You are working on a project under an unamended NEC contract and the site is closed by snow for 7 days, who is responsible for the time and cost consequences?
- The Employer;
- The Contractor;
- Contractor entitled to time only;
- It depends on location of project
The answer to who is liable for the consequences of poor weather under an NEC contract his question is not black and white. A number of factors come into play, including the location of the project, as the expected weather in Inverness will be different from the expected weather in Tunbridge Wells. Whilst NEC contracts do provide that extreme weather is a compensation event, the contractor is only entitled to limited compensation. It is 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."
I published an article of this point earlier in the year (a copy can be found here) but I've taken this chance to delve a little more into the consequences of this position. Continuing with the Inverness theme, let's assume that the seven-day snow closure has occurred in January. It may be that the weather data shows that, across the last ten years, snow is expected to be lying on the ground at the agreed time on ten days in any given January. If this is the case, then the contractor is unlikely to be able to claim any relief – the contract price is deemed to have taken account of the potential for these events to occur. However, if the weather data showed that there was only expected to be one "snow day" then the contractor will have a better claim.
It is also important to note that the consequences of any adverse weather event will be assessed in the same way. For example:
- if the snow leaves the ground waterlogged, preventing work from continuing, then the lost days will only be a recoverable cost if they are outside what can be expected as a result of the "one-in ten" scenario.
- if productivity is reduced, it will only be the loss in productivity beyond the "one-in ten" scenario that the contractor can recover.
The practical advice to take from this is:
- Both parties should ensure the Contract Data contains clear, detailed and relevant weather data to use as the basis for assessment and that agreed processes are in place to measure the weather during the works. This should reduce the potential for disputes.
- Contractors should ensure that their tender price takes account of any expected weather difficulties that might affect the project and keep detailed records of how the weather has impacted on the works during the course of the project. This will mean that they should be able to present clear and compelling evidence to an employer if the need arises.