Frequently Asked Questions


We are currently running a Contract using NEC3 ECC Option C.

1) Our query relates to Defects and what is deemed as being a Disallowed Cost under clause 11(25).

For example if the Contractor constructs a road with materials not in accordance with the Works Information this would be a Defect, however,

a) Would this be a Disallowed Cost under the Contract?

b) Or does the cost of remediation become part of the Defined Cost?

2) Furthermore, can you please clarify what is meant by clause 25.2, if “Any cost incurred by the Employer as a result of the Contractor not providing the services and other things which he is to provide is assessed by the Project Manager and paid by the Contractor.”

a) Does a Defect mean that the Contractor has not provided the service in accordance with the Works Information?

Generally speaking the cost of correcting Defects is paid as part of Defined Cost.  That is because it is within the definition of Defined Cost, but is not within the definition of Disallowed Cost.  The only exception to that is that the cost of correcting Defects after Completion is part of the definition of Disallowed Cost, and is therefore not paid.  The risk (or reward) of defective work in Options C & D is shared with the Contractor, in exactly the same way as the opposite to that risk, i.e. the cost of carrying out the work in the first place, is. 

The part of Clause 25.2 you refer to needs to be read in conjunction with the previous sentence from the same clause.  That refers to “…services and other things as stated in the Works Information….”.  This therefore does not refer to carrying out the works themselves.  It would apply, for example, if the WI required the Contractor’s to train the Employer’s staff to use the works.  That is not part of the works themselves but would be a service the Contractor is required to provide.

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