NEC ECC: With X3 presumably retention, like the Fee, is deducted in Sterling?

Question

Under an Option A contract with X3 there is provision for payment in Euros. X16 retention is also included. In making an assessment I have calculated the Euro value. When applying retention I presume the value is calculated in Sterling using the exchange rate stated in Contract Data Part 1 for those elements being paid in Euros as one calculates the Fee.

Answer 1

A good question.

Assuming the currency of the contract is in 'pounds sterling', then that woul be what is used to price the Activity Schedule, with the Prices being the sum total of all the activities.

The Price for Work Done to Date (PWDD) is the total of the Prices for each completed activity (or group), which is what the retention calculation in Option X16 uses.

Option X3 is essentially used where the Employer (Client) takes the risk for currency fluctuations for the items stated in Contract Data Part 1, up to a maximum amount, where they are paid for in another currency as calculated in accordance with the stated exchange rate.

These items, however, would be priced in pounds sterling within the Activity Schedule, presumably with tendered prices converted using the exchange rate stated in the Contract Data for option X3.

Consequently, as a retention calculation uses PWDD, which relates to the Activity Schedule as priced in pounds sterling, any payment under option X3 would not fall under the definition of PWDD and would, therefore, not affect any retention calculation under option X16.

Comments

Thanks for your response. My thought is that the retention free amount is stated as a percentage of the total of the Prices. The total of the Prices includes the Stirling value of those materials paid for in Euros. As such I think retention is applicable to the full value including those materials paid in Euros.

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I agree with your comment, confirming that retention applies to items applicable to Option X3, but using the PWDD value in sterling to calculate the retention amount.  Interestingly the Project Manager is not mentioned in Option X3 and I think that is because it is a procedure which is administered by the Employer (Client), so in a sense the PM need not be concerned with the multiple currency issue.