We are currently advising a client on an ECC option C contract. The contract is now running substantially beyond the completion date, allowing for the implemented compensation events. For several months now, the contractor has submitted revised programmes that have not been accepted by the project manager on the grounds they are not practicable. The reason for non-acceptance is that the outputs shown have never been achieved. Despite writing to the contractor stating the reason for non-acceptance and asking how the contractor intends to address the issue, no reply has been received.
There have subsequently been further changes to the works information, causing more compensation events to arise. The contractor has responded to these by providing a quotation based on the latest accepted programme (no some 9 months out of date), and has stated that this is in accordance with subclause 63.3 of the contract. The contractor assessed the impact on the latest accepted programme, despite the primary cause for the delay to date not being the fault of the employer. The effect of this interpretation is that the contractor is claiming a period leading to revised completion date substantially greater than the time taken to undertake the activity required by the compensation event.
I can see no remedy within the contract for the failure of the contractor to submit an acceptable programme. On the basis that both parties to the contract are aware of the current progress to date on the latest accepted programme has now past (by several months) and – by the admission of the contractor – the delays are not due to the actions of the employer, how should the effect of compensation events be assessed in terms of time?
Answer
The answer to your question lies in subclauses 64.1 and 64.2 of the contract. We need, however, to look at other part of the contract first. You have rejected the contractor’s programme for a reason in the contract under subclause 31.3. In that case, when the contractor submits any quotation for a compensation event, you should reject it and make your own assessment – see the final bullet point of subclause 64.1. In making that assessment you can and should use your own assessm,ent of the programme – see subclause 64.2. It is just for problems such as this that subclauses 64.1 and 64.2 were designed to resolve.
