Frequently Asked Questions

We are a subcontractor working under an NEC3 ECS option A (priced contract with activity schedule). The contractor is going to remove works from our subcontract and carry out the work itself or potentially have it performed by another subcontractor. This intention to remove works is not due to any shortfall in performance by ourselves but is perhaps because the contractor feels it can be done for a lower price by others. Do we have any redress under the subcontract?
The simple answer is that the contractor in an ECS can issue an instruction to change the subcontract works information (see clause 14.3) and there is no contractual limit to the contractor doing this. However, the instruction not to carry out the work will be a compensation event, which will be valued based upon the forecast reduction in defined cost to carry out the work it has caused plus the fee. It is not just a case of deleting the priced items in the activity schedule.

If you can show that the cost of the deleted work, in terms of defined cost plus your fee, is lower than the price in the activity schedule, then the contractor will have to pay you the difference. You could also argue that if the contractor can get the deleted work done cheaper then so could you by sub-sub-contracting it to the same people, such that the contractor will save very little. That would be especially so if you can show that you could not instantly pick up work to cover the resources you would have used, in which case you could include the forecast cost of those resources as well. But, in doing so, you do need to remember that you must act promptly and competently to any instruction (see clause 63.7).

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