Frequently Asked Questions

We are the contractor on an NEC3 ECC option C (target contract with activity schedule) and are well through the contract. Most of our subcontractors have been accepted by the project manager in accordance with clause 26, with the exception of labour- only suppliers. We also proposed at the start of the contract what subcontract conditions we intended to use. No response was received from the project manager about the subcontract terms. There are a couple of queries that arise from this. First, if the contractor did not request acceptance of a subcontractor, employed the subcontractor, and subsequently the project manager certified monies for the such subcontractor's work, is there a remedy available here for the project manager other than termination? Secondly for labour-only subcontractors, does clause 26 apply?

Regarding your first query, there seems to be no provision that allows the project manager to refuse to certify such amounts. The costs are part of the defined cost because they fall within the bullet of clause 11.2(23) and they do not fall within any of the stated reasons for disallowed cost set out in clause 11.2(25).

On the latter, note that the bullet on procurement procedure refers only to such procedures set out in the works information. The project manager's practical remedy is to instruct the contractor to stop work under clause 34.1 on the work the subcontractor is carrying out. Although this would be a compensation event, it would carry no time or cost implications because it arises from the contractors fault - see the second sentence of clause 61.1

Regarding your second query, an hourly paid labour-only subcontractor does not fall within the definition of a subcontractor in clause 11.2 (17), in that they do not fall within any of the bulleted points. Instead, they only have a contract to send persons to site to work under the contractor's instructions. The contractor is paid for such in accordance with item 14 of the schedule of cost components, to which is added the working areas overhead percentage. If though the labour-only subcontractor had a contract to carry out a specific item of work and is paid based upon the amount of work it does, then it will be a subcontractor under either of the first two bullets.

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