Yes, the contractor is right. Clause 63.15 states how the bill of quantities is changed for compensation events. Note the first bullet allows the use of changed rates, changed quantities or a changed lump sum. Any compensation event could use a mixture of all those if it sensible to do so, and the rules in the second bullet can be changed if both the project manager and contractor agree. If clause 63.15 requires the use of a lump sum or, in the case of the first bullet, if the parties agree to use a lump sum to assess the compensation event, that will not be remeasured. However, if clause 63.15 requires the use of quantities and rates or, in the case of the first bullet, the parties agree to use quantities and rates to assess the compensation event, those quantities will be remeasured. That is because the ‘Price for Work Done to Date’ (see clause 11.2(30)) sets out how the contractor will be paid.
If there are rates and quantities in the changed bill of quantities, those revised rates and/or quantities are still used to assess the ‘Price for Work Done to Date’. If a lump sum is inserted in the bill of quantities, that lump sum is paid based upon the proportion of works but the final lump sum will not be changed.
The principle of Option B is that the contractor gets paid on a remeasurement basis for the work set out in the bill of quantities which uses quantities and rates. Therefore, the client is at risk (or reward) if the quantities in the bill of quantities change when the work is remeasured. That principle does not change just because the rates and prices in the bill of quantities were added to or amended because of a compensation event.
If you want to change that, you and the contractor can agree to use lump sums for all compensation events. Both those lump sums will have to be priced considering the contractor’s additional risk of quantities changing, see clause 63.8. You and the contractor may also opt to agree lump sums for any compensation events, see clause 63.2.
As for implementation, if the assessment for a compensation event is based upon rates and quantities, those rates and quantities are used. That does not change anything as far as assessment is concerned if those quantities change. The ‘Price for Work Done to Date’ of the work carried out is still based upon the rules in clause 11.2(30). What implementation does do is prevent any change in the way the compensation event is assessed, that is by lump sum, by quantities or by rates.
All of the above is confirmed in page 65 of the NEC4 ECC User Guide Volume 4 Managing an Engineering and Construction Contract. With regard to Option B it states, ‘if quantities and rates are used to change the bill of quantities, the client will remain at risk of the accuracy of quantities’.