The two Industry experts, Glenn (GMH Planning) and Neil (NE Consult), delivered solutions to navigating challenges, avoiding these misconceptions, and our Business Development Manager, Brad Cahill, explained how the Contract Bee system guarantees conformity with NEC Contracts. This article will give an overview of the webinar and recommendations from the panel of specialists.
Matters for the Early Warning Register and Associated Liability
The webinar commenced with Neil highlighting early warnings often being misunderstood at pre-contract. Realistically, they provide space in both Contract Data Part One and Two for either party to flag potential issues early, ensuring they’re “on the table” for discussion once the contract begins. Importantly, capturing items in the Early Warning Register does not assign liability—risk allocation is determined elsewhere in the contract. Instead, this process promotes proactive co-operation and minimises potential impacts.
Is There an Obligation to Respond to an Early Warning?
Neil clarified that there’s no obligation to formally reply to an early warning. Instead, issues are addressed in early warning meetings, with actions recorded in the register. Many cloud-based systems add to the confusion by prompting a response within the period of reply and then showing as a late action if no response. A better use would be to document actions directly in the Early Warning Register’s action column.
Relating to Early Warnings, Glenn Asked Brad – “How does Digital Beehive deal with this? Is it mandatory to respond to an early warning or not within Contract Bee?”
Brad stated, “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.”
Glenn welcomed Digital Beehive’s approach to early warnings, noting that most responses should be captured through meetings and the register rather than being mandated by the system. He agreed it’s useful to allow optional replies, but not to penalise non-responses.
Whether Contractors Can Include Their Own Assumptions With CE Quotations.
Glenn explained that under the full ECC contract, Contractors cannot include their own assumptions within compensation event quotations. Clause 61.6 allows only the Project Manager to state assumptions, which can reduce risk allowances in the quotation.
Glenn and Neil’s Recommendations to the Future ECC Edition:
That the ECC includes a formal option for Contractors to propose assumptions, which the Project Manager can then agree in writing before submitting a compensation event quotation.
Neil’s key point, “There’s no such thing as a Contractor’s assumption, only Project Manager-confirmed assumptions count under the contract.”
X7 Delay Damages
The explanation by Neil outlined that while leaving X7 delay damages blank may seem beneficial for Contractors, it exposes them to unliquidated loss claims. These may be challenging for Clients to recover, but are still possible. He recommended that the strongest position is to include X7 in the contract with damages clearly stated, even as £0 or £1 per day, providing certainty and better protection for the Contractor’s interests.
Compensation Event – Should It Be Based on Actual or Forecast Cost?
Clarification was provided regarding compensation event quotations in that they must follow clause 63.1, using:
- The actual Defined Cost of the work done by the dividing date,
- The forecast Defined Cost of the work not done by the dividing date,
- The resulting Fee
Assessments are based on forecasts at the point the instruction was given or compensation event notified, not actuals, and Project Managers cannot retrospectively adjust for risk or duration. Contractors must act efficiently to minimise cost and delay
Is a Project Manager’s Instruction Always Something That a Contractor Can Recover Time and Cost Against?
Not all Project Manager instructions trigger time or cost recovery, only those that qualify as compensation events under clause 60.1. Glenn added that instructions clarifying existing scope or enforcing safety should not cause concern, as they don’t entitle the Contractor to compensation.
What Does It REALLY Mean to Act in a “Spirit of Mutual Trust and Co-Operation”?
Glenn and Neil feel that this should be looked at thoroughly, but in a nutshell:
This does not mean ignoring contractual rules. For example, the Contractor should not follow verbal instructions simply to maintain relationships. All Parties must continue to follow the agreed contract terms, as these underpin collaboration and trust.
Neil’s Golden Rule:
The phrase “…act in a spirit of mutual trust and co-operation.” should be seen and not heard
Too often, it’s used cynically during disputes as a way of pushing for agreement. In those moments, Neil advises returning to clause 10.1- “…shall act as stated in the contract”
Knowledge Sharing Is Key
Glenn, Neil, and we all consider that recognising and addressing these common misconceptions is key to avoiding disputes, improving unity, and ensuring projects are delivered more efficiently and successfully.
This article only underlines the key points of the common pitfalls webinar.
