Q1.
A new hotel is being built under an ECC Option D.
The Contractor is proceeding extremely well and ultimately
finishes some 8 weeks early. However, the Client does not want
the building early but did not include the ‘Client is not willing to
take over the works prior to the Completion Date’ optional entry
in Contract Data part one.
a. How should the Project Manager advise the Client in terms of
its obligations. What else would the Project Manager need to
do? [7 marks]
The Project Manager should advise the Client that without the optional
entry in Contract Data part one stating "Client is not willing to take over
the works prior to the Completion Date", the Client cannot refuse to take
over the completed works. This is in accordance with Clause 35.2, which
states that the Project Manager certifies Completion once the Contractor
has achieved Completion as defined in the Works Information. According
to the Clause 30.2, the Project Manager must issue the Completion
Certificate within one week of the works achieving completion, regardless
of whether this is before the planned Completion Date. The Client has a
contractual obligation to take over the works once the Project Manager
certifies Completion.
The Project Manager should make arrangements for the handover of the
completed works to the Client, ensuring all necessary documentation and
keys are transferred. Inform the Client that the Defects Liability Period will
commence from the date of Completion as per Clause 43.1. The Project
Manager should also ensure that the Contractor addresses any defects
The Project Manager should prepare for any necessary final payments to
the Contractor, considering the early completion and any associated costs
or savings.
Five weeks after Completion has been achieved,
the Client decides that it wants the car park extending and the
original Contractor to do this work.
b. Can the Project Manager instruct additional work after
Completion and can the Contractor refuse? [6 marks]
The Project Manager can indeed instruct additional work after Completion
under Clause 60.1(1), which refers to a change to the Works Information.
The new requirement to extend the car park would be considered a
change to the Works Information. This would be handled as a
Compensation Event, and the Project Manager would issue an instruction
to change the Works Information under Clause 14.3.
While the Project Manager can instruct additional work, the Contractor has
the right to refuse this instruction. According to Clause 19.1, if the
Contractor believes that the change is not within the scope of the
contract, they can notify the Project Manager of this belief. The Contractor
may also refuse if the new work constitutes a significant change to the
original contract or if it impacts their ability to complete other contractual
obligations.
In this scenario, it would be prudent for the Project Manager to discuss the
proposed changes with the Contractor and reach an agreement before
issuing the instruction. If the Contractor agrees, a Compensation Event
would be raised, and the contract would be adjusted accordingly to
include the additional work and any associated costs or time implications.
The original Contractor comes back to undertake the additional
work. The Client envisaged that the rates from the Bill of
Quantities would be used to assess the additional works.
However, the Contractor argues that they should not be used as it
has had to re-mobilise and therefore should be paid the actual
Defined Cost.
c. How should the additional work be assessed? [6 marks]
The assessment of the additional work should follow the principles
outlined in the NEC4 ECC Option D. Since the Contractor has had to re-
mobilize, the situation involves considerations beyond merely using the
rates from the Bill of Quantities.
Under Clause 63.1, the additional work should be assessed based on the
Defined Cost plus the Fee. The Defined Cost includes the actual cost of the
work, which encompasses resources, materials, and any additional
expenses incurred due to re-mobilization.
The extension of the car park is a Compensation Event (Clause 60.1(1)).
The assessment of the Compensation Event will be based on the actual
Defined Cost incurred by the Contractor (Clause 63.2). This would include
the costs associated with re-mobilizing, as these are legitimate expenses
that the Contractor has incurred to carry out the additional work.
The Project Manager will assess the quotation for the Compensation Event
provided by the Contractor. This assessment should ensure that it reflects
the true Defined Cost incurred, plus the Fee as per Clause 63.1. The
Project Manager should review the Contractor's cost records and verify the
accuracy of the Defined Cost claimed.
In summary, the additional work should be assessed based on the actual
Defined Cost incurred by the Contractor, including re-mobilization costs,
plus the applicable Fee. This approach ensures that the Contractor is fairly
compensated for the additional effort and resources required to complete
the work.
Completion has occurred, following which one of the boilers
installed by the Contractor stops working. The Client emails
the Project Manager asking that the Contractor be notified of the
Defect.
d. What should the Project Manager do in this instance? [2 marks]
The Project Manager should immediately notify the Contractor of the
Defect in writing, as stipulated in Clause 43.2. This ensures that the
Contractor is formally informed and aware of the issue. The Project
Manager should instruct the Contractor to correct the Defect within the
specified time, as per Clause 44.2. The Contractor is obliged to correct the
Defect without cost to the Client during the Defects Correction Period.
Having discussed the matter with the Contractor, it is established
that the 4 week defect correction period cannot be complied with
as the necessary spare parts for the boiler need to be ordered.
The Client is happy to accommodate a slight delay.
e. How can the Project Manager manage this within the contract?
[4 marks]
The Project Manager should discuss and agree on a new deadline with the
Contractor for correcting the Defect, considering the time required to
order and receive the necessary spare parts.
The Project Manager should issue a revised instruction under Clause 44.2,
specifying the new deadline for correcting the Defect. This revised
instruction should clearly state the reasons for the delay and the agreed-
upon new completion date for the Defect correction.
The Project Manager should document the agreement with the Contractor
regarding the new deadline and ensure that both parties sign off on this
agreement. This documentation will serve as a record of the mutual
understanding and commitment to the revised schedule.
