NEC ECC: Payment for Attendance at Subcontractor Works

NEC3 and NEC4 Contracts Payment
1

Part of the Contractor’s Team recently attended Factory Acceptance Tests at a Subcontractor’s/Supplier’s premises, which are not included as part of the Working Areas. The FAT’s were also attended by part of the Project Manager’s/Employer’s team.

The members of the Contractor’s team, who attended, usually spend all of their time within the Working Areas, with the exception of such required visits.

The Project Manager has disallowed the costs for the Contractor’s team (time) stating that during this period they were not within the Working Area. Is this action by the Project Manager reasonable? Whilst appreciating that the FATS’s took place outside of the Working Area, there was no other means for carrying out the tests except to attend the Subcontractor’s/Supplier’s premises. Surely such visits cannot be deemed to be included within the Fee?

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Under NEC3, to be treated as a ‘genuine’ cost, People costs are required to be incurred in order to Provide the Works and also be within the Working Areas. In this instance the premises was not in the Working Areas so the PM is actually correct in their action, although this may seem harsh. NEC4 has been amended so that the ‘Working Areas’ test is not definitive, although I appreciate this doesn’t assist you.

To overcome this situation in NEC3 you would need to extend the Working Areas accordingly with a request under clause 15. There doesn’t appear to be any reason why the PM shouldn’t accept this, although the People costs were still incurred outside the Working Areas at the point in time when they were ‘incurred’, so you may need further ‘discussions’ to accommodate their inclusion,