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NEC ECC Option C - Does the Contractors 'Risk Allowance' reduce the Target Price if it is not used?

+2 votes
If a Contractor has priced a sum of money for risk into the Target Price and they do not expend this, is it removed from the overall Target Price?

Also, does the Project Manager have the right to reject and sums that are taken from the Risk Allowance?

Is the above clearly stated in the Contract or Guidance Notes?
asked Jul 16 in NEC3 General by TheGaz1982 (200 points)  

1 Answer

+3 votes
Best answer
No - the Prices are not reduced except for situations in the contract that it says that it can, the obvious ones being change in Works Information instructed by the Project Manager and when accepting a quotation do not correct a defect. I am sure the Project Manager would not be looking to increase the Target Price if the risk element the Contractor had not allowed for was not enough!

Any such costs not expended will form part of the pain/gain calculation at the end of the project.
answered Jul 16 by Glenn Hide (33,040 points)  
selected Nov 16 by Neil Earnshaw