Frequently Asked Questions

We are the project manager on an NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule). The contractor is entitled to additional time as the result of a compensation event, which has pushed some activities into a planned 2 week holiday period.

We think the contractor is entitled to overhead costs for this period, while the contractor thinks it is also due staff time even though the staff are on annual leave. The contractor has included its employees’ home addresses as part of the working areas in the contract data. Can staff time be included in the compensation event?

The amount of time delay is assessed as the length of time that, due to the compensation event, planned completion is later than planned completion shown on the accepted programme (clause 63.5). This is assessed using the logic on the accepted programme. If that shows the contractor taking the full 2 week break, it still can do so. When it comes back after the break, you pay for the additional time it is in the working areas. On the other hand, if you want the contractor to work through the break and it agrees, it will have to pay staff and operatives overtime rates which will further increase defined cost.

With regards to people, it is important to remember that those people whose normal place of working is in the working areas get paid whether they are working in the working areas or not. See also the different wording between the first and second bullet of item 1 in the short schedule of cost components.

You have not said what version of NEC4 ECC you are using. Following the move to home working caused by Covid-19, the 2023 version changed the wording of item 1 in the short schedule of cost components, such that most people will be paid for at the people rates if the time is spent on work on the contract. Compared to the 2017–2020 versions, there is no requirement that that work will be in the working areas.

With regards to the ‘working areas’ in the contract data, that term is only used as part of the definition of the ‘Working Areas’, which is the defined term used, see clause 11.2(20). For the ‘Working Areas’ to be part of the ‘working areas’, they have to be used only for work in the contract, see the second bullet of clause 11.2(20).

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