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NEC ECC: How to calculate the Gain Sharing when Contractor Defects are involved
The Contractor had been forecasting a 50/50 gain share of £73,000 (i.e. total of £146,000). However, in light of the Contractor's problems the projection is now less.
Is there any guarantee of the share to the Client? How are costs forecast during the contract? When and how is the Contractor’s share calculated?
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The gainshare through out the life of the project is only a forecast. The Client has no guarantee on their share (and neither does the Contractor for that matter) until the final calculation. The cost of correcting defects if corrected before Completion is not disallowed so that if defects have occurred that the Contractor has corrected prior to Completion then that will reduce the gainshare pot for both Parties. Option C is a shared risk contract. Correcting defects after Completion would however be a disallowed cost.
An preliminary assessment of gainshare is made at Completion and the amount included within the next assessment after Completion. The final assessment is made using the final total of Prices/final Price for Work Done to Date which would be at the assessment following the Defect Date.
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