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NEC ECC: Recovery of full time staff costs in Compensation Events

+2 votes
86 views
Contract is Option A.  The Contractor has several staff who are employed full time within the Working Area.  A Compensation Event occurs which involves several of these full time staff working on the CE (eg additional planning time and supervision on site).  The staff are not paid overtime and there is no impact on the programme.

Can the Contractor include time for these staff in his quote for the CE?  There is no increase in his Defined Cost, but the Employer has increased the scope of the work he wants the Contractor to do and therefore reduces the opportunity for these staff to be utilised elsewhere in the business if available through efficiencies in working practice etc?

Reviewing similar questions on here there seems to be more than one school of thought!

Thanks.
asked Jan 16 in Compensation Events by SJG21 (230 points)  

1 Answer

+1 vote
Slightly surprised (but I will go and do a review) that you feel there is more than one school of thought on the principle of this answer as I think our experts will have a common answer to this. It may be that there are subtly different questions on a similar theme that might give rise to subtly different answers.

The intent of the contract is that the Contractor can only claim for additional resources as part of the CE quotation. If the existing team that are full time on that project can deal with that event then there is no additional cost incurred. The only exception I would say to that is that if you had a resource that would have left the project part way through, but now they are staying longer to do that CE then that could be claimed for. The problem you would have there is proving it. As a Contractor I always used to submit a resource schedule/release plan so they could see what resources I had planned throughout the project. This made it easier to justify where staff are being kept longer as otherwise it was difficult/subjective to prove.

I take your argument about that staff could have been utilised elsewhere but that is a practical or moral argument not a contractual one. The problem is if a Contractor could claim that cost for every CE, they could be doubling/trebling/quadrupling their staff costs they can claim for every CE compared to the actual resource they will have - which would not be fair on the Employer. You could argue what the contract says is not fair on the Contractor, but I think on the scale of fairness that is more closer to fair than if the Contractor can claim staff cost for every single CE that are running parallel with each other.
answered Jan 16 by Glenn Hide (68,950 points)  
Glenn - will the answer be different for Option C?
No - same answer (in terms of how the CE is assessed and hence change in target)