Frequently Asked Questions

We are a client using NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule) and want to be clear how to assess a once in 10 year weather compensation event. Should it be based on weather data from the last 10 years only, or the full period of record? We have 57 years’ worth of river level records at that particular gauge, and the river level on the day the site was flooded was exceeded 17 times in that period, that is on average once every 3.4 years. The contractor thinks that the assessment should be based on the last 10 years of records only, saying that this is normal practice. As it happens, if we did look at only the last 10 years, then the river level in question has probably been one of, if not the, highest (we are missing the last 2 or 3 years of data). As such it would qualify as a compensation event.

Our take is that the compensation event definition says, ‘by comparison with the weather data,’ and the contract data says, ‘The weather data are the records of past weather measurements for each calendar month’. There is nothing there about taking only the last 10 years. Furthermore, the compensation event definition talks about the weather measurement occurring on average less than once in 10 years and, to get an average, one needs multiple 10 year periods. Otherwise, why does it even say on average? Finally, when considering ‘standard industry practice’, judging from the example ‘location-based planning averages’ included in a Met Office brochure, they have used a period of 1971−2010, which was presumably the full period of record.
You are correct. The contract requires that you take into account all of the weather data to calculate the once in ten-year return average. That is clear from the wording of the contract. The contractor is conflating a once in 10 year return average with an average of the last 10 years. Any statistician will tell you that these are different calculations. If the contract was supposed to cover only the last 10 years of weather data, it would have said so. Instead, it says you must use all the weather data you have to calculate a once in ten-year average. The more data you have for that calculation, the more accurate it will be.

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