Frequently Asked Questions

We are the contractor on an NEC3 Engineering and Construction Contract (ECC) where part of the works consists of a new roundabout and its approaches. The approaches have been partially completed and opened to traffic, but the roundabout has not yet been formally taken over by the local authority, which will occur after completion. A couple of weeks ago a road accident occurred in the area causing minor damage to the pavement. For the purpose of this contract and as a learning point, would this be considered as defect, so is a fault on the works in use before completion? Or will the local authority be liable to undertake the repairs?
Usually when an employer starts to use a part of the works, as has happened here, they take that part over, see clause 35.2. However, there are two exceptions to that general rule, as set out in that clause, and it is assumed one or other of those apply and therefore that take over has not occurred.

The employer assumes the risk of damage to the works after take over, see the fourth main bullet point of clause 80.1. Before that you as the contractor assume that risk, see clause 81.1, and have to repair any damage to the works promptly, see clause 82.1. You are also required to maintain insurance against such damage, see clause 84 and, specifically, the first line in the insurance table.

It seems likely the cost of repair will be less than the excess of your insurance cover, so you would not make a claim under that. But, in any event, you will not be paid by the employer to correct this damage. That applies even with ECC Options C to E (target and cost-reimbursable contracts), where you are paid the defined cost to carry out the works. This is because the costs of events which you should insure against are excluded from the definition of defined cost, see section 7 of the schedule of cost components.

So, in this case, the pavement damage should be treated as a defect. If it will prevent completion (as defined by clause 11.2(2)) occurring, it should be repaired before completion. Otherwise it should be repaired within the timescales set out in clause 43.2.

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