Compensation event Under ECC Option B

Under the ECC Option B is a compensation event subject to remeasure or is it a lump sum price?

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It depends on the circumstances: see option B clauses 63.13 under NEC3 and 63.15 under NEC4.

Either way, unless the Project Manager and Contractor agree otherwise, the default method of working out the change in Defined Cost + Fee is under clause 63.1. If they agree otherwise, they can use rates and lump sums instead - see end of clause 63.13 under NEC3 and 63.2 under NEC4.


Thanks Jon. My understanding was as per your comment re 63.1 and 63.13. The Defined Cost + Fee then becomes the PWDD. I was just unsure if you were to agree to use rates whether these would be remeasured or not

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As I understand, for ‘the work not yet done’ (clause 63.1, 2nd bullet) regardless of whether you use Defined Cost plus Fee or agree to use rates and lump sums (clause 63.13, last paragraph) these will always be compiled to become either a change to an existing BoQ item (1st bullet, clause 63.13) or a new priced item (2nd bullet, clause 63.13). Once inserted in to the BoQ, these are then subject to remeasurement as if they had always been part of the BoQ. For the ‘work already done’ (clause 63.1, 1st bullet), the actual Defined Cost plus Fee is used to compile the actual cost and this is then inserted in to the BoQ as a lump sum (63.13, 3rd bullet) which will not be subject to remeasurement as it won’t be required.

The Defined Cost plus the Fee for ‘the work not yet done’ will only become the PWDD when the work associated to the existing or new BoQ items has been completed (in full or part).

I don’t believe the NEC3 ECC Opt B/D is very clear or descriptive in the mechanism around this area of the contract.

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