Frequently Asked Questions

We are a client using the NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule). The contractor has inserted –50% against the list of equipment from the Civil Engineering Contractors Association (CECA) document in contract data part two. The contractor needs to hire a crane as part of some compensation event works. The project manager has said it will apply the –50% to the cost of the crane. If the contractor used one of its subcontractors to hire the crane, would the cost of the crane be assessed under subcontractor or would it still be assessed under CECA rates using the –50%?

The amount of defined cost recovered in relation to the crane would be determined by the cost component under which it was recoverable. If the contractor was to procure the crane directly, it would be recovered under cost component 2 relating to equipment, and the CECA schedule less the adjustment stated in the contract data would apply. If the crane was provided by a subcontractor, it would be recovered under cost component 4 relating to subcontractors.

However, for it to fall under cost component, 4 the company procuring it would need to meet the definition of a subcontractor (clause 11.2(19)). The cost payable under cost component 4 would be the amount due to the subcontractor calculated in accordance with the subcontract, and it would also have to represent an open market or competitively tendered price in accordance with clause 52.1.

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