We are the client on an NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule). The contractor wants us to retain all the savings from any of its proposals in relation to value engineering: it does not wish to split the saving as per clause 63.12. At present, contract data part one is drafted as the default 50% value engineering percentage. Using a clause 12.3 agreement we have drafted a deed of variation that will be signed by both parties. However, there is disagreement about what the value engineering percentage needs to be for us to retain all the saving: is it 0% or 100%?
If you are currently negotiating the contract, you will not need to use clause 12.3. All you will need to do is to insert the correct percentage in the contract data. Otherwise the answer to your questions lies in the wording of clause 61.12. If you are going to keep all the savings made by the contractor’s proposals, the value engineering percentage is 100%. That will mean the prices are reduced by 100% of the value of the assessed effect of the compensation event.