Frequently Asked Questions

We are the project manager on an NEC3 ECC Option F (management contract). The contractor is reporting that planned completion is beyond the completion date. The question has been asked by the employer as to whether the employer has to pay the defined cost for the contractor’s site and working areas costs and its fee during the period of delay, considering that the delay is the contractor’s fault.

The employer appreciates it will have to pay for the works to be completed and the fee associated with that, but is baulking at the possibility that it may have to pay the ‘preliminaries’ (we know this is not an NEC term but it is the term used by the employer) and the fee on top of this. Our understanding is that the employer will have to continue to pay as there is no provision in the contract saying stop paying for such costs once the completion date is missed.
Option F is a management contract where all of the work is usually carried out by subcontractors. Any work the contractor carries out is covered by the prices the contractor quotes in the contract data. The only addition the contractor gets is its fee percentage applied to the cost of subcontractors and the prices for its own work.

We are therefore somewhat confused by your reference to defined costs for the contractor’s site and working areas costs, as these should be covered either in its prices or fee. Either way the contractor should be paid in any event despite the overrun. The only exceptions to that would be:
  • if the contractor was paying a subcontractor to carry out work that formed part of the contractor’s prices or for carrying out the management that the contractor should be carrying out (see the last two bullets of 11.2(26))
  • if the contractor was not recovering sums that it should be from the subcontractors for their defaults, such as delay damages (see second bullet of 11.2(26)).

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