Frequently Asked Questions

Clause 50.3 of the NEC3 Engineering and Construction Contract (ECC) states that if no programme is identified in the contract data, one quarter of the price for work is done to date is retained in assessments of the amount due until the contractor has submitted a first programme to the project manager for acceptance, showing the information which this contract requires. My question is, what happens to the retained money should the contractor fail to submit a compliant programme throughout the contract period?

Without an accepted programme the contract cannot be administered as properly intended. See for example the compensation events that rely upon an accepted programme - clauses 60.1(2) (3) and (5) - also operating clause 63.3 is obviously a problem. 

The lack of a programme is probably indicative of one of two things. Either the contractor is disorganised and has no control of progress, or the contractor has a programme that it does not want to show you. Neither is good news for your project and both must be avoided.

Without an accepted programme the assessment of all compensation events is taken out of the hands of the contractor altogether. The project manager is required to reject all compensation event quotations and make his or her own assessment of each compensation event - see the 3rd and 4th bullet points of clause 64.1. That assessment must be made using the project managers assessment of the programme of the remaining works - see clause 64.2

As for when the 25% is released, the contract is silent because it did not envisage that any contractor would allow such a situation to occur given that cash flow is the life blood of any contractors business! The project manager should notify an early warning to the contractor and make sure that senior members of the contractors management attend a risk reduction meeting to sort the problem out.

Back to FAQs