Frequently Asked Questions

In attempting to wrap up a quite contentious ECC Option C final account, our contractor is claiming a variety of costs after completion has occurred. To address the issue of delay damages, our project manager has accepted the principle of a minor amount of non-critical works, not needed for handover, being deferred until after completion, but the contractor is claiming a disproportionately large amount of costs relative to the amount of work remaining outstanding. These include commercial staff time being involved in the preparation of the final account over about 8 months, including the settlement of supply chain final accounts and the provision of information to evidence the amount due for the account; and staff costs attendant on the demobilisation of the site. Our perspective on the matter as employer is that the only staff costs allowable are those strictly attendant on the minor items of deferred works and all other costs are not payable. Do you agree?
Most of the costs you mention will form part of defined cost in principle and therefore should be paid. They have been incurred by your contractor to provide the works and are therefore payable in principle – see the preamble to the schedule of cost components.

The definition of ‘provide the works’ is wide (see clause 11.2(13)) and all these works would fall within it, being incidental to actions that the contract requires. Such things as finalising accounts and clearing the working areas all fall into this definition, and there is nothing (other than one minor item below) in the definitions of defined cost or disallowed cost that limits costs to only those incurred before completion.

The one minor exception is that costs of correcting defects after completion are disallowed – see the fourth main bullet of clause 11.2(25). That would refer to the costs of the minor amount of non-critical work you refer to.

Your project manager seems to have got it the wrong way around. The costs of sorting out the minor defects are not paid, but the other costs are. All of this assumes that the people involved were working in the working areas at this time – see item 1 of the schedule of cost components. If they are working in other offices or other sites then they are not paid. And it also assumes that they were working on your project when they were in the working areas.

ECC Option C is a risk-and-reward-sharing contract. If you wish the contractor to take these risks alone in future, you should use ECC Option A.

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