Library of Congress Cataloging-in-Publication Data. Eggleston, Brian, CEng. The NEC 3 engineering and construction contract: a commentary/Brian Eggleston. Engineering and. Construction Contract. NEC3 Engineering and Construction Contract. Simon McGrail. Head of Construction and Dispute Resolution, South. Downloads PDF NEC3 Engineering and Construction Contract (ECC), PDF Downloads NEC3 Engineering and Construction Contract (ECC).
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NEC3 Engineering and Construction Contract (ECC) entered into by and between. Transnet SOC Ltd. Registration Number // The NEC Engineering and Construction Contract: A user's guide It includes a brief history of the development of the NEC family of contracts, detailed advice on contract strategy and an outline of the main First Page Preview | PDF ( KB) . The Employer allows access to and use of each part of the Site to the Contrac- tor which is necessary for the work included in this contract. Access and .
The New Engineering Contract NEC , or NEC Engineering and Construction Contract, is a formalised system created by the Institution of Civil Engineers that guides the drafting of documents on civil engineering and construction projects for the purpose of obtaining tenders, awarding and administering contracts. The contract consists of two key parts the Contract Data part one Data provided by the Employer and Contract Data part two Data provided by the Contractor. Several approaches are included making it a family of options. Characteristics The NEC is a family of standard contracts, each of which has these characteristics: Its use stimulates good management of the relationship between the two parties to the contract and, hence, of the work included in the contract. It can be used in a wide variety of commercial situations, for a wide variety of types of work and in any location. It is a clear and simple document - using language and a structure which are straightforward and easily understood.
The clauses of these options have been be adapted for simpler less risky work short contracts , for use as subcontracts, and for professional services such as design as below. The Engineering and Construction Subcontract Contract ECS Very similar in detail and complexity of contractual requirements to the ECC contract above, but allows the contractor to sub-let the project to a subcontractor imposing most of the clauses that he has within his headline contract.
There is very little difference between the ECC and the ECS, other than the names of the parties are changed contractor and subcontractor and some of the timescales for contractual responses are altered to take into account the timescales required in the ECC contract. The Engineering and Construction Short Contract ECSC This is an abbreviated version of the ECC contract and most suitable when the contract is considered "low risk" not necessarily low value on a project with little change expected.
This contract is still between the employer and contractor but does not use all of the processes of the ECC making it simpler and easier to manage and administer. The Professional Services Contract PSC This contract is for anyone providing a service, rather than doing any physical construction works. Designers are the most obvious party that fit into this category. Whilst they are producing a design for an employer or contractor, they would sign up and follow the clauses within the PSC. Most of the clauses within this contract are the same or similar to those in the main ECC contract, so that all contractors, designers and subcontractors have pretty much the same obligations and processes to follow as each other.
It is for simpler less complex assignments than the PSC, such as the appointment of small team for managing an ECC contract on the Employer's behalf. It is frequently used as a subcontract to the PSC for design work. Framework Contract FC Parties enter into a "framework" of which work packages will then be let during the life of that framework. It describes who will take what action to manage the risk or to mini- mise the likelihood of the risk event happening. The third objective of the Risk Register is to identify the time and cost conse- quences to the Parties and Others if the risk event occurs.
Whilst the Risk Register allocates the actions needed to manage the risk, the rest of the conditions of contract deal with the allocation of the cost and time conse- quences of that risk. If it is covered by either of these, the total cost is borne by the Employer Fo on through the operation of the compensation event procedures. The infor- mation provided with the Risk Register, including the allowances made for on esi risk, provide a much greater understanding of basic costs and the cost of risk transfer.
This helps in both cost assessment of future work and budgetary ly ty management. The Employer lists the risks that he wants to be included in the Risk Register in the Contract Data part one; the tenderer adds other risks in the Contract Data part two.
Following contract award, the Risk Register is updated and reviewed as part of the early warning process — see Clause The Contractor may wish to extend the Working Areas to cover areas of land that he proposes to use temporarily for the purposes of the contract. Examples are a borrow pit or a compound that is outside the Site. The procedure for this is set out in Clause Works Information can be changed by the Project Manager during the course of the contract Clause Communications 13 Lo In some circumstances it may be appropriate to specify more than one period re S nd for reply in the Contract Data.
Relying on Clause Where other periods for action are stated in the ECC, provisions for their extension if l u Un any are stated in the relevant clauses. For example, so that on esi delays which could be avoided are not missed, submission of a revised programme which shows a delay does not count as an early warning of the ly ty delay.
Requiring separate notices also makes it much easier to track the pro- cedure following the issue of the notice. As Clause The mechanism described in Clause He does carry the risk of the Project Manager withholding acceptance for a reason stated in the contract.
Withholding acceptance for any other reason is a compensation event Clause His duties and authority are described in the clauses of the contract. They are not summarised in a single clause.
It is assumed that the Project Manager will confer with the Employer as neces- sary in deciding which of various possible actions to take and in making other decisions which affect the outcome of the project as far as the Employer is concerned. For example, the Project Manager has full authority to arrange an acceleration of work, although the Employer would normally be vitally inter- ested.
The fact that the Employer is not often mentioned in the contract does not mean that the Employer has only a minor role. It does mean that, for the purposes of the contract, almost all dealings with the Contractor are handled by the Project Manager. Fo on The Contractor will expect that all decisions which the contract envisages will Lo be taken by the Project Manager will be taken by him within the time limits re S stated in the contract. In some organisations, this may require the Project nd Manager to pass on decisions to the Contractor which have in fact been taken by the Employer.
This may happen, for example, when an Employer has not du ou delegated the authority to make a particular type of decision to his Project Manager. His main function is to check that work is carried out in compliance with the Works Information.
The actions of the Project Manager and Supervisor are independent of each other. There is no appeal ly ty from the Supervisor to the Project Manager where the actions of the Super- visor are questioned by the Contractor.
Delegation does not prevent the person who delegates from also acting himself. The Project Manager would normally advise the Employer and the Supervisor, as well as the Contractor, of any delegation of his actions, but this is entirely a matter for arrangement between these parties.
In the same way the Supervisor would normally inform the Project Manager and the Employer of any delegation of his actions. A Project Manager will not normally delegate actions to the Supervisor, or the other way round. However, in very small contracts, where for example the Supervisor is absent for unavoidable reasons, it may be convenient for him to delegate his actions to the Project Manager.
Neither the Employer nor the Supervisor can change the Works Information. The Adju- dicator cannot change the Works Information.
Consequently, it includes additions to and deletions from the Works Information as well as alterations to it. Consequently, all such changes are potentially compensation events as set out in Clause Adding to the Working 15 Areas Early warning 16 The sanction for failure by the Contractor to give early warning is to reduce the payment due to him for a related compensation event Clause If an early warning is given by either the Project Manager or the Contractor, the Project Manager is required to make an addition to the Risk Register to cover the matter.
These are matters that will be included in the Risk Register. As the Contract Data includes a list of risks that are to be included in the Risk Register, it would be sensible to call a risk reduction meeting at an early stage in the contract to discuss them.
Examples of such problems are. It may be agreed that other people should attend according to the particular circumstances. For example, Subcontractors, suppliers, public utilities, local authority representatives or the Employer himself may need to attend. Note that the intention of the meeting is to solve the problem. It is not to decide responsibility, or who will pay for actions taken; the relevant provisions of the contract will cover these aspects quite adequately.
Ambiguities and 17 inconsistencies There is no stated precedence of documents. The Project Manager has the responsibility of instructing resolution of an ambiguity problem or an inconsistency in or between documents. An instruction to change the Works Information in order to resolve an ambiguity or inconsistency is a compensa- tion event.
Such a change would not be a compensation du ou event Clause It covers events that either stop the se iv Contractor completing the works or make it impossible for him to complete on time, whatever measures he might take. Once it is so recognised, the ly ty Project Manager has authority to manage the consequences in the best inter- ests of the Employer, and the event is a compensation event A delay to planned Completion which can as opposed to will be recovered by acceleration, by increased resources, or by adjusting the programme does not stop the Contractor from completing on time.
The Contractor must demon- strate that there is no reasonable means by which he can complete the works on time for the event to be recognised under the second bullet point. In certain circumstances the event may lead to termination by the Employer — see Clause Guidance on these is included in the explanatory notes on Section 5. Other sections deal with particular responsibilities appropriate to the section heading. Core clauses Providing the Works 20 The Works Information provided by the Employer should state every- thing the Contractor is to do, including design work.
Between these re S nd two limits, contracts will include some design done by the Employer and some by the Contractor. For instance, it is common for civil engineering and building du ou works to be fully designed by or on behalf of the Employer, with mechanical and electrical plant designed by the Contractor to the performance require- ca thb ments of the Employer.
Using Option F, the ECC is suitable for a design and management contract as tio a well as for a design and construct contract. It is not se iv recommended that parts of an element of work should be designed by different parties as this may confuse liability in the event of Defects occurring.
Any change to the allocation of design responsibility or change or addition to the design criteria in the Works Information in part one of the Contract Data constitutes a change to the Works Information and is a compensation event. The time limits are those stated in Clause They are intended to encourage prompt action by the parties so that delay can be avoided and the whole process properly managed. As stated in Clause Sometimes the Project Manager will see in the design submitted by the Contractor characteristics which, if they had been foreseen, he would earlier have stated to have been unacceptable by including an appropriate constraint in the Works Information.
This change to the Works Information is a compensation event. This clause in the ECC ensures that the Contractor is protected from the risk of additional constraints on his design being intro- duced after his commitment to the Prices for the work has been made. The Employer is thus placing reliance on the design skill of the Contractor.
Lo For instance, a foundation design cannot be properly assessed without some details of the superstructure and any du ou Plant to be supported. The Contractor is still liable if, after having made the Equipment to details na nk which have been accepted, it fails because it did not comply with the Works Information. The clause gives three criteria for design of the Equipment. However, responsibility for producing Equipment generally including temporary works that permits the works themselves to be completed properly lies with the Contractor.
People 24 Possible reasons for asserting this authority include.
However, the Project Manager may do it for any reason, provided he states what it is. Working with the Employer 25 and Others These may include public utilities who are to divert their services or provide new services and plant. Sometimes a public utility employs its own contractor but the utility supervises the work. The duty of the Contractor to co-operate with Others has been expressed in general terms only as the detailed requirements will depend on the particular project and Site and should be fully described and explained in the Works Information.
Failure to do so may lead to a compensation event e. The Contractor is not responsible for the failure of Others to carry out their work in accordance with the Works Information unless the failure is caused by Fo on the Contractor not co-operating.
The exchange of information on health and Lo safety matters is particularly important in order to comply with the law as well re S as with the contract, see notes on Clause Any services to be provided by one contractor to another, or by or to the Employer, should also be ca thb stated. Responsibility for the provision and maintenance of facilities should also be stated.
Examples of these facilities are tio a. It is important that this work is planned and programmed as far as possible before the start of the contract. The start dates for work should be agreed together with details of the work, its likely duration and facilities required to be provided by and for the Contractor. Details of the obligations of the parties at each interface and the timing and programming arrangements should be agreed.
It should also be stated which party is to supply and maintain access e.
If precise dates are not available, approximate dates should be given in the Works Information. The Contractor should then be required to meet the other parties soon after the starting date, agree detailed programmes with them and incorporate the information in his own programme. In addition, the health and safety requirements, with which each contractor is required to comply, should be stated in the Works Information.
This is particu- larly important for sites occupied by several contractors see explanatory notes on Clause Failure by the Contractor to provide the services and other things stated in the Works Information results in his having to pay any cost incurred by the Employer under Clause The Works Information should include details of the services and other things which the Employer requires during the construction opera- tions.
This particularly applies where the Contractor is required to work in an area where the Employer needs to continue working, or when he requires an existing facility to be maintained. This clause establishes a procedure for the Employer to recover from the Contractor any additional costs he incurs due to the Contractor failing to meet the Condition required by the Key Date.
Fo on Lo Subcontracting 26 In the case of proposals for subcontracts for small amounts of technically simple du ou work, acceptance by the Project Manager may be a formality. No provision is included in the ECC for nomination of Subcontractors.
This is ca thb because of the legal and practical problems of accountability which frequently ensue. The principle of the ECC is that the Contractor is fully responsible for tio a every aspect of managing the work he has contracted for hence Clause Alternatives to nominating Subcontractors whilst achieving similar objectives are l u Un a making the Contractor responsible for all work; he may then subcon- se iv tract parts and the Project Manager retains some control over the identity of the Subcontractors provided any withholding of acceptance on esi is for the reason stated, b providing for separate contracts, with the Project Manager managing ly ty the time and physical interfaces between them, c including lists of acceptable Subcontractors for particular tasks in the Works Information.
Where national or international law requires, the Works Information should include a statement of award criteria for subcontracts. Acceptance of a Subcontractor cannot be withdrawn later, providing his appointment complies with these clauses. However, in overseas contracts or where the requirements of a particular industry make the NEC subcontracts inappropriate, the Project Manager may accept other subcontract conditions being used see also explanatory notes on Clauses The contract is silent about the Contractor obtaining approval from outside bodies to other aspects of his work such as road closures or access for major items of Equipment.
It is important that these instructions are given within the limits and for the reasons expressly stated. If, for any reason, the Contractor disagrees with an instruction, his remedy is not to refuse to obey the instruction, but to follow the dispute resolution procedure chosen for the contract Option W1 or Option W2.
In most European countries there is considerable legislation relating to health Fo on and safety on construction sites. This legislation is regularly being increased Lo in scope. Generally, the sanctions for non-compliance are criminal in nature as opposed to civil.
It is not appropriate or necessary to reproduce or to re S nd summarise this legislation in contract documents. The various parties each have their obligations under statute and the general law. These requirements are stated in the Works Informa- tion since they affect how the Contractor is to Provide the Works and are in tio a parallel with statutory obligations. These requirements may include such matters as na nk.
This can be achieved by setting down the processes to be followed in an Option Z clause. Especially under Option F, detailed procurement procedures should be stated clearly, preferably in a Z clause.
These should include such matters as. Option F: Management contract Providing the Works 20 The effects are shown in the table below. Provision of Site services tio a design two to be done by.
Construction and. If this is not done, the work would have to be subcontracted or its price covered by the Fee. Instead, the starting date and the completion date are given in the Contract Data.
The starting date is the date when the Contractor can start work, but not on Site see Clause Both starting date and completion date may be adjusted by agreement before the Contract Date. For many contracts, the period between the starting date and the completion date is decided by the Employer, enabling the completion date to be inserted in the Contract Data before inviting tenders. Alternatively, the completion date may be decided by the tenderers and Fo on submitted as part of their offers.
If this is done, Employers should make clear Lo how tenders are to be assessed, indicating the value to be placed on an early re S completion date. Again in such a case, the basis of assessing tenders should be made clear to ca thb the tenderers. Even if the extent of the work is uncertain, which na nk may be the case in a cost reimbursable contract, a time should be stated based on a stated assumed amount of work. If this is not done, extension of l u Un time and delay damages provisions cannot be applied.
The access se iv dates are stated in the Contract Data. The programme 31 The programme is an important document for administering the contract.
It enables the Project Manager and Contractor to monitor progress and to assess the time effects of compensation events, including changes to the Completion Date. Employers may wish to have programmes submitted with tenders in order to judge whether a tenderer has fully understood his obligations and whether he is likely to be able to carry out the work within the stated time, using the methods and resources he proposes.
Any doubts on these matters can then be resolved after submission of tenders. Failure to accept a revised programme does not require the Contractor to stop work. The following notes are broadly in the same order as the bullets in the clause. The dates stated in the Contract Data or changed in accordance with the contract see explanatory notes on Clauses The work of the Employer and Others. The dates when the Contractor plans to complete work for which Key Dates apply see explanatory notes on Clause These allowances are owned by the Contractor as du ou part of his realistic planning to cover his risks.
It follows that they should be retained in the assessment of any delay to planned Completion due to tio a the effect of a compensation event. It is normally available to accommodate the l u Un time effects of a compensation event in order to mitigate or avoid any delay to planned Completion.
However, in accordance with Clause Any delay to on esi planned Completion due to a compensation event therefore results in the same delay to the Completion Date. See further explanatory notes on ly ty Clause It is important that the time risk allowances included by the Contractor in a programme submitted for acceptance are realistic.
If they are not, the Project Manager may refer to the third bullet of Clause The programme is to show the dates when the Contractor will need access and other things to be provided to him by the Employer and also information from Others. The penultimate bullet of Clause As the work progresses, the statement may be revised to show more detail and any changes he proposes for acceptance by the Project Manager see explanatory notes on Clause The Employer should ensure that the Works Information states the opera- tions for which he requires detailed method statements.
This requirement should be limited to operations where the method of construction and the design of the Equipment to be used are crucial if the design of the works is not to be put at undue risk.
Where there is a large amount of Contractor design, it may be appropriate for the Works Information to require an increasing amount of detail to be shown on the programme as the design is developed. Any failure by the Project Manager to accept a programme for reasons other than those noted is a compensation event Clause The Project Manager is required to respond within two weeks, but if the reply is non-acceptance the Contractor is required to re- submit, within the period for reply. Revising the programme 32 It should record the actual progress achieved on each operation and the repro- gramming of future operations.
It should also show the effects of implemented compensation events. The revised programme Lo should also show proposals for dealing with delays, Defects and any changes the Contractor wishes to make. He should be prepared to accept a programme with earlier dates if this is acceptable to the Employer. Access to and use of 33 on esi the Site In many cases it may be possible to ly ty give access to the whole Site on the starting date.
In other cases, particularly where there are several contractors on the Site, this may not be possible. The Contractor must then programme his activities according to the dates when he can have access. The Contractor may not require access on the dates stated in the Contract Data, in which case he should show on his programme the later dates. These then supersede those in the Contract Data and become obligatory on the Employer.
Instructions to stop or not 34 to start work An instruction given constitutes a compensa- tion event Clause In certain circumstances, if the Project Manager fails to instruct the re- start of work within thirteen weeks of instructing work to stop, either Party may be entitled to terminate the contract under Clause If so, this should be stated in the Contract Data. For example, the work in this contract may be part of a larger scheme such that there is no advantage to the Employer in its early completion.
If the Contract Data is silent on this, the Employer is required to take over the works within two weeks of Completion. If Option X5 is included in the contract and the works are divided into sections, Completion of a section results in the Employer having to take over the section within two weeks of its Completion. The Employer is then responsible for providing access so that the Contractor can correct Defects, which will include completing outstanding work Clause If the Fo on Lo Project Manager is concerned that delay which has already occurred may result in the Completion Date or a Key Date not being achieved, he can re S nd instruct the Contractor to produce a revised programme under Clause Acceleration cannot be imposed on the Contractor without his agreement.
However, the programme may contain more operations than the Activity Schedule has activities. It is also possible that the Activity Schedule contains more activities than the number of operations in the programme. There should always be correlation between the programme and the Activity Schedule, whether the Accepted Programme is in the Contract Data i.
This correlation should be kept up to date as the job proceeds. Correlation is best achieved by adding to the Activity Schedule the relevant programme operation references. Example of good correlation: The actions are the same as when the Project Manager implements a compensation event Clause Options E and F Acceleration 36 These standards provide the basis on which the existence of a Defect is judged Clause Quality systems If quality systems are required in a project, they should be initiated by the Employer at an early stage, such as at the early design stages.
This is a compensation event under Clause Such instructions should specify details of the test. Before payment for or marking of Equipment or Plant and Materials Clause Before delivery to the Working Areas Clause Before Completion. The Works Information should state which tests have to be passed before Completion.
The Works Information should state the tests to be passed before these dates. After take over but before the defects date. In the case of process plants, they may involve production materials which the Employer may need to have under his direct control. It is possible that the completed parts of the works may be put into operation by the Employer before completing his own tests.
This provision does not apply to tests which have to be repeated due to discovery of a Defect. Failure by the Supervisor to carry out his tests promptly is a compensation event Clause Where tests are to be The Works Information should state the location of each test if it is not to be done carried out within the Working Areas. Items which may come into this category include heavy structural units, mechanical and electrical plant, computer and other proprietary equipment.
Who does the test The Works Information should specify who is responsible for carrying out each Fo on test or for arranging for it to be carried out. The choice will be between the Lo following. The Contractor, including his Subcontractors and suppliers. Where the Contractor is to arrange for a test to be carried out by an independent or du ou public authority, the Works Information should include the name of the authority, the tests and the form in which the results are to be supplied.
The Supervisor. The required items may include the following. Samples of materials to be tested. These are normally provided by the Contractor, his Subcontractors or suppliers. Testing apparatus, test loads, measuring instruments.
These could be se iv provided by the Employer, the Supervisor or the Contractor including his Subcontractors or suppliers or hired from an independent or public authority. Testing facilities such as a Site laboratory normally provided by the Contractor but sometimes by the Employer or laboratories off-Site ly ty normally those of an independent company or authority. Services for the tests water, electricity, air, steam, etc. Materials for use in the tests including performance tests — normally provided by the Employer or by a specialist Subcontractor or supplier.
Fuel for the tests gas, coal, oil, etc. Provision and disposal of production materials — normally provided or disposed of by the Employer. Types of tests may include the following. Checking setting out, line, level, verticality. Measuring movements, settlement and soil characteristics in earthworks. Testing the structural, mechanical or pressure resisting strength of Plant, piping systems, structures or other parts of the works.
Testing the performance, accuracy and reliability of control systems and associated instruments and servo-mechanisms incorporated in the works. Testing the reliability, safety and effectiveness of electrical, mechanical and other systems incorporated in the works. Lo The Contractor and Supervisor are each required to give the other advance re S nd notice of tests which each is to carry out. This enables both parties to be fully informed and to take any action they wish to take.
If, for example, testing du ou reveals that some work does not comply with the Works Information, early discussion of the consequences is likely to be required.
Any repeat test or inspection of work after a Defect has been corrected is not a compensation event. The early warning procedure Clause 16 requires early discussion of the matter. Possible solutions include changing the Works Information after redesign or accepting the Defect Clause If unnecessary delay occurs a compensation event results Clause Some payments to the Contractor may be conditional upon doing particular tests to show that the work has been carried out satisfactorily.
If the Supervisor causes unnecessary delay, such payments may become due after the defects date whether or not the tests are carried out. There is there- fore no need to have separate clauses in the conditions of contract or add Z clauses to deal with different types of test. Many combinations of tests may be required for process Plant and it is not practical for the conditions of contract to prescribe particular tests. The Employer must state in the Works Information what tests are required see notes on Clause For a typical ECC contracted process Plant the testing regime would be as follows.
Manufacture During manufacture various tests would be carried out in the factory. Erection on site Following erection on site, static alignment, electrical and mechanical re S nd and basic process automation tests stated in the Works Information will be performed Clause If the Plant passes the tests and all other work required to achieve ca thb Completion is done, then take over may proceed.
If the Plant fails then a Defect exists and is corrected Clause After take over After take over, performance tests are carried out also under Clause na nk The Employer and Contractor provide facilities, etc. If the Plant passes, the Contractor has met his obligations in this respect.
If Option X17 low performance damages is used and the perfor- mance is low, but within the levels stated in the Contract Data, low ly ty performance damages are paid by the Contractor. If the performance is low and either X17 has not been used, or the failure is outside the limits of X17, a Defect exists and is corrected Clause If the Employer is willing to accept the Defect, a price reduction may be agreed Clause If the Employer is unwilling to accept the Defect and the Contractor cannot correct it, the Project Manager assesses the cost of having the Defect corrected by Others, which is paid by the Contractor Clause It is useful to include in the Works Information a schedule tabulating details of the tests to be done at different stages of the works with cross-references to the relevant sections of the Works Information containing the detailed procedures.
Testing and inspection 41 before delivery A fault in a design provided by the Employer is not a Defect. He may decide to change the design and instruct the Contractor accordingly. This would constitute a change to the Works Information, which would be a further compensation event Clause If the defect is due to non-compliance with the Works Information, it is a Defect and does not result in a compensation event. Whether or not such tests are compensation events is determined using Clause Normal practice for most civil engineering du ou and construction contracts in the United Kingdom would be a period of 12 months.
For process plant, longer periods, commonly 3 years but up to 7 or ca thb even 10 years in special circumstances, may be appropriate. The defects date is the earliest date when the Contractor ceases na nk to be liable under the contract for the correction of Defects. He therefore needs to correct Defects in time to avoid delaying.
In effect, the Contractor is free to decide when he should correct Defects to avoid delaying these dates refer to Figure 3. The defect correction periods, stated in part one of the Contract Data, only affect the timing of correcting Defects after Comple- tion. Provision is made in the Contract Data format for different lengths of defect correction period appropriate for different types of Defect.
The length of the defect correction period for each type of Defect to be given in the Contract Data depends on. An example of a high degree of urgency for a Defect to be corrected would be one found after Completion which prevents the Employer from using the works. The defect correction period for such a Defect should be stated in the Contract Data part one to be short. If the Contractor is then unable to comply, the Employer is allowed to have the Defect corrected by other people and recover the incurred cost from the Contractor see explanatory notes on Clause The purpose of the last sentence re S nd is to preserve the liability of the Contractor for undiscovered Defects.
The clause also tio a states that the defect correction period does not start until access and use have been provided. This clause gives a procedure within the contract for accepting a on esi Defect in these circumstances.
Either the Contractor or the Project Manager may propose a change to the Works Information solely to avoid the need to ly ty correct a Defect. The other is not obliged to accept the proposal. In some cases the reduction may be nominal. For example, a nominal price reduction may be acceptable if the effect of the change to the Works Information is not detrimental and if the alternative of correcting the Defect will reduce the likelihood of prompt Completion.
If the quotation is not acceptable, no further action is necessary. If the quota- tion is accepted by the Project Manager, the Works Information, the Prices and the Completion Date are changed accordingly. Such a change to the Works Information is not a compensation event Clause In terms of liability, the consequences are the same as for other changes to the Works Information.
The assessment of the cost of having a Defect corrected by other people does not trigger an assessment under Clause This means that most of such amounts accumulate until the defects date unless there has been Completion of a section of the works and a defect correction period ends before Completion of the whole of the works. This is one of the reasons for the retention arrangement. Quite a high percentage retention should be set in these circumstances because its main purpose is to cover the cost of dealing with uncorrected Defects after Completion.
This may be lower than that assessed in Clause It will re S nd rarely, if ever, be higher, given that the Contractor could also employ Others to correct the Defect in When used in conjunction with the core clauses in Section 5 they establish the payment mechanism for each main Option.
The use made of the Prices varies between the main Options. The effect of a compensation event may be to extend the duration of an activity or group of activities so that its completion is delayed. The delay may result in a delay to payment if the activity completion occurs after the assessment date by which the activity was originally expected to have been completed.
In deciding whether to agree to this, the Project Manager should take account of the extent to which the Contractor is collaborating through the early warning procedure and by keeping the Accepted Programme up to date.
He should also take account of any delays to the activity or overall programme which are Fo on the fault of the Contractor. In this way, the Contractor is paid for the actual quantities of work done, not those in the original bill of quantities. Option B is therefore a re-measurement contract. It on esi can be used for building contracts where re-measurement is not traditional. Why not share!
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