Allowed costs under Termination Option E PSC

The client has terminated a contract under 90.3 (the Employer no longer requires the services). Following the 5 day termination notice, we have submitted a CE to the client for committed costs up to point of termination, which include sub-contract labour costs and site clean up costs. However, the sub-contract costs have increased by an additional 2 days as our contract had different termination notice. The client is disputing the additional 2 days costs as unallowable under NEC3 PSC. What are the allowed costs under Option E and can we claim these additional days as committed?


I think you are in luck as neither of you seem to be following the correct procedure. You say that you have “submitted a CE (compensation event) to the client for committed costs up to point of termination”. The termination procedures as stated in clause 91.1 are a separate procedure to the compensation event procedures as stated in section 6.

The amount due is stated in clause 92. Your subcontract costs seem to fall under “other costs reasonably incurred by the Consultant in expectation of completing the whole of the services and to which the Consultant is committed.” There is no time-bar on this.