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NEC ECC: Option C working areas

+2 votes
After a recent Audit I have realised within the  Contractor’s accounts  that the Contractor’s planner has been allocated full time to the project but only works on site one day out of 5 and in the contractors head office the rest of the time.

They have been invoicing and paid as per the contract that the planner was to be on site in the working area 5 days per week

How does the contract under Option C deal with this situation and can I claim any money back with a Compensation even or would this be a disallowed cost?
asked Jul 22 in General by Lucy2019 (140 points)  

1 Answer

+2 votes
A compensation event is not the contractual route to go.

Rather, under both NEC3 & NEC4, the 1 day a week within the Working Areas is allowed for under  the 2nd bullet of People 1 in the Schedule of Cost Components (although the wording is a little different under NEC3 v NEC4).

Consequently, the 4 days should never have been a Defined Cost in the first place and hence, strictly speaking, not a Disallowed Cost..

As Defined Cost is a cumulative increasing figure as the contract progresses, the additional 4 days can be taken out of the Defined Cost figure .

Having said the above, I suggest a bit of common senses : if the planner has clearly been working on the contract and would be making say a 200 mile round trip &/or overnight stays in order to count as a Defined Cost going forward, when he or she can clearly work effectively from HO and home, then I suggest an agreement is reached to avoid this unnecessary cost (for both Parties as it comes out of the pain/gain) & hassle for the individual. I.e. agree what justification the Client is happy with for the Contractor to demonstrate he or she is working on their contract.

Likewise, looking back, fully not allowing the full 4 days a week if the planner has been working on the contract will create quite a bit if bad blood, so I suggest an agreement is reached for historical time.
answered Jul 23 by Jon Broome Panel Member (60,630 points)