Frequently Asked Questions

We are the project manager on an NEC4 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule). The client is expecting the delivery of its own equipment to be delayed. We are considering stopping the works under clause 34.1 for a period not exceeding 12 weeks. This would be a compensation event under clause 60.1(4).

In discussing the delay of the client-provided equipment, the contractor considers that all people resources for the extent of the delay can be included in the quotation, stating it is unable to redirect such resources to another project and therefore the costs should be recoverable under the delay. What would be the allowable costs in this situation?

The contractor’s and its subcontractors’ resources cannot just be turned off and on like a tap. It may be that some work will be able to be carried on with changes to the programme and some of the delay to the completion date will be avoided.

But the contractor will probably not be able to find meaningful work elsewhere for most of its people, subcontractors and equipment and, if that is the case, the costs of those people will be part of the assessment of the compensation event. They are people whose normal place of work is within the working areas, and they are therefore included in defined cost.

If the contractor does find work for them elsewhere, there will be no guarantee they could return when the client’s equipment eventually turns up. That would mean the risk to time and cost of this happening would also be factored into the assessment of the compensation event, see clause 63.8.

You should first notify an early warning to the contractor under clause 15 that this equipment will be late. You should then sit down with the contractor and, if necessary, its subcontractors in a spirit of mutual trust and co-operation to discuss how the problem can be managed, see clause 15.3.

After that, you should not issue an instruction to stop work. Instead, you should notify this as a compensation event under clause 60.1(5) and instruct the contractor to provide a quotation. If the client does not have a definite delivery date, you should state an assumed date using clause 61.6. That will then get the ball rolling in seeing how much this will cost the client in both time and money.

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