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NEC ECC: What is included in 'buying & leasing land' within schedule of cost components?
We are operating an NEC3 ECC Option E Contract.
In section 43 of the SCC item (b) it states that payments for buying and leasing land is defined cost.
We have a main Contractor that has used a part of their office space to have an integrated team with the Employer. They are claiming that they are entitled to charge a hire rate for this space and are highlighting the aforementioned item in the SCC.
so the question is does the hire or purchase of land include the office space that covers it? or is it purely for the land itself and a charge for the accommodation is not included?
As I see it the wording in the NEC is quite clear and the term land would come to mean just the land and not the accommodation in terms of SCC 43 (a). the accommodation would not be able to fall under the term Equipment as it can not be removed from the working area (permanent structure) and therefore, these hire charges should be deemed part of the Fee as it is not a defined cost under the contract.
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An interesting issue, but whether or not you could define a building as a structure which 'forms part of the land', (borrowing a term from the Construction Act), I think the problem is that item 43 relates to 'Payments', that is money paid by the Contractor which is incurred in order to Provide the Works.
You could perhaps more realistically argue that it is compensation for buildings under 43 (c) but this again would likely fail the test of Payments 'made' by the Contractor.
I don't see why it couldn't be classed as Equipment, provided it was within the Working Areas (which can be extended to add this), as it is not included in the works. I don't also see that it has to be 'removable' from the Working Areas to be treated as Equipment.
In my experience it is reasonably common to extend the Working Areas to include temporary accommodation, for use on the project, as Equipment, removable or otherwise.
The PM could of course instruct a change to the Works Information to include this requirement. That way certain items, such as any consumables and equipment provided for the PM and Supervisor's offices (including those people acting on their behalf) could be included as Defined Cost under 43 (i).
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