In an ECC option C (target contract with activity schedule) the contractor has constructed some access metal work with mesh flooring which does not meet the standard required. The contractor has installed 43mm mesh instead of 45mm mesh. How should we proceed to get the work corrected and are there any circumstances where we should not pay for the existing non-compliant works?
Answer
To answer your question I will assume that the document that requires the mesh flooring to be 45mm forms part of the works information. If it does not, then it is probably not a contractual requirement and so cannot be enforced.
The installation of the 43mm mesh will be a defect, because it does not comply with the works information (first bullet, subclause 11.2(5))). The supervisor (not the project manager) should therefore notify the contractor of this defect (subclause 42.2). The contractor is then required to contract correct it under subclause 43.1. That has to be carried out before completion if it will prevent completion (subclause 11.2(2)), otherwise it has to be carried out in the contract data (subclause 43.2). If the contractor does not correct this within that period, then the project manager assesses what it will cost the employer to get it corrected by others and deducts that from the contractor (subclause 45.1).
As to payment, an option C contract basically shares the risk of the cost of correcting defects between the parties. The answer will therefore depend upon when the correction is carried out. If it is carried out after completion, then the cost of correcting it will be disallowed cost (fourth main bullet, subclause 11.2(25)). The cost will otherwise forma part of defined cost and is paid. Of course the employer is likely to recover a share of the payment when the share mechanism in clause 53 is later applied.
