A contractor submitted its tender under ECC option A but, not being familiar with the payment mechanism, only allowed for a handful of lump sum activities on the activity schedule. In this schedule, preliminaries was only one activity, and the procurement and installation of sheet piling over the course of 2–3 months was also just one activity. These two activities amounted to approximately a third of the overall contract sum. The tender was accepted and, at the start of the project, the contractor was advised that it would only be paid upon completion of each activity. Realising that this may create problems with cash flow, the contractor submitted a revised activity schedule with the activities broken down over the course of the programme. The employer is concerned about the closure of one of the contractor’s regional offices, although this is a major contractor and a parent company guarantee is in place. The employer does not believe that it is under any obligation to allow the activity schedule to be revised and therefore rejected the contractor’s proposal. Is the employer in breach of clause 10.1 in that it is not acting in the spirit of mutual trust and co-operation?
Firstly, it is the project manager and not the employer that makes such decisions. The contract does not allow for the changing of the activity schedule, unless it is changed in accordance with the contract – see clause 11.2(20). The primary ways it can be changed in option A is set out in clauses 54.2 and 63.12, neither of which covers your circumstance. The spirit of mutual trust and co-operation cannot be used to change a contract the parties have agreed to and so there is no contractual obligation to change this activity schedule.