The WR is ranked fifth in the hierarchy of documents listed under clause 1.3.1 of the Public Works Contract (PWC). Documents 1 to 4 take precedence over the WR, and the WR takes precedence over documents 6 to 8 should inconsistencies occur.
1. The Agreement, even if it has not been executed
2. The Schedule and the Letter of Acceptance and any post-tender clarifications listed in it
3. The Contractor’s completed form of tender (excluding other documents in the tender)
4. The Conditions of Contract
5. The Works Requirements
6. The Pricing Document
7. The Contractors Works Proposals, if there are any
8. Any other documents in the Contract
Article 1 of the Agreement (1st in the hierarchy) states, “The Contractor shall execute and complete the Works subject to and in accordance with the Contract […]”. Clause 1.2 [Interpretation] item (1) defines the “Works” as being “the works described in the Works Requirements”, and item (17) states that reference to the WR is the WR identified in the Schedule Part 1B.
A typical Schedule Part 1B (2nd in the hierarchy) can be as follows, which is hereinafter referred to as the WR Box:
Before claiming for changes to the WR, you must be aware of what is in the WR Box. Typically, the WR Box should only include drawings and specifications which define the scope of the Works to be undertaken by the Contractor. I have often seen the wrong documents in the WR Box where, for example, the drawings and/or specifications are not included or incorrect versions of both are included. On some occasions, the Pricing Document (BOQ) and even a Site Investigation Report have been included, as shown in the following example.
Including items such as the Pricing Document and Site Investigation in the WR Box can expose an Employer to additional risk and be a source of Contractor claims should this information be found to be incorrect.
Contractors should also be mindful of situations where the Employer seeks to transfer risk, such as design or unforeseen ground condition risk it owns through statements made in the WR. A typical statement might say, “If so directed, the Contractor shall propose / set out his preferred route for all pipelines, manholes, shafts, chambers etc., and the selected routes of pipelines and the location of manholes and chambers shall be agreed on site between the Contractor and the Employer’s Representative”. This statement is inconsistent with clause 7.7 of the PWC which states “The Contractor shall set out the Works by reference to the points, lines and levels of reference in the Works Requirements” and in accordance with clause 1.3.1 (see above) the contract will override such WR statements.
Clause 1.1 of the PWC defines a Change Order as
“an instruction of the Employer’s Representative [ER] to change [including add to or omit from] the Works or to change [including impose or remove] constraints in the Contract on how the Works are to be executed.”
This defines the scope of an ER’s right to change the WR, and a change in scope must be connected to the Works. The courts will apply limits on the ER’s ability to change the WR if an instruction is not deemed connected to the Works.
In accordance with clause 4.4.1 (1) of the PWC, an instruction to Change must come from the ER named in the Schedule. Also, the definition of Change Orders under clause 1.1 confirms that Change Orders are instructions that must come from the ER. Before acting on an instruction and claiming changes to the WR, the Contractor must ensure the ER has the authority to issue Change Orders and this authority is not restricted under clause 4.3.2 of the PWC. The ER scope to change the WR is broad under clause 4.5.1; however, the change must be in connection with the Works and must be of a nature that was “contemplated” by the parties.[1]
Including items such as the Pricing Document and Site Investigation in the WR Box can expose an Employer to additional risk and be a source of Contractor claims should this information be found to be incorrect.
Clause 10.3.1 of the PWC contains a conditions precedent clause (better known as a time-barring clause) that must be strictly complied with when claiming changes to the WR. A clause is deemed a condition precedent when it states the precise time within which the notice of claim must be served and make clear that, unless the notice is served within that specified time, the claiming party will lose its right to claim.[2]
Clause 10.3.1 states that “If the Contractor considers that under the Contract there should be an extension of time or an adjustment to the Contract Sum, […] the Contractor shall, as soon as practicable and in any event within 20 working days after it became aware, or should have become aware, of something that could result in such an entitlement, give notice of this to the Employer’s Representative.”
Clause 10.3.2 confirms that if clause 10.3.1 is not strictly complied with when claiming changes to the WR, the Employer will be “released from all liability” to compensate the Contractor for such change.
There may be a glimmer of hope hidden in the wording of clause 10.3 where it says the Contractor must issue its notice to the ER “…within 20 working days after it became aware, or should have become aware, of something that could result in such an entitlement….”
The courts have found that if the Contractor issued its notice within 20 days of when “it became aware” of something that “could result in such an entitlement” rather than within 20 days of the event occurring on site, then one could argue that the notice is valid.[3] If a claim is not substantiated within 20 working days of the notice of claim, this glimmer of hope may well be lost.
A Contractor may also seek protection under the Law of Estopple if the ER, by its words or conduct, lead the Contractor to believe that the provisions of clause 10.3 would not be strictly enforced.
The basic concept of estoppel is that where a person (A) has caused another (B) to act on the basis of a particular state of affairs, (A) is prevented from going back on the words or conduct which led (B) to act on that basis if certain conditions are satisfied. In such cases, (A) is estopped (i.e. 'stopped') from resiling from, or denying, the existence of that particular state of affairs.
Within 20 working days of receiving the Contractors claim, the ER must determine an adjustment to the Contact Sum and extension of time – Clause 10.5.1 (3). If the ER fails to issue its determination, the determination is to be taken to be nil, and no adjustment to the completion date will apply – Clause 10.5.3. The ER’s determination (including its nil or non-determination) is binding on the parties unless the Contractor refers the disputed determination to the dispute management procedure under sub-clause 13.1 or conciliation under sub-clause 13.2 of the PWC – see Clause 10.5.4.
In situations where the scope of the WR is reduced, then the only way the Contract Sum can be reduced downwards is through an Employers Claim under sub-clause 10.9.1 of the PWC, which states, “If the Employer or the Employer’s Representative considers that, under the Contract, there should be a reduction of the Contract Sum, or that any amount is due to the Employer […], the Employer or the Employer’s Representative shall, as soon as practicable, give notice and particulars of the event or circumstances to the other, and to the Contractor.”
The ER is therefore obliged to issue a notice to the Contractor alerting it to such reduction and provide details of the event with a detailed calculation. It is incumbent on the ER to issue this notice and details “as soon as practicable”. NH International v National Insurance found that if the ER/Employer doesn’t issue its claim promptly, then “the back door of set-off or cross-claims is firmly shut”. [4] The Contractor could reasonably argue that similar timelines to clause 10.3 also apply to Employers Claims.
1. Be mindful of the information included in the WR box. This defines the scope of the Works
2. The Schedule and Contract take precedence over the WR, so statements in the WR transferring risk to the Contractor will not apply
3. Instruction to change the WR must come from ER named in the Schedule
4. Check the Schedule to make sure the ER’s power to vary is not restricted
5. Condition Precedent clause 10.3 must be strictly complied with for a claim to be valid
6. Words or conduct of the ER may relieve the Contractor of compliance with clause 10.3
7. Disputed claims must be referred to the dispute management procedure or conciliation under clause 13 of the PWC to remain live
8. If the ER seeks to reduce the Contract Sum resulting from reductions to the WR, the ER/Employer must notify this reduction promptly with details
[1]Thornv London Corporation [1876] 1 App Cas 120
[2]BremerHandelgesellschaft v Vanden Avenne [1978] 2 Lloyd's Rep 10
[3]Nobahar-Cooksoonand Others v The Hut Group Ltd [2016] EWCA Civ 128
[4]NHInternational (Caribbean) Limited v National Insurance Property DevelopmentCompany Limited (Trinidad and Tobago) [2015] UKPC 37
