Frequently Asked Questions

We are the employer on an NEC3 ECC project. The contractor did not correct a notified defect within the defect correction period, so we have invoked the ‘Uncorrected Defects’ clause 45.1. How quickly does our project manager have to assess the reasonable cost of having the defect corrected by others and deducted from the final amount due to the contractor?
There is no specific time limit in clause 45.1 (46.1 in NEC4 ECC). It could be argued that it should be done within the period for reply (clause 13.3) though, strictly speaking, it is not a reply to a communication. From your point of view as employer it should always be done as quickly as possible so that you can benefit from the money that is to be deducted from the final amount due to the contractor and get on with appointing another contractor to correct the defect. The quicker it is done, the quicker everybody knows where they stand.

As you have decided to invoke clause 45.1, your project manager should tell the contractor this is happening and make the calculation as soon as possible. Otherwise, the contractor does not know what is going on. Up until that point the contractor may still be able to correct the defect and, if it does so before it hears from the project manager, the cost of appointing another contractor cannot be deducted. That is another reason for getting it done quickly.

Finally, it is important to understand that your project manager cannot just wait until another contractor has corrected the defect and use the amount it has cost you. As with most compensation events, this amount has to be calculated prospectively, based upon what it is forecast to cost, not retrospectively.

Back to FAQs