NEC claims Flashcards
The traditional approach to managing change in construction projects is normally dealt within three separate elements. How does JCT deal with these?
JCT – Variations, L&E, EOT
Variations – Receives money through interim valuations performed by PQS using their tender rates.
L&E – Relevant matter, MC must give notice of losses when he becomes aware. Actual Cost so must be proven.
EOT/RE – likely to be delayed by one of the relevant events, to get an extension of time he must provide written notice showing cause and effect.
Actual cost.
Rates in tender at start are rates used throughout project
Contract completion date is the key date.
How does NEC4 deal with change in these?
Compensation events – if the contractor believes a compensation event has occurred, he will put a notice in.
For CE, MC will submit prices for change, a quotation with some cost risk allowance.
He issues a revised programme with how long he expects it will take to complete. Forecast
Time Risk allowance might be used – time float.
L&E – forecast using schedule using either the short/schedule of components.
Dealt with as a forecast
When a programme is submitted with a planned completion date and it is accepted, that is the key date.
What is the aim of compensation events under NEC4?
Try’s to cover – damages, EOT, variations, L&E etc.
In an attempt to reduce the risk of the MC, NEC ethos is collaboration, shouldn’t be tied down to rates for new works, should for work expected but changes he shouldn’t.
As soon as MC submits notice of CE then the PM needs to accept the cost of change.
How does NEC4 deal with unforeseen ground conditions on site? Explain how the clause operates? How are inconsistencies/discrepancies in the site information dealt with?
Dealt with as a Compensation Event. MC can claim under certain scenarios.
Must have been unforeseen – over and above what an experienced MC could have reasonably expected to have been there.
Expectation - Site location & History, Public documents, site searches.
If there is a risk – he must show this on TRA on his programme
How does NEC4 deal with delays or costs incurred by extremely adverse weather conditions (CE13)?
Adverse weather – must be over what could be reasonably expected e.g. snow in summer.
Must have occurred on higher than the average in the last ten years to be adverse in a single calendar month.
Compensation event – Allows MC extra cost and time.
Must be worse on average over that calendar month –
¥ Rainfall – no. of days exceeding 5mm of rain per
day
¥ Rainfall – cumulative rainfall within a month –
¥ Snow – No. of days snow lays on the ground
¥ No. of days where the air temperature is less than
0.
¥ Can be cumulative based on average of each
month in the last 10 years
What is the difference between assumptions and forecasts?
Assumption – PM makes the assumption. Assumptions can be changed.
Forecast – MC makes a forecast for compensation events up front. Forecasts cost and time. If forecast is wrong, not entitled to anymore if accepted.
Do NEC4 contracts have a provision for “force majeure”?
Kind of yes…. but they define an act of god
Try to define force majeure (act of god). E.g. Tsunami, Volcanic eruption.
Expressly stated what the MC can claim and when.
Often CE 13 is deleted from the contract. Advise a Client on the consequences of this action.
Relating to Weather.
Risk of – Higher tender as can’t claim cost for weather.
Advise – leave it in, very rare that the weather is worse than the 10-year average so the risk of that is less.
What is the procedure for notifying CE?
must notify within 8 weeks when it has occurred
then pm- must get back within a week
if not contractor issues 2 week notice for CE and quotation to issue one within 2/3 weeks
submission of quote reply in 2 weeks then implementation
“If the Contractor does not notify a compensation event within eight weeks of becoming aware that the event has happened, the Prices, the Completion Date or a Key Date are not changed unless the event arises from the Project Manager or the Supervisor giving an instruction or notification, issuing a Certificate or changing an earlier decision”.
If the MC does not agree with a PM decision, what can he do?
Refer it to dispute. PM decision is final.
Must give notice of compensation events – if he doesn’t then he has 8 weeks from the compensation event occurring to notify the PM else he will lose his right to claim unless it was one notifiable by the PM.
Isn’t a time bar for the PM
Why might you advise a PM to make an assumption when issuing a CE?
No assumption – risk lies with MC
Assumption – Client takes the risk
Way of reducing the risk from the main contractor so prices are lower as forecast means they will be paid the full amount.
Assumption you pay then any extra will be paid as a compensation event.
.JCT has schedule 2 quotations. Does NEC4 have anything similar?
Ask contractor to give a quotation for a proposed instruction.
3 weeks to price it, PM decides whether to go ahead or not.
What are the responses a PM can make to a CE notification from the MC?
Negative reply
¥ arises from fault of MC
¥ has not happened or is not expected to happen
¥ has no affect on defined cost, completion or
meeting key dates
¥ is not a CE
Positive reply ¥ instruct MC to submit quotations ¥ submit Alternative quotations ¥ Any assumptions ¥ MC assumptions? ¥ EWN?
No reply
¥ Reminder by MC
¥ Notified event treated as accepted CE and instruction to submit quotations
14 days to reply.
What are the responses a PM can make to a CE quotation from the MC?
¥ Submit within 3 weeks of instruction!!
¥ PM to reply within 2 weeks
o Possibility to extend time
¥ If MC fails to submit, PM make own assessment
¥ PM can:
o accept quote
o instruct to submit revised quote as doesn’t believe its been valued properly
o notification that he will be making his own assessment
o No reply?
If the MC failed to submit an early warning notice for a CE later notified what should the PM do? What will the MC be entitled to?
If MC failed to give EWN but then submits for a CE then the amount awarded may be reduced due to if the PM believes he could have dealt with this and found another supplier if the EWN was given.
Early warning notice – once given the PM can mitigate the effect of that CE.
