® NCC 3 Engineering and Construction Contract CORE CLAUSES 4 General Actions 10 40.1 Mdentified and defined 44 terms 14.4 14.2 ‘The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract and in a spirit of mutual trust and co-operation. In these conditions of contrast, terms identified in the Contract Data are in ics and defined terms have capital initial (1) The Accepted Programme is the programme identified in the Contract Data or is the latest programme accepted by the Project Manager. The latest programme accepted by the Project Manager supersedes previous Accepted Programmes. (2) Compietion is when the Contractor has * done all the work which the Works Information states he is to do by the Completion Date and * corrected notified Defects which would have prevented the Employer trom using the works and Othors from doing their work, If the work which the Contractor is to do by the Completion Date is not stated in the Works Information, Completion is when the Contractor has done all the work necessary for the Emplayer to use the works and for Others to do their work. (3) The Completion Date is the completion date unless later changed in accordance with this contract. (4) The Contract Date is the date when this contract came into existence. (5) A Defect is * a part of the works which is not in accordance with the Works Information or + a partof the works designed by the Contractor which is not in accordance with the applicable law or the Contractor's design which the Project Manager has accepted, (6) The Defects Certificate Is either a list of Defects that the Supervisor has. notified before the defects date which the Contractor has not corrected or, if there are no such Defects, a statement that there are none. (7) Equipment is items provided by the Contractor and used by him to Provide: the Works and which the Works Information does not require him to include in the works. (8) The Fee is the sum of the amounts calculated by applying the subcon- tracted fee percentage to the Defined Cost of subcontracted work and the direct fee percentage to the Defined Cost of other work. © copyright nec 20033 option clauses uses secondary option cl cast ‘components ‘contract cata (main option clauses cost components secondary option clauses contract, data \ Interpretation and the law 412 4 = copyright nec 2008 42.4 12.2 12.3 12.4 (9) A Key Date is the date by which work is to meet the Gonalition stated. Thy Key Date is the key date stated in the Contract Data and the Condition is thy condition stated in the Contract Data unless later changed in accordance wit this contract, (10) Others are people or organisations who are nat the Employer, the Proje Manager, the Supervisor, the Adjudicator, the Contractor or any employee Subcontractor or supplier of the Contractor. (44) The Parties are the Employer and the Contractor. (412) Plant and Materials are item: (43) To Provide the Works means to do the work necessary to complete th works in accordance with this contract and all incidental work, services ang actions which this contract requires. intended to be included in the works. (14) The Risk Register is a register of the risks which are listed in the Contract Data and the risks which the Project Manager or the Contractor has} notified as an early warning matter. it includes a description of the risk and a description of the actions which are to be taken to avoid or reciuce the rish, (45) The Site is the area within the boundaries of the site and the volumes] above and below it which are affected by work included in this contract (16) Site Information is information which * doscribes the Site and its surroundings and = isin the documents which the Contract Data states itis in. (47) A Subcontractor is @ person or organisation who has @ contract with the: Contractor to * construct or install part of the works, * provide a service necessary to Provide the Works or * supply Plant anc Materials which the person or organisation has wholly oF partly designed specifically for the works, {18} The Working Areas are those parts of the working areas which are + necessary for Providing the Works ane * used only for work in this contract Unless later changed in accordance with this contract. (19) Works Information is information which either ‘ specifies and describes the works or * states any constraints on how the Contractor Provides the Works and is either * in the documents which the Contract Data states it Is in or * inn instruction given In accordance with this contract. In this contract, except where the context shows otherwise, words in the singular also mean in the plural and the other way round and words in the masculine also mean in the feminine and neuter This contract is governed by the law of the contract. No change to this contract, unless provided for by the conditions of contract, has effect unless it has been agreed, confirmed in writing and signed by the Parties, This contract is the entire agreement between the Parties. www.neccontract.comCore Clauses = NEC3 ne The Project Manager and the Supervisor he he Adding to the Working Ateas Early warning 13.2 13.3 13.4 13.5 13.6 13.7 13.8 44 44.1 14.2 14.3 14.4 415 15. 16 16.1 Each instruction, certificate, submission, proposal, record, acceptance, notification, reply and other communication which this contract requires is communicated in a form which can be read, copied and recorded. Writing is in the language of this contract. A communication has effect when it is received at the last address notified by the recipient for receiving communications or, if none is notified, at the address of the recipient stated In the Contract Data. If this contract requires the Project Manager, the Supervisor or the Contractor to reply to a communication, unless otherwise stated in this contract, he replies within the period for reply, ‘The Project Manager replies to a communication submitted or resubmitted to him by the Contractor for acceptance. If his reply is not acceptance, the Project Manager states his reasons and the Contractor resubmits the commu hication within the period for reply taking account of these reasons. A reason for withholding acceptance is that more information is needed in order to assess the Contractor's submission fully. ‘The Project Manager may extend the period for reply to a communication if the Project Manager and the Contractor agree to the extension before the reply is due. The Project Manager notifies the Contractor of the extension which has been agreed. ‘The Project Manager issues his certificates to the Employer and the Contrac- lor. The Supervisor issues his certificates to the Project Manager and the Contractor. A notification which this contract requires is communicated separately from other communications. The Project Manager may withhold acceptance of a submission by the Contractor. Withholding acceptance for a reason stated in this contract is not compensation event. The Project Manager's or the Supervisor's acceptance of a communication from the Contractor or of his work does not change the Contractor's responsi- bility to Provide the Works or his liability for his design, ‘The Project Manager and the Supervisor, after notifying the Contractor, may delegate any of their actions and may cancel any delegation. A reference to an action of the Project Manager or the Supervisor in this contract includes an action by his delegate. The Project Manager may give an instruction to the Contractor which changes. the Works Information or @ Key Date. ‘The Employer may repiace the Project Manager or the Supervisor after he has notified the Contractor of the name of the replacement. The Contractor may submit a proposal for adding an area to the Working ‘Areas to the Project Manager for acceptance. A reason for not accepting is that the proposed area is either not necessary for Providing the Works or used for work not in this contract. ‘The Contractor and the Project Manager give an early warning by notifying the other as soon as either becomes aware of any matter which could ‘© Increase the total of the Prices, + delay Completion, + delay meeting a Key Date or ‘+ impair the performance of the works in use. | Meccontract.com copyright nec 2005 5 main option clauses | secondary | option clauses cost ponents. | «o contract, datasecondary option clauses cost components contract option clauses data =" NCC 3 Engineering and Construction Contract Ambiguities and inconsistencies legal and impossible requirements Prevention 6 «copyright nec 2005 19 19.1 The Contractor may give an early waming by notifying the Project Manager ¢ any other matter which could increase his total cost. The Project Manag enters early waming matters in the Risk Register. Early warning of a matte| for which a compensation event has previously been notified is not required, Either the Project Manager or the Contractor may instruct the other to attend 4 risk reduction meeting. Each may instruct other people to attend if the othe agrees. fisk reduction meeting, those who attend co-operate in making and considering proposals for how the effect of the registered risks can be avoided or reduced, seeking solutions that will bring advantage to all those who will affected, deciding on the actions which will be taken and who, in accordance wit this contract, will take them and deciding which risks have now been avolded or have passed and can by removed from the Risk Register. The Project Manager revises the Risk Register to record the decisions made a each risk reduction meeting and issues the revised Risk Register to t Contractor, If a decision needs a change to the Works Information, the Projed Manager instructs the change at the same time as he issues the revised Rist Register, The Project Manager or the Contractor notifies the other as soon as eith: becomes aware of an ambiguity ar inconsistency in or botween the documents which are part of this contract. The Project Manager gives an instructiot resolving the ambiguity or inconsistency. | The Contractor notifies the Project Manager as soon as he considers that thi Works Information requires him to do anything which is illegal or impossibl If the Project Manager agrees, he givos an instruction to change the Works Information appropriately. Han event occurs which ‘+ stops the Contractor completing the works or ‘+ stops the Contractor completing the works by the date shown on th Accepted Programme, | and which ‘+ neither Party could prevent and ‘= an experienced contractor would have judged at the Contract Date t have such a sinall chance of occurring that it would have been unreason able for him to have allowed for it, the Profect Manager gives an instruction to the Contraetor stating how he is t deal with the event. wunw.neccontract.cor0 of er er la er | Core Clauses = NEC 3 2 The Contractor's main responsibilities Providing the Works ‘The Contractor's design Using the Contractor's design Design of Equipment People Working with the Empioyer and Others 20 20.1 24 214 21.2 21.3 22 22.4 23 23.4 24 24.4 24.2 25 25. 25.2 The Contractor Provides the Works in accordance with the Works Information. The Contractor designs the parts of the works which the Works information states he is to design. The Contractor submits the particulars of his design as the Works Information roquires to the Project Manager for acceptance. A reason for not accepting the Contractor's design is that it does not comply with either the Works Information or the apolicable law. The Contractor does not proceed with the relevant work until the Project Manager has accepted his design, The Contractor may submit his design for acceptance In parts if the design of each part can be assessed fully The Employer may use and copy the Contractor's design for any purpose connected with construction, use, alteration or demolition of the works unless otherwise stated in the Works Information and for other purposes as stated in the Works Information, ‘The Contractor submits particulars of the design of an item of Equipment to the Project Manager for acceptance if the Project Manager instructs him to. A reason for not accepting Is that the design of the item will not allow the Con: tractor to Provide the Works in accordance with © the Works Information, * the Contractor's design which the Project Manager has accepted or © the applicable law. ‘The Contractor either employs each key person named to do the job stated in the Contract Data or employs a replacement person who has been accepted by the Project Manager. The Contractor submits the name, relevant quaiifica tions and experience of a proposed replacement person to the Project ‘Manager for acceptance. A reason for not accepting the person is that his relevant qualifications and experience are not as good as those of the person who is to be replaced. The Project Manager may, having stated his reasons, instruct the Contractor to remove an employee. The Contractor then arranges that, after one day, the employee has no further connection with the work included in this contract, ‘The Contractor co-operates with Others in obtaining and providing information which they need in connection with the works. He co-operates with Others and shares the Working Areas with them as stated in the Works Information. The Employer and the Contractor provide services and other things as stated in the Works Information. Any cost incurred by the Employer as a result of the Contractor not providing the services and other things which he is to provide is, assessed by the Project Manager and paid by the Contractor. © copyright nec 20087 eS Coe main option clauses cost | secondary components | option ciauses contract data7 a ssa TEC 3 Engineering and Construction Contract 3 If the Project Manager decides that the work does not meet the Condit tated for a Key Date by the dati 4 and, as a result, the Employer ine additional * in carrying out work © by paying an additional amount to Others in carrying out work on the same project, the additional the Empfoyer has paid incur is paic cost within four weeks of the date wi the circums| Subcontracting 26 26.1 tor submits the name of each props Manager for acceptance. A reason for not acceptin: is that his appointment will not allow the Contractor to Provide the Work Contractor does not appoint a prop contractor until the Prd Mani ‘cepted him. The Contractor submits the proposed ¢ tract to the Proj ® the Project Manager has agreed that no submission is required. The Contractor does not appoint a Subcontractor on the proposed si ditions submitted until the Project Manager hi pted tl for not accepting them is that ‘will not allow the Contractor to Provide the Works ¥y do hot include a statement that the parties to the su! mutual trust and co-operation. Other respons ign from Other \d to Plant being stored for this contract for + the Project Manager, ypervisor tified to him by the Project Manager. sntractor obeys an instruction which is in accordance with this and is given to him by the Profect Manager or the Supervisor. The Contractor acts in accordance with the health and safety requiren stated in the Works Information. * eopyright nec 2005ng Time | starting, Completion and ill Key Dates ‘The programme 30 30.1 30.2 30.3 at 31.4 31.2 31.3 Core Clauses = NEC3 The Contractor does not start work on the Site until the first access date and does the work so that Completion is on or before the Completion Date. The Project Manager decides the date of Completion. The Project Manager certifies Completion within one week of Completion. The Contractor does the work so that the Condition stated for each Key Date is met by the Key Date. If 2 programme is not identified in the Contract Data, the Contractor submits. a first programme to the Project Manager for acceptance within the period stated in the Contract Data. ‘The Contractor shows on each programme which ho submits for acceptance © the starting date, access dates, Key Dates and Completion Date, * planned Completion, © the order and timing of the operations which the Contractor plans to do In order to Provide the Works, * the order and timing of the work of the Employer and Others as last agroed with them by the Contractor or, if not so agreed, as stated in the Works Information, * the dates when the Contractor plans to meet each Condition stated for the Key Dates and to complete other work needed to allow the Employer and Others to do their work, © provisions for * float, «= time risk allowances, + health and safety requirements and + the procedures set out in this contract, + the dates when, in order to Provide the Works in accordance with his programme, the Contractor will need ‘© access to a part of the Site if later than its access date, * acceptances, = Plant and Materials and other things to be provided by the Employer and * information from Others, + for each operation, a statement of how the Contractor plans to do the work identifying the principal Equipment and other resources which he plans to use and * other information which the Works Information requires the Contractor to show on a programme submitted for acceptance. Within two weeks of the Contractor submitting a programme to him for acceptance, the Project Manager either accepts the programme ar notifies the Contractor of his reasons for not accepting it. A reason for not accepting a programme is that the Contractor's plans which it shows are not practicable, it does not show the information which this contract requires, it does not represent the Contractor's plans realistically or * it does not comply with the Works information. ‘wneccontract.com © copyright nec 2005 9 eS cae E secondary option clauses cost ‘components ‘contract, dataNNEC 3 Engineering and Construction Contract, Revising the programme 32 32.1 The Contractor shows on each revised programme * the actual progress achieved on each operation and its effect upon timing of the remaining work, * the effects of implemented compensation events, * how the Contractor plans to deal with any delays and to correct notif Defects and ‘any other changes which the Contractor proposes to make to thd Accepted Programme. The Contractor submits 2 revised programme to the Project Manager fom acceptance ‘© within the period for reply after the Project Manager has instructed hin} to, when the Contractor chooses to and, in any case, at no longer interval than the interval stated in the Contract Data fron] the starting date until Completion of the whole of the works. Access to and use of the Site 3 ‘The Employer allows access to and use of each part of the Site to the Contrac} tor which is necessary for the wark included in this contract. Access and usd is allowed on or before the later of its access date and the date for access shown on the Accepted Programme. Be Instructions to stop or not to start work The Project Manager may instruct the Contractor to stop or nat to start any work and may later instruct him that he may re-start or start it Take over, The Employer need not take over the works before the Completion Date if iti stated in the Contract Data that he is not willing to do so. Otherwise th Employer takes over the works not later than two weeks after Completion. ‘The Employer may use any part of the works before Completion has beer certified. If he does so, he takes over the part of the works when he begins tq use it except if the use is. secondary option clauses | * for a reason stated in the Works Information or ‘= to suit the Contractor's method of working. The Project Manager certifies the date upon which the Employer takes ove any part of the works and Its extent within one week of the date. cost components. Acceleration The Project Manager may instruct the Contractor to submit @ quotation for af acceleration to acnieve Completion before the Completion Date. The Projeg Manager states changes to the Key Dates to be included in the quotation. {quotation for an acceleration comprises proposed changes to the Prices and revised programme showing the earlier Completion Date and the changed K Dates. The Contractor submits details of his assessment with each quotation. ‘The Contractor submits @ quotation or gives his reasons for not doing s| within the period for reply. contract data 10 «copyright nec 2005 www.neocontract.cofee core Clauses =" NCC 3 | 4 Testing and Defects Tests and inspections 40 40.4 40.2 40.3 40.4 40.5 40.8 Testing and inspection 44 before delivery 41.1 Searching for and 42 notifying Defects 42.4 42.2 Conrecting Defects 43 43.4 43.2 Tho subclauses in this clause only apply to tests and inspections required by the Works Information or the applicable law. The Contractor and the Employer provide materials, facilities and samples for tests and inspections as stated in the Works Information. The Contractor and the Supervisor each notifies the other of each of his tests and inspections betore it starts and afterwards notifies the other of its results. The Contractor notifies the Supervisor in time for a test or inspection to be arranged and done before doing work which would obstruct the test or inspection. The Supervisor may watch any test cone by the Contractor. If a test or Inspection shows that any work has a Defect, the Contractor corrects the Defect and the test ar inspection is repeated. The Supervisor does his tests and inspections without causing unnecessary delay to the work or to a payment which is conditional upon a test or inspec- tion being successful. A payment which is conditional upon a Supervisor's test, or inspection being successful becomes due at the later of the defects date and the end of the last defect correction period if + the Supervisor has not done the test or inspection and * the delay to the test or inspection is not the Contractor's fault. The Project Manager assesses the cost Incurred by the Employer in repeating a test or inspection after a Defect is found. The Contractor pays the amount assessed. The Contractor does not bring to the Working Areas those Plant and Materials which the Works Information states are to be tested or inspected before dotivery until the Supervisor has notified the Contractor that they have passed ‘the test or inspection. Until the defects date, the Supervisor may Instruct the Contractor to search for a Defect. He gives his reason for the search with his instruction. Searching may include + uncovering, dismantling, r0-covering and re-erecting work, + providing facilities, materials and samples for tests and inspections done by the Supervisor and * doing tests and inspections which the Works Information does not require, Until the defects date, the Supervisor notifies the Contractor of each Defect as soon as he finds it and the Contractor notifies the Supervisor of each Defect as soon as he finds it. ‘The Contractor corrects a Defect whether or not the Supervisor notifies him of it The Contractor corrects @ notified Defect before the end of the defect correction period. The defect correction period begins at Completion for Defects notified before Completion and when the Defect is notified for other Defects. © copyright nec 2005 11 main option clauses |. secondary option clauses cost | components contract data {main Qn clauses ont secondary option clauses | cost ‘components contract data “NEC 3 Engineering and Construction Contract 43.3 Accepting Defects 44 444 44.2 Uncorrected Defects 45 45.1 45.2 ‘The Supervisor issues the Defects Certificate at the later of the defects da and the end of the last defect correction period. The Employer's rights Fespect of a Defect which the Supervisor has not found or notified are affected by the Issue of the Defects Certificate. The Project Manager arranges for the Employer to allow the Contractor ace: The Contractor and the Project Manager may each propose to the other th the Werke information should be changed so that 4 Defect does not have | be corrected. . If the Contractor and the Project Manager are prepared to consider change, the Contractor submits a quotation for reduced Prices or an ear Completion Date or both to the Project Manager for acceptance. If the Proj anager aecepts the quotation, he gives an instruction to change the Wo Information, the Prices and the Completion Date accorcingly. Ir the Contractor is given access in order to correct a notified Defect but has not corrected it within its defect correction period, the Project Mana, assesses the cost to the Employer of having the Defect corrected by otf people and the Contractor pays this amount. The Works Information is treat as having been changed to accept the Defect. If the Contractor is not given access in order to correct a notified Def before the defects date, the Project Manager assesses the cost to the Contr tor of correcting the Defect and the Contractor pays this amount. The Wo Information is treated as having been changed to accept the Defect. | | | ) 42 “© copyright nec 2005 www.neccontract.Payment The Project Manager assesses the amount due at each assessment date. The first assessment date is decided by the Project Manager to suit the procedures of the Parties and is not later than the assessment interval after the starting date, Later assessment lates occur the end of each assessment interval until four weeks al Supervisor issues the Defects Certificate and * at Completion of the whole of th ‘The amount due + the Price far Work Done to * plus other amounts to be paid to the Contractor, * less amounts to be paid by or retained from the Contr whieh U juires the Employer to pay to the Contractor «din the amount due. If no programme is identified in the Contract Data, one quarter of the Price i: Done to Date is retained in assessments of the amount due until @ Contractor ti mitted a first programme to the Project Manager for showing the information which this contract require sssing the amount due, the Project Manager co any application for payment the Contr 18 submitted on or bef The Project Manager comects any wrongly assessed amount due in a later payment certificate, snager certifies a payment within one week of ¢ date. The first payment is the amount due. Other payms change in the amount due since the last payment certificate. A payment is made by the Contractor to the Employer if the the amount due, Other payments are made by the Employer to the Contractor. Payments are in the currency of this contract unless otherwise stated in this contract. Each cettified payment is made within th assessment date or, if @ different period is ithin the period stated. If certified payment is late, or if a payment is late because the Project Manager does not Issue a certificate which he should issue, interest is paid on the late payment. Interest is assessed from the date by which the late payment should have been made until the date when the late payment made, and is included in the frst assessment after the late payment is mat if an amount du ter certificate eith + by the Project Manager in relation to a mistake or a compensation event ollawing a decision of the Adjudicator or the tribunal, interest on the correcting amount is paid. Interest Is assessed from the date when the incorrect amount was certified until the date when the correctin mount Is certified and is included in the as: ant which includes orrecting amount. Interest is calculated on a daily basis at the interest rate and is compounded annually. © copyright nec 2008«© TYEC 3 engineering and Construction Contract Defined Cost 52 52.1 All the Contractor's costs which are not included in the Defined Cost ax ‘treated as included in the Fee, Defined Cost includes only amounts calculated using rates and percentages stated in the Contract Oata and other amounta at open market or competitively tendered prices with deductions for al discounts, rebates and taxes which can be recovered, A ey 1 | = D3 |e | 3 secondary option clauses cost components 14 © copyright nec 2008, wrw.neccontract.com}6 Compensation events Compensation events 60 60.4 The following events, Project Manager gives an instruction changing the Works Information ‘sa change made in orcler to accept a Defect or +a change to orks Information provided by the Contractor for his design which is made either at his requ mply with other Works Information provided by the Employer. 2) The Employer does nat allow a f @ part of the Site by the later of Its access date and the own on the Accepted Programme, 3) The En’ does not provide something which he is to provide by the date for providing it shown on the Accepted Programme. 4) The Project Manager gives an instruction to stop or not to start any work or to change (5) The Employer or Others * do not work within the times shown on the Acct > not work within the conditions stated in the Works * carry out work ot stated in the Works information. (6) The Project Manager or the Supervisor does not reply to a communic from the Contractor within the period required by this contract. (7) The Project Manager gives an Instruction for dealing with an object of value or of historical or other Interest found within the Sit (8) The Project Manager or the Supervisor changes a decision which he h smmunicated to the Contractor. (9 ject Manager withhold reptance (other than acceptance of ‘2 quotation for not correcting a Defect) for a reason not stated in this e¢ (10) The Supervisor instructs the Contractor to search for a Defect and no Defect is found uniess the search is needed only because the Contractor gave ingutticient notice of doing work obstructing a required test or i (11) A test or inspection done by the Supervisor causes uni ary delay, (42) The Contractor encounters physical conditions which * are within the * are not peri ntractor would have judged at the Contract Date to ich a small chance of occurring that it would have been unreason: able for him to have allowed for them. Only the difference between the physical conditions encountered and thos hich it would have been reasonable to have allowed is taken into account ssing @ compensation event, (13) A weather measurement is recorded * within a calendar month, ‘= before the Completion Date for the whole of the works and the place stated in the Contract Data the value of which, by comparison with the weather data, is shown rage less frequently than once In ten years, copyright nec 2008 15 sesCe clauses option clauses secondary option clauses | components contract data ( 16 Notifying compensation events, ‘© copyright nec 2005 ® TLEC 3 engineering and Construction Contract 60.2 603 61 614 613 only the difference between the weather measurement and the weather ¥ the weather data show to occur on average less frequently than once j years is taken into account in assessing @ compensation event, (24) An event which is an Employer's risk stated in this contract (415) The Project Manager cerlifies take over of a part of the works both Completion and the Completion Date. (16) The Employer does not provide materials, facilities and samples for and inspections as stated in the Works Information, (17) The Project Manager notifies a correction to an assumption which n stated aboul a compensation event. (48) A breach of contract by the Employer which is not one of the ‘compensation events in this contract. (49) An event which + stops the Contractor completing the works or + stops the Contractor completing the works by the date shown Accepted Programme, ‘and whieh + neither Party could prevent, * an exoerienced contractor would have judged at the Contract D have such 3 small chance of occurring that it would have been unr able for him to have allowed for it and # is not one of the other compensation events stated in this contract, In judging the physical conditions for the purpose of assessing @ com tion event, the Contractor is assumed to have taken into account the Site information, publicly available information referred to in the Site Information, tommtion obteinabie fom a visual mspection of the Site and other information which an experienced contractor could reason expected to have or to obtain. If there Is an ambiguity or inconsistency within the Site Information (in the information referred to in it), the Contractor is assumed to have tak ‘account the physical conditions more favourable to doing the work. For compensation events which arise from the Project Manager or the sor giving an instruction or changing an earlier decision, the Project M notifies the Contractor of the compensation event at the time of giv instruction or changing the earlier decision, He also instructs the Contr Submit quotations, unless the event arises from a fault of the Contre quotations have already been submitted. The Contractor puts the inst or changed devision into effect. ‘The Project Manager may instruct the Contractor to submit quotatior propased instruction or a proposed changed decision. The Contractor a put a proposed instruction or a proposed changed decision into effect. ‘The Contractor notifies the Project Manager of an event which has ha of which he expects to happen as a compensation event if + the Contractor believes that the event is a compensation event any © the Project Manager has not notified the event to the Contractor. If the Contractor does not notify a compensation event within eight of becoming aware of the event, he is not entitled to a change in th the Completion Date or 2 Key Date unless the Project Manager shot notified the event to the Contractor but did not www.neccontt| | ' : | ‘ a 1 | Quotations for ‘compensation events 61.4 615 616 817 62 62.4 62.2 62.3 62.4 core Clauses “* NEC 3 It the Project Manager decides that an event notified by the Contractor * arises from a fault of the Contractor, * has not happened and is not expected to happen, * has no effect upon Defined Cost, Completion or meeting a Key Date or * is not one of the compensation events stated in this contract, he notifies the Contractor of his decision that the Prices, the Completion Date and the Key Dates are not to be changed. If the Project Manager decides otherwise, he notifies the Contractor accord ingly and instructs him to submit quotations. If the Project Manager does not notify his decision to the Contractor within either * one week of the Contractor's notification or * a longer period to which the Contractor has agreed, the Contractor may notify the Project Manager to this effect. A failure by the Project Manager to reply within two weeks of this notification Is treated as acceptance by the Project Manager that the event is a compensation event and an instruction to submit quotations, If the Project Manager decides that the Contractor did not give an early warning of the event which an experienced contractor could have given, he notifies this decision to the Contractor when he instructs him to submit quotations. If the Project Manager decides that the effects of a compensation event are too uncertain to be forecast reasonably, he states assumptions about the event in his instruction to the Contractor to submit quotations. Assessment of the event is based on these assumptions. If any of them is later found to have been wrong, the Project Manager notifies @ correction. A compensation event is not notified after the defects date. After discussing with the Contractor different ways of dealing with the com- pensation event which are practicable, the Project Manager may instruct the Contractor to submit altemative quotations. The Contractor submits the required quotations to the Project Manager and may submit quotations for other methods of dealing with the compensation event which he considers practicable, Quotations for compensstion events comprise proposed changes to the Prices and any delay to the Completion Date and Key Dates assessed by the Contractor. The Contractor submits details of his assessment with each quotation. If the programme for remaining work is altered by the compensa tion event, the Contractor includes the alterations to the Accepted Programme in his quotation. The Contractor submits quotations within three weeks of being instructed to do so hy the Project Manager. The Project Manager replies within two weeks of the submission. His reply is * an instruction to submit a revised quotation, ‘+ an acceptance of a quotation, + a notification that a proposed instruction will not be given or a proposed changed decision will not be made or a notification that he will be making his own assessment. The Project Manager instructs the Contractor to submit a revised quotation only after expiaining his reasons for doing so to the Contractor. The Contractor submits the revised quotation within three weeks of being instructed to do so. © copyright nec 200517 secondary option clauses cost components ‘contract data“TIEC 3 Engineering and Construction Contract / : Assessing compensation main option ct | ary secon option clauses cost components ontract data Ls ‘The Project Manager extends the time allowed for = the Contractor to submit quotations for a compensation event and ‘ the Project Manager to reply to a quotation if the Project Manager and the Contractor agree to the extension before Submission or reply is due. The Project Manager notifies the extension th, has been agreed to the Contractor. If the Project Manager does not reply to a quotation within the time allowec the Contractor may notify the Project Manager to this effect. If the Contract Submitted more than one quotation for the compensation event, he states i his notification which quotation he proposes is to be accepted. If the Proj Manager does not reply to the notification within two weeks, and unless th quotation is for @ proposed instruction or a proposed changed decisior the Contractor's notification Is treated as acceptance of the quotation by the Project Manager. The changes to the Prices aro assessed as the effect of the compensatio event upon ‘+ the actual Defined Cost of the work already done, © the forecast Defined Cost of the work not yet done and « the resulting Fee. The date when the Project Manager instructed or should have instructed th Contractor to submit quotations divides the work already done from the wor not yet done. If the effect of a compensation event is to reduce the total Defined Cost, t Prices are not reduced excent as stated in this contract. ‘A delay to the Completion Date is assessed as the length of time that, due the compensation event, planned Completion is later than planned Completi fas shown on the Accepted Programme. A delay to a Key Date is assessed a) the length of time that, due to the compensation event, the planned dal when the Condition stated for a Key Date will be met is later than the dai shown on the Accepted Programme. The rights of the Employer and the Contractor to changes to the Prices, th Completion Date and the Key Dates are their only rights in respect of compensation event. If the Project Manager has notified the Contractor of his decision that th Contractor did not give an early waming of a compensation event which a experienced contractor could have given, the event is assessed as I tl Contractor had given early warning. ‘Assessment of the effect of a compensation event includes risk allowance for cost and time for matters which have a significant chance of occurring an} ate at the Contractor's risk under this contract. ‘Assessments are based upon the assumptions that the Contractor reac competently and promptly to the compensation event, that any Defined ‘and time due to the event are reasonably incurred and that the Accept Programme can be changed, ‘A compensation event which Is an instruction to change the Works Informatl in order to resolve an ambiguity or inconsistency Is assessed as if the Price} the Completion Date and the Key Dates were for the interpretation moj favourable to the Party which did not provide the Works Information. if a change to the Works Information makes the description of the Conditi for a Key Date incorrect, the Project Manager corrects the description. TH correction is taken into account In assessing the compensation event for tH change to the Works Information copyright nec 2005, www.neecontract.cCore Claus nec3 The Project Manager's G4 Find ‘assessments 64.1. The Project Manager assesses a compensation event * ifthe Contractor has not submitted a quotation and details of his assess ment within the time allowed, « if the Project Manager decides that the Contra compensation event correctly in a quotation and he does not instruct the Contractor to submit a revised quotat 2 allowed, * if, when the Contractor submits quotations for a compensation event, he reactor: has not submitted a programme or alterations to a programme which this contract requires him to submit or * if when the Contractor submits quotations for @ compensation event, the Project Manager has not accepted the Contractor's latest programme for decision, one of the rea jon by they pa before the frension that, ‘The Project Manager ass submitted a progra as required by this Manager notifies the Contractor of his assessment of a compen- him dotails of it within the period allowed tor the on of his quotation far the vent. This peri Project. Manager’ sssment becomes apparent. If the Project Manager does not assess @ compensation event within the time allowed, thi yr may notify the Project Manager to this eff Contractor submitted more than one quotation for the compensation he states in his notification which quotation he proposes is to be ac the Project Manager does not reply within two weeks of this notificat tification is treated as acceptance of the Contractor's quotation by the Project Manage: Implementing 65 ‘compensation events Acompensi ent is implemented when + the Project Manager notifies his acceptance of the Contractor's quotatior * the Project Manager notifies the Contractor of his own a: ‘* a Contractor's quotation is treated as having b Project Manager. The assessment of 2 compensetion event is not revised if a forecast upon which itis based is shown by later recorded information to have been wrong. ecco *ccontract.com “copyright nec 2008 19core co sl dl al secondary ‘option clauses cost ‘components data l 7 Title The Employer's title to Plant and Materials Marking Equipment, Plant and Materials, outside the Working Areas Removing Equipment Objects and materials within the Site NNEC 3 Engineering and Construction Contract 70 70.4 70.2 74 TA 72 724 73 TBA 73.2 20 «copyright nec 2005 Whatever title the Contractor has to Plant and Materials which is outside t Working Areas passes to the Employer if the Supervisor has marked it as this contract. Whatever title the Contractor has to Plant and Materials passes tot Employer if it has been brought within the Working Areas. The title to Pla andl Materials passes baok to the Cantractor if tt is removed from the Workin ‘Areas with the Project Manager's permission. The Supervisor marks Equipment, Plant and Materials which are outside t Working Areas If + this contract identifies them for payment and 3 the Contractor has prepared them for marking as the Works Informati requires, ‘The Contractor removes Equipment from the Site when it is no longer need unless the Project Manager allows it to be left in the works. ‘The Contractor has no title to an object of value or of historical or ott interest within the Site. The Contractor notifies the Project Manager when su ‘an object is found and the Project Manager instructs the Contractor how deal with it. The Contractor does not move the object without instructions. The Contractor has title to materials from excavation and demolition only stated in the Works Information. wwww.neccontract.cg Risks and insurance 80 4 Employer's risks 1 and ac ‘eee eptec tion s of oF rebellion, ats employees or sdioactive conta er, except loss, wear ortificate whic whic! © the a of or w Site after the * Additional Emp The Contractor's risks starting date unl the arried by U which are not ¢ Repairs Until the by the damage to the wi Indemnity lability of each Party to i s risk contrib juction is i ontribu ited to tion and costs payable the work result of the ty or interferenc and Materials supplie 1's behalf, Plant a serial revolution, insurrecti of th ‘ak wring betore U to the part and any Equip of the Od tic tly repl is at hi demnify the cla tion to t ed, taking i re due t oF for the purp events ompensation and 5 responsibiliti:lauses option cost components option clauses ©" TEC 3 engineering and Construction Contract Insurance cover Insurance policies If the Contractor does not insure Insurance by the Employer 384 B44 84.2 The Contractor provides the insurances stated in the Insurance Table excey any insurance which the Employer is to provide as stated in the Contract Day The Contractor provides additional insurances as stated in the Contract Data} The insurances are in the joint names of the Parties and pravide cover 4 events which are at the Contractor's risk from the starting date until y Defects Certificate or a termination certificate has been issued, INSURANCE TABLE Insurance against Loss of or damage to the works, Plant and Materials Loss of or damage to Equipment ability for loss of or damage to property (except the works, Plant and Materials and Equipment) and liability for bodily injury to or death of a person (not an employce of the Contractor) caused by activity in connection with this contract Liability for death of or bodily injury to employees of the Contractor arising out of and in the course of their ‘employment in connection with this Minimum amount of cover or minimum limit of indemnity The replacement cost, including the amount stated in the Contract Data for the replacement of any Plant and Materials provided by the Employer ‘The replacement cost ‘The amount stated in the Contract, Data far any one event with cross liability so that the insurance applies to the Parties separately ‘The greater of the amount required by the applicable law and the amount stated in the Contract Data for any one event contract Before the starting date and on each renewal of the insurance policy unti defects date, the Contractor submits to the Project Manager for acceptan certificates which state that the insurance required by this contract is in ford The certificates are signed by the Contractor's insurer or insurance broker. reason for not accepting the certificates is that they do not comply with 1 contract Insurance policies inclucle a walver by the insurers of their subrogation righ against directors and other employees of every insured except where there fraud. ‘The Parties comply with the terms and conditions of the insurance policies. ‘Any amount not recovered from an insurer is borne by the Employer for over which are al his risk and by the Contractor for events which are at his risk The Employer may insure 2 risk which this contract requires the Contractor insure if the Contractor does not submit a required certificate. The cost of t insurance to the Employor is paid by the Contractor: The Project Manager submits policies and certificates for insurances provid by the Emplayer to the Contractor for acceptance before the starting date a! afterwards as the Contractor instructs. The Contractor accepts the poli and certificates if they comply with this contract. copyright nec 2005, www neccontract.c4e Clauses * The Contractor's acceptance of an insurance policy or certificate provided by the Employer does nat change the responsibility of the Employer to provide the insurances stated in the Contract Data ‘The Contractor may insure a risk which this contract requires the Employer to »r does not submit a required policy or cortificate. The ntractor © copyright necEE ESE EEE EEE EEE ESSE EEE Cee eee <® TEC 3 Engineering and Construction Contract 9 Termination Termination 90 90a 90.2 a Be ied igs 90.3 SESE 90.4 ve 90.5 Reasons for termination 91 94.4 if either Party wishes to terminate the Contractor's obligation to Provide Works he notifies the Project Manager and the other Party giving details of Yeason for terminating. The Project Manager issues a termination certificate both Parties promptly if the reason complies with this contract. ‘The Contractor may terminate only for a reason identified in the Terminat Table. The Employer may terminate for any reason. The procedures followed the amounts due on termination are in accorcance with the Termination Table TERMINATION TABLE Reason Terminating Party Amount due ‘A1, A2 and A A reason ather than R1-R24 RL-R1S oF RIS RAT or R20. The Employer Pa and P2 AL and A AL and A2 AL and A2 AL, AZ and A PA, P2 and P3 PA and PS Pa and P4 RI-R10, R16 or R19 RAT of R20 ‘The Contractor P41 and Pa. AL and A2 ‘The procedures for termination are implemented immediately after the Pr Manager has issued a termination certificate. Within thirteen weeks of termination, the Project Manager certifies @ payment to or from the Contractor whieh is the Project Manager's assess! Pr the amount due on termination tess the total of previous paym« Payment is made within three weeks of the Project Manager's certificate. ‘After a termination certificate has been issued, the Contractor does no furl work necessary to Provide the Works, Either Party may terminate if the other Party has done one of the followin its equivalent. ‘+ If the other Party is an individual and has presented his petition for bankruptey (R1). had a bankruptey order made against him (R2). had a receiver appointed over his assets (R3) or made an arrangement with his creditors (R4). « If the other Party is a company or partnership and has had a winding-up order made against it (R5), hhad a provisional liquidator appointed to it (R6), passod a resolution for winding-up (other then in order to amalgal ‘or reconstruct) (R7), had an administration order made against it (R8), had a receiver, receiver and manager, or administrative rec appointed over the whole or a substantial part of its undertakin assets (RO) or + made an arrangement with its creditors (R10). 24 © copyright nec 2005Procedures on termination Wwwwsneecontract.com The Employer may terminate if the Contractor has defaulted in one of th right within four weeks of the notification. fect Manager has notified that the lowing ways and not put the default * Substantially failed to comply with his obligations (R11) » Not provided a be hich this contract requires (R12). © Appointed a substantial work before the Project loyer may terminate if the Project Manager has notified that the ntractor has defaulted in ono of the following ws d not faulting within four weeks of the natification, ‘ubstantially hindered the Employer or C Substantially broken a health or safety regulation ( The Contractor may terminate if the Employer has not paid an amount certified ithin thirteen weeks of the date of the certificate may terminate if the Parties have released under the law f the whole of this contract (R17). from further performa IF the Project Manager has instructed the Gontractor to stop or not to start any substantial work of all work and an instruction allowing the work to re-start or art has not been given within thirteen weeks, = the Emp ay terminate if the instruction was due to a default by the Contractor (R18), * the Contractor may terminate if the instruction was di default by Employer (R19) and ly may terminate if the instruction was due to any other reason The Employer may terminate if an event occurs which works by the date shown to dela and whieh © neither Party could prevent and ‘© an experienced contractor would have jud have such a small chance of occurring that it able for him to have allowed for it (R21), On termination, the Employer may complete the works and may use and Materials to which he has title (P1) The procedure on termination al one oF more of the following as The Employer may instruct the Contractor to leave the Equipment, Plant and Materials from the Site and a any subcontract or other contract relate: formance of this contract to the Employer. ‘The Employer may use any Equipment to wh fontractor has title to complete the works. The Contractor promptly removes the Equipment from Site when the Project Manager notifios him that the Employer no longer requires it to complete the works. ‘The Contractor leaves the Working Areas and removes the » copyrie!<<" TYEC 3 engineering and Construction Contract Payment on termination 93 93.1 The amount due on termination includes (A1) ‘= an amount due assessed as for normal payments, the Defined Cost for Plant and Materials : * within the Working Areas or | ‘+ to which the Employer has title and of which the Contractor has | accept delivery, | * other Defined Cost reasonably incurred in expectation of completing : whole of the works, ; ‘+ any amounts retained by the Employer and / * a deduction of any un-repaid balance of an advanced payment. 93.2. The amount due on termination also includes one or more of the following, set out in the Termination Table, A2_ The forecast Defined Cost of removing the Equipment. 3A deduction of the forecast of the additional cost to the Employer of cor pleting the whole of the works. Ad The direct fee percentage applied to * for Options A, B, © and D, any excess of the total of the Prices at th Contract Date over the Price for Work Done to Date or * for Options E and F, any excess of the first forecast of the Defined Cos for the works over the Price for Work Done to Date less the Fee, option clauses. secondary | option clauses cost components j | contract date 26 & copyright nec 2005. www.neccontract.Identified and defined 44. terms 14, ‘The programme Acceleration The Activity Schedule Assessing compensation events sdule is the activity schedule unless later chang ce with this contract fined Cost is the cost of the components in the Shorter Schedu ‘ost Components whether work is subcontracted or not exoluding the co: aring quotations for compensation {27) The Price for Work Done to Date total of the Prices for h group of completed activities and h completed activity which Is not in a group, pleted activity is one whieh is without Defects which would either delay or be covered by immediately following work. (30) The Prices are the lump sum prices for each of the activities on the later changed in accordance with this contract. The Contractor provides information which shows haw each activity on the Activ n amme which he submits vation, he cordingly and ty Schedule is not Works Information or Site informatio anges a planned method of working at his discretion so activities on the Activity Schedule do not relate to the operations on ‘pted Programme, he submits @ revision of the Activity Schedule to the Project Manager for acceptance. A reason for not accepting a revision of the Activity Scheaule is that * it does not comply with the Accepted Programme © ar are not reasonably distributed between the activities the Prices is If the effect of a comper s to red al Defined Ci the e ‘a change to the Works Information or * a correction of an assumption stated by the Profect Manager for a an earlier compensation event, the Prices are reduced, Assessments for changed Prices for compensation events are in the form of changes to the Activity Schedule. « copyright necEORteces option clauses components. “NEC 3 Engineering and Construction Contract 63.44 Implementing 65 ‘compensation events 65.4 Payment on termination 93 933 28 © copyright nec 2008 If the Project Manager and the Contractor agree, rates and lump sums may Used to assess a compensation event instead of Defined Cost. ‘The changes to the Prices, the Completion Date and the Key Dates included in the notification implementing a compensation event. ‘The amount due on termination is assessed without taking grouping activities into account. wwew.neccontract:Main Option Clauses = NEC 3 | option B: Priced contract with bill of quantities [dentified and defined 44 terms 11.2 Acceleration 36 36.3 ‘The Bill of Quantities 55 55.1 Compensation events 60 60.4 60.5 60.6 60.7 ae "i neccontract.com (21) The Bill of Quantities is the bil! of quantities as changed in accordance with this contract to accommodate implemented compensation events and for accepted quotations for acceleration, (22) Defined Cost is the cost of the components in the Shorter Schedule of Cost Components whether work is subcontracted or not excluding the cost of preparing quotations for compensation events. (28} The Price for Work Done to Date is the total of * the quantity of the work which the Contractor has completed for each item in the Bill of Quantities multiplied by the rate and * a proportion of each ump sum which is the proportion of the work covered by the item which the Contractor has completed Completed work is work without Defects which would either delay or be covered by immediately following work. (31) The Prices are the lump sums and the amounts obtained by multiplying the rates by the quantities for the items in the Bill of Quantities. When the Project Manager accepts a quotation for an acceleration, he changes the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme. Information in the Bill of Quantities is not Works Information or Site Information. AA difference between the final total quantity of work done and the quantity stated for an item in the Bill of Quantities is a compensation event if + the difference ddes not result from a change to the Works Information, * the difference causes the Defined Cost per unit of quantity to change and * the rate in the Bill of Quantities for the item multiplied by the final total quantity of work done is more than 0.5% of the total of the Prices at the Contract Date. If the Defined Cost per unit of quantity is reduced, the affected rate is reduced. A difference between the final total quantity of work done and the quantity for an item stated in the Bill of Quantities which delays Completion or the meet- ing of the Condition stated for a Key Date is a compensation event ‘The Project Manager corrects mistakes in the Bill of Quantities which are departures from the rules for item descriptions and for division of the work Into items in the method of measurement or are due to ambiguities or inconsistencies. Each such correction is @ compensation event which may lead to reduced Prices. In assessing a compensation event which results from a correction of an Inconsistency between the Bill of Quantities and another document, the Contractor is assumed to have taken the Bill of Quantities as correct. © copyright nec 2005 29 core a 3 ‘secondary option clauses cost components ‘contract data= TYEC 3 engineering and Construction Contract Assessing compensation 63 events 63.10 If the effect of a compensation event is to reduce the total Detined Cost a Ce Implementing 65 compensation events 65.4 secondary option clauses cost components contract data ‘© copyright nee 2005 the event is ‘+ a change to the Works Information or + a correction of an assumption stated by the Project Manager for assessje | an earlier compensation event, the Prices are reduced. Assessments for changed Prices for compensation events are in the form changes to the Bill of Quantities. + For the whole or a part of a compensation event for work not yet dag | and for which there is an item in the Bill of Quantities, the changes are | * a changed rate, * a changed quantity or » a changed lump sum, + For the whole or a part of a compensation event for work not yet ‘and for which there is no item in the Bill of Quantities, the change i new priced item which, unless the Project Manager and the Contrac agree otherwise, is compiled in accordance with the method of measur ment. * For the whole ar a part of a compensation event for work already do the change is a new lump sum item, If the Project Manager and the Contractor agree, rates and lump sums may used to assess a compensation event instead of Defined Cost, The changes to the Prices, the Completion Date and the Key Dates Included in the notification implementing 2 compensation event. 4 www neccontract.ctMain Option Clauses option C: Target contract with activity schedule Identified and defined 14 terms 11 D) ‘The Activity accordance with this c Defined Cost is # retention, © payment] meet 2 upply of equipment, supplies and services inclucled in the charge r overhead cost within the Working Areas in this contract the cost of components in the Schedule of Cost Components for other work Disallowed Cost, ) Disallowed Cost is cost which the Project Manager decides is not justified by the Contractor's accounts and records, tractor did not * give an early warnin and the cost of correcting Defects after Completion, correcting Di b for not complying with a faint on how he is to Provide the Works stated in the Works Information, Plant and Materials not used to Provide the Works (after allowing for reasonable wi to the We Information, resources not used to Provide the Works (after allowing for reasonable lability and utilisation) or not taken away from the Working Ar when the Project Manager requested and * preparation for and conduct of an adjudication or proceedings of the tribunal. (29) The Price for Work Done to Date is thi fi st which the Project Manager forecasts will have been paid by the Contractor before the next assessment date plus the Fee. ) The Prices are the lump sum prices for each of the activities on the ivity Schedule unless later changed in accordance with this contract. Providing the Works al implications of « copyright nec 2 Cicer=" NEC 3 Engineering and Construction Contract 20.4 The Contractor prepares forecasts of the total Defined Cost for the whojg the works in consultation with the Project Manager and submits the the Project Manager. Forecasts are prepared at the intervals stated in g Contract Data from the starting date until Completion of the whole of 4 works. An explanation of the changes made since the previous forecas submitted with each forecast Subcontracting 26 26.4 The Contractor submits the proposed contract data for each subcontract acceptance to the Project Manager it ‘+ an NEC contract is proposed and = the Project Manager instructs the Contractor to make the submission, A reason for not accepting the proposed contract data is that its use will g allow the Contractor to Provide the Woras. The programme 31. 31.4 The Contractor provides information which shows how each activity on Activity Schedule relates to the operations on each programme which submits for acceptance. Acceleration 36 36.3 When the Project Manager accepts a quotation for an acceleration, changes the Prices, the Completion Date and the Key Dates accordingly a accepts the revised programme. Coes Tests and inspections 40 40.7 When the Project Manager assesses the cost incurred by the Employer) repeating a test or inspection after 2 Defect is found, the Project Manag does not include the Contractor's cost of carrying out the repeat test inspection, g gs | Assessing the amount due 50 : 50.6 Payments of Defined Cost made by the Contractor in a currency other than t currency of this contract are included in the amount due as payments to # | made to him in the same currency. Such payments are converted to tf curreney ‘of this contract in order to calculate the Fee and any Contracto share using the exchange rates. cost components Defined Cost 52 52.2 The Contractor keeps these records | + accounts of payments of Defined Cost, ‘+ proof that the payments have been made, + communications about and assessments of compensation events Subcontractors and «+ other records as stated in the Works Information. 52.3 The Contractor allows the Project Manager to inspect at any time wit ‘working hours the accounts and records which he is required to keep. contract data The Contractor's share 53 | 53.1 The Project Manager assesses the Contractor's share of the differen: between the total of the Prices and the Price for Work Done to Date. The dif ence is divided into increments falling within each of the share ranges. limits of a share range are the Price for Work Done to Date divided by th total of the Prices, expressed as a percentage. The Contractor's share equ: the sum of the products of the increment within each share range and ‘corresponding Contractor's share percentage. 53.2 If the Price for Work Done to Date is less than the total of the Prices, Contractor is paid his share of the saving. If the Price for Work Done to Date, greater than the total of the Prices, the Contractor pays his share of excess. 32 © copyright nec 2005 www.neocontract.0@yon t ‘which th ‘The Activity Schedule, [Assessing compensation events Implementing Compensation events Payment on termination Main Option Clauses The Project Manager makes a preliminary assessment of the share at Completion of the whole of the works using his forecasts of th Price for Work Done to Date and the final total of the Prices. Thi included in the amount due following Completion of the whofe of the works. The Project Manager makes final assessment of the Contractor’s sha using the final Price for Work Done to Date and the final total of the Prices, ‘This share is included in the final amount due. {Information in the Act If the Contractor changes a planned method of working at his discretion sc that the activities on the Activity Schedule do nat relate to the operations on. the Accepted Programme, he submits a revision of the Activity Schedule to the Project Manager for acceptanc: A reason for not accepting a revision of the Activity Schedule is that * it does not comply with the Accepted Programme, * any changed Prices ar + the total of the Prices is changed, If the effect of a compensation event Is to reduce the total Defined Gost and the event is * a change to the Works Information, other than a change to the Works pmation provided by the Employer which the Contractor proposed and the Project Manager has accep * a correction of an assumption stated by the Project Manager for asses sing an earlier compensation event, the Prices are reduced. Assessments for changed Prices for compensation events are in the form of anges to the Ac If the Project Manager and t ractor agree, the Contractor a: nt using the Shorter Schedule Compon his own assessments using the Shorter The changes to the Prices, the Completion Date and the Key Dates are in the notification implementing a compensation event. *t Manager assesses the Contre hare atter he rent uses, as the Price for Work Done to Da st which the Contractor has paid and which he is committed to pay for work done before termination. The asses ment uses as the total of the Pri © the tu ‘or each activity which has been completed and © a proportion of the lump sum price for each incomplete activity which is ‘the proportion of the work in the activity which has been completed. The Project Manager's assessment of the Contractor's share is added to the amount due to the Contractor on termination if there has been a saving or deducted if there has been an copyright nec CcnerreJ core clauses e secondary option clauses cost components. contract Cie data =" TYEC 3 Engineering and Construction Contract Option D: Target contract with bill of quantities Identified and defined 44. terms 11.2 {2:1} The Bill of Quantities is the bill of quantities as changed in accorda with this contract to accommodate implemented compensation events andj accepted! quotations for acceleration. (23) Defined Cost is, ‘+ the amount of payments due to Subcontractors for works which is sul tracted without taking account of amounts deducted for ‘* retention, * payment to the Employer as a result of the Subcontractor failing meet a Key Date, ‘* the correction of Defects after Completion, * payments to Others and + the supply of equipment, suppties and services included in the chay for overhead cost within the Working Ateas in this contract and + the cost of components in the Schedule of Cost Components for ot) work’ less Disallowed Cost. (25) Disallowed Cost Is cost which the Project Manager decides «is not Justified by the Contractor's accounts and records, ‘= should not have been paid to @ Subcontractor or supplier in accorday with his contract, ‘+ was incurred only because the Contractor did not + follow an acceptance or procurement procedure stated in the We Information or + give an early warning which this contract required him to give and the cost of + correcting Defects after Completion, * correcting Defects caused by the Contractor not complying with a o straint on how he is to Provide the Works stated in the Works informati nt_and Materials not used to Provide the Works (after allowing feasonabie wastage) uniess resulting from a change to the Works In mation, * resources not used ta Provide the Works (after allowing for reasonall availability and utilisation) or not taken away from the Working. AV when the Project Manager requested and * preparation for and conduct of an adjudication or proceedings of & tribunal. (29) The Price for Work Done to Date is the total Defined Cost which tl Project Manager forecasts will have been paid by the Contractor before the assessment date plus the Fee. (34) The Prices are the lump sums and the amounts obtained by multiply the rates by the quantities for the items in the Bill of Quantities. (33) The Total of the Prices is the total of * the quantity of the work which the Contractor has completed for 2: item in the Bill of Quantities multiplied by the rate and +a proportion of each lump sum which is the proportion of the wo Covered by the item which the Contractor has completed. Completed work is work without Defects which would either delay or covered by immediately following work, 34 ‘© copyright nec 2005Main Option Clauses = NCC 3 Providing the Works. Subcontracting Acceleration Tests and inspections Assessing the amount due Defined Cost ‘The Contractor's share 20 20.3 20.4 52 52.2 52.3 53 53.5 53.6 ‘The Contractor advises the Project Manager on the practical implications of the design of the works and on subcontracting arrangements. The Contractor prepares forecasts of the total Defined Cost for the whole of the works in consultation with the Project Manager and submits them to the Project Manager. Forecasts are prepared at the Intervals stated in the Contract Data from the starting date until Completion of the whole of the works, An explanation of the changes made since the previous forecast is, submitted with each forecast, The Contractor submits the proposed contract data for each subcontract for acceptance to the Project Manager if * an NEC contract is proposed and © the Project Manager instructs the Contractor to make the submission. A reason for not accepting the proposed contract data is that its use will not allow the Contractor to Provide the Works. When the Project Manager accepts @ quotation for an acceleration, he changes the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme. When the Project Manager assesses the cost incurred by the Employer in repeating a test or inspection after a Defect is found, the Project Manager does not include the Contractor’s cost of carrying out the repeat test or inspection. Payments of Defined Cost made by the Contractor in a currency other than the currency of this contract are included in the amount due as payments to be made to him in the same currency. Such payments are converted to the currency of this contract in order to calculate the Fee and any Contractor's share using the exchange rates. The Contractor keeps these records ‘+ accounts of payments of Defined Cost, + proof that the payments have been made, * communications about and assessments of compensation events for Subcontractors and * other records as stated in the Works Information. The Contractor allows the Project Manager to inspect at any time within working hours the accounts and records which he is required to keep. The Project Manager assesses the Contractor's share of the difference between the Total of the Prices and the Price for Work Done to Date. The aifference Is divided into increments falling within each of the share ranges. ‘The limits of a share range are the Price for Work Done to Date divided by the Total of the Prices, expressed as a percentage. The Contractor's share equals the sum of the products of the increment within each share range and the corresponding Contractor's share percentage. If the Price for Work Done to Date is less than the Total of the Prices, the Contractor is pald his share of the saving. If the Price for Work Done to Date is, greater than the Total of the Prices, the Contractor pays his share of the excess. ‘copyright nec 2005 35. main Croan ‘secondary option clauses cost components. ‘contract data (53.7 53.8 The Bill of Quantities 55 55.4 Compensation events 60 60.4 q 605 af 60.6 607 Be B8 Assessing compensation 63 E events 63.11 contract, data 63.13 ing and Construction Contract The Project Manager makes a preliminary assessment of the Contracg share at Completion of the whole of the works using his forecasts of the Price for Work Done to Date and the final Total of the Prices. This shay Included in the amount due following Completion of the whole of the work, The Project Manager makes a final assessment of the Contractor's gh using the final Price for Work Done to Date and the final Total of the Prigg This share is included in the final amount due. 4 Information In the Bill of Quantities is not Works Information or Site Infor tion, A difference between the final total quantity of work done and the quan stated for an item in the Bill of Quantities is a compensation event if * the difference does not result from a change to the Works Information, © the difference causes the Defined Cost per unit of quantity to chan and ‘© the rate in the Bill of Quantities for the item multiplied by the final t quantity of work done is more than 0.5% of the total of the Prices at i Contract Date. If the Defined Cost per unit of quantity is reduced, the affected rate reduced. A difference between the final total quantity of work done and the quantity f an item stated in the Bill of Quantities which delays Completion or the meg Ing of the Condition stated for a Key Date is a compensation event. The Project Manager corrects mistakes in the Bill of Quantities which ai departures from the rules for item descriptions and for division of the wo into items in the method of measurement or are due to ambiguities @ inconsistencies. Each such correction is a compensation event which m4 lead to reduced Prices. In assessing @ compensation event which results from a correction of inconsistency between the Bill of Quantities and another document, Contractor is assumed to have taken the Bill of Quantities as correct. I the effect of a compensation event is to reduce the total Defined Cost a the event is ‘© a change to the Works Information, other than a change to the Wott Information provided by the Employer which the Contractor proposed af the Project Manager has accepted or + a correction of an assumption stated by the Project Manager for asse ssing an earlier compensation event, the Pri Js are reduced. Assessments for changed Prices for compensation events are in the form changes to the Bill of Quantities. ‘* For the whole or a part of a compensation event for work not yet cof and for which there is an item in the Bill of Quantities, the changes are + a changed rate, ‘* a changed quantity or * a changed lump sum. ‘For the whole or a part of @ compensation event for work nat yet done al for which there is no item in the Bill of Quantities, the change is a nel priced item which, unless the Project Manager and the Contractor agret othenvise, is compiled in accordance with the method of measurement. 36 «copyright nec 20085. contractor, Bis of the tna, “is st tne works. implementing compensation events Payment on termination Main Option —Nec3 * For the whole or a part of a compensation event for work already done, the change is a new lump sum item. ms may be ent using the Shorter Sch Project Manager may make his own of Cost Componen The changes to the Prices, the Completion Date and the uded in the notification implementing a compensation event If there is a termination, the Project Manager assesses the Contractor's share after he has certified termination. His assessment uses, as the Price for Work Done to Date, the total of the Defined Cost which the Contractor has paid and which he is committed to pay for work done before termination. The Project Manager’ ent of the Contracto: amounts due to the Contractor on termination if there has been a saving or deducted if there has been an exces: Cyne=" TLEC 3 Engineering and Construction Contract Option E: Cost reimbursable contract Identified and defined 44. terms 11.2 (23) Defined Cost is * tho amount of paymonts due to Subcontractors for work whichis subg tracted without taking account of amounts deducted for + retention, * payment to the Employer as a result of the Subcontractor falling = meet a Key Date, ‘ « the correction of Defects after Completion, * payments to Others and * the supply of equipment, supplies and services included in the chayp for overhead cost within the Working Areas in this contract and * the cost of components in the Schedule of Cost Components for ott work less Disallowed Cost. (28) Disallowed Cost Is cost whieh the Project Manager decides * is not justified by the Contractors accounts and records, * should not have been paid to a Subcontractor or supplier in accorda with his contract, + was inourred only because the Contractor did not * follow an acceptance or procurement procedure stated in the Wore Information or * give an early warning which this contract required him to give Ciouee secondary option clauses and the cost of + correcting Defects after Completion, + correcting Defects caused by the Contractor not complying with a cong aint on how he is to Provide the Works stated in the Works Information, * Plant and Materials not used to Provide the Works {after allowing reasonable wastage) unless resulting from a change to the Works inf mation, | + resources not used to Provide the Works (after allowing for reasonably availability and utilisation) or not taken away from the Working Ared when the Project Manager requested and + preparation for and conduct of an adjudication or proceedings of tribunal. (29) The Price for Work Done to Date Is the total Defined Cost which Project Manager forecasts will have been paid by the Contractor before ttf next assessment date plus the Fee. (32) The Prices are the Defined Cost plus the Fee. cost components Providing the Works 20 20.3. The Contractor advises the Project Manager on the practical implications 4 the design of the works and on subcontracting arrangements. 20.4 The Contractor prepares forecasts of the total Defined Cost for the whole 4 ‘the works in consultation with the Project Manager and submits them to t Project Manager. Forecasts are prepared at the intervals stated in Contract Data from the starting date until Completion of the whole of th works. An explanation of the changes made since the previous forecast # submitted with each forecast. : 38 «© copyright nee 2005 www.neccontract.comtlSubcontracting ‘The Contractor submits the proposed contract data for each subcontract for acceptance to the Project Manager if * an NEC contract is proposed and © the Project Mai ucts the Contractor to make the submission. ;pting the proposed contract data is that its use will not ontractor to Pravide the Works Acceleration Completion Dat the forecast of the total st of the whole of the works accordingly and accepts the revised programme, Tests and inspections When the Project Manager as incurted by the Employer in Tepeating a test or Inspection after a Defect Is found, the Project Manager does not include the Contracto inspection, Assessing the amount due Payments of Defined Cost made by the Contract c other than the ‘currency of this contract are included in the amount due as payments to be made to him in the same currency. Such payments are converted to the ; urrency of this contract in order to calculate the Fee using the exchange prordanc rates, Defined Cost + accounts of payments of Defined Cost, * proof that the payments ha compensation events for Contractor allows the Project Manager to inspect at any time within working hours the accounts and records which he is required to keep. Assessing compensation events If the Project Mar and the Contractor agree, the Contractor asses: npensation event using the Shorter Schedule of Cost Component: Project Manager may make his own assessments using the Shorter Schedule of Cost Components. Implementing Compensation events, The changes to the forecast amount of the Prices, the Completion Date and the Key Dates are incluced in the notification implementing a compensation event. pyright tl Cec© TLEC 3 engineering and Construction Contract Option F: Management contract Codie secondary option clauses |_ components contract, data ( 40 Identified and defined 44 terms 11.2 Providing the Works « copyright nee 2005, 20 20.2 20.3 20.4 (24) Defined Cost is «+ the amount of payments due to Subcontractors for work which is Subeg tracted without taking account of amounts deducted for + retention, + payment to the Employer as a result of the Subcontractor failing g meet a Key Date, 4 the correction of Defects after Completion, payments to Others, the supply of equipment, supplies and services included in the cha ‘for overhead cost within the Working Areas in this contract and + the prices for work cone by the Contractor himself less Disallowed Cost. (26) Disallowed Gost is cost which the Project Manager decides * is not justified by the accounts and records provided by the Contractor, ‘ should not have been paid to a Subcontractor or supplier in accordang with his contract, ‘+ was inourred only because the Contractor did not ‘+ follow an acceptance or procurement procedure stated in the Worle Information or * give an early warning which this contract required him to give or ‘ is a payment to a Subcontractor for ‘= work which the Contract Data states that the Contractor will do himset or = the Contractor's management. (29) The Price for Work Done to Date is the total Defined Cost which Project Manager forecasts will have been paid by the Contractor before t next assessment date plus the Fee. (32) The Prices are the Defined Cost plus the Fee. ‘The Contractor manages the Contractor's design, the provision of Site servi: and the construction and installation of the works. The Contractor subcol tracts the Contractor's design, the provision of Site services and t construction and installation of the works except work which the Contratl Data states that he will do himself. The Contractor advises the Project Manager on the practical implications 4 the design of the works and on subcontracting arrangements, 4 ‘The Contractor prepares forecasts of the total Defined Cost for the whole @ the works In consultation with the Project Manager and submits them to thé Project Manager. Forecasts are prepared at the intervals stated in tl Contract Data from the starting date until Completion of the whole of works. An explanation of the changes made since the previous forecast submitted with each forecast.IF work whic , the Pre gree the change to the price for the work and any change to the Completion ate and Key Dates. If they cannot agree, the Project Manager decides the change. ‘Subcontracting submits the proposed contract data for each subcontract for 10 the Project Manager if tract is proposed and ct Manager instr tontractor to make the submission. A reason for not accepting the proposed contract data is that its use will a¢ allow the Contractor to Provide the Works. Acceleration When the Project Manager a quotation for an acceleration, he s the Completion Date, the Key Dates and the forecast of the total Gost of the whole of the works accordingly and accepts the revised ssing the amount due Payments of Defined Cost made by the Contractor in a c other than the curreney of this contract are included in the amount due as payments to t made to him in th urrency of thi Cocca Defined Cost orks Information, The Contractor allows. the Project Manager to Inspect at any time within working hours the accounts and records which he is required to kee Implementing 65 compensation events wetape eee DISPUTE RESOLUTION Option W1 Dispute resolution procedure (used unless the United Kingdom Housing Grants, Construction and Regeneration 4 1996 applies). Dispute resolution Wa. W1.1. A dispute arising under or in connection with this contract is referred to a decided by the Adjudicator. ‘The Adjudicator W1.2 (1) The Parties appoint the Adjudicator under the NEC Adjudicator's Contrag current at the starting date, (2) The Adjudicator acts impartially and decides the dispute as an indepe dont adjudicator and not as an arbitrator. {3) If the Adjudicator is not identified in the Contract Data or if the Adjudicate resigns or is unable to act, the Parties choose a new adjudicator jointly. I Parties have not chosen an adjudicator, either Party may ask the Adjudlcaty nominating body to choose one. The Adjudicator nominating body chooses adjudicator within four days of the request. The chosen acljudicator beca! Coe 5 3 ‘the Adjudicator. g3 (4) A replacement Adjudioator has the power to decide a dispute referred go his predecessor but not decided at the time when the predecessor resigned gs became unable to act. He deals with an undecided dispute as if it had bee & referred to him on the date he was appointed. (5) The Aajudicator, his employees and agents are not liable to the Part {or any action or failure to take action in an adjudication unless the action ¢ fallure to take action was in bad faith, The adjudication W1.3 (4) Disputes are notified and referred to the Aajudicator in accordance with: the Adjudication Table. cost components. contract data 42» copyright nec 2005 wwew.neccontract.cor‘om Dispute Resolution ADJUDICATION TABLE Dispute about Which Party may | When may it be referred to the refer it to the Adjudicator? Adjudicator? An action of the Between two and fo after the C ion of the dispute to the Employer and the Pro Manager, the notification itself being made not more than four | The Project Mana The Contractor | Between two and four w oF Supervisor not after the Contractor's having taken an of the dispute to the action Employer and the Project Manager, the notification itself being made not more than four tor the Contractor aware that the a was not taken A quotation for a The Employer Between (wo and four weeks ‘compensation event after the Project Manager's which a notification of the dispute to the Contractor, accepted the notification itself being made not more than four weeks aiter the quotation was treated Any other matt fore the not snsion that has been agi notified and referred within the times set out in this contract, neither Party may ysequently refer it to the Adjudicator or the tribunal. (3) The Pany referring the dispute to the Adjudicator includes with his referral mation to be considered by the Adjudicator. Any more Information from a sidered by the Adjdicator Is provided within four weeks of the s period may be extended if the Adjudicator and the Parties agree. ter disputed by the Contractor under or in tion with is also a matter disputed under or in connection with this contract, and if the subcontract allows, the Contractor may refer the subcontract dis to the Aajudicator at the same time as the main contract referral, The Adjugicator then decides the disputes together and references to the Parties for the purposes of the dispute are interpreted as including the Subcontractor. Ceesecondary co Cicucers option clauses cost ‘components =" TICC 3 Engineering and Construction Contract (5) The Adjudicator may * review and revise any action or inaction of the Project Manager Supervisor related to the dispute and alter a quotetion which has ty treated as having been accepted, * take the Initiative in ascertaining the facts and the law related to dispute, * instruct a Party to provide further information related to the dispug within a stated time and * instruct a Party to take any other action which he considers necessary reach his decision and to do so within a stated time, (6) A communication between a Party and the Adjudicator is communicated: the other Party at the same time. (7) If the Adjudicator’s decision includes assessment of additional cost g delay caused to the Contractor, he makes his assessment in the same way a a compensation event is assessed. (8) The Adjudicator decides the dispute and notifies the Parties and th Project Manager of his

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