NEC4, Engineering and Construction Contract,

VERY IMPORTANT : You must explain the answer in accordance with the "relevant Clause " of NEC Contract!!

Question 2

A contract to construct a sports centre complex has been awarded under an ECC Option C. Secondary Options X2 and X7 have been incorporated.

The work is underway when the Contractor encounters a burst pipe which it did not cause and which requires immediate repair in order to prevent further damage to the rest of the works. The Contractor notifies a compensation event under clause 61.3. The Project Manager refuses to accept this as a compensation event stating that an early warning should have been notified initially. Any response referring to dispute resolution should identify whether Option W1, W2 or W3 applies as an assumption.

a. Is the Project Manager correct to take this approach? What options are available to the Contractor?

[7 marks]

Six months into the project, a change in law comes into effect. This is to do with electrical standards. The Contractor immediately notifies a compensation event. The Project Manager refuses to accept this because it was known about before the tender period but was not enacted.

b. Is the Contractor correct?

[2 marks]

Underground mine workings are uncovered by the Contractor. The Contractor decides to fill the voids with expensive concrete which is readily available. The Project Manager subsequently accepts that this is a compensation event but considers it could have been more efficiently dealt with by use of a weak mix concrete.

c. Upon notification of a compensation event how should the Project Manager respond and how should this be assessed? Is there any effecton payment?

[6 marks]

The most recent programme submitted by the Contractor forecasts that the works will not be complete before the Completion Date. This would be disastrous for the Client who has a number of high profile sports events booked. The Project Manager is put under pressure by the Client to not accept the latest programme submitted by the Contractor.

d. How should the Project Manager respond?

[5 marks]

The Contractor employs a new contracts manager who manages to mitigate the five week delay down to one. Ultimately, the project finishes one week late. The Client is delighted and agrees with the managing director of the Contractor that delay damages will not be deducted.

e. How should the Project Manager deal with a request from the Client to not deduct damages? What paperwork should be in place to formalise this agreement?

[5 marks]

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