Contractor’s Scope provided for its design

The use of design and build contracting is a common procurement strategy for many clients who wish the responsibility for both the design and construction of a project to rest with its main contractor. This approach is achieved when using the ECC by making appropriate statements in the client’s scope as required by clause 20.1 and 21.1. Client’s may also specify their desired outcomes by including performance criteria in the scope.

Design work may be undertaken by the contractor before the parties enter the construction contract. Two examples of how this may occur are:

• During a separate pre-construction contract between the parties using, for example, the NEC4 Professional Service Contract and
• Technical proposals developed by the contractor as part of its tender submission

However, the contractor’s design will not readily be treated as a contract document unless it is expressly stated as being so. Contract data part two, prepared by the contractor, makes provision for the documents comprising ‘the scope provided by the contractor for its design’ to be identified and therefore incorporated into the contract.  If this approach is followed the scope, as defined by clause 11.2(16), will consist of two parts:

1. Scope provided by the client – identified in contract data part one
2. Scope provided by the contractor for its design – identified in contract data part two

For the version of the ECC published in October 2020 or earlier, parties using the ECC with secondary option X22 (early contractor involvement) should also be aware that design produced by the contractor during stage one is treated as scope provided by the contractor for its design (X22.3(7)). However, this is not the case with the January 2023 amendments (see article).

 Resolving ambiguities and inconsistencies

After the parties have entered into the contract, if the project manager or contractor becomes aware of an ambiguity or inconsistency in or between the contract documents, they must notify the other of the matter. The project manager is then required to give a statement setting out how the matter should be resolved (clause 17.1).   The project manager may give an instruction which changes the scope (clause 14.3).  The project manager’s authority to instruct changes to the contract documents are limited to the scope and key dates (and the bill of quantities (clause B/D 60.6). For all other changes that are needed to resolve an ambiguity or inconsistency should be agreed in writing and signed by the parties (clause 12.3). 

Ambiguities and inconsistencies between the client's scope and the scope provided by the contractor for its design

If there is an ambiguity or inconsistency between the client’s scope (contract data part one) and the scope provided by the contractor for its design (contract data part two), the project manager may decide to give an instruction to the contractor which changes the scope provided by the contractor. The contractor would need to comply with the instruction (clause 27.3). However, this does not give rise to a compensation event as this instruction is one of the exceptions stated in the second bullet point of clause 60.1(1).

Ambiguities and inconsistencies within the contractor scope

When there is ambiguity or inconsistency solely within the scope provided by the contractor for its design, the project manager may also give an instruction to the contractor which changes the scope provided by the contractor (clause 14.3).   Such instruction by the project manager is not one of the exceptions stated in clause 60.1(1) and is therefore treated as a compensation event (61.1). 

Assessing the compensation event

The project manager may decide the compensation event has no effect on defined cost or completion of the works, or that the event is due to a fault of the contractor and is therefore not required to instruct a quotation (61.2). Otherwise, the project manager must instruct the contractor to submit a quotation and the event is assessed in accordance with clause 63.10 which states:

‘A compensation event which is an instruction to change the Scope in order to resolve an ambiguity or inconsistency is assessed as if the Prices, the Completion Date and the Key Dates were for the interpretation most  favourable to the Party which did not provide the Scope.’

Clause 63.10 follows the legal rule known as contra proferentem which, loosely translated, means ‘against the party proffering them’. In other words, the scope is interpreted based on what is most favourable to the party who did not create the ambiguity or inconsistency.  In the case of an ambiguity or inconsistency in the contractor’s scope provided for its design (as identified in contract data part two), the assessment would be made in the client’s favour.

Consider the following scenario where the clients scope for the design and construction of a new office building states a requirement for lighting levels to be ‘suitable for the specified tasks to be carried out in each area.’  The contractors scope provided for its design of the open plan office areas shows an illuminance of 300 lux on the drawings and 500 lux in the specification.  The difference in this information would represent an inconsistency within the contractor’ scope, the resolution of which the project could instruct a change to the drawings to 500 lux, matching that stated in the specification. The assessment, being made most favourable to the client as stated in clause 63.10, would result in the contractor being obliged to provide lighting to the higher specification without any increase to the prices or change to the completion date.  Further, it seems unlikely that even if the contractor could demonstrate it had priced for the lower lux level, the contractor would be entitled to an increase to the prices.

A change to the scope is one of the limited circumstances under which the prices can be reduced (63.4).  If the client in the scenario above had decided that 300 lux was suitable and the project manager instructed a change to the specification to match the drawings, the assessment would still be made in the client’s favour and could therefore result in reduced prices.

Conclusions and recommendations

The scope is a very important contract document and for design and build contracts may comprise of both the client’s scope and the contractor’s scope. Information in the contractor’s scope provided for its design may consist of separate parts which need to be consistent. The project manager is empowered to instruct a change to the contractor’s scope to resolve an ambiguity or inconsistency and such a change is at the contractor’s risk. Thorough checks of all parts of the contractor’s scope by both the contractor and the client before contract can mitigate this risk.

David Hunter
Daniel Contract Management Services Ltd

November 2023

This article is an edited version of that first published in the NEC User Group newsletter Issue No. 119 July 2022.