On an NEC4 Contract (Option B), we have agreed a range of People Rates for the SSCC.
A bunch of CE’s have substantially prolonged our presence on site, resulting in us incurring increased people costs (including increased rates caused by inflation). We will assess these CE’s based upon Defined Cost + Fee.
However, I can’t see any mechanism in NEC4 to adjust the People Rates for inflation.
In these circumstances, how can the effect of inflation on our people costs (to the extent caused by CE’s) be recovered (there is no Option X1).
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you may want to consider inflation under the heading of risk (Contractor’s risk that has a potential of occurring)
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Thanks Dave. Am I right in saying therfore that, in principle, a quotation for a comensation event could potentially allow for inflation which has a significant chance of occurring even if there is no mechansm for adjusting the People Rates in the SSCC? If so, I suppose that some allowance could be made for the anticiapted increase in the rates after the dividing date but not the increase in the People Rates which allready occurred up to the dividing date?
I think a reasonable view is that the agreed People Rates which were for the original contract period and therefore for any delay beyond the original planned Completion there is a risk of inflation.
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Hi Dave,
In the same situation would the party be able to apply inflation to people rates through the risk component of CE quotations if it’s clear they are not incurring a higher cost than the rates in SC Data Part 2 for people ?.
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yes, on a commensurate basis
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