BuiltIntelligence

Top 20 list of common problematic NEC3 ECC Z clause amendments

 

Z clauses whilst a necessity for most projects are also the biggest causes of issues and ambiguities within contracts. Z clauses are intended to allow different sectors of the industry to fine tune the contract to meet their particular industry specific requirements. It is also possible to slightly fine tune the risk profile that the Employer is seeking to achieve. However, in our experience this is taken too far and the Employer (mainly at the advice of their lawyers) seek to significantly change the contract. The problem is that any such amendments will not have gone through the same level of thought process, checks, verification that the rest of the contract clauses have had in their 22 years of evolvement and development. Contractors, Subcontractors and Consultants need to be very careful what they are signing up to in the form of Z clause amendments.

Below is a list of the top 20 “problematic” amendments that I have seen over the years, many of which the instigator (i.e. the Employer) with hindsight probably did not want themselves or appreciate the impact that these could or would have.

Employers/lawyers please note (and for the avoidance of doubt) – the following list is not a list of good ideas to include your next contract!!!  
  1. Clause 10.1 – delete “and in a spirit of mutual trust and co-operation”
  2. Clause 11 – defined terms added that are subjective and ambiguous
  3. Clause 13.8 – Project Manager may withhold acceptance for “any reasonable reason”. Other similar change is where after any other acceptance in the contract they add “following reasons are reasons for non-acceptance but are not limited to”
  4. Clause 16.2 – amended so that Contractor cannot instruct a risk reduction meeting
  5. Clause 17.1 – often amended to say that any ambiguities are not considered a compensation event trying to make these Contractor risk
  6. Clause 20.1 – words “and regularly and diligently” added?
  7. Clause 21.2 – extra subjective reasons added for not accepting design
  8. Clause 31.3 – more subjective reasons added not to accept a programme
  9. Clause 32.1 – added that new programme for acceptance has to be issued with every CE – completely unworkable(and unnecessary) for a project with significant change
  10. Clause 36 – amended so that PM can insist upon acceleration and reviews it through the compensation event process (which PM can assess self). Questionable whether legal?
  11. Clause 50.3 – add further financial penalty for not having further programmes accepted
  12. Clause 60.1 – lots of reasons sometimes deleted making them Contractor risk
  13. Clause 61.3 – last sentence amended to make every compensation event Contractor responsibility to notify and be time-barred against
  14. Clause 61.4 – sometimes Employer delete the “deemed acceptance” element of this clause and 62.6 and 64.4 leaving Contractor nowhere to go if PM does not respond
  15. Sometimes CE timescales significantly altered where Contractor given less time and PM more time for each part of the process
  16. Clause 60.2/60.3/60.1(12) sometimes deleted making all Site Conditions a Contractor risk they cannot seek a CE against
  17. Clause 63.8 – altered to say “least” rather than “most” which again makes ambiguities a Contractor risk item.
  18. Option B – amended to make any discrepancy between B of Q and other documents a Contractor risk, rather than a CE that 60.6/7 clarifies
  19. Option C-E: significant changes to disallowed costs which puts more risk to Contractor
  20. Amendments to schedule of cost components which means less elements are claimable by Contractor

Leave a comment