contractor did not…follow an acceptance...procedure stated in the works information’, see the wording of the third bullet of clause 11.2(25).

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