This article explains the following:
- How to correct errors in NEC3/NEC4 ECS Engineering Construction Subcontract Compensation Event Quotes
- Resolving errors in Subcontractor quotes already accepted
- How to correct errors in NEC3/NEC4 Engineering Construction Contract Compensation Event Quotes
- Resolving errors in Contractor quotes already accepted
- How to resolve errors in other types of quotes
How to correct errors in NEC3/NEC4 ECS Engineering Construction Subcontract Compensation Event Quotes
Clause 63 sets out how a compensation event must be assessed and applies whether the Subcontractor is making the assessment or the Contractor is making the assessment (either when checking a Subcontractor’s quote or when making its own assessment under clause 64).
An error in a quotation would equate to it not being assessed in accordance with clause 63.
When the Contractor spots an error in a Subcontractor's quote
On that basis, the Contractor (if they know about the error), should instruct the Subcontractor to submit a revised quotation, giving reasons for that instruction and allowing the Subcontractor to correct the error, or make their own assessment.
When the Subcontractor spots an error in their own quote
All that remains is the mechanism by which the Subcontractor can advise the Contractor of the error. There is no provision in the contract for this but there is nothing that prevents it.
Accordingly, the workflow should be:
- Subcontractor submits quote
- Subcontractor realises there is an error in the quote before it is accepted
- Subcontractor advises the Contractor of the error (in FastDraft this can be done by ‘other notification’ under the notification workflow in the dropdown or by reference in the revised quote)
- Contractor instructs the Subcontractor to provide another quote (with reasons) or tells the Subcontractor they will be making their own assessment
In the workflow above the Subcontractor submits a further quote. Clause 62.2 refers to ‘Quotations for a compensation event’ in plural; so the contract does anticipate more than one quotation for a single event. In that case the second quote, providing it informs of the error, would act as the notification of the error as well as the quote or it could be raised as a separate notification under the notification workflow.
Rejecting incorrect Subcontractor quotes
In this case, the Contractor has 2 quotations for the same event and no method to reject one of them as an outright rejection of the original quote as it is not one of the replies allowed by clause 62.3.
However, we do not believe that this is an issue, as clause 62.1 allows multiple quotations to be submitted for a single compensation event and, although not expressly stated in the contract, it is likely to be implied that accepting one quotation will reject the others.
In that case, an alternative workflow might be:
- Subcontractor submits quote
- Subcontractor/Contractor realises there is an error in the quote before it is accepted
- Either party notifies the other of the error
- Subcontractor submits a revised quote which also highlights the error in the first quote
- Contractor accepts the revised quote (or does the other things they can do) which, by implication, rejects the others
FastDraft does not allow a quote to be deleted (allowing one party to unilaterally delete a communication is not a good idea), it already rejects all other quotes for a compensation event when one is accepted and that should be sufficient.
Resolving errors in Subcontractor quotes already accepted
One more point, if the quotation is already accepted, then it is probably closed off unless the Subcontractor can argue that the Contractor breached the contract by not assessing a compensation event correctly; in which case that would be a compensation event under 60.1(18). The Contractor does not have authority to correct an error in an implemented CE, but nothing in NEC precludes the parties from mutually agreeing revised terms in a supplementary agreement. All parties should check that they are authorised to do so with their Employers.
How to correct errors in NEC3/NEC4 Engineering Construction Contract Compensation Event Quotes
Clause 63 sets out how a compensation event must be assessed and applies whether the Contractor is making the assessment or the Project Manager is making the assessment (either when checking a Contractor’s quote or when making their own assessment under clause 64).
An error in a quotation would equate to it not being assessed in accordance with clause 63.
When the PM spots an error in a Contractor's quote
On that basis, the Project Manager (if they know about the error), should instruct the Contractor to submit a revised quotation, giving reasons for that instruction and allowing the Contractor to correct the error, or to make their own assessment.
When the Contractor spots an error in their own quote
All that remains is the mechanism by which the Contractor can advise the Project Manager of the error. There is no provision in the contract for this but there is nothing that prevents it.
Accordingly, the workflow should be:
- Contractor submits quote
- Contractor realises there is an error in the quote before it is accepted
- Contractor advises the PM of the error (in FastDraft this can be done by ‘other notification’ under the Contractor Notification workflow in the dropdown)
- PM instructs the Contractor to provide another quote (with reasons) or tells the Contractor it will be making their own assessment
In the workflow above the Contractor submits a further quote. Clause 62.2 refers to ‘Quotations for a compensation event’ in plural; so the contract does anticipate more than one quotation for a single event. In that case the second quote, providing it informs of the error, would act as the notification of the error as well as the quote.
Rejecting incorrect Contractor's quotes
In that case, the PM has 2 quotations for the same event and no method to reject one of them, as outright rejection of the original quote is not one of the replies allowed by clause 62.3.
However, we do not believe that is an issue as clause 62.1 allows multiple quotations to be submitted for a single compensation event and, although not expressly stated in the contract, it is likely to be implied that accepting one quotation will reject the others.
In that case, an alternative workflow might be:
- Contractor submits quote
- Contractor realises there is an error in the quote before it is accepted
- Contractor submits a revised quote which also highlights the error in the first quote
- PM accepts the revised quote (or does the other things they can do) which, by implication, rejects the others
FastDraft does not allow a quote to be deleted (allowing one party to unilaterally delete a communication is not a good idea), it already rejects all other quotes for a compensation event when one is accepted and that should be sufficient.
Resolving errors in Contractor quotes already accepted
One more point, if the quotation is already accepted, then it is probably closed off unless the Contractor can argue that the PM breached the contract by not assessing a compensation event correctly; in which case that would be a compensation event under 60.1(18). The PM does not have authority to correct an error in an implemented CE, but nothing in NEC precludes the parties from mutually agreeing revised terms in a supplementary agreement. All parties should check that they are authorised to do so with their Employers.
How to resolve errors in other types of quotes
We will be expanding this support article to cover errors in:-
- Other types of quotes in NEC ECC and ECS contracts and subcontracts such as quotes for acceleration and quotes to accept a Defect
- How errors in quotes in other forms of contract are dealt with such as NEC PSC, NEC TSC, NEC FMC, NEC Short forms, JCT and FIDIC contracts
- Errors in other types of workflows.
If you have an immediate question on a different contract or quote type, please reach our to our support team on support@builtintelligence.com.
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