How does NEC4 clause 64 work?
Your main contractor can make its own assessment on four grounds only, within the time you had to quote, or your quotation can be treated as accepted.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
The answer
Clause 64 lets the other side take the assessment out of your hands, but only on stated grounds and to a timetable. In the NEC4 main contract the Project Manager does this. On an NEC subcontract your main contractor does, and your subcontract may set different periods. Under clause 64.1, it assesses an event if you did not submit the quotation and details in time. It also does so if it decides you assessed the event wrongly, and does not ask for a revised quotation. The third ground is that you did not submit a programme, or programme changes, the contract requires. The fourth is that your latest programme was not accepted for a reason the contract states. The assessment follows the same rules as any quotation: Defined Cost plus the Fee under clause 63, split at the dividing date. Where there is no accepted programme to use, it uses its own assessment of the programme. Under clause 64.3, it must notify you of the assessment, with details, within the period you had for your quotation. That period runs from when the need for the assessment became clear. Clause 64.4 is the sanction. If no assessment arrives in that period, notify the failure. If 2 more weeks pass without one, your quotation is treated as accepted. Once notified, the assessment is implemented under clause 66. The way to change it is the dispute procedure, not a revised quotation. Three things go wrong. Own assessments are used as a bargaining position: a bare figure with no details. Subcontractors treat them as an opening offer, and keep resubmitting quotations that no longer count. And where the ground was that you sent no quotation, there is nothing for clause 64.4 to treat as accepted. Your only protection then is to have quoted in time.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor quotes £50,000 for an instructed change. The main contractor decides it is assessed wrongly, because the labour is priced at bill rates, not from the Schedule of Cost Components.
What happens
- Instead of asking for a revised quotation, the main contractor notifies that it will make its own assessment.
- Within the subcontractor's quotation period, it notifies an assessment of £38,000. The details show the people cost rebuilt from the records, and the Fee at the Contract Data percentage.
- The £38,000 assessment is implemented in place of the quotation.
- If instead it had said it would assess and then done nothing, the subcontractor would notify the failure.
- Once the further period passed with still no assessment, the £50,000 quotation would be treated as accepted.
The outcome
Either the £38,000 assessment stands, made within the quotation period, or the failure to assess leaves the £50,000 quotation treated as accepted.
Our Compensation Event Claim tests a Project Manager's assessment against the clause 63 rules and the records it should have used.