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Sub-Contract Fee Under Option B

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I am working for a groundworks sub-contractor we are working for a main contractor under NEC option B.

We have encountered several delays and the main contractor has requested that our works are carried out on a cost + fee basis.

I have put forward cost + 15%.

However he has stated that in sub-contract data part 2 the sub-contract fee is 0%

So therefore we should be happy with 7.5%

Is this correct could he actually enforce cost + zero fee?
asked May 5 in NEC3 Contract Data by Ryan Guest  
   

1 Answer

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Best answer
What matters is your 'direct fee percentage' as entered in your contract's Contract Data. That is the deal which is struck under NEC option B and you have signed up for it at 0%. Consequently, for the additional work, you will receive 0% margin.

They are asking you to convert the whole of your works to an an option E contract which is a fundamentally different contract strategy. It effectively means an agreement to terminate the old contract and replace it with a new contract. That is subject to commercial negotiation.

So you have to make a commercial decision wrt your total recovery under option B - i.e. original work Works Information @ whatever margin you had priced + changed WI @ 0% margin versus all remaining work @ 7.5% margin.
answered May 5 by Jon Broome (16,970 points)