Frequently Asked Questions

We are a client on an NEC4 Engineering and Construction Contract (ECC) Option B contract (priced contract with bill of quantities). At tender stage we explained that the design was not complete, and this had to be factored in. Subsequently, after signing the contract, the contractor has notified numerous compensation events following changes to the scope. The contractor is now claiming additional quantity surveying time to review instructions and compile quotations for compensation events. The quantity surveyor is full time on site. Is the contractor allowed to claim for the cost of preparing quotes? We know that under 60.1(20) it is allowed to claim for some additional cost if we do not proceed with an instruction.

Entering into a contract that does not define exactly what is to be built is always a high-risk strategy for a client, as any change will be a compensation event. And an Option B contract makes it riskier given that the client takes the risk of the inevitable inaccuracies in the bill of quantities.

Compensation events are assessed based on the effect they have on defined cost, see clause 63.1. If the contractor’s quantity surveyor is on site anyway it will be difficult for the contractor to argue that each compensation event increased the cost of employing the quantity surveyor. They are already there. The contractor could argue that the quantity surveyor has to be paid overtime, but we doubt that very much. However, if the load is such that the contractor brings in another quantity surveyor, or that the existing quantity surveyor would only have been part time on site, the contractor may be able to argue the case. But if the quantity surveyor was always going to be there on site, we doubt very much that the contractor will be able to show that its defined cost has increased because of the compensation events.

There is another factor you will need to consider. If a compensation event causes a delay to planned completion on the accepted programme, then the completion date is moved based on that date, see clause 63.5. In that case, the assessment of the compensation event includes the increase defined cost caused by the contractor’s resources being on site longer and that will, of course, include the cost of the quantity surveyor.

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