The compensation event quotation has to go in and we've never built one
NEC wants it in a form and to a deadline, and this is the first time.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
What's happening?
NEC runs changes through compensation events, and the quotation is where the money gets decided. It is the cost effect built from the contract's own cost components plus the Fee, the percentage the contract adds for overheads and profit. It is not priced at your usual rates. It states its assumptions and goes in by a deadline the contract polices.
A first quotation pieced together from guesswork tends to be rejected, or assessed for you. Your main contractor's own assessment is rarely the number you hoped for.
The solution
Before any figure is written, check the event, the quotation period, the main option, the cost components that apply and the Fee in the Contract Data. Then build the quotation in that shape: people, equipment and materials forecast from the records, assumptions stated, missing records listed, and the whole thing in within the period.
Compensation Event Loss Prevention sets up that quotation routine and can prove it on this live quotation, so the next one does not start from nothing. If your main contractor has already rejected or assessed the quotation, Compensation Event Claim rebuilds it and answers the reply.
Example
Illustrative example. The scenario and figures are invented.
The facts
A groundworks subcontractor on an NEC subcontract is told to remove contaminated material found in a trench. It is the firm's first compensation event. Before any figure is written down, the subcontract and its option are checked for the event.
What happens
- The check covers the quotation period, put in the diary the day of the instruction. It also covers the cost components that apply, the Fee in the Contract Data and the supporting information the subcontract requires.
- The quotation is built in that shape, not from the company's usual rates. People go in at the Contract Data rates and equipment at the listed rates, for the hours the diary records.
- The disposal contractor's quotation goes in at cost, and the Fee is added as the subcontract states.
- The assumptions are written in: 240 tonnes removed on the engineer's instruction, disposal classed from the test results held, and programme inputs from the planner. The waste transfer notes not yet received are listed as missing.
- The quotation goes in at £38,000 on the fifteenth day of the period.
- The main contractor asks for a revised quotation on a lower tonnage. It is revised to £34,000 with the changed assumption stated, then accepted and implemented.
The outcome
The file keeps the £38,000 quotation and the £34,000 implemented assessment as two separate documents.