Hello all,
I am a Client and have received a CD Pt2 from a Consultant which states their fee percentage is 85%. (PSSC Option A)
Their tendered fee for the works is £300,000.
My question is- is their fee percentage only applied to CE’s and if so, is the 85% applied to the CE amount or is it applied to the total tendered fee?
Thanks
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Hi James, quick question, is it NEC3 or 4?
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Hi stevebrownassociates - Sorry, it is NEC 4
Hi James, apologies for the slight delay in responding.
85% sounds very high but I’m saying that without any knowledge of the contract conditions, sometimes there are good reasons for such a high percentage, e.g. a lot of Z clauses imposing high risk on to the Consultant.
In relation to your query the fee percentage is only used to determine the Fee when assessing a CE - see clauses 63.1, 11.2(8) and 52.1.
Defined Cost is defined as the cost of the components in the Short Schedule of Cost Components - see A11.2(16) and includes the People Rates which are identified in the Contract Data part two - see clause A11.2(19).
The £300,000 you refer to is the total of the Prices - the Prices are the lump sums against each activity in the Activity Schedule - see A11.2(22).
The amount the Consultant is paid at each assessment date is the Price for Service Provided to Date (PSPD) which is defined under A11.2(20) - for work which is complete and free of Defects. The Fee is deemed to be included within the Prices therefore the fee percentage is not applied to the PSPD.
Hope that helps, happy to discuss.
Thanks stevebrownassociates.
That’s really helpful (especially noting the clauses - really appreciate that).
I thought 85% was high and I will be going back to them to query this, but just wanted to understand how the fee was applied before discussing it with them.
Thanks for your help.
Just to add my tuppence worth to this - how much lower was this Consultant’s tendered fee of £300k in comparison to others?
With a fee percentage that high, it looks like they may have made a commercial decision to go low on the tendered fee of £300k, with the hope of winning the work and clawing back money via compensation events. This could well cause you a headache during the delivery of the service as they are likely to try and claim everything as a compensation event. You will need to be aware of this from the outset and nip it in the bud early.