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NEC3 ECC: Option E - Working & Design Area Overheads.

+1 vote
What is the correct way to apply Working Area Overhead and Design Area Overhead to your defined costs? For example, if Contract Data Part 2 reads the following:-

WAO Percentage- 15%
DAO Percentage- 30%
Direct Fee Percentage- 10%

...And both the Working Are and Design Area are on the same site/office, should the Working Area Overhead be applied to certain disciplines and Design Area Overhead to design people? For example:-

Project Manager - £40/hour
Add WAO @ 15%
Add Fee @ 10%

Design Engineer- £35/hour
Add DAO @ 3-%
Add Fee @ 10%

(Note: fee is added onto WAO/DAO).

Any clarity on this matter would be greatly appreciated.
asked Jul 20 in NEC3 Contract Data by anonymous   1 4

1 Answer

+2 votes
The Working Area overhead is applied to Contractor employed people (as defined in People 1) who are working in the Working Areas. The percentage for Design overheads is applied to designers directly employed by the Contractor who aren't working in the WAs. Either way, on top of whichever percentage is applied, the direct fee percentage is applied

If the designers are not employed by the Contractor, then the Contractor is reimbursed in accordance with the subcontract. On top of this, you would apply the subcontracted fee percentage.
answered Jul 20 by Jon Broome (25,100 points)  
Thank you. What if both Design and Other personnel are working in the 'Working Area' would the two applicable OH rates be applied, dependant upon if the personnel were Design Resource or not?
No, because in the SCC part 6 for design, it specifically states that the percentage for design overheads only applies to those working outside the WAs.