Frequently Asked Questions

We are a client who has appointed a consultant under an NEC4 Professional Service Short Contract (PSSC) on a time-charge basis. Categories of persons are listed as engineer, senior engineer and so on, with corresponding hourly rates. The qualification and responsibility requirements for each of these roles is defined in the scope. Named key persons have also been provided, with the job entry linking directly to the category of person, for example Susan Smith has the job of engineer, with the qualifications and responsibilities entries referring to the scope. The intention of this was that, for the duration of the contract, rates would be fixed for named consultant’s staff, for example Susan Smith would always cost the engineer rate of £x per hour, however this was not stated explicitly. Shortly after contract award, one of the engineer key persons became chartered, and then satisfied the scope requirements for senior engineer. The consultant is claiming this person now attracts a senior engineer rate, however we do not see a mechanism in the contract which would justify this. Clause 50.3 states, ‘the amount work carried out on a time charge basis, the time expended on work which has been completed multiplied by the appropriate people rates’. Are key persons linked to the people rates for the purpose of payment?

Presumably the entry on page 2 of the contract data states that the work is to be carried out on a time-charge basis and that the price list only shows expenses. There is no contractual link at all between the people rates and key persons. The concepts of these two are different. Key persons are about the quality of staff the consultant will use, regardless of what or how they are paid for those staff. The list of key persons ensures you get the people the consultant based its offer on. If the consultant wants to change any of the key persons, it must provide a replacement with qualifications and experience as good as the person being replaced, see clause 21.2. In a time-charge-based contract, the people rates are what you pay the consultant for the people it provides. There are several different ways to link the people rates to the people being used. You appear to have linked them based upon qualifications and something called responsibilities in your contract rather than, for example, a job description, name or salary range. In that case, if the person has the qualifications and responsibilities you have listed, they are charged at the rate due for those people. It is irrelevant as to whether they are also named as a key person or were charged at a different people rate before. However, just because a person gets the correct qualifications, they do not necessarily now have the responsibilities described in the contract to go with those qualifications. So, it will also depend on how the consultant has described those responsibilities and whether or not the newly qualified person now meets the criteria set out in that description. If they do, the relevant people rate for those new qualifications and responsibilities is used. The parties’ intentions count for little in any contract; it is what the contract they entered into says and objectively means that counts. If you had wanted to achieve the result of ‘Susan Smith would always cost the engineer rate of £x per hour’, you should have linked the people rates to the name of the person. As your contract is written, once Susan Smith meets the qualifications and responsibilities of a higher grade in your people rates, the consultant is paid for her at the people rate for that higher grade. There is nothing unfair about this, after all you are now getting a better qualified and more responsible person than before. Finally, this is not in any way a criticism of the way you have described the roles for the purpose of the people rates, as that is usually the most sensible way of doing it. Other ways, such as using names or vague job titles, would probably have caused more problems than you have now. However, as people get better qualified and more responsible, their salaries will usually increase to reflect that, and therefore the people rates should also change to reflect that.

Back to FAQs