Question 1

You are asked to step in as the Project Manager to manage an ECC Option A contract
to construct a new retail store in its final 4 months. The defect correction period is 2
weeks. The project has been under way for 18 months and, following an initial review
of the paperwork and procedures, it is evident that both the previous Project Manager
and current Contractor have failed to manage the contract correctly. Any response
referring to dispute resolution should identify whether Option W1, W2 or W3 applies
as an assumption.

There are a number of Defects on the project which is nearing Completion. The
Client is keen to get the store open and is prepared to accept some of the Defects.

a. What provisions exist within the contract for a Defect to be accepted? How is
this dealt with financially and who is then liable for work if the Defect is
accepted?

[3 marks]

You meet the Contractor for the first time who explains they were unhappy with the
previous Project Manager. A compensation event quotation was submitted for
£420,000, but the previous Project Manager did not accept this and then assessed it
for £40,000. Upon review you believe that this is clearly wrong and should be more
like £400,000. The Contractor is threatening adjudication.

b. How might this be resolved without the need for adjudication and who is able
to make such an agreement? Assuming that the compensation event is
subsequently changed to £400,000 by agreement of the Parties, how is the
shortfall in payment dealt with?

[4 marks]

The Contractor’s most recent programme shows planned Completion after the
Completion Date. Delay damages of £50,000 per day are included in the contract.
c. Assuming the Contractor is late by 8 days, at what time are the damages
retained? What discretion does the Project Manager have?

[5 marks]

The Contractor eventually achieves Completion.

d. What duties should the Project Manager fulfil at Completion? What

documentation should be produced and who should it be sent to?

[5 marks]

After Completion, it becomes apparent that a lift installed by the Contractor has a
maximum load capacity of 8 people, but the Scope required a lift with a maximum
load capacity of 10 people.

e. How should this be dealt with? What happens if this is not resolved by the
Contractor? Assuming there is no retention, how would this issue be dealt with
financially?

[8 marks]
Question 2

During the construction of a new asset on an ECC Option A contract, there is an

argument about the status of the Scope. The Scope provided by the Client states
performance criteria for the mechanical and electrical installation that the
Contractor’s design is required to comply with. The Scope states that the Contractor
is required to design these parts of the works.

The Scope provided by the Contractor for its design does not fully comply with the
performance criteria. The Contractor says, that by accepting the tender, the Client has
agreed to the revised design and that this is what the Client will get. Apparently, any
change to this would constitute a compensation event.

a. Is the Contractor correct? How should this be dealt with by the Project
Manager?

[6 marks]

On the same project a further argument has emerged. This time the Scope provided by
the Client states that the air conditioning unit should perform 9 air changes per hour.
Elsewhere, in another document, which is part of the Scope provided by the Client, it
states 7 air changes per hour.

b. How should the Project Manager manage this and how should it be dealt with
financially?

[8 marks]

c. The Contractor later admits that it has priced for 9 air changes per hour. Does
this affect how any compensation event is assessed?

[2 marks]
d. If this was an Option C contract, how would the impact of this differ from an
Option A contract?

[3 marks]

To compound problems, the Scope provided by the Client did not state that the
cladding to the building should be in their corporate green colour, it merely defined
the performance standards but said nothing about the colour.

e. The Contractor’s view is that specifying a particular colour would now be a

compensation event. Is that correct? Also, how should the Project Manager deal
with this?

[6 marks]

[END]
Question 3

An ECC Option C contract has been awarded for the construction of a concert arena.

The access to the Site is constrained significantly and results in the Contractor having
to decant the fill material into small dumper trucks from the delivery wagons. The
Scope provided by the Client was clear about the access constraints.

a. The Contractor believes that this constitutes an impossible requirement and

notifies the Project Manager of this under clause 17.2. How should the Project
Manager respond?

[3 marks]

The Client’s health and safety representative is concerned about the deep excavations
required to construct the arena lighting columns and wants to see the design of the
earthwork supports.

b. What provisions exist within the contract to provide for this?

[4 marks]

The Contractor notifies a compensation event under clause 61.3 stating that this was
not included in the Scope and this is impeding the work.

c. Is this a compensation event? How should the Project Manager respond?

[5 marks]

The original Scope was, in hindsight, poorly drafted in certain areas. Whilst the
Contractor is responsible for design, the Scope did not contain a requirement for the
submission of design in accordance with clause 21.2. The newly appointed
Supervisor now wants to see the design of the permanent foundations and steelwork.

d. Can the Supervisor instruct this? How can the design be verified before work
commences?

[6 marks]

The Client’s use of the arena has now changed from that envisaged at the tender stage.
When the Contractor’s steelwork design is submitted, it complies with the law and
original Scope, however, it would now prevent future expansion to the West side of
the arena which is what is being considered by the Client.

e. Does the Project Manager have to accept the design? What provisions exist in
the contract for dealing with this situation?

[7 marks]

[END]
Question 4

An Option B contract has been awarded for the construction of a new road.

The requirements for street lighting were not included in the Scope. The Project
Manager instructs a change to the Scope to include the street lighting but does not
notify a compensation event. The Client, who has budgetary constraints, is now
stating that, as 10 weeks have passed by, the Contractor is not entitled to a change in
the Prices or Completion Date.

a. Is this correct and how should the Project Manager deal with this?

[5 marks]

The work has been undertaken and completed. The Contractor argues that as no rate
exists in the Bill of Quantities, the compensation event should be based on the
Contractor’s actual costs plus Fee.

b. What key clauses define how the compensation event should be assessed and is
the Contractor correct?

[7 marks]

Within the Bill of Quantities, an item of excavation has not been divided into different
depth classifications, which the method of measurement requires.

c. The Contractor notifies a compensation event under clause 61.3. Is this

correct? How should the Project Manager respond and within what timescale?

[4 marks]
The Project Manager fails to respond to the notified compensation event. Four weeks
later the Contractor realises this.

d. What options are available to the Contractor? If the Project Manager continues
to fail to respond to a notified compensation event, what impact will this
ultimately have?

[4 marks]

The Project Manager eventually responds, accepts that this is a compensation event
and instructs the Contractor to submit a quotation. Two weeks into the quotation
response period the Contractor telephones the Project Manager stating it is very
difficult to assess.

e. What is the default method of assessing a compensation event under Option

B? What other option is available to the Project Manager and Contractor?

[5 marks]

[END]
Question 5

A contract to construct a sports centre complex has been awarded under an ECC
Option C. Secondary Options X2 and X7 have been incorporated.

The work is underway when the Contractor encounters a burst pipe which it did not
cause and which requires immediate repair in order to prevent further damage to the
rest of the works. The Contractor notifies a compensation event under clause 61.3.
The Project Manager refuses to accept this as a compensation event stating that an
early warning should have been notified initially. Any response referring to dispute
resolution should identify whether Option W1, W2 or W3 applies as an assumption.

a. Is the Project Manager correct to take this approach? What options are
available to the Contractor?

[7 marks]

Six months into the project, a change in law comes into effect. This is to do with
electrical standards. The Contractor immediately notifies a compensation event. The
Project Manager refuses to accept this because it was known about before the tender
period but was not enacted.

b. Is the Contractor correct?

[2 marks]

Underground mine workings are uncovered by the Contractor. The Contractor

decides to fill the voids with expensive concrete which is readily available. The
Project Manager subsequently accepts that this is a compensation event but considers
it could have been more efficiently dealt with by use of a weak mix concrete.
c. Upon notification of a compensation event how should the Project Manager
respond and how should this be assessed? Is there any effect on payment?

[6 marks]

The most recent programme submitted by the Contractor forecasts that the works will
not be complete before the Completion Date. This would be disastrous for the Client
who has a number of high profile sports events booked. The Project Manager is put
under pressure by the Client to not accept the latest programme submitted by the
Contractor.

d. How should the Project Manager respond?

[5 marks]

The Contractor employs a new contracts manager who manages to mitigate the five
week delay down to one. Ultimately, the project finishes one week late. The Client is
delighted and agrees with the managing director of the Contractor that delay damages
will not be deducted.

e. How should the Project Manager deal with a request from the Client to not
deduct damages? What paperwork should be in place to formalise this
agreement?

[5 marks]

[END]