Frequently Asked Questions

We are the contractor on an NEC3 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule). The project manager decided to assess a compensation event and used an incorrect rate in their assessment. Is it legitimate to call this an incorrect assumption and notify a further compensation event under clause 60.1(17)? Further, we have gone on to use this same incorrect rate to assess another compensation event, which has been accepted by the project manager. Is there an option to correct this or has it set a precedent for future compensation events?
To interpret clause 60.1(17), you need to refer to clause 61.6. If the project manager decided that the effect of the compensation event was too uncertain to be forecast reasonably and told you the assumptions you should use in your assessment, and one of those assumptions was wrong, then the project manager must notify a correction to that assumption. The notification would be a compensation event under clause 60.1(17).

However, as the ‘incorrect rate’ you refer to is within the project manager’s assessment of the compensation event, clause 60.1(17) does not apply. Once the compensation event has been implemented in one of the ways set out in clause 65.1, the compensation event cannot be changed if a forecast the project manager made in their assessment is shown to be wrong, see clause 65.2. Your only recourse in this case is to the adjudicator.

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