Contaminated Fill on a Highway Embankment

The stronger view is that the Contractor has a compensation event, but it arises from the PM's instruction to excavate and dispose to a licensed landfill, not simply from encountering contaminated clay. The Scope did not describe that disposal method, so the instruction changes the Scope and falls within the clause 60.1 compensation event list. The early warning is not the same as a compensation event notification; it is a risk-management communication. The Contractor notified five weeks after the instruction, which is within the eight-week notification period if that is the trigger date. The PM should have responded to the notification within the contractual response period, either accepting it, denying it with reasons, or requesting further information. The PM's late response to the notification is significant: NEC4 contains a deemed position where the PM fails to respond in time, and the PM cannot simply leave the matter open. The PM's response to the quotation was within the two-week quotation response period, but that does not cure the earlier failure to deal with the notification itself. The PM should now confirm the trigger event, the notification date and the response status in writing.

The statement is too broad. Under NEC, the Contractor takes responsibility for its own method, its programme and its interpretation of the Site Information, but the PM provides the Site Information and the Scope. If the Site Information accurately showed no contamination in the eastern area, the mere discovery of contaminated clay is not automatically a compensation event; NEC does not contain a general 'unforeseen physical conditions' clause. However, the PM did not merely observe the contamination. The PM instructed a specific disposal method to a licensed landfill that was not in the Scope. That instruction is a change, and the Contractor is entitled to be assessed for the effect of complying with it. The PM's 'should have allowed' argument could succeed only if the Scope or Site Information allocated that contamination and that disposal method to the Contractor, or if the Contractor's own tender assumptions were inconsistent with the contract documents. A general allowance for 'some contamination' is not enough to defeat a compensation event caused by a specific instruction. The PM should separate the risk of encountering contamination from the risk of the instructed disposal method and assess only the latter.

For money, the PM should assess the quotation using Defined Cost plus fee, not the Contractor's unpriced tender allowance or a lump-sum comparison with other projects. The assessment should include the additional excavation, testing, transport, landfill charges, supervision and any temporary works directly caused by the instruction. The PM should check that the recorded costs are not already included in the Bill of Quantities or in the Accepted Programme's risk allowance. For time, the PM must use the Accepted Programme and the updated programme, not the Contractor's actual sequence alone. The claimed 8 days must be tested against the critical path. If the earthworks have 5 days of genuine float before Completion, a delay of 8 days may extend the Completion Date by 3 days while still delaying planned Completion by 8 days; the PM should distinguish the effect on the Completion Date from the effect on planned Completion and on time-related cost. The PM should also consider mitigation: could the contaminated material have been stockpiled separately while clean fill continued? If the Contractor failed to mitigate reasonably, the PM assesses the event as if it had mitigated. Finally, the PM should record the assessment and implement it, rather than leaving the quotation neither accepted nor assessed.