The NEC3. The Unknowns

Transcription

1 The NEC3 The Unknowns

2 The Gaps Between the Express Terms; Is Clause 10.1 the Answer?

3 First, a few unknowns in the NEC 1. What happens when the Accepted Programme is not accepted? 2. What happens when a PM assessment (or required assumption) turns out to be incorrect? 3. How do you assess the time impact of a CE without an up to date Accepted Programme? 4. What does 10.1 really mean in circumstances outside of the current guidance?

4 Example 1 - Accepting the Contractor s Programme The Contractor submits its programme for acceptance (which, if accepted, would then form the basis for calculating the effect of a compensation event) (31.1). The Project Manager is required to either accept or reject (for specific reasons) that programme (31.3). The contract provides for a compensation event if the Project Manager invalidly withholds his or her acceptance (60.1(9)).

5 Example 1 Some Problems It is almost impossible to avoid all of the reasons for validly rejecting a Programme: Impractical it is impossible in the PM s reasonable view? (everyone has a view); Does not show required information key dates, sections, etc. missing; Does not represent the Contractor s plans realistically not a true representation of intention (in the PM s reasonable view again?); Does not comply with the Works Information which could be any number of things.

6 Example 1 Some Problems While improper failure to approve does give rise to a CE, this does not necessarily prevent the Project Manager from unnecessarily hindering or delaying the acceptance of a programme in order to avoid any potential compensation event/completion effects of that programme which may be more significant. Can 10.1 help?

7 Example 2 PM Assessment or Assumption Incorrect The Project Manager rejects a Contractor s quotation for a compensation event and makes his or her own assessment.

8 Example 2 PM Assessment or Assumptions, a few problems The Project Manager instructs assumptions be allowed for that turn out to be incorrect. The Contractor cannot re-visit a compensation event quotation once accepted, even if it is wrong. Can 10.1 assist?

9 Example 3 - Time Effects of Compensation Events Without an Accepted Programme Compensation Events must include any effects on the Accepted Programme 62.2; The Accepted Programme must include the current progress, position and intentions (various provisions cover this); If there is no Accepted Programme then the PM can assess the effects using the PM s own programme (64.2); If the Accepted programme is not up to date it is not possible to show the true effect of the CE a dilemma; But if the Accepted Programme has failed to pass the acceptance requirements then it probably will not show the true effect in any event. Can 10.1 help?

10 Example 3 - Time Effects of Compensation Events Without an Accepted Programme The impact will only be accurate (as far as that is possible) with a programme that is: A dynamic model, free from constraints; Resourced; Logic linked; Fully progressed; Representative of the planned works; Etc. (If these requirements are met then acceptance should be much more straightforward in any event.) Can 10.1 help here as well?

11 Some Possible Answers The NEC Definitely, Maybe

12 Example 1 The Answer? Plan to make the Programme Acceptable; Discuss the programme fewer surprises; Make it realistic and involve the people who are going to assess the programme; Make it as complete as possible and cooperate in trying to improve it; Don t overcomplicate it; Keep detailed records when re-baselining and update with accurate progress (you should Clause 32); Don t bend the facts to suit a political objective!

13 Example 2 PM Assessment or Assumption Incorrect An Answer? However, a Project Manager is able to raise a new compensation event to correct his or her own error in the assessment for which the Contractor is now suffering Can Clause 10.1 require that a new compensation event is raised?

14 Example 3 - Time Effects of Compensation Events Without an Accepted Programme A Few Possible Answers? Try to get the programme accepted first (he said stating the obvious) (see the earlier slides for the problems with acceptance of the programme) Has the conduct of the PM effectively accepted the programme? Used it for assessing CE s for example; or Followed the submitted programme in some material respect. What programme is the one that is most up to date? For the Contractor what programme are you building the project to? Which programme is really the most up to date and accurate? Which ones have been discussed in the planning meetings?

15 All answers have something in common, they require: mutual trust co-operation for example in establishing the level of information to be provided by the Contractor in order to avoid his costs being Disallowed; or Agreeing what level or type of information is necessary for a programme to be accepted. for example in providing suitable evidence as to the reasons for not accepting a programme; or providing access to records of progress; or Cost records to establish the effect of incorrect assumptions.

16 NEC Clause 10.1: 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 cooperation.

17 What does Clause 10.1 actually say? The guidance note states that: Clause 10.1 obliges the parties to do everything which the contract states they do. (If you are looking for a way out of an express provision forget it.) But the unknowns are there as a result of the gaps between or in the understanding of the Contract s Terms.

18 Therefore the parties should act as stated first; and in a spirit of mutual trust and co-operation Is this a type of good faith?

19 The Concept of Good Faith Good faith, and good faith clauses, are currently construed narrowly in English law (as can be seen from the previous presentations). A general duty will not override an express duty simply because the express provision has unforeseen or unintended consequences. But does the maxim of the actions of a reasonable man in English Common Law contain an element of good faith? Is Good Faith an option for dealing with the unknowns in the NEC?

20 So is this similar to a duty of Good Faith? A general duty of good faith as in civil law jurisdictions exists as a separate entity founded in public policy and therefore exists outside the contractual framework. This public policy of good faith exists as a platonic idea outside the confines of the agreement and would therefore seem to be much broader in its application is a Contract Term. In which case the answer is no, it is not Good Faith.

21 So what is the technical application of the English approach? See, for example David Thomas examples and perhaps: MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2015] EWHC 283 (Comm) Portsmouth City Council v Ensign Highways Ltd [2015] EWHC 1969 (TCC)

22 In both cases, what is termed as good faith in dealings appears to be rather like an agreement by both parties to act reasonably between themselves, rather than acting reasonably solely in their own individual interest. Follow what the Contract states and act reasonably and in a cooperative and trustworthy manner when doing so it is not a remedy for the unintended effects of express terms. I believe it is arguable that this is/was intended by Clause 10.1

23 Everyone I speak to is a little dismissive of Clause 10.1, but the principle that underpins it can: help to avoid the worst effects of the unknowns; Make life easier for all project participants; Avoid arguments; At least make sure you are all having the same argument. Look at the examples and consider how a persistent approach that emphasises cooperation, and seeks to practice it, may help. And if it does not, at least you will know you are having the same argument.

24 And if Clause 10.1 does not help, at least you will know you are more likely to be having the correct, and the same, argument.

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