Driver Trett Digest Issue 26 - Flipbook - Page 28
DIVIDING DATE – NEC4
‘THE LINE IN THE SAND’’
Andy Smith
Technical Director
Bristol, Driver Trett UK
What is the ‘dividing date’, referred to in the NEC4
contract, and why is it so important?
Therefore, all compensation events may contain an
element of actual cost and an element of forecast cost
of the work yet to be done as at the dividing date. This is
reinforced by the NEC User Guide, Volume 4, ‘Managing
an engineering and construction contract’1 which
states:
The contract does not refer to the ‘dividing date’ as an
‘identified and defined term’ but its function can be
easily determined from Clause 63 which sets out the
procedure for assessing compensation events. Briefly
summarised, this comprises the actual defined cost of
the work done at the dividing date, the forecast defined
cost of the work not done by the dividing date, together
with any fee. The dividing date therefore delineates
‘actual’ costs from ‘forecasted’ costs in the assessment
of a compensation event – it is the ‘line in the sand’.
“Nevertheless, for most cases, the inclusion in the
clause of a dividing date set early in the assessment
process reinforces the point that compensation
events are not cost-reimbursable but are assessed
on forecasts with the Contractor taking some risk.”
It logically follows that the dividing date is of significant
importance.
But how does this sit with the ethos of NEC4 Option E –
Cost Reimbursable contract?
Again Clause 63.1 provides the necessary guidance
and states that for a compensation event that arises
from the Project Manager or the Supervisor giving
an instruction or notification, issuing a certificate or
changing an earlier decision, the dividing date is the
date of that communication. For other compensation
events, the dividing date is the date of notification of the
compensation event.
Under Option E, ‘Defined Cost’, as described at Clause
52, “includes only amounts calculated using rates and
percentages stated in the Contract Data and other
amounts at open market or competitively tendered
prices with deductions for all discounts, rebates and
taxes which can be recovered.”
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1 June 2017