NEC 3

Thanks for passing that on, Gary. I have always been uncomfortable with the concept of "deemed acceptance" espescially with something as complex as a programme. What the NEC does not allow is for the Contractor to be disadvantaged by the PM’s failure to accept/reject, but the "Accepted Programme" is too powerful a document to be approved by default.

Gary,



"2. It is a Compensation Event if a PM does not respond within the period stated in the contract...."



It is not a compensation event because the PM didn’t approve the programme but because the PM didn’t accept or reject it in time - therefore the compensation event arising and the compensation events subsequent approval has nothing to do with approving the programme.



It is merely a mechanism to allow the contractor to claim something for the PM not doing what he should in time, not because the programme hasn’t been approved - because it has by default under the two option rule.



Exactly what this compensation event would be worth I’m not sure. I don’t know of any contractor who’s ever used it. The NEC "salesmen" are always keen to point out that a compensation event arises in these circumstances but when asked what use it is they always seem to swiftly move onto the next subject!



Mike,



Is the lack of court cases showing the NEC to be a good contract? Maybe, but then adjudication has removed so many cases from court it’s hard to tell. Also there is the NEC User group and people are often accepting of thier opinions as too the meaning of the various clauses. Personally I think people are wrong to do this but it’s another reason not many cases make it to court.



It’s a contract that has been very skillfully set up, supported and marketed. I actually like alot of what it tries to do but don’t believe all the marketing hype that surrounds it.

I’m having a very similar discussion to this with another fellow planner who (for shame) is not on PP.

He has a differing point of view as to whether no response to the submitted programme should be deemed approval, which is worth sharing:



"Contractually I believe it s a fact that a programme is never deemed accepted for the following reason:



1. The contract states that the programme is either to be accepted or notifies the Contractor of his reasons for not accepting it. These are the only two options available to the PM.



2. It is a Compensation Event if a PM does not respond within the period stated in the contract. This does not help massively financially - in terms of getting recovery as you will still be working to the programme whether accepted or not. It does however raise the anti in terms of making it a contractual issue.



3. NEC3 introduces deemed acceptance for three specific issues associated with the compensation event notification/quotation process.

This again suggests that if deemed acceptances where assumed to be in place we would not need these three very specific places where they are now contractual.



4. It would not be right for the PM to rely on silence to reject a programme - but for the reasons stated above he can not in fact do that. "

Alistair,



Another important point is Clause 14.1, which states that acceptance of any communication does not transfer liability away from the contractor to comply with his obligations under the contract.

So for example if a contractor deletes an element of the work in a programe, which is then (wrongly) approved, this doesn’t nullify the contractor’s obligations in the original works information to do that work within the contract period.

Hi Alistair



It could be said that lack of case law shows that the contract works well.



To my mind unjust enrichment is where a party gains from its own default.



Failure to comply with a contractual notice is a default.



Best regards



Mike Testro

Hi, Mike



One of the weaknesses of the NEC3 is that nothing is getting tested in the courts so no case law is being built around it to decide on which of the factors you listed are capable of overriding a clearly stated contract provision.



Recent case law seems to be in favour of the requirement for notifications to be made in order to claim time and/or money under the contract, but this is by no means definitive yet. Yet failure to notify and the subsequent preclusion from money/time to which the contractor may feel he is entitled would be in conflict with the "Unjust Enrichment" rule stated.



Alistair

Hi Alistair



We are talking about a dispute situation here - not Contract Administration.



In a dispute there are a number of factors to be taken into consideration three of which are:



1. Unjust Enrichment.

2. Contra proferentum.

3. Natural Justice.



Any of which would require the adjustment of a flawed programme - in spite of what the contract says.



Best regards



Mike Testto

Hi, Mike



I agree that wrong calendars being used can be difficult to spot, espescially as Planners may take short cuts - in your example for instance the Planner may have been trying to show a 7 week period, rather than the actual period when the floor would be curing.



The problem with the NEC3 is that these things are all supposed to be done at the time - there is no remedy for a programme which has been accepted but is later found to be defective, therefore there are one of two remedies - either the defective programme must be used or a revised programme can be submitted remedying the defects.



And whilst programmes can be revised whenever circumstances require, this revised programme though would need to be accepted by both parties, with the usual submission / period for reply / acceptance / rejection timelines in place. And there is no allowance in the contract for the Client to revise the programme and impose it on the Contractor - all he can do is reject the programme and give his reason for the rejection in the hope that the Contractor will, in his next submission, remedy the defect.



Alistair

Hi Alstair



The example that I quoted on the wrong calendar being used is not easy to spot without an in depth examination.



Just because it has been accepted in NEC3 rules does not mean that it has to be adopted for EoT purposes.



Under NEC3 my understanding is that the programme can be adjusted whenever circumstances require.



Rectifying a flaw would - in my mind - be such a circumstance.



Best regards



Mike Testro

Hi, Mike



But if the baseline is flawed wasn’t the remedy not to accept it in the first place - once it has been accepted shouldn’t it be the basis for determining time in the event of a compensation event.



In your example shown, shouldn’t the programme have been rejected when originally submitted under Clause 31.3 as it did not represent the Contractor’s plans realistically?



Alistair

Hi Alistair



If the baseline is flawed then any EoT submission would be negated very easily by the receiving party.



I once reviewed an EoT claim for a sports hall where the baseline programme had a 35 day acclimatisation period for the sprung timber floor.



The task was set on the working calendar 8h/5d so when I set it on a 24/7 calendar the claim colapsed.



Best regards



Mike Testro

OK then. Concensus seems to be that the programme is accepted by default...



As a follow up question can a Contractor rely on the Client’s non-acceptance of an obviously deficient programme (for instance, elements of the scope of works are missing, or the time risk allowance is not shown) to utilise the programme to show entitlement in a claim situation?



Alistair

Hi Scarlet



In a contractual relationship kissing doesn’t come into it.



The parties are trying to screw each other and silence often brings it on.



Best regards



Mike Testro

I agree with Andrew.



Silence means "YES".



I learned it when i was in my teens.



I used to tell girls how much I love her. and since the girls is so timid, or still hiding her loving feeling or maybe playing hard to get so



it means yes, so i just hold her hands and we end up kissing each others. It did not happens once, but most of the time.



Lesson learn: you don’t need a contractual clause to learned the intricate of human relationship and contractual relationship.



Experience is the best teacher.



Amen.



Thank you,

Scarlett

Clause 31.3: "Within two weeks of the Contractor submitting a programme to him for acceptance, the Project Manager either accepts the programme or notifies the Contractor of his reasons for not accepting it."



So EITHER the Employer:



1. accepts the programme OR:



2. notifies the Contractor of his reasons for not accepting it.



Therefore if no notification is given by the Employer for not accepting it, the Employer must have accepted it as per (1.) as there is no other alternative position available.



Silence equals no notification equals acceptance.

Indeed.



Particularly in a contract form such as NEC, which relies heavily on a current agreed programme for impacting CEs contemporaneously.

Hi Alistair



Welcome to Planning Planet.



The default position if the Employer makes no response to an updated programme must be an implied approval.



He cannot rely on no response to then reject an updated programme sometime in the future.



Best regards



Mike Testro

"Each update sent to employee is approved by default if not rejected within two weeks" - which clause states this?

I accept that the contract requires the PM to accept or reject the programme within 2 weeks, but the contract does not state what happens if he doesn’t.

Muhammad,



Sorry, that should have said employer, not employee.



Clause 31.3: "Within two weeks of the Contractor submitting a programme to him for acceptance, the Project Manager either accepts the programme or notifies the Contractor of his reasons for not accepting it."

Gary,



I will be much obliged if you can elaborate you point mention in this line.



"Each update sent to employee is approved by default if not rejected within two weeks,"



I looked on Guidance notes and conditions as well but could not find any reference?



regards



Muhammad Anwar

Couldn’t tell you. I wouldn’t be suprised, but I’ve never looked.

Fairly standard reporting requirements, really. Though you really do need to get hold of a copy of the contract.



One thing you should be aware of is the requirement for the programme to show "for each operation, a method statement which identifies the Equipment and other resources which the Contractor plans to use"

This is often interpreted as a resource loaded programme



You also need to include provision for TRA, H&S, and any employer responsibilities like access, free-issues, approvals, etc



CEs are impacted on the programme as soon as they are instructed



Each update sent to employee is approved by default if not rejected within two weeks, each approved update becomes the new baseline, all float belongs to the contractor, and the employer can only reject for 1 of the following 4 reasons:



-not achievable

-not showing all info requried by the contract (mainly clause 31)

-not actually representative of contractor’s plans

-not compliant with the works information



Cheers,

G