{
  "query": "NEC contract auto-approval risks PM loss of reject right",
  "raw_results": [
    {
      "url": "https://www.digitalbeehive.com/latest-news/common-pitfalls-in-nec-management/",
      "title": "7 Common Pitfalls to Avoid in NEC Management",
      "content": "Glenn and Neil propose that in a future ECC edition, it should allow Contractors to propose assumptions for Project Manager’s approval.\n\nNeil’s key point is that “There is no such thing as a Contractor’s assumption, only Project Manager-confirmed assumptions are valid under the contract.”\n\n## Leaving X7 Delay Damages Blank\n\nContractors sometimes leave X7 empty, believing that it reduces risk. However, this exposes them to unliquidated damages claims, as, despite it not being in the contract, clients legally have the right to claim back loss.\n\nThe best practice, as recommended by Neil, is to include X7 with a stated value, even £0 or £1, to establish clarity and protect both parties. [...] Digital Beehive’s Brad Cahill states;\n\n“We don’t mandate responses to early warnings in Contract Bee. Instead, the system supports issuing early warning actions and meetings, without counting responses towards overall compliance scores in the contract.”\n\n## Contractors Adding Their Own Assumptions in CE Quotations\n\nAnother common pitfall in NEC management is Contractors inserting their own assumptions in Compensation Event quotations. Under the full ECC (Engineering and Construction) contract, Contractors cannot include their own assumptions within quotes.  \n\nClause 61.6 allows only the Project Manager to state assumptions, which can reduce risk allowances in the quotation.",
      "score": 0.562874,
      "raw_content": null
    },
    {
      "url": "https://www.linkedin.com/posts/mohammed-talib-hk_the-nec-contract-can-cause-the-project-manager-activity-7373542980621815808-20FO",
      "title": "Navigating NEC contracts: A Project Manager's nightmare | Mohammed Talib posted on the topic | LinkedIn",
      "content": "The NEC contract can cause the Project Manager headaches when assessing compensation events. Because when you’re dealing with hundreds of events to evaluate prospectively, each with strict timelines, procedural landmines, and the contractor and employer both breathing down your neck, things get complicated fast. It’s not just about applying the contract. It’s about surviving the process: (1) Miss a deadline, and the contractor’s quote is deemed accepted. (2) Delay an assessment, and you risk stacking unresolved events that choke cash flow. (3) Update the programme, or risk time assessments moving further away from reality (4) Stay within the limits of your authority from the employer to make decisions on time and money (5) Wait while the employer goes through its internal processes when [...] 34   12 Comments\n\nLike   Comment\n\nMark Austin Artist MCIOB FRSA   3mo \n\n Report this comment\n\nItem 4 and 5 are the most interesting surely the Project Manager has to make impartial decisions based on entitlement not based on budget ? Is this where governance causes problems ?\n\nLike Reply  1 Reaction   2 Reactions\n\nDaniel Cowan   3mo \n\n Report this comment\n\nThats because the NEC requires people to do things they are not normally taught educated or disciplined to do. Why would your QS not assess a compensation event, when we do this on every other form of Contract and the PM does not. The NEC and its proponents have destroyed Quantity Surveying in the UK and reduced our profession to being an Engineers assistant for lazy Engineers\n\nLike Reply  2 Reactions   3 Reactions [...] while the employer goes through its internal processes when you want to exceed your delegated authority (5) Push back too hard and trigger a dispute, a claim for breach, and be accused of failing to act in the spirit of mutual trust and cooperation. And let’s not forget the pressure from clients who want everything assessed yesterday but signed off tomorrow. So here’s the question: are we setting Project Managers up to succeed under the NEC or to fail quietly under the weight of procedural risk? \\_\\_\\_\\_ If you want more of these insights sign up for my newsletter:  \\_\\_\\_\\_",
      "score": 0.50344294,
      "raw_content": null
    },
    {
      "url": "https://www.neccontract.com/getmedia/517c3d32-df47-4b53-b515-9faf3b377d5a/Richard-Patterson-Risk-Management-Paper.pdf?srsltid=AfmBOop8aVwyZ9akcVTZAVML0tguRoW2WUUcs97WyQIrNw82BYDW2z5e",
      "title": "[PDF] NEC contracts provide an excellent basis for risk management, both ...",
      "content": "or any combination of the two. It is up to the client to include a clear statement in the scope. If the scope is silent on this point, then the default is that the contractor does not design any part of the works. Then the contractor can expect the client to design the whole of the works. As stated above, the contractor has a simple obligation to provide the works in accordance with the scope. One would ‘expect’ in a contract that a contractor should take the risk that its designs actually do allow it to meet the requirements of the (client’s) scope. In the case of any design by the contractor required to be submitted after award of contract, the project manager has an obligation to accept them or not accept them (for limited stated reasons) (Clause 21.2). However, any such acceptance [...] data completed by the contractor as part of the tender. The term ‘Scope provided by the Contractor for its design’ is referred to in only one line in the ECC conditions – Clause 60.1(1). The effect of this clause is that if the contractor requests a change to ‘its’ part of the scope so as to meet a requirement elsewhere in the scope • the project manager (on behalf of the client) has the option to accept the proposed change or not to do so and • the resulting change to the scope will NOT be a compensation event. Because of this, the risk of the pre-contract design by the contractor and the possible need for design development for elements to be designed by the contractor is clearly where it should be: with the contractor. This establishes a clear hierarchy: in the event of any conflict [...] the client to retain a particular risk in a quotation, then under clause 61.6 the project manager may state specific assumptions to be used in the contractor’s quotation for that compensation event. If any of those stated assumptions are later found to have been wrong, the notified correction of the assumption is a further compensation event (clause 60.1(17)). On the other hand, if for a compensation event notified at a particular time, it is in the client’s interest to obtain more time and cost certainly, the project manager can ‘buy’ that certainty on behalf the client by requiring a quotation without assumptions. Hence by using assumptions appropriately, the project manager can allocate and ‘buy out’ the risks caused by the compensation event. Rightly, only the project manager may",
      "score": 0.46570396,
      "raw_content": null
    },
    {
      "url": "https://necstorageprod.blob.core.windows.net/mediacontainer/nec/media/nec/products/events/ap%20ug%20conferences%20and%20workshops/presentations/presentations2015/09-pm_dga-managing-risks-and-compensation-events.pdf",
      "title": "Managing Risks and Compensation Events – A Practical Case ...",
      "content": "30.3 The Contractor does the work so that the Condition stated for each Key Date is met by the Key Date (note sanction for failure in cl 25.3) Note absence of ‘proceed regularly and diligently’ etc NEC key obligations • The Contractor’s design 21.1 The Contractor designs the parts of the works which the Works Information states he is to design. 21.2 The Contractor submits the particulars of his design as the Works Information requires to the Project Manager for acceptance…does not proceed until…[acceptance] 27.1 The Contractor obtains approval of his design from Others where necessary X15 – Option needed to limit design standard to reasonable skill and care not fit for purpose Early Warning (clause 16) • Early Warning – risks to time, cost, quality – each party must notify “as soon as it [...] is right or wrong. • But, PM may state “assumptions” for a compensation event if “too uncertain to forecast reasonably” and if the assumptions prove incorrect that is a further CE • Contractors have no power to decide that a compensation event quotation is subject to assumptions but should set out clearly where they consider the PM should use assumptions and what they are. Summary • NEC requires a new mindset and authority and willingness to make decisions rapidly. • NEC contracts must be carefully tendered and require more resources to manage. If final account is avoided fewer resources needed after completion. • Staying on top of programme obligations is crucial. • When NEC is not followed correctly it can make disputes harder to settle and resolve. Questions and Answers 27 Contractor’s [...] work outwith contract scope/risks then instruction needed. Programme • If the programme is not identified in the Contract Data, the Contractor submits a first programme for acceptance within the period stated in the Contract Data • What should be in the Programme? – Starting dates, access dates, key dates, completion dates – Order and timing of operations – Float provisions – Order and timing of works by Employer & Others – Statement on how the Contractor plans to resource the Works • PM should accept programme within 2 weeks or notify C of non-acceptance • If not accepted C must revise and resubmit. Programme • 31.3 – PM can only reject the programme if: – C’s plans which it shows are not practicable – It does not show information required by contract – It does not represent the C’s",
      "score": 0.35481355,
      "raw_content": null
    },
    {
      "url": "https://www.neccontract.com/news/when-and-why-nec-project-managers-have-to-assess-compensation-events?srsltid=AfmBOopU-5KEMis9wTjSk_I7W4HLSCXmBawT6o1Ar964mtLkC3CNa0vF",
      "title": "When and why NEC project managers have to assess compensation events | News | NEC Contracts",
      "content": "However, there is no similar provision for the project manager when the contractor fails to submit its quotation within the three-week period, presenting a potentially dangerous cliff edge for the contractor. The project manager could remind the contractor of the need to submit in the last few days leading up to the end of three-week period. Such action by the project manager could avoid the burden of the assessment falling to the project manager. It could also trigger a discussion and possible agreement between the project manager and the contractor to extend the period (clause 62.5). [...] The contractor’s obligation to submit a compensation event quotation and details of the assessment is stated in clause 62.2. The time allowed for submission is three weeks following instruction by the project manager (clause 62.3). Clause 62.6 also allows the contractor to notify the project manager of the project manager’s failure to respond to a quotation, giving rise to an automatic extension to the period in which the project manager must respond. [...] The reasons why the project manager may not accept a programme submitted for acceptance are stated in clause 31.3. Figure 1 shows how the fourth reason would apply with an example time line of communications.",
      "score": 0.33274442,
      "raw_content": null
    }
  ],
  "formatted": "Source: 7 Common Pitfalls to Avoid in NEC Management\nURL: https://www.digitalbeehive.com/latest-news/common-pitfalls-in-nec-management/\nGlenn and Neil propose that in a future ECC edition, it should allow Contractors to propose assumptions for Project Manager’s approval. Neil’s key point is that “There is no such thing as a Contractor’s assumption, only Project Manager-confirmed assumptions are valid under the contract.” ## Leaving X7 Delay Damages Blank Contractors sometimes leave X7 empty, believing that it reduces risk. However, this exposes them to unliquidated damages claims, as, despite it not being in the contract, clients legally have the right to claim back loss. The best practice, as recommended by Neil, is to include X7 with a stated value, even £0 or £1, to establish clarity and protect both parties. [...] Digital Beehive’s Brad Cahill states; “We don’t mandate responses to early warnings in Contract Bee. Instead, the system supports issuing early warning actions and meetings, without counting responses towards overall compliance scores in the contract.” ## Contractors Adding Their Own Assumptions in CE Quotations Another common pitfall in NEC management is Contractors inserting their own assumptions in Compensation Event quotations. Under the full ECC (Engineering and Construction) contract, Contractors cannot include their own assumptions within quotes. Clause 61.6 allows only the Project Manager to state assumptions, which can reduce risk allowances in the quotation.\n\n---\n\nSource: Navigating NEC contracts: A Project Manager's nightmare | Mohammed Talib posted on the topic | LinkedIn\nURL: https://www.linkedin.com/posts/mohammed-talib-hk_the-nec-contract-can-cause-the-project-manager-activity-7373542980621815808-20FO\nThe NEC contract can cause the Project Manager headaches when assessing compensation events. Because when you’re dealing with hundreds of events to evaluate prospectively, each with strict timelines, procedural landmines, and the contractor and employer both breathing down your neck, things get complicated fast. It’s not just about applying the contract. It’s about surviving the process: (1) Miss a deadline, and the contractor’s quote is deemed accepted. (2) Delay an assessment, and you risk stacking unresolved events that choke cash flow. (3) Update the programme, or risk time assessments moving further away from reality (4) Stay within the limits of your authority from the employer to make decisions on time and money (5) Wait while the employer goes through its internal processes when [...] 34 12 Comments Like Comment Mark Austin Artist MCIOB FRSA 3mo Report this comment Item 4 and 5 are the most interesting surely the Project Manager has to make impartial decisions based on entitlement not based on budget ? Is this where governance causes problems ? Like Reply 1 Reaction 2 Reactions Daniel Cowan 3mo Report this comment Thats because the NEC requires people to do things they are not normally taught educated or disciplined to do. Why would your QS not assess a compensation event, when we do this on every other form of Contract and the PM does not. The NEC and its proponents have destroyed Quantity Surveying in the UK and reduced our profession to being an Engineers assistant for lazy Engineers Like Reply 2 Reactions 3 Reactions [...] while the employer goes through its internal processes when you want to exceed your delegated authority (5) Push back too hard and trigger a dispute, a claim for breach, and be accused of failing to act in the spirit of mutual trust and co\n\n---\n\nSource: [PDF] NEC contracts provide an excellent basis for risk management, both ...\nURL: https://www.neccontract.com/getmedia/517c3d32-df47-4b53-b515-9faf3b377d5a/Richard-Patterson-Risk-Management-Paper.pdf?srsltid=AfmBOop8aVwyZ9akcVTZAVML0tguRoW2WUUcs97WyQIrNw82BYDW2z5e\nor any combination of the two. It is up to the client to include a clear statement in the scope. If the scope is silent on this point, then the default is that the contractor does not design any part of the works. Then the contractor can expect the client to design the whole of the works. As stated above, the contractor has a simple obligation to provide the works in accordance with the scope. One would ‘expect’ in a contract that a contractor should take the risk that its designs actually do allow it to meet the requirements of the (client’s) scope. In the case of any design by the contractor required to be submitted after award of contract, the project manager has an obligation to accept them or not accept them (for limited stated reasons) (Clause 21.2). However, any such acceptance [...] data completed by the contractor as part of the tender. The term ‘Scope provided by the Contractor for its design’ is referred to in only one line in the ECC conditions – Clause 60.1(1). The effect of this clause is that if the contractor requests a change to ‘its’ part of the scope so as to meet a requirement elsewhere in the scope • the project manager (on behalf of the client) has the option to accept the proposed change or not to do so and • the resulting change to the scope will NOT be a compensation event. Because of this, the risk of the pre-contract design by the contractor and the possible need for design development for elements to be designed by the contractor is clearly where it should be: with the contractor. This establishes a clear hierarchy: in the event of any conflict [...] the client to retain a particular risk in a quotation, then under clause 61.6 the project manager may state specific assumptions to be used in the contractor’s quotation for that compensation eve\n\n---\n\nSource: Managing Risks and Compensation Events – A Practical Case ...\nURL: https://necstorageprod.blob.core.windows.net/mediacontainer/nec/media/nec/products/events/ap%20ug%20conferences%20and%20workshops/presentations/presentations2015/09-pm_dga-managing-risks-and-compensation-events.pdf\n30.3 The Contractor does the work so that the Condition stated for each Key Date is met by the Key Date (note sanction for failure in cl 25.3) Note absence of ‘proceed regularly and diligently’ etc NEC key obligations • The Contractor’s design 21.1 The Contractor designs the parts of the works which the Works Information states he is to design. 21.2 The Contractor submits the particulars of his design as the Works Information requires to the Project Manager for acceptance…does not proceed until…[acceptance] 27.1 The Contractor obtains approval of his design from Others where necessary X15 – Option needed to limit design standard to reasonable skill and care not fit for purpose Early Warning (clause 16) • Early Warning – risks to time, cost, quality – each party must notify “as soon as it [...] is right or wrong. • But, PM may state “assumptions” for a compensation event if “too uncertain to forecast reasonably” and if the assumptions prove incorrect that is a further CE • Contractors have no power to decide that a compensation event quotation is subject to assumptions but should set out clearly where they consider the PM should use assumptions and what they are. Summary • NEC requires a new mindset and authority and willingness to make decisions rapidly. • NEC contracts must be carefully tendered and require more resources to manage. If final account is avoided fewer resources needed after completion. • Staying on top of programme obligations is crucial. • When NEC is not followed correctly it can make disputes harder to settle and resolve. Questions and Answers 27 Contractor’s [...] work outwith contract scope/risks then instruction needed. Programme • If the programme is not identified in the Contract Data, the Contractor submits a first programme for acceptance withi\n\n---\n\nSource: When and why NEC project managers have to assess compensation events | News | NEC Contracts\nURL: https://www.neccontract.com/news/when-and-why-nec-project-managers-have-to-assess-compensation-events?srsltid=AfmBOopU-5KEMis9wTjSk_I7W4HLSCXmBawT6o1Ar964mtLkC3CNa0vF\nHowever, there is no similar provision for the project manager when the contractor fails to submit its quotation within the three-week period, presenting a potentially dangerous cliff edge for the contractor. The project manager could remind the contractor of the need to submit in the last few days leading up to the end of three-week period. Such action by the project manager could avoid the burden of the assessment falling to the project manager. It could also trigger a discussion and possible agreement between the project manager and the contractor to extend the period (clause 62.5). [...] The contractor’s obligation to submit a compensation event quotation and details of the assessment is stated in clause 62.2. The time allowed for submission is three weeks following instruction by the project manager (clause 62.3). Clause 62.6 also allows the contractor to notify the project manager of the project manager’s failure to respond to a quotation, giving rise to an automatic extension to the period in which the project manager must respond. [...] The reasons why the project manager may not accept a programme submitted for acceptance are stated in clause 31.3. Figure 1 shows how the fourth reason would apply with an example time line of communications."
}