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NEC3 ECC: Fees applied under ECI Stage One - Option C, WAO/H or People OH?

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We are under contract with a Subcontractor on a two stage contract, using the NEC3 ECI addendum, Option C.

Stage One applications are being submitted by the Subcontractor applying People Overhead for People costs, and Direct Fee to People and other categories.

No target has yet been agreed (part of Stage One WI), and final ECI cost will form part of the eventual agreed target.

With this in mind, I am of the opinion that Working Area Overhead should be applied to People costs in Stage One applications, not People Overhead?

Any advice would be appreciated
asked Nov 26 in Payment by BJM_2019 (120 points)  

1 Answer

+1 vote
When reimbursing the (Sub)Contractor's Defined Costs under options C, D or E, the full Schedule of Cost Components is always used (and it is the default for assessing compensation events unless it is agreed to use the Shorter Schedule).

Consequently, throughout the duration of the contract, it should be the WA OH% that is applied to People costs.
answered Nov 27 by Jon Broome Panel Member (60,470 points)  
Thanks for your response Jon.