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NEC - Compensation Events

4 replies [Last post]
Fri, 2005-01-21 09:34
Joseph Roberts
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Cl: 32.1 of the ECC states that:

The Contractor shows on each revised programme
ยท The effects of implemented compensation events and of notified early warning matters,

Further Cl: 65.1 then states:

The Project Manager implements each compensation event by notifying the Contractor of the quotation which he has accepted or of his own assessment. He implements the compensation event when he accepts a quotation or completes his own assessment or when the compensation event occurs, whichever is latest.


From these statements it is my interpretation that the revised programme should not include those activities (and any change to the Completion Date) that are associated with the CE until the quotation has been accepted (i.e. Implemented).

While the contract clearly lays down a time table for preparation, assessment of Compensation events, experience has shown that this can be onerous and that the reality is that it can take much longer for the implementation (Cl65.1) to be reached.

As a result the situation may arise where by the revised programme continues to be submitted reflecting the original planned intent and not the plan incorporating the changes as a result of the CE. Again it is my interpretation that this is the correct approach in line with the contract mechanisms. However this in practice potentially leads to a programme that is of reduced value as a proactive tool for managing the works (as it does not reflect reality).

Discussion would be welcomed as to other peoples interpretation (and practical experience)or whether people believe the wording elsewhere imposes (or at least implies) a requirement to show the CE activities even if they are unagreed.
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Replies

Sun, 2013-04-28 14:52
#1
Russell Gareth Cl...
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I need help with adding compensation events to a schedule and then linking them to activities that will show an extension to the overall completion date of my schedule, the activities have already commenced but now i have to add compensation events to the ativity and show the time delay effect that it has now on the end date of the activity

 

 

Please help with advice

 

Regards

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Wed, 2011-01-26 09:09
#2
Gary Whitehead
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I totally agree with Damian.

 

I don't have a copy of the clauses with me, but I believe you are required to show all implemented CEs on the programme, but not banned from showing unimplemented CEs -just don't link them to your completion date.

You are certainly required to submit (and PM should reject if you don't) a programme which is realistic. So if not including unimplemented CEs makes the programme unrealistic, this is clearly the wrong thing to do.

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Wed, 2011-01-26 04:22
#3
Damian Smith
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Joseph

You are correct in what the document say, but you will be silly not to so the impact of the Compensation Event.

I have been told to do this in the past.

Show the CE as if it were impacting, and rather than changing the Completion date milestone, inset a new milestone called "Potential Completion date" and link your CE to this milestone and your planned completion.

That way you can submit a fully upto date programme with the correct logic and data shown on it. From herein the PM can accept it. Remember he is not signing his life away by accepting this programme, just acknowledging that it is a reflection of reality.

Then, once the CE is implemented, you can adjust the Completion date milestone.

 

Hope this helps.

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Fri, 2005-01-21 12:20
#4
Philip Rawlings
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Joseph
I believe your interpretation is correct and that is indeed the major cause of dispute. In my experience (with retrospective claims) CEs are never agreed and so cannot be planned. What OUGHT to be the case is that the current schedule is amended to include known CEs (i.e. where it is agreed they are to be implemented but no price/time agreed) and that the target (i.e. contract) schedule is not amended until EOT is agreed. Then at least all can see the work that has to be done and also what is yet to be finalised. Sadly, this scenario never seems to be taken up - so plans are used that are hopelessly out of date.
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