What is so wrong about being “contractual”?

Do you remember the days when the word “contractual” was a swear word and had negative connotations? What do you mean it still is? Isn’t it sad that we are still in a position that despite NEC3 contracts being written much more constructively and proactively they are still tarnished with the same brush as other contracts that are shall we say are “less helpful” and not much more than a claims tool. The processes within the NEC3 contracts are trying to be a set of good practice management tools that will help/guide people into following processes and timescales that will help them deliver the project and not end up with a big drawn out claim at the end to ascertain entitlement(which never generally goes well for anyone).

 

It surprises me that people complain about one party not following the contract, but then refuse to follow the remedy process within the contract available to them to rectify this, for fear of it being seen as “too aggressive”. Remember – you whilst someone could be perceived to be “contractually aggressive”, but being contractual does not need to be construed as being aggressive. My definition of being contractual is very simple and easy to remember – it is simply “follow the contract”!

 

Here are common examples that I have often witnessed, where one Party does not follow the contract and the other Party does not trigger the remedy available to them:

 

  • Contractor does not produce a quotation for a compensation event and the Project Manager does not then go onto assess themselves.

Result: the pot of un-agreed CE’s grows ever larger for which neither Party are clear on their associated liability. CE’s then compound on other CE’s and then they seem too difficult to unpick – so everything gets left until the end of the project (which is never a good result).

  • Project Manager does not respond to a quotation within two weeks but the Contractor does not notify them of this failure, which would result in it being “deemed accepted” if no further response within another two weeks.

Result: again neither Party understand their relative liability and this only grows harder to agree and/or more subjective the longer it takes to assess.

  • Project Manager does not respond to a programme within two weeks, but the Contractor fails to notify this lack of response as a compensation event.

Result: the programme is not “deemed accepted” due to no response (the only area in the contract that is the case for is within the compensation event process). The CE is not anything the Contractor can claim money for but it would up the ante to encourage a response in the first place. No accepted programme now begs the question as to how/what future compensation events should be assessed against?

  • Project Manager gives a verbal instruction on site and the Contractor acts on it because they feel that “in a spirit of mutual trust and cooperation” they should be.

Result: Contractor thinks they will be paid for this, but how much and what process allows them to be paid for it? The instruction should be in writing to make it clear what is being instructed, which can then be notified as a compensation event process which will follow the quotation/ assessment/implementation route to a conclusion. Clause 10.1 first and foremost is about following the contract as well as (not instead of) acting in a spirit of mutual trust and cooperation i.e. only follow an instruction that is in writing.

  • Contractor fails to submit their first programme for acceptance, or the one that is submitted is rejected by PM as it does not contain the information the contract requires. The PM however then fails to withhold 25% of the Contractors Price for Work Done to Date until they do submit/get it accepted.

Result: Contractor does not feel too motivated to make sure they do get their programme accepted any time soon. However, this then allows the PM the opportunity to assess compensation events themselves until such time the programme is accepted (or at least issued showing the information the contract requires) which is unlikely to be in the Contractors interest to allow to happen!

 

The contract is there to be followed and is intended to be as fair as possible to both Parties – but hold both to account when it is not followed. Being “contractual” as in “following the contract” should be actively encouraged and seen in a positive light.