The Society of Construction Law's Astra Committee

Earlier today Tom Haley attended an event organised by The Society of Construction Law's Astra committee and held at Clyde & Co's very impressive offices at the St Botolph building. The event was a panel discussion on the "Different approaches to the assessment of quantum under FIDIC, NEC and JCT".

One of the key differences in approach is the use of prospective assessments in NEC where JCT and FIDIC tend to be retrospective assessments. However, Tom was also reminded about the case of Northern Ireland Housing Executive v. Healthy Buildings (Ireland) Ltd [2017] NIQB 43, where the court said, "Faced with seeking to award compensation to the consultant here for any cost to it as a result of the instruction of 10 January 2013, why should I shut my eyes and grope in the dark when the material is available to show what work they actually did and how much it cost them?" [54].

The effect of the judgment is that any forecast defined cost included in a prospective compensation event assessment should be replaced with actual defined cost if this is, or when it becomes, available.

This came up in a client issue Tom was dealing with recently, and whilst he worked with the client to revise their compensation event assessments to comply with the legal advice they received, Tom did, and still does, grapple with the contradiction that the judgment presents to quantity surveyors working on NEC contracts.

On the one hand, it is logical. Why should one party be compensated more or less than the loss they have suffered? However, on the other hand, it contradicts a key principle of NEC contracts where the intent is to proactively and collaboratively resolve issues to, in theory at least, avoid conflicts escalating.

When you think about the practical impact of the judgment it adds to the administrative burden on the commercial team, where forecast defined cost included in compensation events should be updated each month to include the actual defined cost when this becomes known and increases the possibility that the project manager waits to see the effect of a compensation event before implementing it. This doesn't seem to meet with the obligation to act in the spirit of mutual trust and co-operation

The judgment was published 8 years ago, so this isn't a new issue, but given the panel discussion and the issue Tom dealt with recently, it did cause him to reflect and think about the challenges this presents quantity surveyors working on NEC contracts.

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