Plain English Explanation
Under NEC, the PM can instruct the Contractor to search for a Defect — opening up completed works, testing, or investigating. If the search reveals a Defect that was not caused by the Contractor (e.g. it was caused by a Client-supplied component, a design error by others, or a pre-existing condition), the search instruction is a CE.
However, if the search reveals a Defect that was caused by the Contractor's failure to Provide the Works in accordance with the Scope, then there is no CE — the Contractor bears the cost of the search and the correction.
This CE incentivises the PM to be confident a Defect exists and is the Contractor's responsibility before instructing a search. It protects the Contractor from the cost and disruption of speculative investigations.
Key Takeaway
If ordered to open up and the search reveals no Defect caused by you, notify a CE for the full cost of the investigation — the PM instructing a speculative search does not get a free result.
What This Means for Subcontractors
For subcontractors, search instructions issued by the main contractor (acting as PM under the subcontract) should be evaluated critically. If the search reveals no defect, or a defect caused by someone else, notify a CE for the cost and disruption of the opening-up. Ensure your records clearly document the condition of your works before opening up.
Common Risks & Disputes
- 1The PM arguing the Defect found was the Contractor's fault even where causation is ambiguous
- 2Opening-up disrupting other ongoing works — this consequential impact can be significant
- 3Failing to notify a CE at the point of the instruction, then finding no Defect but having lost the CE notification window
- 4Poor records of the condition of the works before opening up, making it hard to prove the Defect was pre-existing
- 5Speculative search instructions on large, complex projects adding up to significant uncompensated cost
Sources
Related Clauses
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