Detailed Analysis of NEC4 Option D Contract in Construction Law

This report provides a detailed analysis of the NEC4 Option D construction contract, examining various scenarios and potential disputes. It explores issues such as delayed program submissions, faulty piling work, changes to project scope, subcontracting approvals, and acceleration of work. The report delves into the implications of each scenario, referencing specific clauses within the NEC4 Option D contract to determine appropriate actions and resolutions. It addresses compensation events, assessment errors, and adverse weather conditions, offering insights into the roles and responsibilities of the contractor and project manager. The report emphasizes the importance of adhering to contract terms for effective project management and dispute avoidance, providing a comprehensive overview of the contract's key elements and their practical application in construction law.

CONSTRUCTION LAW
CONTRACT

Table of Contents
INTRODUCTION...........................................................................................................................1
NEC4 OPTION D CONTRACT.....................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Construction Law Contracts, like any other contracts, are those agreements which are
enforceable by law on the basis of mutual consent as well as policies or conditions that have
been mentioned in the document form. The most favoured form of Construction Contract relates
to NEC Contract Suite which acts as a guiding light to the implementation of sound project
management principles in Building industry. This report gives a detailed account of NEC4
contracts in regards to a given case scenario. Thus, facilitating in understanding the importance
of various clauses and conditions given in such contracts at the time of any dispute or issue
arising between the binding parties.
NEC4 OPTION D CONTRACT
The arising issues and their befitting solutions have been enlisted below:
 In May 2018, Revised Programme still not received for works:
As per the NEC4 Option D Contract, the interval on receiving the revised programmes is
stated at a time span of 4 weeks (Cartlidge, 2019). Revising a programme essentially means to
check the progress of the work regarding each operation as well as determining its impact on the
work needed to be completed. A contractor is liable to submit a revised programme to Project
Manager for acceptance within the pre-determined period. As per the contract, the contractor was
required to submit a revised programme with Project Manager at an interval of 4 weeks, which
BuildUK failed to do so. This can mean one of the two things viz. either the work has not been
completed on time which has resulted in the delay of the revised programme submission with the
project manager. Hence, BuildUK Ltd, must submit a printed copy of Revised Programme within
next few days of May 2018, so that the Project Manager may approve and make the necessary
changes required for the completion of next phase of the construction project. In addition to it,
the contractor will be liable to pay a compensating amount to the project manager for resulting
loss of time and money. Any departure from this shall be treated as a Breach of Contract on the
part of BuildUK Ltd. (NEC4, Resolving and Avoiding Disputes - Option W2 ).
 It is suspected that some piling work undertaken is of faulty nature and may well be
repeated elsewhere:
As per the given case scenario, Piling Work undertaken is suspected to be faulty with a
probability of being repeated elsewhere too (Eggleston, 2019). While undertaking such work,
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various factors are taken into consideration such as the soil condition present beneath the ground
among others. In such a case, it is recommended to ascertain that the Pile has adequate
drivability as well as the systems enforced are effective in nature. If no obvious reasons are
found, a new batch of piling work must be implemented on the existing one ensuring that no
fault takes place this time.
 Change in the Roof of Glazed Reception Area to a Traditional Pitched and Tiled
Alternative by Client.
The NEC4 Option D Contract gives the power to make any changes in scope of a
construction project to the Project Manager. Hence, any decision made regarding the change of
roof from glazed to a traditional one would solely depend on Project Manager's Discretion. Also,
the client does not want to make changes to the roof at the cost quoted by the Contractor
(Ganotra, 2017). As the period for reply for Project Manager is 2 weeks and the revert from PM's
side comes after 3 weeks, the decision stands rejected and must be done on the basis of Client as
there is a lapse of stipulated time given to the Project Manager (PM) as per the conditions
mentioned in the contract. (NEC4, Resolving and Avoiding Disputes - Option W2).
 Subletting of the steel frame design to the Subcontractor, however, no request of
approval has been initiated on Subcontractor's part regarding the same.
As per the Clause [26.2], NEC4 Contract, a contractor needs to submit the name of
proposed subcontractors to the Project Manager. The PM is fully allowed to reject such a name if
the project Manager does not believe that the Subcontractor does not meet the criteria which is
required to meet the necessary conditions and demands of contract (Hughes, 2018). Until and
unless the Project Manager does not approve of the request of subcontracting, a contractor
cannot allow subletting of the steel frame design to the Steel Frame Subcontractor. With an
absence of Subcontract Request with Project Manager, it cannot be initiated. Hence, in order to
rectify this situation, the contractor, BuilderUK Ltd., needs to submit a request for subletting the
design of steel frame to the Project Manager.
 Client wants to bring forward the completion of work by three weeks in order to
ensure that manufacturing commences well in advance so as to allow readiness for
the Christmas Period.
As per the given case scenario, the Client, that is Manufacture King Ltd., wishes to bring
forward the completion of work by three weeks. This would mean a change in the timeline as
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well as key date, that is March 31, on which the completion of work would be executed. As
Christmas Period mainly falls between December 21, 2018 and January 5, 2019. This would
result in changes made in the planned activities, revised programmes, budgets among other
important factors. It depends on the Project Manager and the Contractor now whether to accept
the proposed changes or not (Clause 36.1).
As per the [36.1] Clause of the NEC4 Option D contract, such a situation shall result in
the acceleration of the given project. If the Project Manager accepts the proposal set by the
Client, another quotation shall be provided by the contractor, here BuilderUK Ltd. to the Project
Manager regarding the changes in the Key Date (Jackson, 2017). Such a quotation shall be
provided within the three weeks of the instruction given by the Manager. A reply shall be given
to the Contractor regarding the same in the next three weeks of such a receipt of quotation on
their part. The reply shall include either:
(a) a notification stating acceptance of the quotation; or
(b) a notification stating a rejection of the quotation with a statement to not change the key as
well as the completion date of the project.
If such a quotation is accepted, the Project Manager needs to make the necessary changes
in the Key as well as the Completion Date including Prices accordingly and accept the revised
programme. (Clause 36.3)
 Information regarding Additional Costs associated with testing of piling over and
above the scope have surfaced on Contractor's part through the submission of CE.
The CE Submitted by the Contractor regarding the testing of Piling, falls over and above
the scope of the project. One cannot falter from the Scope of the Project at all times. Such a
deviation would result in the Breach of Contract on the defaulter's part. As per the clause 41 of
the NEC4 Option D Contract Family, Tests and Inspections need to be informed well in advance
before and after they are actually executed (Mitchell and Trebes, 2015). In addition to this, only
those materials, facilities and samples are provided in the form of samples for testing and
inspection purposes that have been clearly defined in the scope of the project. Since the CE
Submission requires testing of the Piling that is well out of the scope, any additional costs
incurred on this are not attributable to the Project resulting in breach of contract on contractor's
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part. Hence, the Project Manager needs to notify the same to the Client as well as ask the
contractor to withdraw such a submission on their part.
 In addition to the non-certification of CE for the additional testing of Piling Work,
BuilderUK Ltd. has complained of ascertaining an incorrect value of the steelwork.
It was agreed that 50% of the work was completed, however, value certified by the
Project Manager is the 42% of the total value. After a thorough review, an
arithmetical error has been identified.
In accordance with the procedure of assessing the amount due mentioned in the Clause
[50.9] of the NEC4 Option D Contract, the Project Manager reviews the records available within
the thirteen weeks after the Contractor issues a notification to the PM regarding such assessment.
The Manager assesses the Contractor's share by looking at the difference between total prices
and price of the work done till date (Powell, 2016). Such a situation would result in a
compensation event on the Manager's part. Such a compensation event would be in pursuance
with the Clause 66 of the NEC4 ECC Contract Family, wherein a notification regarding the
acceptance of claims made by BuilderUK Ltd. shall be declared correct. For this purpose, a
notification shall be issued on the correction of assessment of total value of steelwork will be
described at length.
 BuilderUK Ltd. fears that the contract will not be completed by the completion
date. For this purpose, the contractor submits a CE for both time as well as cost for
adverse weather conditions for 3 weeks. Such a cost is expected to take the
contractor over the target cost.
For successful completion of any construction project, the contractor surveys the weather
conditions so as to determine the contract date. To ensure the successful completion, a weather
measurement is recorded within a calendar month before the arrival of completion date of the
whole project. As the weather conditions are said to be adverse for 3 weeks, the given case
scenario, states that BuilderUK Ltd. Would not be able to finish their work by the set date of
completion. As per the Clause 60.1 (12), a compensation event occurs if the contractor identifies
physical conditions that are 'within the Site' and 'are not weather conditions'. Since the above
mentioned issue is a weather condition, such a compensating event shall not be applicable in the
given situation. As adverse weather conditions are not in direct control of anyone, the completion
date stands extended (Somrey, Gouveia and van Dyk, 2017). The project manager needs to take
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such information into account and form a considered opinion with the contractor and changes in
the prices as well as the completion date shall be made appropriately with the next date of
completion being April 21, 2019.
CONCLUSION
A Construction Contract Law is a type of legally binding agreement that includes a client
and the contractor. From the above discussion it can be concluded that the NEC4 Option D
Contract is an important part of the NEC4 Contract Suite that helps in overcoming various issues
in terms of Completion Date, Compensation, Assessment and Error Detection among others.
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REFERENCES
Books and Journal
Cartlidge, D., 2019. Estimator's Pocket Book 2e.
Eggleston, B., 2019. The NEC4 Engineering and Construction Contract: A Commentary. Wiley-
Blackwell.
Ganotra, S., 2017. Good Fortune-NEC4. Ct. Uncourt. 4. p.15.
Hughes, K., 2018. Understanding the NEC4 ECC Contract: A Practical Handbook. Routledge.
Jackson, S., 2017. Fresh perspective. Construction Journal. p.25.
Mitchell, B. and Trebes, B., 2015. NEC4: The Role of the Supervisor. London, UK: ICE
Publishing.
Powell, G., 2016. Construction Contract Preparation and Management: From Concept to
Completion. Macmillan International Higher Education.
Somrey, M., Gouveia, J. and van Dyk, J., 2017. NEC4: a step up?. Without Prejudice. 17(4).
pp.46-47.
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