Luke Parham provides an update on any changes between how the NEC3 engineering and construction contract (ECC) and NEC4 ECC deal with the risk of extreme weather and weather compensation events.
A review of the wording for Clause 60.1(13) in both NEC3 and NEC4, and examination of the way in which selected relevant weather conditions are recorded in the contract data, confirms there are no contractual changes between the 2013 and 2017 contracts.
The weather events that are the clients’ risks (taking the client-contractor relationship by way of example) are:
- cumulative rainfall exceeds the one-in-10-year ‘average’
- the number of +5mm days is greater than the one-in-10-year ‘average’
- the number of days where temperature stays below 0 deg C exceeds the one-in-10-year ‘average’
- the number of days with snow lying at a particular selected time [refer to Contract Data] exceeds the one-in-10-year ‘average’
While the guidance notes (NEC3) and user guide (NEC4) are advisory from the NEC (and not a binding part of the contracts) it is interesting that the guidance extended to two pages under NEC3 but is reduced to one page under NEC4.
Updated guidance on notifying a clause 60.1(13) event under NEC4 has perhaps clarified that the eight-week period for notification of the event under clause 61.3 begins from the end of the calendar month when the full extent of the month’s weather was known.
Previously, the date of awareness for the purpose of notification (at least insofar as described in the guidance notes) may have been considered as occurring at the time when the weather conditions breached the one-in-10 level: i.e. perhaps earlier than the end of the calendar month. There are also some who believe that the date of awareness, for the purposes of the time bar, occurs on the date the comparison is made between the actual weather and the one-in-10-year ‘average’ weather data.
To qualify for a compensation event, weather observations must be recorded at the location stated in the contract data. If it is believed that the rainfall, snowfall or temperatures within the calendar month have triggered a compensation event then a monthly weather report can be purchased (for around £200 each) from the named weather station (via the Met Office) to verify this.
‘Updated guidance on notifying a clause 60.1(13) event under NEC4 has perhaps clarified that the eight-week period for notification of the event under clause 61.3 begins from the end of the calendar month when the full extent of the month’s weather was known.’
The weather reports are produced to be read in conjunction with various contract forms and formatted to assist the purchaser in identifying the relevant fields for notification. In my experience, a 60.1(13) weather compensation event is likely to be triggered two or three times a year and if a project is subject to delay damages, then the costs of the reports comparable to the relief from delay damages may be of reasonable cost/value benefit.
The NEC4 user guide states that the ECC approach to allocating the risk of adverse weather is an objective and measurable approach and may be less subjective than other standard forms. While this ‘measurability’ is likely true, it inherently also comes with its flaws.
Further consideration of the mechanisms of the NEC clause confirms that the contractor will only be compensated for qualifying weather that has occurred within a calendar month.
By way of example, if the qualifying threshold number of +5mm days of rainfall for February was 8 and for March was 8, and the actual +5mm rainfall days during the last week of February and the first week of March (two weeks of time) totalled 14, and there were no further +5mm days in February or March then a compensation event may not be notified for either month.
However, the combined total of 14 days of heavy rain over a two-week period is clearly more adverse than would have been required to qualify for a compensation event over the whole of either month. Such a weather event could lead to extreme consequences on construction sites such as rivers bursting banks or balancing ponds exceeding capacity.
This is an important nuance of the clause, which should be considered as many organisations may wrongly assume that all qualifying weather that occurs less frequently than one in 10 years on ‘average’ is the client’s risk.
This additional risk is borne by the contractor and organisations should remember to make this distinction when pricing risks within the tender.
GVE’s 7 tips for preparing for extreme weather:
- Include weather observations, effects on the workforce and work productivity in site diaries.
- If cranes are required consider adding a weather parameter in the contract data for the working days lost due to a critical wind speed being recorded on site.
- If a critical wind speed is included ensure that it is relevant to the types of craneage being used and not set at a higher level than the cranes can work at.
- Organisations should consider visiting the location at which the weather is to be recorded to observe if the conditions in this location are similar and appropriate to the site, checking tree cover, elevation, exposure or other micro-climate factors.
- A craneage ‘downtime schedule’ is a good idea (even if wind is not included in the contract data as a weather event) as if compensation event work occurs then the cost and time risks can be added for activities that use the crane.
- Take lots of photographs and even consider video footage when adverse weather is witnessed.
- Finally… keep a very keen eye on the weather forecasts!
Luke Parham is a director of GVE Commercial Solutions