Frequently Asked Questions

We are the project manager on an NEC3 Engineering and Construction Contract (ECC) Option C (priced contract with activity schedule). It is a design and build contract for three assets. These assets are being designed and built outside of the working areas and, once this is done, they will be brought to the site, installed and commissioned by the subcontractor. The works information is silent about payment for plant and materials outside the working areas. The contractor has included in the price for work done to date the stage payments it has made to a subcontractor for activities (design, plant, materials and building) outside the working areas. Is this cost part of defined cost under the first bullet point of clause 11.2(23) and payable, or is it not payable as the contract is silent on this and therefore clause 71.1 cannot be satisfied?
The definition of defined cost is, as you state, in clause 11.2(23). The first bullet of this clause makes it clear that if the work is being carried out by a subcontractor (see definition in clause 11.2(17)) it is paid based upon what the contractor is required to pay the subcontractor. Therefore, what is in the schedule of cost components is irrelevant.

As the final bullet makes clear, the schedule of cost components is only used to assess work which is not being carried out by a subcontractor. So, the payments the employer makes will be based upon the contract the contractor has with the subcontractor. That should be available to you given clauses 26.3 and 26.4 of the contract. If the contractor pays the subcontractor more than it is contractually entitled to under the subcontract conditions, then that can be disallowed – see second bullet of clause 11.2(25).

With regard to plant and materials, item 3 of the schedule of cost components applies to all plant and materials, wherever they are initially delivered to. You can see that because it does not limit them to only those in the working areas, whereas, for example, items 1 and 2 do.

It is uncertain whether clause 71.1 would apply in any event, given that the plant and materials are not provided by the contractor but by the subcontractor. If clause 71.1 did apply, the supervisor is responsible for marking them on behalf of the employer. If the supervisor fails to do so, that will be the employer’s problem.

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