Frequently Asked Questions

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?

Clause 20.1 states that the consultant provides the service in accordance with the scope. Clause 11.2(12) says to provide the service means do the work necessary to complete the service and all incidental work which the contract requires. The scope is information which specifies and describes the service. Accordingly, someone who is providing part of the service must be carrying out actions to provide the service. Therefore, the distinction between people who are covered by item 1 of the schedule of cost components and support people is established by what the scope states the consultant must do.

In your case, the person has been administering document control and weekly time sheets. If the scope specifies that a document control system must be provided, and that weekly time sheets are to be submitted to the service manager, then this person is clearly providing part of the service. Additionally, if you can demonstrate that such work is necessary to comply with some contract requirement – such as quality control requirements set out in the contract or evidence of defined cost – then again, that person would be providing part of the service.

If, however, the contract has no requirement for such work, and you are simply applying your own management processes to ensure your own documents are kept in order and timesheet records are able to support payment to people, then the person would not be providing a part of the service. In that case they would be included as part of your support people, because there is no requirement in the contract that this work has to be done.

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