What does NEC4 clause 60.1(1) mean?
It makes an instruction that changes the Scope a compensation event, unless the change accepts a Defect or you asked for or caused it.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
It is NEC's version of a variation. The Scope is the description of your work and the limits on how you do it, including any design you supply. In the NEC4 main contract the Project Manager gives the instruction. On an NEC subcontract your main contractor does. To rely on this clause, show three things. There was an instruction. It came from your main contractor. And it changed the Scope as it stood. A drawing revision issued without an instruction does not count. Nor does a change you proposed to suit your own design. Because the event comes from its own instruction, your main contractor should notify it when it gives the instruction, and ask you to quote. If it does not, you notify under clause 61.3. The 8-week bar does not apply, because your main contractor should have notified it. The change to the Prices, your contract price, is assessed under clause 63.1. It is the effect of the instruction on actual Defined Cost for work done by the date of the instruction. Add forecast Defined Cost for work still to do, plus the Fee. So an omission cuts your price and an addition raises it, both with the risk allowances clause 63 requires. Two things go wrong most. The change is priced from the activity schedule or bill of quantities instead of from Defined Cost. Or your main contractor argues you caused the change, when the Scope itself was unclear. Any delay to the Completion Date is assessed separately under clause 63, and that is a job for your planner.
Example
Illustrative example. The scenario and figures are invented.
The facts
A mechanical subcontractor on an Option C subcontract is told by the main contractor to change the ductwork in one plant room from galvanised to stainless steel. The galvanised sections have been ordered but not installed.
What happens
- The instruction changes the Scope, does not accept a Defect, and was not asked for by the subcontractor. So the main contractor notifies the event with it.
- The quotation assesses the extra material and the cancellation charge on the galvanised order at £14,600, under clause 63.1.
- Extra fabrication and installation labour comes to £3,900, a change in forecast Defined Cost of £18,500 in all.
- With a fee percentage of 12 per cent, the Fee is £2,220 and the proposed change to the Prices is £20,720.
- The quotation states the risk allowance for lead time on the stainless sections, and shows any programme effect separately.
The quotation in figures
| Item | Amount |
|---|---|
| Additional material and cancellation charge | £14,600 |
| Additional fabrication and installation labour | £3,900 |
| Change in forecast Defined Cost | £18,500 |
| Fee at 12 per cent | £2,220 |
| Proposed change to the Prices | £20,720 |
The outcome
The proposed change to the Prices is £20,720, with the programme effect shown separately from the money.
To have a refused event tested against the clause it falls under and pressed to implementation, see our Compensation Event Claim service.