Frequently Asked Questions

We are the client on an NEC4 Engineering and Construction Contract (ECC) Option A (priced contract with activity schedule). The contractor is adding vehicles for its staff to quotations for compensation events. The contractor’s position is that the vehicles have been hired in specifically for this one project, so when it claims the compensation event hours for its project manager using the people rates, the hours are also added for a vehicle. The contractor is further saying that its employees do not have a company vehicle or car allowance as part of their employment contract. We believe that under the short schedule of cost components, the staff vehicles should be included in the people rate in contract data part two.

You are correct. The contractor is not able to claim any costs for cars for people in an ECC Option A contract. The simple reason is that the only calculation for the cost of people is set out in item 11 of the short schedule of cost components. That multiplies the people rates by the hours worked.

There is no mention of the additional cost of cars for people in the short schedule of cost components, which defines how the defined cost is calculated. Therefore, the costs of these cars are deemed to be included in the fee, see clause 52.1.

We suspect the contractor may be confused by the fact that cars are included in the schedule of cost components which is used for ECC Options C to E (target and cost reimbursable contracts). However, that is irrelevant to your Option A contract. The calculations used for calculating the defined cost of people in the short schedule of cost components are very different to that in the schedule of cost components.

Or it could be that the contractor is confused between the short schedule of cost components in the NEC3 ECC and the short schedule of cost components in the NEC4 ECC, which have very different calculations for the defined cost of people.

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