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We can always learn something new, and that’s exactly what we decided to search for: Interesting answers to questions we didn’t know we had. Let’s check it out!
A compensation event was implemented when the PM notified his assessment of a compensation event. He later found that his assessment had used the wrong fee % and he wishes to revise the assessment to correct this mistake.
All the published advice seems to rely on clause 65.2 to prevent a compensation from being revised. This clause prevents a compensation event, once implemented, from being revised if a forecast upon which it is based is shown by later recorded information to have been wrong. This does not apply to this situation. The PM is not revising the forecast, i.e. the work not yet done when the compensation event was assessed in accordance with clause 63.1. He simply wishes to apply the correct fee % set down in the Contract Data.
Whilst the contract is silent about correcting mistakes, I believe that there is little that a contractor could do if the PM revises his assessment for this reason. If challenged through adjudication, an adjudicator would almost certainly decide that the PM's revised assessment is correct because it complies with the contract by applying the correct fee %. Would you agree?
“I think you answered your own question very well. If it was a clear mistake by using the "wrong fee %" as opposed to the "correct fee %" stated in the Contract Data, there is no basis for dispute. The PM is not re-assessing the Defined Cost. He is merely correcting an administrative mistake. Clause 10.1 is clear we shall act as stated in the contract. The PM didn't by making the mistake. He is obliged to correct it. Clause 61.3 dictates the method for assessment. Clause 11.2(8) states what the Fee is. Hence the PM is not authorised to use an incorrect fee %”.
Jaco de la Rey - Logistics Manager at JH de la Rey Transport
If a revised programme shows a later completion date than that agreed at contract award, would accepting the programme change the contract completion date?
Works completing later than planned are usually caused by both contractor and employer delays. Therefore, the later completion date on the revised programme is not always solely caused by the employer's actions/inaction.
Does accepting the revised programme, result in delay damages only being applied from the completion date shown in the revised programme?
“Accepting a revised programme does not change the Completion Date. This is why the contract calls for a separate planned Completion and Completion Date(clause 31.2), which allows the Contractor to show the reality (planned Completion) versus the potential liability (Completion Date). The Project Manager can then accept the programme (as a logical sequence of activities and duration's that fully complies with the contract) but not worry at that point about the liability of why planned Completion has changed. This will be assessed as part of the compensation event process. Clause 14.1 makes it pretty clear on what the acceptance of anything by the Project Manager means in terms of liability and is a very important clause.
For example, a Contractor issues a programme with planned Completion two weeks beyond the Completion Date. This may be as a result of Contractor problems which are their own risk, or due to the affects of Project Managers Instructions that are compensation events which have been instructed but not yet been implemented (i.e. agreed in terms of time and/or cost). Either way, the Project Managers acceptance of the programme does not accept any liability and there is no change to Completion Date at that point. The only time the Completion Date moves is if a compensation event is agreed as having time as well as cost when implemented. In this example, if a compensation event gets implemented(agreed) at £XX.00 with a two-week affect on the critical path, then at that point the Contractor can move the Completion Date by two weeks which then hopefully catches up with planned Completion.
Any project will invariably have both Contractor and Employer delays. The key is to be regularly updating the programme with progress and change as it happens so that you can see the cause and effect of delays as they occur, and how they contractually, therefore, affect the two milestones highlighted above. In very simple terms you assess the delays in the order that they occur, and the effect they have on other activities should be relatively clear. That does, of course, assume/depend that you have a good well thought out fully detailed programme that is regularly updated to capture things as they occur, which is exactly what the contract is trying to promote particularly with the programme clauses.
Delay Damages become applicable when the Contractor exceeds the Completion Date – which can only be extended from that identified in contract data part 1 by implemented compensation events”.
Glenn Hide – Director, GMH Planning
Using standard ECC is it reasonable to assume the Supervisor duties will include supporting the PM in reviewing, commenting, accepting proposed materials and working processes?
“In short - No! The role of the Supervisor is pretty much solely to monitor that the works are carried out in accordance with the Works Information, identify defects and get involved with tests and inspections. The only instruction the Supervisor can specifically give under the contract is to uncover works if they believe a defect may exist. On a practical level, they may assist the PM more, and may even have delegated powers from the Project Manager, but otherwise, that is the limit of their responsibility under the contract”.
Glenn Hide – Director, GMH Planning
“They are events which affect Prices, the Completion Date or a Key Date and do not arise from the Contractor’s fault. Under other contracts, they would typically be called claims, changes, variations, etc. These events entitle the Contractor to be compensated. A list of compensation events is in core Clause 60.1.”
Chris Corr – Director, Built Intelligence
If the Client (PM) rejects the proposed CE, what would be the correct steps to take, if I believe that they are wrong?
- re-notify it is a CE giving better/clearer reasons/demonstration why it definitely is a compensation event and see if they agree, and if still no go either to point 2 or 3 below
- accept that they are right and give up and go and open a bottle of wine to console yourself and
- go to adjudication and try to get that decision overturned, and if you win, open a bottle of wine to celebrate, or if you lose open a bottle of wine to commiserate (if you can afford one at that point).”
Glenn Hide – Director, GMH Planning
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