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Professional Services FAQs

Top Frequently Asked Questions

Q We are the project manager on an ECC Option A (priced contract with activity schedule) and secondary option X1 (price adjustment for inflation) is not included. The contractor has submitted a quotation for a compensation event which includes an amount for inflation. The compensation event is due to the employer’s delay in getting planning approval at the start of the project after contract award. Does the contractor have any entitlement to inflation if option X1 is not included? Further, can the contractor claim for staff on site when the site could not be set up due to planning and the staff working from their normal offices?
Q We are a subcontractor on an NEC3 Engineering and Construction Subcontract (ECS) option A (priced contract with activity schedule). Dispute resolution option W2 is incorporated. We have previously submitted our monthly applications against completed activities and these have all been paid in full. We have just received the assessment our last month’s application. The contractor has retrospectively revalued some of our activities to a lesser amount, without consultation, and applied these as a negative sum against this month’s application for payment. Can the contractor do this?
Q We are the client on an NEC3 ECC Option D contract (target contract with bill of quantities). If we amended the schedule of cost components so that the cost of the contractor’s professional staff who are working in the working areas were not part of defined cost, what effect would this make?
Q We are the project manager on an NEC3 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule) for a highways project. The contractor has submitted a revised programme showing that the completion date has moved some 8 days. This is due to the effect of two compensation events which have not yet been implemented − one of which is not accepted by us. We think the contractor is expecting us to accept the revised programme and subsequently try to implement the compensation events. Should we not accept the revised programme and push the contractor to submit another programme? Or should we accept the revised programme since it is realistic?
Q We are consultants engaged under an NEC4 Professional Service Contract (PSC) using option E (cost reimbursable contract). Our question relates to what should and should not be in the overhead percentage included in contract data part 2 to cover support people and office overheads. When we priced this item we considered it would cover people working in accounts, legal and secretarial roles, namely part of our general company overhead and not specifically employed or working on the project. We have since employed a person specifically to work on this and another project to administer document control and collate and submit weekly timesheets. We have been submitting their time and costs relating to this project as we consider it part of ‘Providing the Service’, as noted in the PSC user guide. However, the client has not accepted these as it considers these duties are not required to provide the service and the costs should be covered by the overhead percentage. Who is right?
Q What does best practice cost audit methodology look like?
Q We are the project manager on an NEC3 ECC project. The contract does not seem to have a clause dealing with the contractor’s right to stop work, for example where there is a dispute in terms of whether an event is a compensation event or not. Is there a clause that can best address such a situation, because we consider this will be a breach of the contract and subject to termination if not put right?
Q How much should I spend on cost checking in open-book contracts?
Q
We are the project manager on an NEC3 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule). A contractor has submitted a first programme for acceptance but we do not believe the date for planned completion shown on this programme is realistic. We know the contractor has lost several days work due to recent high winds preventing use of a crane. We are yet to receive notification of a compensation event regarding the weather, but expect one, and the completion date currently remains unchanged.

Our understanding is that this first programme needs to show a realistic picture of the project at the time it is issued, that is reflecting the impact to planned completion due to weather, or any other delay, regardless of whether a compensation event has been implemented or not. As it stands the programme reflects the situation as if no delay has been experienced and, in our view, this is not a sound basis for the management of the contract or assessment of any compensation events. We would welcome your thoughts on this and whether we would be justified in not accepting the programme as it stands.
Q We are a consultant engaged under an NEC3 Professional Services Contract (PSC) Option A (priced contract with activity schedule). The employer has requested we undertake a desktop study. This is normally fine but, in this case, the scope requires us to engage a subcontractor to drill some boreholes to obtain data for the desktop study. We are concerned here because the PSC does not allow for the usual compensations events in relation to physical conditions or allow for the recovery of equipment, plant and materials. Is it possible to place an NEC3 ECS for the boreholes and recover this from the employer under a PSC? Also, how would we deal with site-related compensation events?

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