NEC3 Practical Solutions

Contents Preface xii
Abbreviations xiii
About the authors xiv
1 General 1
1. Dealing with head office overheads in the TSC (clause 11.2(5) 1
2. What is Site Information? (clause 11.2 (16) 2
3. What is a Subcontractor? (clause 11.2 (17) 4
4. Are in-house designers Subcontractors? (clause 11.2(17) 5
5. How do we sign the contract? (clause 12) 6
6. Mutual agreement to revise the Activity Schedule (clause 12.3) 7
7. Instructing an additional section of the works (clause 12.3) 8
8. Should we consolidate tender documentation? (clause 12.4) 9
9. What is the status of verbal instructions? (clause 13.1) 10
10. Can you confirm verbal instructions? (clause 13.1) 11
11. Should we act on verbal instructions? (clause 13.1) 12
12. Can the Supervisor be the Project Manager? (clause 14) 13
13. Do we approve or accept? (clause 14.1) 14
14. Could extensive Project Manager’s instructions render our
contract void? (clause 14.3) 15
15. What is the interaction of early warnings, the Risk Register and
compensation events? (clause 16) 16
16. What do we do about the late notification of early warnings?
(clause 16) 17
17. How do we deal with the lack of early warning notifications?
(clause 16) 18
18. How do we deal with ambiguities in the ECSC (clause 17) 20
2 The Contractor’s main responsibilities 23
19. Refusing to do what the Works Information requires
(clause 20.1) 23
20. Who is responsible for design? (clause 21.1) 24
21. Requesting more design information (clause 21.1) 25
22. Proceeding with the work prior to acceptance (clause 21.2) 26
23. Requesting the design of Equipment (clause 23.1) 27
24. Changing key people (clause 24.1) 28
25. Not providing services and other things as stated in the Works
Information (clause 25.2) 29
26. Missing a Key Date (clause 25.3) 30
27. Quality control of the supply chain (clause 26.2) 31
28. Working with Others (clause 27.1) 32
3 Time 35
29. Can a Completion certificate also be a payment certificate?
(clause 30) 35
30. Has Completion been archived? (clause 30.2) 36
31. What goes onto the first Accepted Programme? (clause 31) 37
32. Incorporating a programme into Subcontract Works Information
(clause 31) 39
33. Programme float and time risk allowances (clause 31) 41
34. What becomes of a tender programme? (clause 31) 42
35. What do we do if the programme shows a wrong date?
(clause 31) 43
36. Problems with a programme submitted at tender stage
(clause 32) 45
37. Lack of acceptance of programmes (clause 32) 48
38. Showing non-implemented compensation events on a
programme (clause 32) 49
39. Take over and effect on liability (clause 35) 50
40. An Employer’s risk? (clause 35) 51
41. Damage by Others after take over (clause 35.2) 52
42. Where use of the works may not constitute take over
(clause 35.2) 53
43. The interaction of take over, Completion and delay damages
(clause 35.2) 55
4 Testing and Defects 59
44. Frustrated Supervisor! (clause 40.1) 59
45. What does ‘unnecessary’ mean? (clause 40.5) 60
46. Charging costs incurred for repeating tests and inspections
(clause 40.6) 61
47. Is there a snagging list? (clause 42.2) 62
48. Pro forma for latent Defects (clause 42.2) 63
49. Constraints in the Works Information (clause 42.2) 64
50. Dealing with a Defect (clause 43) 65
51. Dealing with Defects after Completion (clause 43) 66
52. No operational and maintenance manuals! (clause 43) 67
53. Disputing the Defect (clause 43) 68
54. Quality control in the ECC (clause 43) 69
55. Consequential costs of Defects (clause 43) 70
56. Defects arising after the Defects Certificate is issued (clause 43.3) 71
57. Accepting a Defect! (clause 44) 72
58. Not getting access to correct Defects (clause 45) 73
59. Whether the Contractor comes back or not (clause 45) 74
5 Payment 77
60. Making applications for payment (clause 50.1) 77
61. Calculating the final account (clause 50.1) 78
62. Assessing the amount due (clause 50.2) 79
63. Retaining money due to non-compliant programmes
(clause 50.3) 80
64. No compliant programme is ever submitted (clause 50.3) 82
65. Retaining monies when programme not accepted (clause 50.3) 84
66. Pay less notices and delay damages in the ECSC (clause 50.3) 85
67. Error in the ECSC Price List (clause 50.3) 86
68. Difference in payment periods between ECC and ECSC
(clause 51) 87
69. Can the Contractor owe money to the Employer? (clause 51.2) 88
70. Payment in the ECSC (clause 51.2) 89
71. Can we add corporation tax into the Fee? (clause 52.1) 90
72. Passing on discounts (clause 52.1) 91
6 Compensation events 93
73. Omitting work under ECC Option A (clause 60.1(1)) 93
74. Inconsistence in the Works Information (clause 60.1 (1)) 94
75. Why is accepting a Defect not a compensation event?
(clause 60.1(1)) 95
76. Are compensation events claims? (clause 60.1) 96
77. Stopping the work (clause 60.1 (4)) 97
78. Dealing with Others (clause 60.1 (5)) 98
79. Late decisions (clause 60.1 (6)) 99
80. Objects of interest (clause 60.1 (7)) 100
81. Not accepting the design (clause 60.1 (9)) 101
82. Tests and inspections that the Works Information requires
(clause 60.1 (10)) 102
83. Unnecessary time for tests and inspections (clause 60.1(11)) 103
84. Interpreting physical conditions (clause 60.1 (12)) 104
85. Underground mine workings? (clause 60.1 (12)) 105
86. What are physical conditions? (clause 60.1 (12)) 106
87. Weather risk (clause 60.1(13)) 107
88. Take over (clause 60.1 (15)) 108
89. Assumptions made by the Project Manager (clause 60.1 (17)) 109
90. Prevention? (clause 60.1 (19)) 110
91. Poor Site Information (clause 60.2) 111
92. Mistakes in a Bill of Quantities (BoQ) (clause 60.6) 112
93. Error in the Bill of Quantities caused by the Contractor
(clause 60.6) 113
94. The difference between clauses 61.1 and 61.2
(clauses 61.1 and 61.2) 114
95. The time bar under clause 61.3 (clause 61.3) 115
96. Project Manager’s failure to respond (clause 61.4) 116
97. The link between early warnings and compensation events
(clause 61.5) 117
98. Compensation events after Completion (clause 61.7) 118
99. Additional work after Completion (clause 61.7) 119
100. Obtaining different quotes for the same compensation event
(clause 62.1) 120
101. Updating for remaining work (clause 62.2) 121
102. Proposed changes to which programme? (clause 62.2) 122
103. Accepting quotations in a timely manner (clause 62.3) 123
104. Failing to respond (clause 62.3) 124
105. What programme should we use when assessing the impact
of compensation events? (clause 63.1) 125
106. Using the SSCC for Subcontractor’s costs (clause 63.1) 126
107.Forecasting the Defined Cost (clause 63.1) 128
108. Using the direct fee percentage (clause 63.1) 129
109. Recovering cost of additional Site staff (clause 63.1) 131
110. Charging for staff time in a compensation event (clause 63.1) 132
111. People costs in compensation event quotation (clause 63.1) 133
112. Are compensation event quotations based on actual cost?
(clause 63.1) 135
113. Compensation event quotations and Subcontractors
(clause 63.1) 136
114. People not working in the Working Areas (clause 63.1) 138
115. Extensions of time? (clause 63.3) 139
116. Dominant cause of delay (clause 63) 140
117. How does the contract deal with multiple programmes that
have not been accepted? (clause 63) 142
118. Including risk in compensation events (clause 63.6) 144
119. Inconsistencies in the Contractor’s Works Information
(clause 63.8) 145
120. Unclear Works Information (clause 63.8) 146
121. Contractor not assessing compensation events (clause 64.1) 148
122. When is a compensation event ‘implemented’? (clause 65.1) 149
123. What is an implemented compensation event? (clause 65.2) 150
124. Having your cake and eating it! (clause 65.2) 151
125. Can you change an accepted quotation for a compensation
event? (clause 65.2) 152
7 Title 153
126. Does title mean ownership? (clause 70) 153
127. Vesting Plant and Materials (clause 70.2) 154
128. Title to materials from excavation (clause 73.2) 155
8 Risks and insurance 157
129. Weather … it’s a compensation event (clause 80.1) 157
130. A Hypothetical situation (clause 80.1) 158
131. Copper theft! (clause 80.1) 159
132. Is terrorism a compensation event? (clause 80.1) 160
133. Take over versus Completion (clause 80.1) 161
134. How to define take over (clause 80.1) 162
135. Insurance of existing buildings (clause 84.2) 163
136. Damage caused during a search (clause 84.2) 164
137. Accepting insurance policies (clause 85) 165
138. Failing to provide insurance certificates (clause 85) 166
9 Termination 169
139. Is there a standard ECC termination certificate? (clause 90) 169
140. Is there a standard TSSC termination certificate? (clause 90.1) 170
141. Can you terminated due to poor performance? (clause 91) 171
142. Can we use Reason 21 termination due to minor earthquake?
(clause 91.7) 172
143. Can you terminate for convenience? (clause 93.2) 173
10 The Options 175
144. W1 or W2? (options W1 and W2) 175
145. W1 or W2, which do I use? (options W1 and W2) 176
146. Subcontracting and inflation (Option X1) 177
147. Indices calculations (Option X1) 178
148. Adjusting for the price adjustment (clause X1.5) 179
149. I think I’ve found a drafting error! (Option X2) 180
150. Is this a change in the law? (option X2) 181
151. Applying X2 (Option X2) 182
152. Paying in different currencies (Option X3) 183
153. Parent company guarantee (Option x4) 184
154.Is there a standard parent company guarantee form?
(Option X4) 185
155. Defining sectional completion (Option X5) 186
156. How is sectional Completion confirmed? (Option X5) 187
157. Sectional Completion – effects of delay (Option X5) 188
158. Defects date running from Completion of the whole of the
works (option X5) 189
159. How to calculate the bonus (Option x6) 190
160. Applying delay damages (Option X7) 191
161. Dealing with late Completion (Option X7) 192
162. Delay damages and take over (Option X7) 193
163. Delay damages and gain share (Option X7) 194
164. Applying partnering principles (Option X12) 195
165. Getting performance bonds in place (Option X13) 196
166. Paying in advance (Option X14) 197
167. Delayed advanced payment! (Option X14) 198
168. Design liability (Option X15) 199
169. Reasonable skill and care (Option X15) 200
170. Subcontractor retention (Option X16) 201
171. Retention percentage (option X16) 202
172. Exceeding the retention amount (Option X16) 203
173. Deciding the retention-free amount (Option X16) 204
174. Release of retention (Option X16) 205
175. How to draft low performance damages (Option X170 206
176. Limiting the liability (Option X18) 207
177. End of liability date (Option X18) 208
178. Providing incentive (Option X20) 209
179. Using X20 (Option X20) 210
180. Is a ‘day’ a day? (Option Y(UK)2) 211
181. The purpose of Y(UK)3 (Option Y (UK)3) 212
182. Preparing quotations for compensation events (clause 11.2(22)) 213
183. Increase of resources by the Contractor (Option C) 214
184. Disallowed Cost (Option C) 215
185. Productivity of resources (Option C) 216
186. Accrued cost in an application for payment (Option C) 218
187. The use of the Activity Schedule (Option A) 219
188. Items on a Activity Schedule not undertaken (Option A) 220
189. Additional management staff (Option C) 221
190. Revising the Activity Schedule not undertaken (Option A) 222
191. Interest paid to a Subcontractor (Option C) 223
192 What are the Contractor’s share payment timings?
(clause 53.3) 224
193. Purpose of Z clauses (Option Z) 225
194. Deletion of clause 63.8 (Option Z) 226
195. Reducing the time bar (Option Z) 227
196. Deleting physical conditions and weather (Option Z) 228
197. Complying with the law (Option Z) 229
198. Stepping down Z clauses (Option Z) 230
199. Mutual trust and co-operation (Option Z) 231
200. Spirit of the contract (Option Z) 232
201. Amending a core clause (Option Z) 233
202. Replacing sentences (Option Z) 234
203. Protecting clients (Option Z) 235
204. Using other main Option clauses? (Option Z) 236
205. Valid Z clauses? (Option Z) 237
11 Schedules of Cost Components 239
206. Time working with the Working Areas (SCC item 1) 239
207. Can we recover congestion charges? (SCC item 13 (a)) 240
208. Meeting the requirements of the law (SCC item 13) 241
209. Using estimated staff costs (SCC item 13) 242
210. Payment for pension shortfall (SCC item 13) 243
211. Dealing with medical expenses (SCC item 13) 244
212. Hand tools not powered by compressed air (SCC item 44) 245
213. Do we get the Working Areas overheads on top of
Subcontractors’ costs? (SCC item 44) 246
214. Is security in the Working Areas overheads percentage?
(SCC item 44) 247
215. How is a security guard paid for? (SCC item 44) 248
216. Working Areas overheads percentage on people (SCC item 44) 249
217. What does ‘services’ mean in the SCC (SCC item 44) 250
218. Using the SCC Working Areas overheads percentage
(SSCC item 44) 251
219. Damage to Equipment (SCC item 7) 252
220. Damage to vehicles (SCC item 7) 253
221. Can we recover the costs of transport for people?
(SCC item 1) 254
222. Cost of people in the SSCC (SSCC item 1) 255
223. Which SSCC Equipment rates do we use? (SSCC item 2) 256
224. Cost of Equipment standing (SSCC item 2) 257
225. Using the percentage for people overheads (SSCC item 41) 258
226. Using the SSCC percentage for people overheads
(SSCC item 41) 259
227. Using the percentage for design overheads (SSCC item 6) 260
12 Contract Data 263
228. What services are in the PSC Scope? (Contract Data) 263
229. Who is Mr I Judge? (Contract Data) 264
230. How do you describe the Affected Property? (Contract Data) 265
231. Incomplete Contract Data (Contract Data) 266
232. Do we need to name the Project Manager? (Contract Data) 267
233. Works Information versus the works (Contract Data) 268
234. Best practice in drafting in the Contract Data (Contract Data) 269
235. The period for reply (Contract Data) 270
236. Responding quicker than the period for reply (Contract Data) 271
237. Contractual significance of the Risk Register (Contract Data) 272
238. The defects date versus the defect correction period
(Contract Data) 273
239. Does the defects date change? (Contract Data) 274
240. Optional statements – what are they? (Contract Data) 275
241. Defining key people (Contract Data) 276
242. Modelling the Contract Data part two rates and percentages
(Contract Data) 277
243. Option statements (Contract Data) 278
244. Completing the Contract Data (Contract Data 279
245. Changes to the Contract Data part two percentages
(Contract Data) 280