| Q: |
 |
How does the NEC Engineering and Construction Contract (ECC) deal with payment for unfixed materials on site? |
|
| A: |
|
This depends on the ECC option chosen.
- Under Option A (Priced contract with activity schedule) the Price for Work Done to Date is the total of the Prices for completed activities. In order for the Contractor to be paid for unfixed materials they must be identified as an activity.
- Under Option B (Priced contract with bill of quantities) the Price for Work Done to Date is the quantity of work which the Contractor has completed for each item in the bill of quantities multiplied by the rate and proportions of lump sums in the bill of quantities. In order for the Contractor to be paid for unfixed materials they would normally form part of method-related charges.
- Under Options C, D and E (target and cost-reimbursable contracts), the Price for Work Done to Date is Actual Cost which the Contractor has paid plus the Fee. The Contractor would have to prove that he has paid for the unfixed materials on site.
- Under Option F (management contract) the Price for Work Done to Date is the amount of Actual Cost which the Contractor has accepted for payment plus the Fee. Unfixed materials would be included within the Subcontractor's accounts.
|
| Top |
|
|
|
| Q: |
|
Is the main contractor under an NEC Engineering and Construction Contract (ECC) obliged to appoint its subcontractors using the NEC Engineering and Construction Subcontract? |
|
| A: |
|
Under ECC clause 26.3 the Contractor submits the proposed conditions of contract for each Subcontractor to the Project Manager for acceptance unless
- the NEC Engineering and Construction Subcontract or the NEC Professional Services Contract is to be used, or
- the Project Manager has agreed that no submission is required.
In addition, under clause 26.4 of ECC Options C, D, E and F (target, cost-reimbursable and management contracts) the Contractor submits the proposed contract data to the Project Manager for acceptance on the same basis. Notwithstanding the requirements it is certainly in the Contractor's interest to appoint its Subcontractors using the NEC Engineering and Construction Subcontract as the Subcontractor is then obliged to comply with the equivalent early warning, programme and compensation-event provisions to the Contractor. |
|
| Top |
|
|
|
| Q: |
|
How is the Contractor's fee percentage in the NEC Engineering and Construction Contract (ECC) applied where work is subcontracted? |
|
| A: |
|
Again this depends on what ECC option has been selected.
- Under clause 63.10 in Options A and B (priced contracts), the assessment of a compensation event which is or includes subcontracted work has the Contractor's Fee added to Actual Cost but fees paid or to be paid to the Subcontractor are not added. The Contractor's Fee is thus deemed to include that of its Subcontractors. This avoids the Employer paying two sets of fees on subcontracted work - and is also because the Employer has no control of fees tendered by Subcontractors.
- Under Options C, D and E (target and cost-reimbursable contracts), the Contractor can add its own Fee to that of its Subcontractors as this is part of the Actual Cost.
Contractor's fee percentage are currently being reviewed by the NEC panel in drafting the ECC 3rd edition, with a view to having separate Fees for contracted and subcontracted work. |
|
| Top |
|
|
|
| Q: |
|
How is option S applied in the NEC Engineering and Construction Contract (ECC)? |
|
| A: |
|
Under ECC Option S the Employer can recover low-performance damages based on the lifetime of a piece of performance-specified work.
The Employer states the different levels of low performance within the contract data and also an amount for damages against each performance level.
If we assume that a performance level has been achieved which attracts £50 a week and the expected life of that piece of work is 20 years, then the low-performance damages would be 20 x 52 x £50 = £52,000.
The deduction of low-performance damages would be made in the assessment at the date of issue of the Defects Certificate. |
|
| Top |
|
|
|
| Q: |
|
In ECC Clause 10.1, why is the requirement to act "in spirit of mutual trust and co-operation" a contractural obligation? Would it be possible for one party to sue the other for a breach of contract if he does not act in this spirit? |
|
| A: |
|
This clause should really be viewed in a positive and proactive light rather than considering merely what happens if someone does not act "in spirit of mutual trust and co-operation", but if the aggrieved party can prove a breach and measure and prove the effect of that breach then it would be actionable.
The procedures within ECC such as early warnings, programme and compensation events enhance and develop the principle of mutual trust and co-operation as that eliminate or reduce doubt and uncertainty which tend to erode trust and co-operation between the parties. |
|
| Top |
|
|
|
| Q: |
|
What purpose does the activity schedule serve under an ECC Option C contract if not to trigger payments |
|
| A: |
|
Under Option C it would at first seem that the activity schedule is not essential, and when one compares it with Option A (payment against completed activities) that would seem a reasonable assumption, but under Option C the activity schedule is the vehicle for creating the target and is also a breakdown of the Contractor's tender to assist price comparisons and tender assessment. It is also revised to take into account agreed compensation events under Clause 63.8.
Also under Clause 31.4 the Contractor is required to show the start and finish of each activity on the activity schedule on each programme that he submits for acceptance so it assists with assessment of compensation events and continues to give the Project Manager a full picture of the project. Clause 54.2 and 54.3 also reinforce the link between the activity schedule and the Accepted Programme. |
|
| Top |
|
|
|
| Q: |
|
What, if any, freedom does a Contractor have to add options to the Subcontract (ESC) which do not follow the 'back-to-back' principle? |
|
| A: |
|
The Contractor is not required to be "back to back" with his Subcontractors.
Note: There are slightly differing requirements regarding subcontractors depending on which Main Option is being used?
Under Options A & B (Clause 26.3) the Contractor submits the proposed subcontract conditions and the only reason under this clause for the Project Manager not accepting is that either they will not allow the Contractor to Provide the Works, or they do not include the mutual trust and co-operation statement.
In Options C to F (Clause 26.4) the requirement goes further than this in also requiring the Contractor to submit the proposed Subcontract Data, but again the reason for not accepting is that its use will not allow the Contractor to Provide the Works. |
|
| Top |
|
|
|
| Q: |
|
Could the Employers PM refuse to accept a Subcontract (ESC) which imposed delay damages (Option R) if he felt it would harm the spirit of the mutual trust and co-operation? |
|
| A: |
|
The Project Manager could not refuse to accept a Subcontract (ESC) which imposed delay damages (Option R) if he felt it would harm the spirit of mutual trust and co-operation as it is not a reason for not accepting. If he withholds an acceptance for a reason not stated in the contract it would be a compensation event (Clause 60.1.(9)) |
|
| Top |
|
