Frequently Asked Questions

We are the project manager on an NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule). We notified a compensation event which involves both deletion and addition of drainage works, most of which were tendered activities. We are assessing the event as the contractor did not submit its quote on time. We propose using the tendered output rates for the assessment, but the contractor says these are incorrect and has submitted revised figures. Should we use the new information or base it on the tender?

Clause 63.1 defines how the compensation event is to be assessed. It is not about relying on prices in the activity schedule or the way they are built up. It is about forecasting the change to the defined cost caused by the compensation event. You cannot just shortcut that and use the output rates from the tender. They are irrelevant, especially if what has already happened shows they were wrong.

As an independent assessor you must use your professional knowledge to decide what the change in the defined cost is because of this compensation event. You must do that in a spirit of mutual trust and co-operation. Therefore, you need to discuss this with the contractor and consider whether the new information they have given you is correct.

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