Certified NEC Professional Training Course

Final Examination

This paper must be answered in English.

INSTRUCTION

1. This paper consists of 4 questions.

2. Attempt ALL questions in this paper. Type your answers in the space below the each
question. Do not write in the margins. Answers written in the margins will not be marked.
3. Do not delete or modify the question, otherwise the answer will not be marked.
4. Unless otherwise specified, all working must be clearly shown.
5. The answers should be no more than 1,500 words per question (excluding the questions).
6. Full marks for the 4 questions are 80 (20 per question). The total marks scored in the final
examination will be combined with that scored in Stage 2 (full mark is 20) and hence the
full marks for this stage are 100 marks.  Pass mark is 60%.
7. No extra time will be given to candidates for uploading the paper. Please upload your
answers before the deadline of submission.

Delegate Number

BK19000148

Deadline of submission

24 Jun 2019

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
www.bkurcotraining.com
Question 1 [20 marks]

A new school is to be built under ECC Option B. During the tender stage, the Contractor included a
programme with the tender submission. The Contractor has been awarded the contract.

a. Differentiate between ‘date of Completion’, ‘planned Completion’ and ‘Completion Date’ and
identify how if at all they are linked. [3 marks]

“date of Completion” is a date decided by the Project Manager under Clause 30.2 when
“Completion” (as defined in Clause 11.2(2)) is achieved by the Contractor.

“planned Completion” is a date shown in a submitted programme, as required in Clause 31.2, when
the Contractor plans to complete the works. This “planned Completion” may change in programme
revisions when the Contractor update the progress and / or update the programme logic.

“Completion Date” is the completion date defined in Clause 11.2(3) and stated in Contract Data Part
One.

The Contractor shows the “planned Completion” and “Completion Date” in the programmes
submitted to the Project Manager for acceptance. If a “planned Completion” is shown beyond the
“Completion Date”, it indicates a forecast of delay and vice versa.

“date of Completion” is the date decided by the Project Manager when physical completion of the
works is achieved. If a “date of Completion” is beyond the “Completion Date”, the difference
between the “date of Completion” and “Completion Date” is determined for the calculation of delay
damages.

(172)

b. If no programme is identified in the Contract Data, when should the Contractor submit a first
programme and what should be included? Advise what the Project Manager should do if the
Contractor does not comply? [5 marks]

Clause 31.1 requires the Contractor to submit a first programme to the Project Manager for
acceptance within the period stated in the Contract Data Part One.

Clause 31.2 lists the elements to be shown on each programme submitted for acceptance. The key
elements include the starting date, access dates, Key Dates and Completion Date, planned
Completion, float, time risk allowances, the order and timing of operations which the Contractor
plans to do in order to Provide the Works.

If the Contractor does not submit the first programme as required in Clause 31.1, Clause 50.5 allows
the Project Manager to retain one quarter of the Price for Work Done to Date in assessments of
amount due until the Contractor has submitted a first programme showing the information which
the contract requires.

Since the retention of PWDD may become a financial burden on the Contractor and affects the
regular progress of works, the Project Manager may give an Early Warning under Clause 15.1 and
instruct under Clause 15.2 the Contractor to attend the Early Warning Meeting for resolution of the
programme submission issue.

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
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Under Clause 15.4, the Project Manager revises the Early Warning Register to record the decisions
made at each Early Warning Meeting and issues the revised Early Warning Register to the
Contractor.

In the meantime, the Project Manager may instruct the Contractor to submit a programme and the
Contractor is required to submit a programme within the period of reply after the Project Manager
has instructed the Contractor to do so.

(251)

c. The Contractor then submits a programme without identifying float or time risk allowances.
Advise what the Project Manager should do in assessing the programme. [4 marks]

Clause 31.2 requires the Contractor to show float and / or time risk allowances on each programme
submitted for acceptance.

If float and / or time risk allowances are not shown the a submitted programme, within two weeks of
the Contractor submitting a programme for acceptance, under Clause 31.3 the Project Manager
notifies the Contractor of the non-acceptance of the programme for the reason that the submitted
programme does not show the information which the contract requires.

The Project Manager may instruct the Contractor to submit a revised programme and the Contractor
submits a revised programme within the period for reply after the instruction under Clause 32.2.

If the Project Manger considers the programme submission issue could delay Completion or delay
meeting a Key Date, the Project Manager may give an Early Warning under Clause 15.1 and instruct
the Contractor to attend an Early Warning Meeting under Clause 15.2 for resolution.

(151)

d. The Contractor then submits another programme which includes float and time risk allowances.
Discuss the purpose of these float and time risk allowances. [5 marks]

“Time risk allowance” is owned by the Contractor as part of its realistic planning to cover its risks.
The Contractor’s time risk allowances are to be shown on its programme as allowances attached to
the duration of each activity or to the duration of parts of the works. They should be either clearly
identified as such in the programme or included in the time periods allocated to specific activities.
The time risk allowances should be retained in the assessment of any delay to planned Completion
because of a compensation event. The “time risk allowances” included by the Contractor in a
programme submitted for acceptance should be realistic or otherwise the Project Manager may
refuse acceptance.

“Float” is any spare time within the programme after the time risk allowances have been included. It
is normally available to accommodate the time effects of a compensation event to mitigate or avoid
any delay to planned Completion. “Float” is shared by the Parties while “terminal float” (i.e. float
attached to the whole programme) belongs to the Contractor.

(173)

e. Should the Project Manager wish to bring forward the completion of the project what should the
Project Manager do? [3 marks]

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
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Clause 36.1 allows the Project Manager to propose to the Contractor an acceleration to achieve
Completion before the Complete Date. If the Project Manager and Contractor are prepared to
consider the proposed change, the Project Manager instructs the Contractor to provide a quotation.
The instruction states changes to the Key Dates to be included in the quotation.

Under Clause 36.2, the Contractor submits a quotation for an acceleration which comprises
proposed changes to the Prices and a revised programme showing the earlier Completion Date and
the changed Key Dates.

Under Clause 36.1, within three weeks a quotation is submitted, the Project Manager replies that (i)
a notification that the quotation is accepted or (ii) a notification that the quotation is not accepted
and that the Completion Dates and Key Dates are not changed.

Under Clause 36.3 when a quotation for an acceleration is accepted, the Project Manager changes
the Prices, the Completion Date and the Key Dates accordingly and accepts the revised programme.

(163)

(910)

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
www.bkurcotraining.com
Question 2 [20 marks]

A new railway station is to be built under ECC Option C. Due to a discrepancy between the Scope
(provided by the Client) and shop drawings (prepared by a sub-contractor), steel trusses were
produced incorrectly and when delivered to site the Contractor discovered they did not fit the RC
structure.

a. What should happen once the problem is identified? What measures could be taken to overcome
the situation? [5 marks]

While the matter may delay Completion of delay meeting a Key Date, the Project Manager may give
an Early Warning under Clause 15.1 and instruct the Contractor and the Subcontractor under Clause
15.2 to attend Early Warning Meetings for resolution.

Under Clause 15.3, at Early Warning Meetings, those who attend co-operate in seeking solutions the
will bring advantage to all those who will be affected. Discussion on making and considering
proposals for how the effects of each matter can be reduced should be conducted.

Under Clause 15.4, the Project Manager revises the Early Warning Register to record the decisions
made at each Early Warning Meetings.

Now a discrepancy between the Scope and shop drawings is identified, under Clause 17.1, the
Project Manager notifies the Contractor (and the Subcontractor) as becomes aware of this
inconsistency. The Project Manager also states how the inconsistency should be resolved (e.g.
revision of shop drawings to conform to the Scope).

The Project Manager needs to review if a former decision is communicated to the Contractor upon
the submission of shop drawings. Clause 13.4 requires the Project Manager to reply to a
communication submitted by the Contractor for acceptance. If the reply is not acceptance, the
Project Manager states the reasons in sufficient detail to enable the Contractor to correct the
matter. If the reply is acceptance, the Project Manager changes the decision which has previously
communicated to the Contractor and this is a compensation event under Clause 60.1(8).

Clause 14.1 states that The Project Manager’s acceptance of a communication from the Contractor
does not change the Contractor’s responsibility to Provide the Works or liability for its design.

Under Clause 61.4, the Project Manager decides that the compensation event arises from a fault of
the Contractor and hence notifies the Contractor that the Prices, the Completion Date and the Key
Dates are not to be changed.

(310)

b. The Contractor had previously submitted the shop drawings to the Project Manager, who
approved them before the production. Who should take responsibility for any rectification/abortive
work? Discuss if the cost of this abortive work should be shared under target contract principle. [5
marks]

Clause 13.4 requires the Project Manager to reply to a communication submitted by the Contractor
for acceptance.

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Clause 14.1 states that the Project Manager’s acceptance of a communication from the Contractor
does not change the Contractor’s responsibility to Provide the Works or liability for its design.

Under Clause 20.1, the Contractor Provides the Works in accordance with the Scope.

Under Clause 11.2(6), the shop drawings / steel trusses produced becomes a Defect when that part
of the works is not in accordance with the Scope. The Contractor has the responsibility for the
rectification / abortive work.

Clause 11.2(26) precludes the cost of correcting Defects before Completion as Disallowed Cost. This
means that the cost of this abortive works should be allowed in Defined Cost, provided that the cost
is spent in accordance with other relevant clauses associated with Defined Cost (e.g. Clause 11.2(24),
Clause 26, Clause 52).

While the cost of the abortive work is a part of Defined Cost, under Clause 11.2(31), it is used in the
assessment of the Price for Work Done to Date and hence the same will be assessed in the
Contractor’s share under Clause 54.1.

(191)

c. Later, the Contractor proposes alternative marble tiles which have the same technical
performance as those specified in the Scope but a lot cheaper. The Project Manager accepts this and
notifies a Compensation Event to change the Scope. How will the Prices and Costs be changed? [5
marks]

If the Project Manager and the Contractor agree, the Project Manager may give an instruction to the
Contractor, changing the Scope to incorporate the Contractor’s proposed alternative marble tiles
under Clause 14.3.

Under Clause 60.1(1), the instruction given is a compensation event.

While this change of the Scope results from the alternative marble tile proposed by the Contractor
and accepted by the Project Manager, under Clause 63.4, the Prices are reduced.

Under Clause 63.1, the change to the Prices is assessed as the effect of the compensation event
upon the forecast Defined Cost of the work not done plus the resulting Fee. The Cost will be reduced
by the difference between the forecast cost for the conforming tiles and the actual cost for the
alternative tiles. The Prices will be reduced by the difference in Defined Cost (and adjusted for risk
allowance if appropriate) plus Fee.

(146)

d. The Contractor makes a mistake when ordering aluminum cladding, ending up with a slightly
different colour at the same price. This is identified only after installation. However, the Client’s
designer prefers the new colour to the one originally specified in the Scope. What should happen in
these circumstances? Discuss if this will be compensation event? [5 marks]

The installed aluminium cladding does not conform to the one specified in the Scope. This becomes
a “Defect” as defined in Clause 11.2(6).

Under Clause 43.2, the Supervisor and the Contractor notifies the other as soon as they become
aware of a Defect.

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Under Clause 44.1, the Contractor corrects a Defect (whether or not the Supervisor has notified it).
This will increase the Contractor’s total cost.

If the Project Manager has not certified the date of Completion, the Contractor’s cost on the
correction / rectification work is a part of Defined Cost (i.e. not Disallowed Cost as defined in Clause
11.2(26)) and this will unnecessarily increase the amount the Client pays to the Contractor for the
Providing the Works.

Under Clause 15.1, the Project Manager gives an Early Warning to the Contractor, or vice versa, and
instructs the other under Clause 15.2 to attend Early Warning Meetings. Under Clause 15.3,
solutions could be sought that will bring advantage to all those who will be affected.

Now the Client prefers the new colour to the one originally specified in the Scope. The Client may
direct the Project Manager to change the Scope for the new colour. The Project Manager gives an
instruction under Clause 14.3 to change the Scope. Under Clause 60.1(1), this instruction constitutes
a compensation event. The change to the Prices is assessed under Clause 63.1. However, if the effect
of this compensation event is to reduce the total Defined Cost, under Clause 63.4, the effect of this
compensation event does not reduce the Prices. When this compensation event is implemented
under Clause 66.1 and Clause 66.2, the “Defect” is considered corrected.

Alternatively, the Contractor may propose to the Project Manager that the Scope should be changed
so that a Defect (i.e. the slight colour difference) does not have to be corrected under Clause 45.1.

If the Contractor and the Project Manager (and the Client) are prepared to consider the change, the
Contractor submits a quotation for reduced Prices or an earlier Completion Date or both to the
Project Manager for acceptance (e.g. Contractor’s quotation may have no change to Prices and / or
change to Completion Date) under Clause 45.2. If the quotation is accepted, the Project Manager
changes the Scope, the Prices and the Completion Date accordingly (if appropriate). The change of
Scope under this Clause is not a compensation event.

(394)

(1,041)

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
www.bkurcotraining.com
Question 3 [20 marks]

A new 5 storey shopping mall with two levels of basement is to be built under ECC Option D.

a. Explain how and when the first Early Warning Register for the project is produced. [3 marks]

Early Warning Register is defined in Clause 11.2(8) and is a register of matters which are (i) listed in
the Contract Data for inclusion, (ii) notified by the Project Manager or the Contractor as early
warning matters. It includes a description of the matter and the way in which the effects of the
matter are to be avoided or reduced.

Matters identified by the Client are included in Contract Data Part One. Upon the commencement of
the contract, the Project Manager prepares the first Early Warning Register under Clause 15.2 and
issue it to the Contractor within one week of the starting date.

(103)

b. During the excavation for the basement, the Contractor encounters large boulders which were not
indicated in the Site Information during the tender stage. Advise what the Contractor should do.
How should the Project Manager react? Who takes responsibility for any time and cost implications?
[5 marks]

The Contractor encounters large boulders during the excavation for the basement, which may (i)
delay Completion, (ii) delay meeting a Key Date or (iii) increase the Contractor’s total cost. The
Contractor should give an Early Warning by notifying the Project Manager under Clause 15.1.

Under Clause 15.2, the Contractor may instruct the Project Manager and any other people, if the
other agrees, to attend an Early Warning Meeting.

Under Clause 15.3, in an Early Warning Meeting, those who attend co-operate in seeking solutions
that will bring advantage to all those who will be affected and deciding on the actions which will be
taken and who, in accordance with the contract, will take them.

Under Clause 15.4, the Project Manager will then revise the Early Warning Register to record the
decisions made at each Early Warning Meetings. If a decision needs a change to the Scope, the
Project Manager instructs the change at the same time as the revised Early Warning Register is
issued.

After an Early Warning is given, the Contractor may notify a compensation event under Clause 61.3,
within eight weeks of becoming aware of the event (i.e. encountering boulders during excavation).

Under Clause 60.1(12), it is a compensation event if the Contractor encounters physical conditions
which (i) are within the Site, (ii) are not weather conditions and (iii) an experienced contractor would
have judged at the Contract Date to have such a small chance of occurring that it would have been
unreasonable to have allowed for them.

Upon the notification of a compensation event by the Contractor, the Project Manager replies to the
Contractor within one week after the Contractor’s notification (or a longer period to which the
Contractor has agreed) under Clause 61.4. If the Project Manager agrees that the event is a
compensation event, the Project Manager instructs the Contractor to submit quotations.

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Under Clause 61.5, if the Project Manager decides that the Contractor did not give an early warning
of the event which an experienced contractor could have given, the Project Manager states this is in
the instruction to the Contractor to submit quotations.

The Project Manager may discuss with the Contractor different ways of dealing with the
compensation event which are practicable. The Project Manager may instruct the Contractor to
submit alternative quotations under Clause 62.1.

Under Clause 62.3, the Contractor submits quotations within three weeks of being instructed to do
so and the Project Manager replies within two weeks of the submission. The reply by the Project
Manage will either be (i) a notification of acceptance of the quotation, (ii) an instruction to submit a
revised quotation or (iii) that the Project Manager will be making the assessment.

Under Clause 62.4, if the Project Manager instructs the Contractor to submit a revised quotation, the
Project Manager explains to the Contractor the reasons for doing so.

If the Project Manager assesses a compensation event, under Clause 64.3, the Project Manager
notifies the Contractor of the assessment and gives details of the assessment.

If the Project Manager is uncertain about the cost and time implication of ways of dealing with the
compensation event, under Clause 65.1, the Project Manager may instruct the Contractor to submit
a quotation for a proposed instruction. The Contractor does not put a proposed instruction into
effect without the acceptance by the Project Manager.

If the effects of a compensation event are too uncertain to be forecast reasonably, under Clause
61.6, the Project Manager states assumptions about the compensation event in the instruction to
the Contractor to submit quotations.

When the Project Manager agrees a compensation event, the Client takes the responsibility for the
time and cost implications.

(607)

c. The Project Manager accepts the Contractor’s quotation for a compensation event. Since the
effects of the compensation event are too uncertain to be forecast reasonably, the quotation was
prepared based on Project Manager’s assumptions in forecasting the defined cost of the
compensation event. The assumptions have subsequently been found out to have been overly
pessimistic. The compensation event has been executed but the actual defined cost plus fee is
$250,000 lower than the forecast. How should this situation be handled and can the Client recover
any of the overpayment? [5 marks]

Under Clause 61.6, if the effects of a compensation event are too uncertain to be forecast
reasonably, the Project Manager states assumptions about the compensation event in the
instruction to the Contractor to submit quotations. Assessment of the event is based on these
assumptions. If any of them is later found to have been wrong, the Project Manager notifies a
correction.

Under Clause 60.1(17), a correction to an assumption which the Project Manager stated about a
compensation event is a compensation event.

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Ideally, the Project Manager shall have assessed the Contractor’s quotation for the forecast of
Defined Cost and the risk allowances for cost (which is allowed in Clause 63.8).

When the risk allowance for cost are priced to each assumption stated in the first compensation
event, if the Project Manager notifies a correction of assumptions (e.g. to eliminate certain risks that
eventually have not occurred) under Clause 61.6, this creates a second compensation event under
Clause 60.1(17). Under Clause 63.4, if the effect of this second compensation event is to reduce the
Total Defined Cost, the Prices are reduced (i.e. reduced from the accepted first quotation, taken out
the risks that have not occurred).

While Option D is adopted for this contract, the payment to the Contractor is based on PWDD (i.e.
total Defined Cost plus Fee), there is no issue of overpayment. The $250,000 excess will be assessed
in the Contractor’s share under Clause 54.5 at the end of the project.

If the correction of assumption approach is adopted, the $250,000 excess will be adjusted in the
second compensation event, reducing the Total of the Prices used in the assessment under Clause
54.5.

(275)

d. The curtain wall system is specified in the Scope to be Contractor design. During the design
development process, the Contractor identifies a cheaper subcontractor who can provide an
alternative design at the same cost but with a better performance. The proposed new
subcontractor’s design is agreed with the Project Manager at an early warning meeting, and the
Contractor then proceeds to enter into a subcontract. After the works are done it transpires that
some items were not included in the subcontractor’s quotation and as a consequence the costs are
greater than originally thought. The Contractor notifies a compensation event. Discuss the
Contractor’s entitlement to recover the extra cost incurred. What should have been done in these
circumstances? [7 marks]

The curtain wall system is specified in the Scope to be Contractor design.

While the proposed new subcontractor’s design is agreed with the Project Manager at an early
warning meeting, the Project Manager should have recorded the decision made and issued the
revised Early Warning Register to the Contractor under Clause 15.4.

Under Clause 21.1, the Contractor designs the parts of the works which the Scope states the
Contractor is to design. Under Clause 21.2, the Contractor submits the particulars of its design as the
Scope requires to the Project Manager for acceptance. The Contractor does not proceed with the
relevant work until the Project Manager has accepted its design.

As the works are done, it is assumed that the above contractual procedure has been observed and
followed by both the Project Manager and the Contractor.

Nevertheless, Clause 14.1 states that the Project Manager’s acceptance of a communication from
the Contractor does not change the Contractor’s responsibility to Provide the Works or liability for
its design.

Clause 26.1 further adds that if the Contractor subcontract works, it is responsible for Providing the
Works as if it had not subcontracted.

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Clause 26.3 requires the Contractor to submit the proposed subcontract documents for each
subcontract to the Project Manager for acceptance.

Clause 26.2 requires the Contractor to submit the name of each proposed Subcontractor to the
Project Manager for acceptance.

Before the Contractor proceeded to enter into a subcontract, it is assumed that Clause 26.1, 26.2
and 26.3 are all observed and followed by both the Project Manager and the Contractor.

If it transpires that there are additional costs to be paid to the subcontractor, provided that the
payment is made in accordance with the subcontract conditions and accepted by the Project
Manager, the additional payment should form a part of the Defined Cost and the same amount shall
be paid to the Contractor by the Client.

When the Contractor notifies a compensation event, he may indicate the relevant type(s) of
compensation event that he believes the event belongs to. However, based on the preceding
paragraphs, it is not likely that the event notified by the Contractor is not one of the compensation
events stated in the contract. The Project Manager replies to the Contractor’s notification within one
week unless a longer period to which the Contractor has agreed.

As to the Contractor’s entitlement to recover the extra cost incurred, the Contractor shall be paid by
the Client the same subcontract amount (as Defined Cost) plus Fee while there is no change to
Prices.

(422)

(1,407)

BK SURCO Limited
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Question 4 [20 marks]

A new swimming pool is to be built under ECC Option A.

a. Should an Activity Schedule be prepared, when should this be done, and who should prepare it? [3
marks]

The first Activity Schedule should be prepared by the Contractor at the time of tender and attached
to Contract Data Part Two.

The activities on the Activity Schedule should relate to the Scope and relate to the operations on the
Accepted Programme. If the Contractor changes a planned method of working, he submits a revision
of the Activity Schedule to the Project Manager for acceptance under Clause 55.3.

(68)

b. When if at all should the Activity Schedule be revised and what is the procedure? [5 marks]

Under Clause 31.4, the Contractor provides information which shows how each activity on the
Activity Schedule relates to the operations on each programme submitted for acceptance.

Under Clause 55.1, if the activities on the Activity Schedule do not relate to the Scope, the
Contractor corrects the Activity Schedule.

Under Clause 55.3, after the first Activity Schedule is accepted, if the Contractor (i) changes a
planned method of working at its discretion so that the activities on the Activity Schedule do not
relate to the operations on the Accepted Programme or (ii) corrects the Activity Schedule so that the
activities on the Activity Schedule relate to the Scope. The Contractor submits a revision of the
Activity Schedule to the Project Manager for acceptance.

Under Clause 63.14, the assessments for changed Prices for compensation events are in the form of
changes to the Activity Schedule.

If the Contractor submits quotations (in the form of a changed Activity Schedule and altered
programme) for compensation events under Clause 62.3 and the Project Manager accepts the
quotations under Clause 62.3, the compensation events are implemented under Clause 66.1 and the
Activity Schedule is changed accordingly under Clause 66.2.

(193)

c. What is the Price for Work Done to Date when the Contractor applies for interim payment under
Option A? How can the Contractor get paid for partially completed works? [3 marks]

Under Clause 11.2(29), the Price for Work Done to Date is the total of the Prices for (i) each group of
completed activities and (ii) each completed activity which is not in a group. In this context, a
completed activity is one without notified Defects the correction of which will delay following works.

If the Contractor wish to get paid for partially completed works, the Contractor should submit a
revised programme under Clause 32.2 to Project Manager for acceptance. In the revised
programme, the Contractor shows the breakdown of the partial completion (e.g. in stages). If the
Project Manager accepts the revised programme under Clause 31.3, the Contractor submits a

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revision of the Activity Schedule (e.g. breakdown of Prices in accordance with the revised
programme) to the Project Manager for acceptance under Clause 55.3.

If the revised Activity Schedule is accepted by the Project Manager, the Contractor may include the
Prices for the completed activities (e.g. a portion of the original activity becomes an individual
activity in the latest Accepted Programme and Accepted Activity Schedule) in the interim payment
application.

(180)

d. How are compensation events assessed when using Option A? What is the purpose of the Short
Schedule of Cost Components under Option A. [5 marks]

Under Clause 63.6, the rights of the Client and the Contractor to changes to the Prices, the
Completion Date and the Key Dates are their only rights in respect of a compensation event.

Under Clause 63.1, the change to the Prices is assessed as the effect of the compensation event
upon (i) the actual Defined Cost of the work done by the dividing date, (ii) the forecast Defined Cost
of the work not done by the dividing date and (iii) the resulting Fee.

Under Clause 63.8, the assessment of the effect of a compensation event includes risk allowances
for cost and time for matters which have a significant chance of occurring and are not compensation
events.

Under Clause 11.2(23), Defined Cost is the cost of the components in the Short Schedule of Cost
Components.

Under Clause 63.2, the Project Manager and the Contractor may agree rates or lump sums to assess
the change to the Prices.

However, under Clause 63.14, the assessments for changed Prices for compensation events are in
the form of changes to the Activity Schedule.

The Short Schedule of Cost Components is always used to define the cost components when
assessing a compensation event when Option A is chosen, unless otherwise agreed by the Project
Manager and the Contractor.

As to the assessment of delay, under Clause 63.5, a delay to the Completion Date is assessed as the
length of time that, due to the compensation event, planned Completion is later than planned
Completion as shown on the Accepted Programme current at the dividing date. A delay to a Key
Date is assessed on the same principle.

(270)

e. The Project Manager considers the Contractor’s site agent to be uncooperative and instructs the
Contractor to remove the site agent. Explain the rights of the Project Manager and the Contractor
respectively. [4 marks]

Under Clause 24.1, the Contractor provides each key person named to do the job stated in the
Contract Data Part Two. If the Contractor’s Site Agent is named in the Contract Data, the Contractor
has to follow, unless a replacement person is proposed to and accepted by the Project Manager.

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Under Clause 24.2, the Project Manager may, having stated the reasons, instruct the Contractor to
remove a person. The Contractor then arranges that, after one day, the person has no further
connection with the work included in the contract. The Contractor then needs to submit the name,
relevant qualifications and experience of a proposed replacement person to the Project Manager for
acceptance under Clause 24.1.

If the Contractor does not agree with the Project Manager’s instruction, the Contractor may seek
dispute resolution by referring the case to Senior Representatives if Secondary Option W1 or W2 is
adopted or to the Dispute Avoidance Board if Secondary Option W3 is adopted.

(159)

(870)

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
www.bkurcotraining.com
 END OF PAPER

BK SURCO Limited
Suite 1901-2, 19th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
www.bkurcotraining.com