Dissallowed costs under NEC3 Option E

NEC3 and NEC4 Contracts Compensation Events
1

We are operating under Option E reimbursable contract.

The works involve many unknowns and we are finding that the hours required to complete the work is increasing on a regular basis mainly due to the work being more complex than anticipated when it was estimated.

What is the correct procedure for notifying the client of these cost/schedule increases?

At the moment we are inserting additional scope into our plan every 2 weeks and submitting it to the client. Should we be doing anything else such as EWN’s and CE’s?

We are conscious that we want to avoid all disallowed costs.

Regards,

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2

An early warning would be a very good idea. This is something that could increase the total of the Prices. If you raise the issue and then talk about the matter in a Risk Reduction meeting you should at least gauge how they feel about these increased costs. At the end of the day it has to be a valid reason under clause 11.2(25) for it to be disallowed.