With media threats of a second "Beast from the East" and suggestions that this winter could be the coldest on record, now is a sensible time to review the provisions of your contracts to see how adverse weather could impact on your entitlement to additional time to complete your works or to further payment. This article deals with how these circumstances are dealt with by the standard form NEC Contracts.

Under both the NEC 3 and NEC 4 contracts, the risks around weather are covered by one of the standard Compensation Events – clause 60.1(13). This sets out that a Compensation Event arises where:

A weather measurement is recorded:

  • within a calendar month,
  • before the Completion Date for the whole of the works and
  • at the place stated in the Contract Data

the value of which, by comparison with the weather data is shown to occur on average less frequently than once in ten years.

Only the difference between the weather measurement and the weather which the weather data show to occur on average less frequently than once in ten years is taken into account in assessing a compensation event.

How is the effect of the weather measured?

The Contract Data provides for four key weather measurements for each calendar month:

  • cumulative rainfall;
  • the number of days with rainfall in excess of 5mm;
  • the number of days with a minimum air temperature less than 0°C; and
  • the number of days with snow lying at an agreed time.

Parties can also add their own weather measurements, for example windspeed, if they so wish.

The Contract Data also contains space for parties to set out who will provide the weather measurements during the course of the works, where the details of the historic weather data have been recorded and where they are available from.

It also contains a section that allows parties, in the absence of historic data, to include their own assumed values for the weather data. This section could be particularly useful for projects in remote locations.

What does this mean?

The key points to take away are:

  • You should ensure that the Contract Data is fully completed when a contract is drafted – in the absence of base weather data, disputes over the extent of liability in the face of inclement weather are sure to arise.
  • Ensure that the nearest/most appropriate location is used for the measurement of the historic records. Weather data from London would bear little relevance to works in Inverness.
  • Although the NEC contracts provide for a compensation event in certain circumstances, the risk of poor weather is actually shared between the Employer and the Contractor. Only once the weather goes beyond the "one in ten years" condition and, even then, only to the extent that the weather is worse is the Contractor entitled to an extension of time or a change in the Prices.
  • As always good record keeping will be key to prove any claim – parties will need to show the effect (or otherwise) that the weather had on their works to support their position.

Contributors

Eric Johnstone

Legal Director