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NEC ECC: CECA Rates - Equipment exceeding Purchase cost

+2 votes
196 views
We are working on a project whereby, prior to start on site, our Contractor purchased Heras Fencing for use initially on this project.  We have had many delays for various reasons and have been on site a lot longer than anticipated (c. 2 years).  Under our Contract, owned plant is charged at CECA rates (less an agreed discount).  I accept there is an argument for 'win some, lose some', but we are currently paying a large amount each month and have paid for the heras fencing more than twice over already (based on cost to Contractor).  Are we bound to carry on paying the CECA rate or, is there a way, without instructing a quotation to purchase, to re-examine these costs on a Defined Cost basis?
asked Oct 13, 2017 in NEC3 and NEC4 Contracts by anonymous   9 21
If your Contract specifies (would probably be in the schedule of cost component) that payment for owned equipment shall be based on CECA rates, then you are already paying based on Defined Cost. Remeber that cost component mentioned in the SOCC is Defined Cost.

If you foresee that such equipment will not be required on site for a given amount of time, your last option may be to instruct the Contractor to temporarily demobilize such equipment until it is already required again on site.

2 Answers

+2 votes
 
Best answer
This is often a consequence of delays on a project, whereby a standing hire charge is extended for a longer period of time, making it more economical to purchase than to hire, although with the use of hindsight may I add.

It depends on what your Contract Data states, which details how such costs are treated.  If it says CECA rates (with stated adjustment) then instructing the Contractor to purchase these wouldn't change the way in which the cost component is actually treated (Equipment owned by the Contractor) so back to square one again !!.

Maybe some issues are 'not fair' such as these but the 'win some, lose some' as Jon previously stated is how most contracts work and its easy to become overly focused on the 'lose some' issues.  If the Contractor was losing money on the rates I am sure most Employers would not lose much sleep over it.
answered Oct 13, 2017 by Andrew WI (7,370 points)  
selected Mar 1 by Glenn Hide
+1 vote
See Andrews answer first.

However, if you instruct the Contractor to purchase the hera fence as Plant and Materials, then you own as part of the works to do with it as you please : sell on, keep for another project etc.

Otherwise, unless both Parties come to agreement to modify the contract in this respect, not that I can think of.
answered Oct 13, 2017 by Jon Broome (43,800 points)